ABSTRCT

New product development refers to original products, product improvements, product

modifications, and new brands developed from the firm’s own research and
development.
Once the major challenges in marketing planning is to develop ideas for new products
and to launch them successfully. The company will have to find replacements for its
products that have entered the declining stage. Because of changes in the customer’ testes,
technology and competition, there is a need for marketing companies to develop new
products. For example, the old radio become obsolete and transistors, CD players and
Discman were launched. Also, many new products fail in the market for various reasons and
need replacements. Customers always want new products, and competitors will do their
best to supply them, unless the company acts fast.
 CONTENT

S.NO. Particulars PAGE NO.

ABSTRACT

1. Introduction 03

2. Types of new product 04

3. Challenges in new product development. 05

4. Why new product fails? 06

5. New product development process. 07

6. Case study 1 13

7. Case study 2 18

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 INTRODUCTION:-

Before knowing about what is new product development we must know what is a product for
which an organization has to go through a lot of stages and phases? Then an organization
comes up with his new product in the market.

So let’s see what is a product?

A product is anything that can be offered to a market to satisfy a need or a want. A product is
a key element in the market offering. Marketing-mix planning begins with formulating an
offering to meet target customer’s needs and wants. The customer will judge the offering by
three basic elements: product features and qualities, services mix and quality and price.

In business and engineering, New Product Development (NPD); is the term used to
describe “the complete process of bringing a new product or service to market”. We
must also be aware of the fact that companies must grow through New Product
Development to survive and flourish in the long run. The core technology must be
grown in the organization. Technology is growing at an ever increasing rate and must
be integrated into product development otherwise the market niche of today will be
absolute and displaced by companies with the new technology. One of the major
challenges in marketing planning is to develop ideas for new products and to launch
them successfully. There are two parallel paths involved in the NPD process:-

1) Involves the idea generation, product design, and detail engineering;

2) Market research and marketing analysis.

Companies typically see new product development as the first stage in generating and
commercializing new products within the overall strategic process of product life cycle
management used to maintain or grow their market share.

Result- New product development refers to original products, product improvements,

product modifications, and new brands developed from the firm’s own research and
development.

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TYPES OF NEW PRODUCTS:-

“There are several general categories of new products some are new to the market (ex.DVD
player into the Home Movie market). Some are new to the company (ex. Game consoles for
SONY), some are completely novel and create totally new markets (ex. The Airline Industry).
When viewed against a different criterion, some new product concepts are nearly minor
modifications of existing products while some are completely innovative to the company. In
the area of new product development, here are some commonly accepted new product
terms- Bozz, Hamilton and Allen identified six categories of new products:-

1) New to the world products- New product that create an entirely new market. These
products are new to the market. Consumers are going to use these products first time in their
life. These products are innovative kinds of product.
Example:- Apple i-Pod
2) New product lines - New product that allow company to enter an established market for
the first time.

Example:- Game consoles for SONY.

3) Addition to the existing product lines: - When new product add supplement in the
established product market. This is called as the addition to the existing product lines.
Example: - Nokia add features in their hand sets.

4) Improvement and revisions of existing products:- New products that provide improved
performance or greater perceived value and replace existing products.
Example: - Intel Centrino, Duo processor etc.

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 5) Repositioning:- Existing product that are targeted to new market or market segments.
Through this a company repositioning its products and goodwill in the market. For Example:
- Gillette Company launched the new Mp3 power wet shaver for men in 2004.

6) Cost Reduction:- New product that provide similar performance at lower cost.
Example: - Tata sky provide set top box at the lower cost with similar features which are
present at the time of launching the prod

CHALLENGES IN NEW PRODUCT DEVELOPMENT:-

COMPANIES THAT FAIL TO DEVELOP NEW PRODUCTS ARE PUTTING THEMSELVES AT

GREAT RISK:- When a company launches a new product in the market, it faces a lot of
problems. There are lots challenge faces at the time of launching of the product. A company
can add new products through acquisition or development. The acquisition route can take
three forms. The company can buy other companies, it can acquire patents from other
companies or it can buy a license or franchise from another company.

The development route can take two forms. The company can develop new product in its own
laboratories, or it can contract with the independent or new product development firms to
develop specific new products. We can identify six categories of new products.

Less than 10 percent of all new products are truly innovative and new to the world. These
products involve the greater cost and risk because they are new to both the company and the
market place. So company faces lots of challenges for launching the innovative product. So
the companies have adopted some principle to guide its new product development.

.Several factor tend to hinder the new product development

 Shortage of important ideas in certain areas.

 Fragmented market.

 Social and governmental constraints.

 Cost of developments.
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  Capital shortage.

 Faster required development time.

 Shorter product life cycle.

There are some successful factors which help in making the new product a success
one. One key product is making superior product and another is well defined product
concept prior to the development. Other factors are market synergy,quality of execution
in all stages & market attractiveness.

WHY NEW PRODUCTS FAILS?

New product development can be quite risky. New product continues to fail at
disturbing rate. New product can fail for many reasons. New product continues to fail
at a disturbing rate. Recent studies put the failure rate of the new consumer products
at 95% in United States and 90% in Europe. It may be happen due to weak
positioning strategy or may be the weak pricing strategy. There are some more
important reasons which are as follows:-

1. Poor organization system for handling New Product Ideas:-

• Poor criteria of working regarding new products.
• Poor or weak procedures undertakings.
• Poor coordination and co-operation between departments. They may be
marketing, finance. Production etc.

2. Poor forecasting and market research:-

• Unaware to the environment of marketing and audit sequences as well as poor
anticipation and prediction about market.
• Marketing myopia

3. Poor market planning:-

• Poor long term planning
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 • Poor segmentation:-Process of converting the heterogeneous markets into
homogeneous market.
• Overpricing and product placement

4. Poor product design:-

• Packaging
• Finishing
• Designing

5. High product development cost

• Raw material cost
• Production cost

6. Bad timing of introduction of new product:- Includes introduction of product at

the time when market is not favorable for the product .

7. Poor product distinctive .

8. Lack of differential advantage.

9. Over optimism about the market plans leads to forecast that cannot be
sustained in the real world.
10. Questionable pricing strategy implementation.
11. The advertising campaign generates an insufficient level of new product / new
service awareness.
These are the main failures which are hinder in new product development. And must
be considered before launching a product in the market.

NEW PRODUCT DEVELOPMENT PROCESS:

There are some steps of new product of development, these are –

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1) Generation of the new idea
2) Idea Screening
3) Concept Development and Testing
4) Business Analysis
5) Product Development
6) Marketing Strategy
7) Test Marketing
8) Commercialization
.

CONCEPT MARKETING
DEVELOPME STRATEGY
NT & &
TESTTESTING DEVELOPME
NT

IDEA BUSINESS
SCREANING ANALYSIS

THE PROCESS
OF NEW PRODUCT
DEVELOPMENT

PRODUCT
IDEA
DEVELOP-
GENERATION
MENT

COMMERCIA- MARKET
LISATION TESTING

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Step 1. Idea Generation

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The new product development process starts with the search of ideas. The objective of idea
generation is to gather as many ideas as possible & from any and all possible sources.
Possible sources include:-

R & D department, committee or task force Suppliers or market intermediaries

Top executives Customers
Sales representatives Competition
Production staff Freelance inventors
Other company employees Consultants
Noncompetitive firms Patent applications
The public

In addition, there are number of marketing research techniques that may be used when an
organization purposefully seeks to generate new product ideas. These include brainstorming,
morphological analysis, scenario writing and demand forecasting. New product ideas can be
come from interacting with various groups & from creativity generation techniques.

The emphasis, at this stage, is upon the quantity of ideas with no source, no idea,
being rejected. Example, that Alexander Fleming, who is credited with the discovery of
penicillin, did not realize its practical application as an antibiotic. This development was left to
others scientists and it did not happen for a decade after Fleming first observed the chance
killing of a bacterial culture on a dish. Likewise, it is said that when ICI first developed
polystyrene no one knew what to do with it.

Step 2. Idea Screening

Having generated a number, sometimes a large number of ideas, filtration process

must begin. The objective is to identify new product ideas which are weak in terms of their
chances of market success or their potential return-on-investment. The important point here
is that product ideas must be evaluated against the company's objectives. A company must
have a clear mission and know what business it is in. Only then can product ideas be
matched with company objectives and resources.

In screening ideas, the company must avoid two types of errors.

A DROP-ERROR occurs when the company dismisses an otherwise good

idea. It is easy to find fault with other people’s ideas. Some companies
shudder when they look back at ideas they dismissed.

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A GO-ERROR occurs when the company permits a poor idea to move into
development and commercialization.

Step 3. Concept Testing

Many factors contribute to the failure of new products but a principal cause is the
inability to predict customer response to new products and services. Systematic tests can be
used to reduce expensive failures. These include; concept testing, market positioning tests,
product testing and market testing.

Concept testing involves presenting the product concept to appropriate target consumers
and getting their reactions. The concepts can be presented symbolically or physically. The
product idea has to be converted to a product concept.

The more the tested concepts resemble the final product or experience, the more
dependable concept testing is. Today firms can use rapid prototyping to design
products on a computer, and then produce plastic models of each. Potential consumers
can view the plastic models and give their reactions.

Concept 1: A snack food for people who, on specific occasions, find that they have
insufficient time to consume a full meal. (The statement could be further
elaborated to specify whether it is intended as an alternative breakfast food or to
be taken at other times of the day).

Concept 4: A health food intended for people active in sports.

Concept 5: A food for babies to sustain health and promote rapid growth.

It can be seen from these examples that a product concept statement will often reveal where
the product is to be positioned in the market. Each product concept would engage a different
set of competitors. If only one concept statement is used then this may or may not position
the product in the market in which it has the best chance of success or where potential profits
are greatest.

Step 4. Business Analysis

A number of new product ideas which do not match company objectives and/or resources
will possibly have been screened out and others will have been modified as a result of the
concept and/or positioning tests. Sometimes no product ideas remain after screening but
assuming one or more ideas remain, and that decision have been made as to where in the
market the product might be positioned, the next task is to prepare a business analysis. Such
an analysis would involve an assessment of the total capital investment cost, the likely
return-on-investment and the payback period. Where at all possible this should be carried out
before a physical product has been manufactured or otherwise produced. The business
analysis phase typically involves the use of a set of pro forma financial statements showing
what future income and expenses would be if a new product idea were fully developed and
marketed. Under this we cover the two following points:

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 1. Estimating total sales: Total estimated sales are the sum of estimated first-time sales,
replacement sales, and repeat sales.

2. Estimating costs and profits: Costs are estimated by the R&D, manufacturing,
marketing, and finance departments.
The most complex method of estimating profit is risk analysis. Here three estimates
(optimistic, pessimistic and most likely) are obtained for each uncertain variable affecting
profitability under an assumed marketing environment and marketing strategy for the
planning period.

Step 5 Marketing Strategy

Following a successful concept test, the new-product manager will develop a preliminary
marketing-strategy plan for introducing the new product into the market. The plan consists of
three parts:

• The first part describes the target market’s size, structure, and behavior; the planned
product positioning; and the sales, market share, and profit goals sought in the first
few years.

• The second part outlines the planned price, distribution strategy, and marketing
budget for the first year.

• The third part of the marketing-strategy plan describes the long-run sales and profit
goals and marketing-mix strategy over time.

Step 6. Product Development

Product development involves the creation and testing of one or more physical versions by
the R&D or engineering departments
• Requires an increase in investment
If the product concept passes the business test, it moves to the R&D and /or the engineering
department into a physical product. Up to now it has existed only as a word description, a
drawing or a very crude model. This stage will answer whether the product ideas can be
translated into a technically and commercially feasible product. The R&D department will
develop one or more physical version of the product concept. It hopes to prototype that
satisfies the following criteria-
• Consumers see it as embodying the key attributes described in the product
concept statement.
• The prototype safety under normal use and conditions.
• The prototype can be produced for the budgeted manufacturing.

When the prototype re ready, they must be put thought rigorous functional and consumer
tests. The functional tests are conducted under laboratory and field conditions to make sure
that the product performs safety and effectively. Consumer tests can ake a variety of forms,
from bringing consumers into a lab to test the product versions to giving those samples to
use in their houses.
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Step 7. Test Marketing

After the management is satisfied with the product’s functional performance, the product
is ready to be dressed up with a brand name, packing and a preliminary marketing
program o be tested in more authentic consumer setting.
The purpose of the marketing is to learn how consumers and dealers react to handling,
using and repurchasing the actual product and how large the market is.
For test marketing consumer goods, the methodology involves sales-wave research,
simulated store technique, controlled test marketing and test marketing.
New industrial products typically undergo extensive product testing in the labs to measure
performance, reliability, design and operating cost. The next most common method is a
product use test where the manufacturer selects some potential customers who agree to
use the new product for a limited period. A second common market test is to introduce
the new industrial products at the trade shows. Testing can also be done in distribution
and dealer display rooms.

Step 8. Commercialization

At this stage ,the company takes the decision to go in for large-scale manufacturing and
marketing of the product .It gets to this stage only when all the previous step provide
favorable single . At this stage, the company fully commits itself to commercialize the new
product with the required investment in manufacturing and marketing.

In launching the new product, the company must take four decisions:-
1) When: - when it is right time to introduce the product.
2) Where: - whether to launch in a single locality, a region, several region, the national
markets etc.
3) To whom: - within the rollout market the company must target its distribution and
promotion to the best prospect groups.
4) How:- company must develop an action plan for introducing the new product into
rollout market.

CASE STUDIES REGARDING NEW PRODUCT DEVELOPMENT

Case study:

TITAN WATCHES

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Background:

There was a time when owing a watch was a momentous event.

It was seen as the first step into maturity, if not adulthood. This was also

the time when buying a watch was similar to buying a car -- the choice

was limited and the product was purely functional.

It was in this scenario that the Tata’s decided to enter the Indian

watch industry, with thorough understandings of the worldwide trends in

watches as their starting point. Two factors seemed critical to the success

of any watch manufacturer, i.e., cutting edge technology (quartz) and

styling (whether elegant, sport or other). And the Tata’s believed that they

had the ability to deliver on both.

Even then, this entry was a momentous decision, considering that

everybody -- consumers as well as dealers -- were fairly complacent and

satisfied with what was available. HMT had a 90 %market share, and few

found reason for complaint with the product. Those wanting more could

just opt for the imported stuff.

Researching the market: The first step for Titan, as with any serious

product launch, was consumer research. The first round was conducted

in 1986. Given that the market was mostly comprised of mechanical

watches, potential buyers of quartz watches were researched. Factors

governing purchase decisions, including opinions about the competition --

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HMT, Citizen and Allwyn -- were surveyed. At that time manufacturers’

reputations, followed by styling were clearly the factors critical to

consumers. Given the Tata backing, it would seem that Titan was on safe

ground. By 1987, just before entry, further research into the existing

product scenario revealed the following consumer perceptions :

 Mechanical watches were -- Durable, reliable, easy to repair,

affordable.

 Imported watches were -- Emotionally satisfying status symbols,

yet ‘risky’ to buy, as they were not backed by guarantees, and

might also be counterfeit.

There seemed to be a clear case of watches being divided into

two segments -- those that delivered sufficiently on performance, and

those that brought great emotional satisfaction.

Titan: Shifting the paradigm

What then could Titan be? Titan sought to enter the market with quartz

technology, with the rationale that it was modern, international and cost-

effective. To this end a 16-acre ultra modern factory was set up at Hosur

at a cost of Rs.40 cr. -- one of the worlds’s most advanced and fully

integrated manufacturing complexes. (All were working towards a launch

date within 2 years of the last research, i.e., 19 April 1987.

Titan knew that the only way to be noticed and to be successful was to

redefine the product category itself. The Titan product, therefore, was

defined not as a watch, but as a personal wear accessory.

The many Ps of the Paradigm Shift

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After all possible research, Titan entered the Indian market courageously,

with a product that was aimed to enter the national mind-set as a personal

accessory.

It is worth nothing how, for its public face Titan’s stress was on the latter,

with other elements of the marketing mix being allowed to take care of the

practical aspects of owning a timepiece. The 5 Ps of the mix, therefore

were:

The Product

 International styles, a wide range of 150 models.

 Modern, superior quartz technology.

2 year (Tata) guarantee.

The Price

 Higher than existing Indian watches -- clearly an in-built premium.

 Lower than foreign watches and those available at duty free

shops.

The Place

This was Titan’s most outstanding contribution to the Indian watch

industry. It made shopping for watches a pleasant experience. Titan

pioneered exclusive Titan showrooms -- world class, modern, spacious --

with a slick ambience having ‘mood windows’ for display, controlled

lighting, granite finish, etc.

The Promotion

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This was one of the most visible faces of Titan. The innovative ‘showcase’

advertising in the print medium depicted the wide range. Prices placed

alongside helped consumers ‘shop’ off the page.

MARKET SHARE FIGURES OF TITAN WATCHES

(1991-92)

Titan 57

HMT 27

Timex 00

IMFQ 16

Titan Sales 1991-92 (Primaries) --- in lacs : Rs. 21.76

(1992-93)

Titan 56

HMT 23

Timex 03

IMFQ 18

Titan Sales 1992-93 (Primaries) -- in lacs: Rs.24.75

(1993-94)

Titan 52

HMT 13

Timex 19

IMFQ 16

Titan Sales 1993-94 (Primaries) -- in lcas : Rs. 26.20.

(1994-95)

Titan 46

HMT 09

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Timex 23

IMFQ 22

Titan Sales 1994-95 (Primaries) -- in lacs: Rs. 29.87

(1995-96)

Titan 39

HMT 07

Timex 24

IMFQ 30

Titan Sales 1995-96 (Primaries) -- in lacs : Rs. 33.68

By all accounts, and after 10 years, the Titan strategy has outlined the

correct ways for pushing a mass brand. A quick look at the brand reveals

the following:

Titan has changed the structure of the watch market

As mentioned, by merely defining the product as a personal

accessory, rather than as a timepiece, Titan has been able to keep on re-

inventing its products, and therefore, redefining its markets.

Increased market size and share.

The Titan Showroom has become a landmark on our cities’ streets. How

many other brands can claim that? Within 10 years of its inception? Today

any mass entrant to India in the same category would find it extremely

difficult to match its quality of distribution. Those who tied up with Titan (a’

la Timex) have benefited the most!

Conclusion

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 There is no question that Titan today is a successful branding story. I feel

quite strongly that Titan watches should always retain the ‘Titan’ name on

the dial. I am not sure as to what extent the brand image of Titan has

been enhanced by the introduction of Tanishq. However, what further

action Titan should take to consolidate its position as the leader-innovator,

so as to increase not only the total watch market, but also its market

share, is a subject for future discussion.

Case study:-2
The case study of Bajaj pulsar:

Bajaj has been synonymous with scooters in India, and scooters have
been the typical family transportation vehicle for urban middle-class consumers. There was a
time when the demand for Bajaj scooters far outstripped the supply, and the brand enjoyed a
near-monopoly status.
The policy of liberalization by the government and the changes in the
competitive landscapes transformed the market for scooters. In addition, economic progress
of the country- which improved the income levels of the people- and the rising aspirations of
the middle class enabled Maruti 800 cars to gradually replace scooters from their role of a
middle-class family vehicle. In order to buckle the trend in the market for scooters, the
company introduced technologically superior products.
The four-stroke engine and a sleeker design helped in slowing down the decline in the
demand for scooters. However, the major strategic shift for the company was in the market
focus: the company decided to concentrate on the motorcycles- the product strategy that was
increasingly becoming a lifestyle statement for the youngsters.
For achieving market dominance the company introduced an array of
motorcycles. This approach helped the company in keeping the brand contemporary and
relevant for consumers. Bajaj has also introduced various sections of motorcycles it includes
premium section as well as average section.

CONCLUSION:-

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 As it was known that the trends of scooter had shown a high decline
in its sales and resulting from that, In order to buckle the trend in the market for scooters, the
company introduced technologically superior products.
The four-stroke engine and a sleeker design helped in slowing down the decline in the
demand for scooters. However, the major strategic shift for the company was in the market
focus: the company decided to concentrate on the motorcycles.
Jumping from scooter for which (Bajaj motors was famous and had its
monopoly in the market) to the motorcycle sections is the best example of new product
development as well as technological advancement. Due to moving towards the motorcycle
section Bajaj again capture the market. And all this occur due to new technological
advancement and technological superior products. As it is known that the bajaj products are
technically sound in mileage as compare to other company products. Like we can take
example of:-
• BAJAJ CT100 - 100cc
• BAJAJ XCD -125cc

Are some good example of the technological advancement of products and development of
new products. So, it is simply proved that how new product development is necessary and
beneficial for Bajaj motors. This new product development policy help Bajaj in making
technological advanced products and also played important role in the increase of market
share and sale. Simply we can say that not only Bajaj motors are benefited by new product
development process each and every company can take advantage of it.

Bibliography:-
Following are the reliable sources referred in project completion:-
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WEBSITES:-
 http://www.google.com

 http;//www.bajaauto.com

 http;//www.metacase.com

BOOKS:-
 “Principal of marketing”- Philip Kotler and Gray Armstrong

 Kothari C.R. , REASEARCH METHODOLOGY & MANAGEMENT.

MAGAZINES:-
 Business world Group- Business World

 India Today group- Business Today

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