The document discusses the new product development process in financial services. It identifies six steps: 1) generating ideas from internal and external sources, 2) screening ideas using predefined criteria, 3) developing and testing the product, 4) launching the product, 5) managing existing product lines and the product range, and 6) innovating through product modification or development to meet changing customer needs. The goal is to develop new or improved products and services that appeal to customers and are profitable for the organization.

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2. The need to move money and make payments (e.g current accounts,
ATMs, debit cards).
The need to earn a return on money (e.g savings account unit trusts).
The need to defer payment or advance consumption (e.g loans, credit
cards, mortgages).
The need to manage risk (e.g life insurance, general insurance).
The need for information(e.g share price information services, product
information).
The need for advice or expertise (e.g tax planning, Investment
planning, IPO services).
What Customers want

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Core
Tangible
Augmented
Potential

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Al-murabahah
Al-mudharabah
Al-Ijarah
Qard Hasan
Amanah and Al-wadiah
Al-Kafalah
Takaful

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Management of existing product lines
Product range management
Consumers
Competitors
External environment
Internal factors

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The first deal with decisions about features to a
particular product.
The second deals with product line management
This covers two broad areas:

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Customers assess services quality from both the
technical and functional aspects.
Technical (or outcome) quality -Is concerned with how the
product performs (e.g does a capital growth investment
trust provide an acceptable rate of capital growth?).
Functional or (process) quality –Is concern with the way in
which the service is delivered and might Include factors
such as the way staff behave towards customers, and the
speed of response to questions.

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Product modification is concerned with
changing
the attitude of a product to make it more attractive
to the market.
Product development involves creating a new
variant of an existing product
It is typically associated with either product line
stretching or product proliferation.

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This ensures that the range is up-to-date,
innovative
And meets changing consumers need.

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Major innovations-These are products new to
both the organization and the market. Major
innovations are thus rare in financial services.
New service lines-These refer to products
new to the organization but not to the market.

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NPD StrategyNPD Strategy
Idea GenerationIdea Generation
Idea screeningIdea screening
Developing and TestingDeveloping and Testing
Product LaunchProduct Launch

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To be oriented towards taking advantage of new
market segment.
Seen as crucial to the continued competitiveness
of the organization.
Required to maintain profitability
Designed to reduce excess capacity or even out
fluctuating demands.

13. Generated from both inside and outside
Generated internally from specialized NPD teams
and employee feedback or suggestions
Externally, generated based on customer feedback,
market research
Specialist new product development agencies or by
Improving on the competitors efforts.

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This means deciding, in advance, on a set of
criteria
for idea evaluation.
The criteria used are likely to Include the following:
oDoes the idea fit the organization's strategy?
oDoes the idea fit the organization's capabilities?
oDoes the idea appeal to the right market
segments?
oIs the idea viable in terms of cost and profit?

15. It is common to test this newly defined product
to identify consumer and market reactions
This will help to make the necessary product
modifications, If any before it is launched.