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PLCM Module 3
PLCM Module 3
Module-3
PRODUCT DEVELOPMENT
By
PRATIBHA V PATIL Asst Professor
• It also involves modification of the existing product, incorporating new features etc
OR
Ex: Converting land line phones into wireless handsets for portability and full time access to
communication,
6) Test marketing :
Market testing is a customer testing. The prototype is introduced for research and feedback in
the test marketing phase. Customer’s feedbacks are taken and further changes if required are
made to the product. This product makes the company ready for the product launch
7) Commercializing product
Final decisions need to be made to move the product to its launch into the market. Prizing
and marketing plans need to be finalized and the sales team and distribution briefed, so that
the product and company is ready for the final stage.
Building Decision support system (DSS)
• DSS is an interactive information system that uses communication and
technologies, data, documents, knowledge, and models to identify and solve
problem related to the complete decision making tasks, and make effective
decisions about various problems.
• In order to improve success rate of the NPD an intelligent Decision support
system is designed and developed.
• It helps companies to concentrate on developing competitive and customer
focused products.
• It may be either fully computerized or human powered.
• Ex: In an engineering firms that has bids on several projects, the management can
identify from being competitive with their costs.
Components in Building Decision Support System
Components of DSS
It consists of three main components
• The decision support system’s database is a software that contains data from
various sources, including internal data from the organization, data generated
by different applications and external data from the internet.
• The system is responsible for data access and manipulates and manages internal
as well as external stored data .
Model Management System (MM’s)
• The DSS software usually contains the predefined models using which new
models can be built to support specific type of decisions.
• Optimization Analysis Models: Are used to find the optimum value for a
target variable under given circumstances. Widely used for making
decision related to optimum utilization of resources in an organization.
• Ex: In order to achieve higher level of production by varying job assign
to workers. (Some workers are skilled )
User Interface
It is an interactive graphical interface which makes the interaction between the
DSS and its users. It displays the output of the analysis in various forms such as
text, table, chats, or graphics,
The user can select the appropriate option to view comparative sales data and
output according to his requirements.
characteristics of a Decision support system
Must provide support for both individual and group of decision marker
Must present information to the customer In a way that is easy to understand
Must include variant types of models
A good DSS should be able to respond quickly to the changing needs of
decision makers
DSS must be intended for repeated/routine use.
Must have programming capability to generate many types of reports, all based
on user specifications.
An ideal DSS should not be used to make automatic decisions, instead assist and
encourage people in an effective decision making process.
• Advantages of DSS
DSS supports both individual and group of decision makers
DSS helps to improve accuracy, quality and overall effectiveness of a decision
Data collection and model construction experimentations are executed with
active users participation there by greatly facilitating communication among the
managers.
• Market growth rate: The rise in sales or market size within a given customer base
on a specific period of time. It is important to know whether the market has
potential for growth or decline for a given product
• Profitability: Determining profitability is important to understand the market
potential . If the expected profit is low then volume of sales needs to be higher. It
based on three elements ,Return on investment, Return on sales, Return on net assets.
• Product & customer type: Opportunities can also be found by examining the product
type and customer category. The frequency of the product purchase on a repeated
basis(Toothpaste, soaps) compared to one time purchase (Refrigerators, TV)
purchase situation be like seasonal changes need to be examined. That helps
companies to position their products appropriately determines the market
opportunities.
New Product Financial Control
The success of new product is usually measured in terms of their financial
results.
The following estimations regards financial control as follows (Overall cost
involved in NPD)
Estimate the present financial status of the company
Determine the financial feasibility of the product during the conceptual phase by
developing cost estimation based on the designer’s idea
Estimate the required investment that would be necessary for each stage of the
product development
Analyse costs for various risks associated with product development and
launching
Estimate feasible market share and forecasting the demands for likely profits.
Financial Control Techniques
1) Budgetary Control
A numerical estimation or a price prepared in advance , That is duplicating the overall cost from
initial PD stage starting through delivery.
Preparation of budget gives certain control to estimated plan
Exercise control with the help of budgets is known as budgetary control
OR
BC involves comparing budgeted figures with actual performances or plans for calculating the
variances and taking corrective actions. It is the best resource to maximize the profit of the
company
2) Return On Investment (ROI)
One of the important tool or technique for financial control. It evaluates the efficiency of an
investment. It is usually calculated using the formula
It represents the various phases of the company’s operations that contribute to this ratio
3) Break-Even-Analysis
It is used to determine the number of units the business needs to cell in order to avoid
losses
It can be evaluated by using formula or a graphical method
From figure at break even point the total sales equal to the total expenses. (Business
doesn’t experience any loss nor profit) Beyond the break-even point company experience
the profits.
It helps to provide a dynamic view of the relationship between sales, costs, & profits at
different levels
4) Ratio Analysis
It is used to judge the financial performance of the company.
Ratio is computed by taking the proportion of one financial variable with another
related financial variable .
The ratio between two financial variables useful interpretations can be made with
ultimately helps make appropriate decisions.
It helps in preparation of the budget because different ratios acts as guide for
determining budgeted figures for different activities.
Implementing New Product Development
It refers to the various steps or processes that a company goes through, in order to bring the
strategic plan for NPD into action.
The various steps involved in implementing NPD are
1) Defining the Product
The product performance requirements are defined with the voice of customer.
It helps to focus all people involved in PD and avoid running out of resources(Skills & Time) late
design changes, multiple revisions and repeated costly validation testing.
2) Identify people
In this step the management should identify a project manager, define and develop the team having
right people with required skills that are needed to support and execute the plan for PD.
The project manager is to look after the project budget, stakeholders and sponsors. Objective and
scope of the project & also to direct and manage each and every activity of the PD stage .
3) Utilize resources
There is a need to assign resources accordingly in order to reduce the
development time & people including the top management know there roles and
responsibilities in advance
so the product will reach the customer and begin generating revenue sooner
Most companies fear during their product launch and fear remains even after
launching the product into the market. fear of failure or getting distracted due to
mystifying reasons, leads to focusing on the most important aspects of product
launch.
It helps to identify various aspects of business promotion and strategies to built
sales & revenues through expansion of customer base.
The various aspects of product launching & tracking are discussed below.
Product Launching Program
• It involves a planned series of activities or set of related measures that company goes through while
launching new product
• The common steps in product launching program are
1) Evaluate market before launch
There is long gap-duration between the preliminary stage of market analysis and the launch stage.
Hence prior to launch, there is a need to evaluate the target customers, existing competitors and their
marketing strategies and tactics including their marketing materials, ads, brochures, website etc.
An effective marketing strategy, along with a variety of marketing channels can be develop with this
evaluation.
It helps to create new products with new features, which in turn drives new
business
Product redesign in a successful way comes with great prizes, like new
possibilities, new customers and new opportunities
Drawbacks of Redesign
The process is iterative and complex in nature, Extensive use of computer based
technologies and skilled persons are essential .
It requires extensive time and resources and as such the company will not be
able to concentrate effectively on NPD
Redesign must not involve drastic changes in the product which was once a
user’s favourite. redesign must satisfy old customers as well as attract new ones.
Steps involved in Product Redesign
1) Analyze Existing Product
Feedback from customers, distributors, supply agents and the product is
analysed from all perspectives. Since customer use the product often they are
best equipped to provide feedback regarding the drawbacks of the product and
how to improve the existing product.
2) Analyze competitive products
It helps the company to determine and weight their attributes, assess their
strength and weakness, identify the short falls of the existing product.
3) Bring all geographies & functions in one room
Once a product has been identify for redesign all geographic business units,
different functions and organizational levels need to be brought into one room.
The team members should change the product’s required functions and attributes
need to be changed. The objective is to tap ideas and information from various
sources.
By evaluating all the concepts for product redesign a final choice is to select the
best requirements, specifications and customer need and wants.
5) Establish and refine target specifications
Once the new design features has been developed establish the specifications of a
prospective new product by taking into consideration the various technical constraints.
From figure (Flow chart for redesign process) input to the redesign module are initial design
and set of design specifications, At each cycle of redesign iterations a check is performed.
Once the specifications are satisfied the iterations stops to yield the improved or modified
design
If the design specifications cannot met the reasonable number of redesign iterations at that
time need to define a new set of design specifications.
END