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New Product Development

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New Product Development New Product Development Presentation Transcript

  • New Product Development
  • 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."
  • 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.
  • 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
  • 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.
  • 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.
  • 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.
  • 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
  • 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?
  • 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
    • 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
  • 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
  • Thank you