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NEW PRODUCT AND NEWPRODUCT DEVELOPMENT

PROCESS

Prepared by:

Muhammad Roman Alvi

M.Com Section AGulshan Campus

Federal Urdu University

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What is a new product ? A product that opens an entirely new

market

A product that adopts or replaces anexisting product

A product that significantly broadensthe market for an existing product

An old product introduced in a newmarket

An old product packaged in a differentway

An old product marketed in adifferent way

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Types of new product

Innovative products New product lines to allow the firm

to enter an existing market

Addition to product line to

supplement the firms existing productline

Improvements and revisions ofexisting product

Repositioned products existingproducts targets at new market

Cost reduction new product thatprovide similar performance at lower

cost

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Examples of new products

New to the world high definition

TV, ipod, flat screen TV, Probiotic

Ice Cream

Product improvement & replacement

:SPEED by BPCL

Cost reduction new product: Moser

Baer.

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New product can be used to

Increase/defend market share byoffering more choice or updating olderproducts

Appeal to new segments

Diversify into new markets Improve relationship with distributors

Maintain the firms reputation a leading

edge company

Even out peaks and troughs in demand Make better use of the organization's

resources

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Why develop New Product ?

To create stars and cash cows forthe future

To replace declining product

To take advantage of newtechnology

To defeat rivals

To maintain/increase market share

To keep up with rivals To maintain competitive advantage

To fill gap in the market

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New product planning

This is the strategic stage

The firm assesses

It current productportfolio

Opportunities and threats

The firm then determines thetype of product which wouldbest fit in with the corporatestrategy

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New product development

New product development isa process which is designed

to develop, test and considerthe viability of productswhich are new to the marketin order to ensure the

Growth or survival of theorganisation.

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Stages in New product development

Idea Generation

Idea Screening

Concept development andtesting

Market strategy development

Business Analysis

Test marketing Commercialization

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Idea Generation

Idea generation is continuous,systematic search for new productopportunities. It involves delineatingsources of new ideas and methods for

generating them. Ideas for new products can beobtained from basic research using aSWOTanalysis(OPPORTUNITY ANALYSIS), Market

and consumer trends, company's R&Ddepartment, competitors, focusgroups, employees, salespeople,corporate spies,

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Idea Screening The object is to eliminate unsound concepts

prior to devoting resources to them. The screeners must ask these questions:

Will the customer in the target marketbenefit from the product?

What is the size and growth forecasts ofthe market segment/target market?

What is the current or expectedcompetitive pressure for the product idea?

What are the industry sales and markettrends the product idea is based on?

Is it technically feasible to manufacturethe product?

Will the product be profitable whenmanufactured and delivered to thecustomer at the target price?

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Concept testing

Concept testing present theconsumer with a proposedproduct and measure attitudes

and intention at this early stageof development.

Concept testing of prototypes

can help avoid costly mistakes.

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Market Strategy Development

2. Outlines the planned price,

distribution strategy, and marketingbudget for the first year.

3. Describes thelong-run sales andprofit goals and marketing-mixstrategy over time.

1. Describe the markets size, structure,and behaviour, the planned product

positioning, and the sales, marketshare, and profit goals for first fewyears.

Includes development of three partstrategy plan

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Business & financial Analysis

Estimate likely selling price

based upon competition and

customer feedback Estimate sales volume based

upon size of market

Estimate profitability andbreakeven point

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Test Marketing

Test marketing involves placing

a product for sale in one or

more selected areas andobserving its actual

performance under the

proposed marketing plan

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Commercialization

Commercialization involves implementinga total marketing plan and full

production

Launch the product

Produce and place advertisements

and other promotions

Fill the distribution pipeline with

productCritical path analysis is most useful

at this stage

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Key success factors in New Product

Development

Operating Philosophy

Organization Structure

The Experience Effect

Management Style