Fdp New Product Development-mm

8/3/2019 Fdp New Product Development-mm

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NEW PRODUCT

DEVELOPMENT

Prof Milind A Marathe


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INTRODUCTION

James Culliton coined the expression MarketingMix and described Marketing Manager as a mixer

of ingredients,

whois a decider and an artist who sometimes

follows a recipe prepared by others

Sometimes adopts a recipe ingredients

immediately available,

Sometimes invents some new ingredients &

Sometimes experiments with ingredients as no one

else has tried before


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FOUR PS

It was Jerome McCarthy,well knownProfessor of marketing ,who described the

variables of Marketing Mix in terms of Four Ps- 4Ps

Product

Place

Price

Promotion


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What is a product?

It is a vehicle by which a company

provides customer satisfaction.

A bundle of expectations to consumers and

society.

A product is a set of tangible and

intangible attributes.

A product is anything that satisfies a need

or want and can be offered in an exchange.


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Why new product?Extension of PLCAnsoff classic model of growth strategies

ROUTESOF NEW PRODUCTDEVELOPMENT

1)Technology:-Launch of PC2)Penetration of new market:- ITC entry into hotel

3)New product line-godrej from toiletries torefrigerators

4)Product line extension:-Bata sportswear, industrials

5)Cost reduction:-Nirma detergent6)Repositioning or product relaunch-Good day

biscuits, Pan Parag, Tata Tea


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WHAT IS A NEW PRODUCT?

Cost reduction-7%

Repositioning=11%-Milkmade

Product Modification=26%-New Lux

Product line extension=26%-Bata shoes

New Product Line=20%-

Breakthrough Product=10% $$$$$


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New Product Development

New Product Adoption Process

Innovators

Early Adopters

Early Majority

Late Majority

Laggards

Area under curve sums horizontally to form first three stages of the

product life cycle.


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NEW PRODUCT ADOPTION1)Innovators:-Consumption pioneers, locate and identify this

group-Target new product

2)Early Adopters:-opinion Leaders-sizable segment-Mktg

should penetrate this segment

3)Early Majority:-Positive approach, try out earlier thanaverage person of the community

4)Late Majority;-By and Large skeptical in their approach

,generally try the product only after a lot of people adopt

the product.5)Laggards:-Tradition bound,will take a product when it

becomes known and accepted product throughout the

market


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ADOPTERS OF NEW

PRODUCT Innovators-2.5%

Early adopters-13.5%

Early majority-34 %

Late majority-34 %

Laggards-16%


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EXTENT OF NEWNESS OF

PRODUCT

Low priority item for consumer

High priority item for consumer A Luxury product

A convenience Product

A product that meets currently felt need


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Changing needs of Customers

Dynamic Marketing Environment

New ,Superior ,Cost Effective Products

Essential for Growth Strategy

Stiff competition

Essential for corporate Planning


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Successful New Products

Goodknight Mosquito Repellent Mats

Parle Maaza

Sony Walkman

Maggi Noodles

Rexona Deodorant

Rasna

Pan Parag


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Demands on time,Efforts,Talent

Attitude,Money and

Risk involved is high

Failure of new product is .

30 to 40% for consumer products

50 to 60% for industrial products


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Stages in New Product Development

Cumulative Time

NO

O

f

St

e

p

s

Idea Generation

Idea Screening

Concept Testing

Business Evolution

Product Development

Test Marketing

Launch


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Steps in NPD

1)Idea Generation

2)Idea Screening

3)Concept Testing

4)Business Evolution

5)Product Development

6)Test Marketing

7)Launching


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Idea Generation

Sources are:-

Employees-Sales force,R&D

Overseas

Competitors

Consumers

Consultants/agencies/


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Lateral Marketing-source of New

Product Ideas-combination of 2concepts


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Idea Screening

Is there a felt need for the new product?

Is it an improvement over existing

Product? Is it close to current line of Business?

Can the existing resources handle the

product?


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DROP-error

A drop error occurs when the companydismisses an otherwise good idea. It isextremely easy to find fault with other

peoples ideas . Some companies shudderwhen they look back at ideas they dismissedor breathe sighs of relief when they realizehow close they came to dropping what

eventually became a huge success. This wasthe case with the television show Friends.


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Friends

The NBC situation comedy Friends

enjoyed a 10 year run from 1994to 2004 as

a perennial ratings powerhouse. But theshow almost didnt see the light of the day

. According to an internal NBC research

report, the pilot episode was described as

not very entertaining, clever, or original

and was given a failing grade, scoring 41

out of100.


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Go-error

A Go-error when the company permits a

poor idea to move into development and

commercialization. An absolute productfailure looses money, its sales do not cover

variable costs. A partial product failure

loses money, but its sales cover all its

variable costs and some of its fixed costs.

A relative product failure yields a profit

that is less than the companys target rate

of return.


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Idea Screening

At Titan Industries every idea is made topass through a stringent 5 point testcovering

Styling

Costing

Sourcing

Schedules

Resource Requirements


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Checklist for Screening New

Product Ideas-Yes- No Idea represents high value added products not

commodity products..

It is not a major capital investment for consumer The product utilizes existing distribution

channels?

There is an extended product Life cycle

Product can be building block for a multiproducts line or business


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CONCEPT TESTING


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Concept Development and

TestingA large food processing company gets the

idea of producing a powder to add to milk to

increase its nutritional value and taste.This is a product idea but consumers do not

buy product idea-they buy product concepts.

A product idea can be turned into several

concepts.The question is who will use this

product?The powder can be aimed at


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Testing

Concept1-An instant breakfast drink foradults who want a quick nutritious breakfastwithout preparation

Concept2:-A tasty snack drink for children todrink as a midday refreshment

Concept 3:-A health supplement for olderadults to drink in the late evening before theygo to bed.


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Testing Each concept represents a category concept

that defines the products competition.

An instant breakfast drink would competeagainst hot milk,corn flakes with coldmilk,bread and toast

A tasty snack drink would compete against

soft drinks, fruit juice and other thrustquenchers


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Testing If the concept of instant breakfast drink

looks best, then the task is to show where

this product would stand in relation toother breakfast products-fig a


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Product concept when

turned into a Brand

concept- A brand

positioning map-it showspositions of existing

brands-company need to

decide on calorific value

and price to be charged tomake the brand distinctive


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Concept Testing

Whether Customers understand the idea?

Whether they are receptive to idea?

Whether they actually need a product?

Whether they will try out such a product?


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Business Evolution

Estimate of Demand

Seasonal Pattern of Consumption

Competition

Market segmentation

Marketing Channels

Marketing Organisation


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Business Evolution

Estimate of Demand

A)Substitution Method

New product displaces old product

Eg:-Nylon replaces cotton,rayon,coir jute ..

B)End Use Method

Altogether new products

End use of product and locate potential customersfor product,aggregate of potential customers ineach use category is taken as potential demand


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New Product Development ProcessStep 5. Business Analysis

Step 6. Product Development

New Product Development ProcessStep 5. Business Analysis

Step 6. Product Development

Business Analysis

Review of Product Sales, Costs,

and Profits Projections to See if

They Meet Company Objectives

If Yes, Move to

Product Development

If No, Eliminate

Product Concept


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Product Development

A pilot production facility is setup

Production and Marketing Depts


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Product Development

At Bajaj Auto ,product development is about fiveactivities like product definition anddesign,manufacturing process,

development,marketing planning and toolingM&M has benchmarked Scorpio against Tatasumo for passenger comfort, against MarutiGypsy for ease of driving against Tata sierra for

acceleration. Philips applies the fault mode effect analysis

technique to check things with product and findoptimum solution.


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Test Marketing

Risk Control Tool

New Product with choosen Mktg mix

Launched in selected markets

HLL organics shampoo-30 million sachets

Metropolitan Shirts 6 months Banglore


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New Product Development ProcessStep 7. Test Marketing

New Product Development ProcessStep 7. Test Marketing

StandardTest Market

Full marketing campaign

in a small number ofrepresentative cities.

StandardTest Market

Full marketing campaign

in a small number ofrepresentative cities.

SimulatedTest Market

Test in a simulatedshopping environment

to a sample ofconsumers.

SimulatedTest Market

Test in a simulatedshopping environment

to a sample ofconsumers.

ControlledTest Market

A few stores that have

agreed to carry newproducts for a fee.

ControlledTest Market

A few stores that have

agreed to carry newproducts for a fee.


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Software testing

Software testing is a process used to identify thecorrectness, completeness and quality ofdeveloped computer software. Actually, testing

can never establish the correctness of computersoftware, as this can only done by formalverification. It can only find defects, not provethat there are none. There are a number of

different testing approaches that are used to dothis ranging from the most informal ad hoctesting, to formally specified and controlledmethods such as automated testing.


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Software testing

Alpha testing

In software development, testing is usually

required before release to the general public. In-

house developers often test the software in what

is known as 'alpha' testing which is often

performed under a debugger or with hardware-

assisted debugging to catch bugs quickly. Thistechnique is known as white box or glass box

testing.


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Software testing

Beta testing

Following that, limited public tests known as

beta-versions are often released to groups of

people so that further testing can ensure the

product has few faults or bugs. Sometimes, beta-

versions are made available to the open public to

increase the feedback field to a maximal numberof future users.


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Software testing

Gamma testing

There are companies that introduced the

so-called gamma tests, which meansfeature-completed, but the software did not

run through all the in-house quality checks.

Some cynics refer to software release as

"gamma testing".


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Test Marketing

Process

1)City selection

2)select sales representatives

3)Duration of the test

4)Select suitable data

5)Implementation


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Test Marketing

Marketing

achievements in test market are recorded

and then projected nationwide for example Monthly volume in 2 % of country were

Rs 4000/-,

then total volume projected would be4000/0.02=Rs 2,00,000/-


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Launching/Commercialisation

Large scale manufacturing

Marketing

Firm fully commits itself to commercialisethe product with required investment


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Launching /Commercialisation

1)Immediate National Launch

To overcome competition,save on costs of launch

if considerable promotion is carried out it will bedifficult for competition to overcome.

2)Rolling Launch

Starting with one or two recognized distributionareas then gradually adding new regions

Coca cola,Kelloggs and HUL use this strategyeffectively


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NPD india

1996

Hindustan motors-Mitsubishi Lancer

Timex set up independent showrooms Mcdonalds launched in india

Anchor Health and beauty Care Pvt ltd(Anchor

group) launched Anchor white Toothpaste

Nirma chemicals launched Nirma toothpaste

Lakme launched Elle 18-lipstick ,nail enamels


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NPD india

1997

Titan launched sonata

Dabur launched Tomato juice Nirma launched Nirma Lime fresh

Reckett and Colman India ltd launched

shaving cream and Gel under Dettol label Raymond introduced denim


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Failed New Products

Kinetic Merlin TV

Cool Cats-PolarFan

Montage Soap Videocon PIP TV

Cibaca Lime Tooth Paste


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How not to launch a product

Unilever heavily promoted its new detergent called Persil power in UK andOmno Power elsewhere

The launch was a Europe-wide extravaganza

P&G research noticed that the new detergents pinkish granules contained

manganese. It could clean clothes well-perhaps too well but eventually the

substance was found to damage clothes

P&G released the laboratory reports, an independent Netherlands basedorganization confirmed that the detergent weakens fibers

Unilever claimed that the British textile technology group(BTTG) found no

physical damage to clothes. But the laboratory subsequently stated that its

favorable report is preliminary and it does not contain fabric safety data.

Even though Unilever officials spent three years testing the product in

laboratory the product was tested nether efficiently nor appropriately

Finally Unilever had to instead change the formula and the instructions for

its use


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New Product Fails Because It

Fails to match customer requirements

Fails to meet competition

Fails to meet opportunities and threats Has a Wrong design

Has a Wrong pricing strategy

Has a Poor time of Launch

Documents

Fdp New Product Development-mm