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ASSIGNMENT

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New Product Development Strategy

In business new product development (NPD) is the complete process of bringing a new product to

market. A product is a set of benefits offered for exchange and can be tangible (that is, something

physical you can touch) or intangible (like a service, experience, or belief).

Key Steps in New Product Development

i. Idea Generation

ii. Product Screening

iii. Concept Testing

iv. Business & Financial Analysis

v. Product Development

vi. Test Marketing

vii. Commercialization

i. Idea Generation

The first step in product development is the generation of as many new product ideas as possible.

Idea generation is a continuous, systematic search for new product opportunities. It involves

delineating sources of new ideas and methods for generating them. The important sources of new

product ideas are companys market research facility, customers, competitors, scientists and

technocrats, research and educational institutions etc..

Example : The idea of touch screen mobiles

Ideas for new products can be obtained from basic research using aSWOT analysis(Strengths,

Weaknesses, Opportunities & Threats). Market and consumer trends,

company'sR&Ddepartment, competitors, focus groups, employees, salespeople, corporate

spies, trade shows, or ethnographic discovery methods (searching for user patterns and habits)

may also be used to get an insight into new product lines or product features.

Lots of ideas are generated about the new product. Out of these ideas many are implemented.

The ideas are generated in many forms. Many reasons are responsible for generation of an idea.

Methods for Generating Ideas

Dimensional Analysis lists all of the physical characteristics of a product type. Having obtained such

a list, creativity can be triggered by asking questions such as: "Why is the product this way?, "How

could the product be changed?" or "'What would happen if one or more of the characteristics were

removed?"

Problem Analysis is aneed-assessment technique designed to develop an inventory ofconsumerproblems in a particular product or service category and to serve as a basis for new product or

service ideas.

http://en.wikipedia.org/wiki/SWOT_analysishttp://en.wikipedia.org/wiki/SWOT_analysishttp://en.wikipedia.org/wiki/SWOT_analysishttp://en.wikipedia.org/wiki/R%26Dhttp://en.wikipedia.org/wiki/R%26Dhttp://en.wikipedia.org/wiki/R%26Dhttp://en.wikipedia.org/wiki/R%26Dhttp://en.wikipedia.org/wiki/SWOT_analysis

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Benefit Structure Analysis determines what specific benefits and characteristics are desired by

consumers within a particular product or service category and identifies perceived deficiencies in

what is currently provided.

Scenario Analysis identifies opportunities by capitalizing on projected future environments and

associated consumer needs.

ii. Product Screening

After the firm identifies potential products, it must screen them. In product screening, poor,

unsuitable, or otherwise unattractive ideas are weeded out from further actions.

Today, many companies use a new-product screening checklist for preliminary evaluation.

In it, firms list the new-product attributes considered most important and compare eachidea with those attributes.

The checklist is standardized and allows ideas to be compared.

The object is to eliminate unsound concepts prior to devoting resources to them.

The screeners should ask several questions:

Will the customer in thetarget marketbenefit from the product?

What is the size and growth forecasts of the market segment / target market?

What is the current or expected competitive pressure for the product idea?

What are the industry sales and market trends the product idea is based on?

Is it technically feasible to manufacture the product?

Will the product be profitable when manufactured and delivered to the customer at

the target price?

iii. Concept Testing

Concept testing presents the consumer with a proposed product and measures attitudes and

intentions at this early stage of development.

Concept testing is a quick and inexpensive way of measuring consumer enthusiasm. It asks potential

consumers to react to a picture, written statement, or oral description of a product. This enables a

firm to determine initial attitudes prior to expensive, time-consuming prototype development.

Develop the marketing and engineering details

Investigateintellectual propertyissues and searchpatentdatabases

Who is the target market and who is the decision maker in the purchasing process?

What product features must the product incorporate?

What benefits will the product provide?

http://en.wikipedia.org/wiki/Target_markethttp://en.wikipedia.org/wiki/Target_markethttp://en.wikipedia.org/wiki/Target_markethttp://en.wikipedia.org/wiki/Intellectual_propertyhttp://en.wikipedia.org/wiki/Intellectual_propertyhttp://en.wikipedia.org/wiki/Intellectual_propertyhttp://en.wikipedia.org/wiki/Patenthttp://en.wikipedia.org/wiki/Patenthttp://en.wikipedia.org/wiki/Patenthttp://en.wikipedia.org/wiki/Patenthttp://en.wikipedia.org/wiki/Intellectual_propertyhttp://en.wikipedia.org/wiki/Target_market

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How will consumers react to the product?

How will the product be produced most cost effectively?

Prove feasibility through virtual computer aided rendering and rapid prototyping

What will it cost to produce it?

Testing the Conceptby asking a number of prospective customers what they think of the idea -

usually viaChoice Modelling.

iv. Business & Financial Analysis

Business and financial analysis for the remaining product concepts is much more detailed than

product screening

Factors considered in business analysis stage :

Demand projections

Cost projections

Competition

Required investment

Profitability

v. Product Development

Product development converts a product idea into a physical form and identifies a basic marketing

strategy. It involves product construction, packaging, branding, product positioning, and usage

testing.

vi. Test Marketing

Test marketing involves placing a product for sale in one or more selected areas and observing its

actual performance under the proposed marketing plan. The purpose is to evaluate the product and

pretest marketing efforts in a real setting prior to a full-scale introduction. Rather than inquire about

intentions, test marketing allows actual consumer behavior to be observed. The firm can also learn

about competitive reactions and the response of channel members.

Produce a physical prototype or mock-up

Test the product (and itspackaging) in typical usage situations

Conduct focus group customer interviews or introduce at trade show

Make adjustments where necessary

Produce an initial run of the product and sell it in a test market area to determine customer

acceptance

http://en.wikipedia.org/wiki/Concept_testinghttp://en.wikipedia.org/wiki/Concept_testinghttp://en.wikipedia.org/wiki/Choice_Modellinghttp://en.wikipedia.org/wiki/Choice_Modellinghttp://en.wikipedia.org/wiki/Choice_Modellinghttp://en.wikipedia.org/wiki/Packaginghttp://en.wikipedia.org/wiki/Packaginghttp://en.wikipedia.org/wiki/Packaginghttp://en.wikipedia.org/wiki/Packaginghttp://en.wikipedia.org/wiki/Choice_Modellinghttp://en.wikipedia.org/wiki/Concept_testing

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vii. commercialization

After testing is completed, the firm is ready to introduce the product to its full target market. This is

commercialization and corresponds to the introductory stage of the product life cycle.

Commercialization involves implementing a total marketing plan and full production.

Launch the product

Produce and placeadvertisementsand otherpromotions

Fill thedistributionpipeline with product

Critical path analysisis most useful at this stage

http://en.wikipedia.org/wiki/Advertisinghttp://en.wikipedia.org/wiki/Advertisinghttp://en.wikipedia.org/wiki/Advertisinghttp://en.wikipedia.org/wiki/Promotion_(marketing)http://en.wikipedia.org/wiki/Promotion_(marketing)http://en.wikipedia.org/wiki/Promotion_(marketing)http://en.wikipedia.org/wiki/Distribution_(business)http://en.wikipedia.org/wiki/Distribution_(business)http://en.wikipedia.org/wiki/Distribution_(business)http://en.wikipedia.org/wiki/Critical_path_analysishttp://en.wikipedia.org/wiki/Critical_path_analysishttp://en.wikipedia.org/wiki/Critical_path_analysishttp://en.wikipedia.org/wiki/Distribution_(business)http://en.wikipedia.org/wiki/Promotion_(marketing)http://en.wikipedia.org/wiki/Advertising