new product development & its process

Mr. Rashmiranjan Panigrahi, Lecturer In Finance & Marketing , ASMIT, BBSR

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A product is anything that can be offered to a market to satisfy a want/need.

Philip Kotler defines PRODUCT “as anything that can be offered to a marketer for attention, acquisition, use of consumption that might satisfy a want or need. It includes physical object, services persons, places organizations and ideas” .

What is a PRODUCT ?

Monday, April 10, 2023

Monday, April 10, 2023 3

Product development means making changes in the size, design, color, shape, characteristics, packing etc. of the product.

It may include addition of a new product line, addition of a new product item in a particular product line, elimination of existing product or product line & changes in the size, color, design, packing, characteristics, and prices of the product & discontinuation of the unprofitable item or product line.

WHAT IS PRODUCT DEVELOPMENT ?


A new product is any product which is perceived by the customer as being new.

What Is A New Product ?

Reasons For New Products ? 1st, new products become necessary for meeting the changes in consumer needs.2nd, new products become necessary for making new profits.3rd, new products become necessary for combating environmental threats.


CATEGORIES OF NEW PRODUCTS

According to BOOZ, ALLEN & HARMILTON have identified 6 categories of new products, such as:

1: New to the world.

2: New to the product lines.

3: Additions to the existing product line.

4: Improvements & revisions of existing products.

5: Repositioning.

6: Cost reductions.


These products are truly new because they create a totally new market and are only a small percentage of the new product category.

Examples-: Microwave ovens, microprocessors and copiers. A cell phone with a better touch

screen is derivative of prior products

1: New to the world.


2. New to the product lines.

When a company offers a product from a new category that they haven't previously offered, then it would be a new product line. Example -: Recent examples include digital music players, such as Apple’s iPod,

3. Additions to existing product lines

It occur when a company adds a new product that solidifies its area of product offerings. This is because people are more likely to purchase products from brands with which they are already familiar. For example, a frozen pizza company may wanted to increase its market share by adding frozen breadsticks and frozen pastas to its product line


4. IMPROVEMENTS OR REVISIONS OF EXISTING PRODUCTS

Ninja Tech uses the ad words 'New and Improved' on their packaging to increase consumer awareness and create interest. Most new and improved products are only slight changes, such as flavors, scents or maybe even slightly more product.

5. REPOSITIONED PRODUCTS

If a product is successfully re launched using a different marketing strategy (perhaps by changing the emphasis of product benefits) then it can be called a new product, even if its physical characteristics have not substantially altered Lifebuoy is known for its germ-killing action. While the brand launched two other sub-brands, Lifebuoy Gold and Lifebuoy Double Action (these brands have been repositioned as international),


• Lifebuoy itself has undergone a repositioning on the health platform (the original Lifebuoy was a carbolic soap which was perceived to be different from the regular cosmetic soaps).

• Lifebuoy re-launched itself on the ‘health’ proposition as a family soap with a change in the product composition (with more of cosmetic fragrance) and a different packaging with the visual of a family.

• Maruti repositioned its Maruti 800 (‘no-frill’ economy car) as the ‘dream car’ for ‘middle-class’ consumers who were wanting to upgrade from a two-wheeler. Red Label, an established brand of tea repositioned itself on product attributes, adding vitamins.


6. Cost reductions

These types of products perform similar to competing brands at lower prices.

NEW PRODUCT DEVELOPMENT PROCESS


The new product development process starts with the search for ideas. Consumer’s problems are the most fertile ground for the generation of new product ideas. New product ideas come from interacting with various groups & from using creativity generation techniques like BRAINSTORMING, SYNECTICS etc.

BRAINSTORMING is a process, where a small group of people are encouraged to came up with their ideas on a specified problem.

Whereas in SYNECTICS, the real problem is kept away initially from the group & only a broader framework of the problem is given to them. The group is encouraged to think in all possible dimensions and slowly the problem will be made clear to them, & their ideas would get refined.

STEP 1:IDEA GENERATION


STEP 2: IDEA SCREENING

The purpose of screening stage is to drop poor ideas as early as possible. Thus an idea committee is formed to classify the proposed ideas into 3 categories, such as: promising, marginal & rejects. Every promising idea is kept together for rigorous screening by product evaluation committee.

In screening ideas, the companies normally face 2 serious errors & they must try to avoid these mistakes as far as possible, those 2 serious errors are: DROP ERROR & GO ERROR. Let’s clarify:

DROP ERROR: error which occurs when the company rejects one really good idea having potential.

GO ERROR: error which occurs, when the company permits & facilitates a poor idea to move onto further development stages & commercialization.


STEP 3: CONCEPT DEVELOPMENT & TESTING

A concept is an elaborated version of a product idea expressed in meaningful consumer terms. Example: a leading soft drink company, if wants to add a new product, i.e. fruit juice to its product lines, then the following concepts can came across:

CONCEPT 1: FRUIT JUICE FOR YOUNG & GROWN UPS AS A FUNNY THIRST QUENCHING ITEM.

CONCEPT 2: FRUIT JUICE FOR CHILDREN AS A HEALTH SUPPLEMENTS.CONCEPT 3: FOR ADULTS AS A NUTRITIONAL ENERGY SUPPLEMENTS.

From the above 3 concepts, the 1st one looks to be attractive & promising.After the product concept has been developed, the stage is now set for testing them. It is here the prospective consumer understand the product idea. Here whether they are receptive towards the idea & their willingness to try out such product is tested.


STEP 4: BUSINESS ANALYSIS

This stage will decide whether from financial as well as marketing point of view, the project is beneficial or not. The projects overall impact on the corporation’s financial position with & without the new product are estimated & compared.

Here management needs to prepare sales as well as cost & profit projections to determine whether they satisfy company objectives.


STEP 5: PROTOTYPING & MARKET TESTING

At this stage the company will determine whether the product idea can be translated into technically & commercially feasible product. Its goal is to find a prototype that consists the key attributes described in the product concept & that performs safely under normal use & conditions and that can be produced within the budgeted cost.Here the companies conduct 2 types of major testing’s, such as: ALPHA TESTING & BETA TESTING.

ALPHA TESTING: testing within the firm to see its function.BETA TESTING: It includes listing a set of customers to use the

prototype & give feedback.


STEP 5 : MARKET TESTING:

The product here is actually tested in the selected market segments. Based on the outcomes of the test marketing, the marketer lunches large scale manufacture of the new product. It is a controlled marketing experiment to decide the soundness & feasibility of fully fledged marketing of the product.


STEP 6: TECHNOLOGICAL IMPLEMANTATION

It involves technical feasibility, search for new available technologies & its economic alternatives if available. It also includes the technological relevance of current technologies, the firm’s knowledge & experience of the techniques, manpower in handling those technologies etc.


STEP 7: COMMERCIALISATION

At this stage the company takes decision to go in for large scale production & marketing of the new product. Various marketing strategies are employed by the company at this stage, when it starts commercialization of a new product idea.

The important factors to which strategists should focus here are:

Market entry timing period.Whether to lunch the product in a single locality, a region,

several regions, nationally or internationally, i.e. geographic strategy.

To whom the new product should target for i.e. targeting & segmenting.


summary of new product development

Every year millions of rupees are being spent on R&D for new products development. Such a huge investment is necessary as new products are the only means of survival of a firm.

New product development provides a number of advantages to the enterprise.

It helps in producing goods & services of best quality. It helps in providing maximum customer satisfaction,

because it is developed in the view of customer specification.

It helps in expanding the market of the products of the enterprise.

It helps in achieving stability in product demand.