Marketing Management

Clasically Chapter 8

New Product Development

1. What all comes under the term new product development? OR when can we classify a development in a product as new?

Answer - New products are commonly divided into three categories:-

a) Classically innovative products – These products can also be said as new to the world products, and are a result of ‘out of the box’ thinking by the managers. These products are revolutionary.

b) New category entries – These are the products whose category already exists in the market and a firm enters the same category. The product introduced is ‘new to the firm’.

c) Additions to product line or line extensions – These are the new versions of the product which are already marketed by the firm. Eg- A new colour or a new flavour.

Some otInher minor changes to the existing product can also be called as a new product. These minor changes might be –

a) Repositioning.b) Product improvements.c) Cost reductions.

2. Describe the following approaches to new product development:a. Classic Linear Approachb. Rugby Approachc. Target Costing Approach

Answer - a) Classic linear approach – This approach is called as linear approach because the firm

using this approach goes through a series of activities performed one after another for the development of the new product. The stages which are involved in this approach are given below :- Opportunity identification - In the first stage of new product development

process, the company determines which market it wants to enter. Once the market entry decision has been made, the company searches for new product ideas.

Design – This phase of the new product development process includes a step to screen the concepts developed in the first stage.

Testing – Once the prototype is developed, it is tested with customers from the target segment.

Introduction – Following product testing, the product is ready to be rolled out nationally or internationally. For all the products the roll out period is critical.

Life cycle management – Pressure from customers and competitors forces firms to consider whether the price is appropriate, the advertising is working as it should and so on.

b) The Rugby Approach - The product development process results from the constant interaction of a multidisciplinary team whose members work together from the beginning of the project to the product’s introduction. The characteristics of this approach are : Built in stability Self organizing project teams Overlapping development phases Multilearning Subtle Control Transfer of learning.

c) The Target Costing Approach – This approach starts with the estimated price that the targeted customers are willing to pay. Before a firm launches a product, the ideal selling price must be determined and the costs must be controlled in a way that the product can be sold at the target price.

3. How can one carry out screening of concepts?

Answer - The main purpose of a concept test is to choose the most the most promising from a set of alternatives, get an initial notion of the commercial prospects of a concept. The subjects used in these tests should be taken from the target customers . The data collection procedures fall into the following three major categories :

a) Surveys – Useful for getting large samples for projection purposes.b) Focus groups - Can be used to get detailed descriptions. c) Demonstrations – Products can be demonstrated to a large mob gathering and

collect their reactions.

4. What are the sources of creative idea generation for a company?

Answer - The sources can broadly be classified into two :-

Internal Sources - These sources are present within the organization. Like employees, Technical department, R&D department, Marketing and manufacturing department etc.

External Sources - These sources are not present within the organization. Like End users, lead users, stakeholders, general public, secondary sources etc.

5. Why has shorter product development cycle gained importance in today’s time?

Answer – Because of shorter life cycles and faster technological obsolescence, companies are finding that quicker time-to-market with the new products has become a competitive advantage. The impact of new technologies , internet and new software developments are helping in reducing the life cycle of the products.

6. What actions should be taken by companies when thinking of New Product Development over the Product Life Cycle?

Answer - The stages of the product life cycle can be a guide to kinds of innovations a company should seek.

a) Introductory- This would include new technologies such as laser printing, satellite TV etc.

b) Growth – In this stage, the focus should be on product innovation and differentiating from existing competitors.

c) Maturity – It is important at this stage to invest in marketing differentiation as the products are similar.

d) Decline – At this stage, focus should be on product enhancements and line extensions that focus on the segments still purchasing the product.

7. What are the pros and cons of the three approaches followed in new product development?