NEW PRODUCT DEVELOPMENT

CHAPTER 13

ENTREPRENEURSHIP

Entrepreneurship

Chapter Objectives

• To understand the importance of having a NPD process

• To list the types of new products• To study the various stages of the NPD process• To understand the adoption of new products• To tabulate the best practices in NPD• To look at various ways of involving customers in

the NPD process• To list various barriers to NPD• To discuss the common mistakes in NPD

Types of New Products

• New-to-the-world products

• New product lines

• Additions to a product line

• Improvements and revisions of existing products

• Repositioning

• Cost reduction

Failure Rate of New Products

“Debugging” Stage

Expected Product Life

“Wearout” Stage

Time

Num

ber

of

failu

re

The NPD Process

• Opportunity identification

• Concept generation

• Concept evaluation

• Technical Development

• Launch

• Life Cycle Management

Product Testing

• Alpha testing

• Beta testing

• Gamma testing

The Adoption Process

1. Awareness

2. Interest

3. Evaluation

4. Trial

5. Adoption

Adopter Groups

According to Rogers, the adopter groups are:

1. Innovators

2. Early adopters

3. Early majority

4. Late majority

5. Laggards

Entrepreneurship

21/2%Innovators

131/2%Early adopters

34%Early majority

34%Late majority

16%Laggards

Time of Adoption of Innovation

Adopter Categories

Adoption

These five product characteristics influence product adoption:

• Relative advantage

• Compatibility

• Complexity

• Divisibility

• Communicability

• Communicate with the customer

• Tap employees for ideas

• New product team

• Budgeting

• Letting go

Involving the Customer

• Lead user method

• Mapping the consumption chain

Entrepreneurship

Barriers to NPD

• Shortage of funds

• Limited scope in some product categories

• Lack of time

• Restrictive laws and regulations

• Small markets

• Changing technology

• Changing consumer preferences

Common Mistakes in NPD

• No market research

• Hasty commercialization

• Focus on product

• Lack of communication

• Product availability

• Pricing it high

• Pricing it low