2. Why develop new product?
Meet changing customer needs.
Competitive advantage over
counterparts
For success in new venture.
3. Problems in underlying
strategies
Defined strategy may discourage
innovation.
Uncertainty in how to develop a new
product.
4. Dimensions involved in strategy
making
Market/Technology Mix
Market Width
Degree of innovation
5. No Technology
Change
Improved
Technology
New Technology
No Market
Change
No Activity Reformulation Replacement
Strengthened
Market
Remerchandisin
g
Improved
Product
Line Extension
New Market New Use Market
Extension
Diversification
6. Degree of innovation
Taking someone else’s technology
and improving/individualizing.
Thorough commitment to innovation.
7. Price/Quality Ranges
Prepare and market products that
represent superior quality to customer
and improve those values constantly.
Values can be in terms of quality or
price.
9. Inside vs. Outside Facilities
Strategy decides the extent of
resource allocation to R&D facilities
and personnel.
10. Competitive situations to be
sought out or avoided
Markets with dominant leader present
may prevent others from making entry.
Some markets are said to have
deteriorated and thus to be avoided.
Competitive conditions can also be an
opportunity.
11. Production Requirements
Different requirements for different
firms.
One might go for innovation and
search for new product.
Other might simply want to mass
produce.
12. Patent Requirements
Some companies go for patent at the
earliest.
Others, specially small scale firms
might go for non patent gamble
because of small investment involved.
13. Speed
Product development is a long term
proposition generally.
But when immediacy is a priority for
the firm, it goes for risky decisions
have short term dimensions.
Others which go slow in their product
development process have long term
dimensions
14. Risk/Failure Factors
Feelings differ widely for managers that
they might form completely opposite
strategies in similar kind of situations.
Some firms accept their inevitable
failure.
But if 1/3rd of market approaches are a
success, firms might still be profitable.
Failure is occasional - Firms make less
risky decisions and want to avoid
production hazards.
15. Pay Back Condition
Financial conditions of firms change from time to time -
Cash Prosperity to Cash Constraining.
People in Product Development remain unaware most
of the time.
Only if the complete idea is rejected because of
excessive cash drain or some pay back, these people
are made aware of financial situation.
So strategy should be flexible so as to absorb some
setbacks.
Bigger firms sometimes refuse ideas because of lack of
glamour which might be profitable in the short term
16. Minimum Sales
In situations of sizeable fixed expense
commitments to a new product.
Profitable strategy.
17. Need for basic research
Expensive process.
Decision on desirability of ideas is
crucial.
Complete innovation may or may not
matter for success as imitation in a
different can give desired results in
some cases.
18. Products/service relatedness
Products can be related to systems of
use or service.
Services can be an opportunity for a
firm to differentiate itself from others.
20. The knock of opportunity
Good strategy helps in:
Reduction in wasted programs, false
starts.
Enhancement in moral.
Managerial control.
Assumptions in new product strategy:
Mistakes may occur
Cost is reduced by dealing with
guidelines
