NEW PRODUCT DEVELOPMENT

Product Development Concept and Its Importance

What is a Product?

A product is anything that can be offered to a market to satisfy a want or

need, including physical goods, services, experiences, events, persons, places, properties, organizations, information,

and ideas.

Five Product Levels

Product Levels

Customer-value Hierarchy

Potential Product(Future augmentations)

Core Benefit(Rest and sleep)

Basic Product(Bed, bathroom, towels)

Expected Product(Clean bed, fresh towels)

Augmented Product

(Free Internet; free breakfast)

Product and Brand

At the heart of every successful brand there lies a good product!

Apple story suggests that companies that excel at developing and managing new products reap BIG rewards.

Keep innovating to remain competitive!

Product Classification Schemes

Durability

Use

Tangibility

What is a Product?

ConveniencePurchased frequentlyLow involvementLow PricedConvenient purchase locationsMass PromotionEg: Staple goods, tooth paste, detergents, fast food

ShoppingPurchased less frequentlyComparison of Brands: Suitability & QualityHigher priceSelected purchase locationsAdvertising &personal sellingEgs: Furnitute, Electronics, Clothes

SpecialtyStrong Brand PreferenceSpecial purchase effortBrand identificationHigh priceWidespread distributionTargeted promotionEgs: Luxury goods, Watches, Cars, TVs

Unsought Little product

awarenessProduct

consumers don’t usually think

about purchasingRequires

aggressive advertising and personal selling

Egs: life insurance, blood

donations

Types Consumer Products

Product Attributes

Quality Features Style and Design

Packaging SKUsService/Warranty

Product Differentiation Product form Features Customization Performance Conformance Durability Reliability Repairability Style

New-Product Development Strategy

A firm can obtain new products through:

AcquisitionRefers to the buying of a whole company, a patent, or a license to produce someone else’s product

New-product developmentRefers to original products, product improvements, product modifications, and new brands developed from the firm’s own research and development

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What is Intellectual Property?

Two forces for NPD

Consumer needs

Technological advances

When the two align, you have a winner!

Rugby and Product Development

Reason for New Product Failure

Reasons for new product failure1. Overestimation of market size2. Poor design3. Incorrect positioning4. Wrong timing5. Priced too high6. Ineffective promotion7. Management influence8. High development costs9. Competition

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Most New Products Fail?

Consumer packaged goods fail most often

Brand extensions not sought by consumer (“new” colors, flavors, packaging)

Products that attempt to meet a need that few consumer have (e.g. combination products)

Reason for New Product Failure

Summary of Characteristics, Objectives, & Strategies

Introduction

Growth Maturity Decline

Sales Low sales Rapidly rising sales

Peak sales Declining sales

Costs High Cost/Customer

Average cost per customer

Low cost per customer

Low cost per customer

Profits Negative Rising profits High profits Declining profits

Mkt. Objectives

Create product awareness and trial

Maximize market share

Maximize profit while defending market share

Reduce expenditure and milk the brand

Product Offer basic product

Offer product extensions, service, warranty

Diversify brand and models

Phase out weak items

Price Use cost-plus Price to penetrate market

Price to match or best competitors

Cut price

DistributionBuild Selective distribution

Build intensive distribution

Build more intensive distribution

Go selective

AdvertisingAwareness among adopters and dealers

Awareness and interest in the mass market

Stress brand differences and benefits

Reduce to level needed to retain hard-core loyal customers

Sales Promotion

Use heavy sales promotion to entice trial

Reduce to take advantage of heavy demand

Increase to encourage brand switching

Reduce to minimal level

Product Life-Cycle Strategies

Decline stage is when sales decline or level off for an extended time, creating a weak product• Maintain the product• Harvest the product• Drop the product

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Additional Product and Service Considerations

Product Decisions and Social Responsibility

Public policy and regulations regarding developing and dropping products, patents, quality, and safety

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New-Product Development Process

1. Idea generation2. Idea screening3. Concept development and testing4. Marketing strategy development5. Business analysis6. Product development7. Test marketing8. Commercialization

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Like success of Pepsi triggered Coca Cola to launch a competitive product same is the case with Indian Premier League...

Indian Premier League

Launch of ICL triggered BCCI to launch a competitive Sport Brand

Launch: On 14th Sep 2007 BCCI launched IPL (Indian Premier League)

Basic Inspiration: Derived from ICL Indian Cricket League

IPL Totally out classed ICL

A good example of across the industry benchmarking

Competition was from T20 cricket leagues of South Africa and England

Benchmarking: EPL (English Premier League) and NBA (National Basket Ball Association)

Benchmarking for IPL

Foundation Stones for a Success of a Product

Innovation

Gratifying

Hidden/Sub

conscious Needs

Effective utilizatio

n of available resource

s

Successful Brand

What BCCI did….?

Targeted the hidden/subconscious need of consumers

In India if Cricket is their religion then Bollywood is their life

Cricket Bollywood Cricketainment

Brand Essence

Fun

IPL

Bollywood

Controversies

CricketBig Brands

On ground entertainme

nt

Business tycoons

Dance

Music/Concert

Cheer Leaders

Scandals

Lalit Moodi

SymondsDhoniGilchrist

Pret Zinta Shelpa

ShetyShahru

k

NokiaIdeaKing

Fisher

Vijay Maliya

Mukesh

Ambani

Ness Wadia

Beauty ContestFun Feed

Snippets