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New Product Development

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  • 1. New Product Development
  • 2. What is New Product Development?  New Product Development (NPD) is a process which is designed to develop, test and consider the viability of products which are new to the market in order to ensure growth or survival of the organization.  The overall process of strategy, organization, concept generation, product and marketing plan creation and evaluation and commercialization of a new product. Also frequently referred to just as "product development."
  • 3. New Product Development Strategy  New Products suffer from high failure rates.  New Products can be obtained via acquisition or development.  Several reasons account for failure.
  • 4. Examples of New Products  New to the consumer – High definition Plasma/LCD Television, iPod,  New product lines – Mars ice-cream  Replacement and product improvement – new car model
  • 5. New Product Development Process – Stage 1 Idea Generation  From Internal sources: - R&D in a organization, employees, trade shows, sales team etc.  From External sources: - Customers, competitors, distributors, suppliers, vendors etc.
  • 6. New Product Development Process – Stage 2 Idea Screening  Ideas are evaluated against criteria; most are eliminated prior to devoting resources on them.  Product development cost increase substantially in later stages.
  • 7. New Product Development Process – Stage 3 Concept Development and Testing  Develop the engineering and marketing details.  Product concepts provide detailed version of new product ideas in meaningful consumer terms.  Test the concept by asking target customers to evaluate product concepts.  Turning ideas into tangible products that consumers perceive as being valuable.
  • 8. New Product Development Process – Stage 4 Marketing Strategy Development Designing an initial marketing strategy for a new product based on the product concept Market Research is carried out to assess the product’s market potential
  • 9. New Product Development Process – Stage 5 Business Analysis  A review of the sales, cost and profit projections for the new product is carried out to find out if this matches with the organizations goals  Estimate potential sales, income, break-even point, profit and return on investment from the new product.  Projecting probable costs and sales; will profit reach the organization’s targets?
  • 10. New Product Development Process – Stage 6 Beta Testing/Market Testing & Product Development  Create a physical prototype and test the product in typical usage situations  Conduct focus group customer interviews or introduce the new product in Trade shows  Releasing the product into a small but representative market where consumer reactions/marketing mix can be assessed and checked.  Make adjustments where necessary  Produce an initial run of the product and sell it in a test market area to check the customer acceptance
  • 11. Commercialization/Product Launch  Timing is critical for success.  Introducing of a new product into the market.  Heavy promotional expenditure at the launch.  Pricing of the product should be skim or penetration pricing.  The product has to be well targeted and positioned in the market. New Product Development Process – Stage 7
  • 12. Stages in a New Product Development (NPD)  Idea Generation  Idea Screening  Concept Development and Testing  Marketing Strategy Development  Business Analysis  Beta Testing/Market Testing & Product Development  Commercialization and Product Launch
  • 13. Thank you

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