New Product Development Strategy


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New Product Development Strategy

  1. 1. Introduction
  2. 2. Product Development strategyGiven the rapid changes in consumer tastes technology arid competitioncompanies must develop a steady stream of new products and services Afirm can obtain-new products m two ways. One is through acquisition bybuying a whole company a patent or a license to produce someone else sproduct The other as through new-product development m the company sown research -and-development department By new products we meanoriginal products product improvements product modifications and newbrands that the firm develops through its own research-and-developmentefforts.When an organization introduces a product into a market they must askthemselves a number of questions. 1. Who is the product aimed at? 2. What benefit will they expect? 3. How do they plan to position the product within the market? 4. What differential advantage will the product offer over their competitors?New products continue to fail at a disturbing rate. One source estimates thatmore than 90 percent of all new products fail in within 2 years Another-study suggested that of the staggering 25,000 new consumer food, beverage,beauty, and healthcare products to hit the market each year, only 40 percentwill be around 5 years later Moreover failure rates for new industrialproducts may be as high as 30 percent.Why do so many new products fail? There re several reasons Although anidea may be good the market size may have been overestimated Perhaps theactual product was not designed as well as it should have beer Or maybe itwas incorrectly positioned in the market priced too high or advertised poorlyA high-level executive might push a favorite idea despite poor marketingresearch findings- Sometimes the costs of product development are higherthan expected, and sometimes Competitors fight back harder than Expected.However the reasons behind some new product failures seem pretty obviousTry the following on for size.
  3. 3. Review of Literature
  4. 4. Product strategiesWhen an organization introduces a product into a market they must askthemselves a number of questions. • Who is the product aimed at? • What benefit will they expect? • How do they plan to position the product within the market? • What differential advantage will the product offer over their competitors?We must remember that Marketing is fundamentally about providing thecorrect bundle of benefits to the end user, hence the saying ‘Marketing is notabout providing products or services it is essentially about providingchanging benefits to the changing needs and demands of the customer’(P.Tailor 7/00)Philip Kotler in Principles of Marketing devised a very interesting conceptof benefit building with a productFor a analysis the book of Principles of Marketing by P.Kotler.
  5. 5. Kotler suggested that a product should be viewed in three levels.Level 1: Core Product. What is the core benefit your product offers?.Customers who purchase a camera are buying more then just a camera theyare purchasing memories.Level 2Actual Product: All cameras capture memories. The aim is to ensurethat your potential customers purchase your one. The strategy at this levelinvolves organizations branding, adding features and benefits to ensure thattheir product offers a differential advantage from their competitors.Level 3: Augmented product: What additional non-tangible benefits can youoffer? Competition at this level is based around after sales service,warranties, delivery and so on. John Lewis a retail departmental store offersfree five year guarantee on purchases of their Television sets, this gives their`customers the additional benefit of peace of mind over the five years shouldtheir purchase develop a fault.Idea generationNew product development starts with idea generation the systematic searchfor new product ideas. A company typically has to generate many in order tofind a few good once. According to one well-known managementconsultant, For every 1 000 ideas, only 100 will have enough commercial t0promise to merits a small sca1e experiment only 10 of those will Warrantsubstantial financial commitment and of those a couple will turn out to beunqualified successes. “His conclusion?“ If you want to find a few ideaswith the power to enthrall customer, foil competition, and thrill investors’you must’ first generate hundreds and potentially thousands ofunconventional strategic ideas.Internal Idea SourcesUsing internal sources the company can find new ideas through formalresearch and development. It can pick the brains of its executives Scientistsengineers manufacturing staff Sand sales people Some companies have-developed successful entrepreneurial programs that encourage employees tothink up and develop new product ideas. For example 3M s well known 15-
  6. 6. percent rule allow employees to spend 15 percent of their tine bootlegging—working on projects of personal interest whether or not those projectdirectly benefit the company.Companies some times look for creative innovation approaches thatovercome barriers to the free flow-of new product ideas For example firmslike Eureka’ Ranch—a well known new product hatchery —employ bothmethod and madness in helping companies to jumpstart their new productidea generation process.External Idea SourcesGood new product idea also come from watching and listening to customersThe company can analyze customer questions and complaints to find newproducts that better solve consumes problems Company engineers orsalespeople can meet with and work. Alongside customers to get suggestionsand ideas The Company can conduct surveys or focus groups to learn aboutConsumer needs and wants. Heinz did just that when its researchersapproached children who consume more than half of the ketchup sold findout what would make ketchup more appealing to them The answer changethe color So, Heinz developed and launc1iedEZ Squirt green ketchup thatcomes iii a squeezable bottle targeted at kids Blastin Green ketchup was asmash hit, so Heinz followed up with an entire rainbow of EZ Squirt colors,including Funky Purple Passion Pink, Awesome Orange, Totally Teal, andStellar Blue. The EZ Squirt bottle s special nozzle also emits a thin ketchupstream, “so tykes can autograph their burgers (or squirt someone across thetable though Heinz neglects to mention that).” In all the new line earned theCompany a 5 percent increase in sales ii the first year after hitting thegrocery shelf.Consumers often create new products and uses on their own and companiescan benefit by putting them on the market. For example for years customerswere spreading the word that Skin-so-soft bath oil and moisturizer was alsoa terrific bug repellent. Whereas some Consumers Were content simply tobathe an water scented with the fragrant oil others carried it in theirbackpacks to mosquito-infested campsites or kept a bottle on the deck oftheir beach houses Avon tuned the idea into a complete line of Skin-So-SoftBug Guard PLUS lR335® products including the Insect Repellent GentleBreeze Moistures Sun block Lotion SPF 30 a combination moisturizer insectrepellent and sunscreen.
  7. 7. The search for new-product ideas should be systematic rather thanhaphazard. Otherwise few new ideas will surface and many good ideas willsputter and die Top management can avoid these problems by installing anidea management system that directs the flow of new ideas to a central pointwhere they can be collected reviewed and evaluated hi setting up such asystem the company can do any or all of the following. • Appoint a respected senior person to be the company s idea manager. • Create a cross-functional idea management committee consisting of people from R&D, engineering purchasing operations finance and sales and marketing to meet regri1rly and evaluate proposed new product and service ideas. • Set up a toll-free number or Web site for anyone who wants to send a new idea to the idea manager. • Encourage all company stakeholders-employees suppliers, distributors, dealers—to send their ideas to the idea manager. • Set up formal recognition programs to reward those who contribute the best new ideas.Idea ScreeningThe purpose of idea generation is to create a large number of ideas. Thepurpose of the succeeding stages is to reduce that number. The first idea-reducing stage is idea screening, which helps spot good ideas and drop poorones as soon as possible. Product development costs rise greatly in laterStages, so the company wants to go ahead only with the product ideas thatwill turn into profitable products.
  8. 8. o The object is to eliminate unsound concepts prior to devoting resources to them. o The screeners must ask at least three questions:  Will the customer in the target market benefit 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?Many companies require their executives to write up new-product ideas on astandard form that can be reviewed by a new-product committee. The write-up describes the product, the target market, and the competition. It makessome rough estimates of market size, product price, development time andcosts, manufacturing costs, and rate of return. The committee then evaluatesthe idea against a set of general criteria. For example, at Kao Company, the- large Japanese consumer-products company, the committee asks questionssuch as these: Is the product truly useful to consumer and society? Is it goodfor our particular company?Does it mesh well with the company’s objectives and strategies? Do we havethe people, skills, and resources to make it succeed? Does it deliver morevalue to customers than do competing products? Is it easy to advertise anddistribute? Many companies have well-designed systems for rating andscreening new-product ideas.Concept development and testingAn attractive idea must be developed into a product concept. It is importantto distinguish between a product idea, a product concept, and a productimage. A product idea is an idea for a possible product that the company cansee itself offering to the market. A product concept is a detailed version ofthe idea stated in meaningful consumer terms. A product image is the wayconsumers perceive an actual or potential product.
  9. 9. o Develop the marketing and engineering details  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?  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?Concept DevelopmentAfter 10 years of development, DaimlerChrysler is getting ready tocommercialize its experimental fuel-cell-powered electric car. This car’snonpolluting fuel-cell system runs directly on methanol, which delivershydrogen to the fuel cell with only water as a by-product. It is highly fuelefficient (75 percent more efficient than gasoline engines) and gives the newcar an environmental advantage over standard internal combustion enginecars or even today’s stupefacient gasoline-electric hybrid cars.Last year, DaimlerChrysler put 60 “F-cell” cars on the road in Japan,Germany, and the United states to test their worth in everyday operation.Based on the tiny Mercedes A-Class, the car accelerates quickly, reachesspeeds of 90 miles per hour, and has a 280-mile driving range, giving it ahuge edge over battery-powered electric cars that travel only about 80 milesbefore needing 3 to 12 hours off recharging. Fuel cell systems are also beingtested in busses, trucks, and other vehicles.Now DimlerChrysler’s task is to develop this new product into alternativeproduct concepts, find out how, attractive each concept is to customers, andchoose the best one. It might create the following product concepts for thefuel-cell electric car:Concept 1 A moderately priced subcompact designed as a second family carto be used around town. The car is ideal for running errands and visitingfriends.Concept 2 A medium-cost sporty compact appealing to young people.Concept 3 A inexpensive subcompact “green” car appealing toenvironmentally conscious people who want practical transportation and lowpollution.
  10. 10. Concept 4 A high-end SUV appealing to those who love the space SUVsprovide but lament the poor gas mileage.Concept TestingConcept testing calls for testing new-product concepts with groups of targetconsumers. The concepts may be presented to consumers symbolically orphysically. Here; in words, isconcept 3: An efficient fun-to drive fuel cell-powered electric subcompactcar that seats four.This methanol powered high-tech wonder provides practical and reliabletrans potation with virtually o pollution It goes up to 90 miles per hour andunlike battery-powered electric cars, it never needs recharging It s priced,fully equipped at $20000.For some concept tests a word or picture description might be sufficient.However a more concrete and physical presentation of the concept willincrease the reliability of the concept test Today some marketers are findinginnovative ways to make product concepts more real to consumer subjectsFor example some are using virtual reality to test product concepts. Virtualreality programs use computers and sensory devices (such as gloves orgoggles) to simulate reality A designer of kitchen cabinets might use avirtual reality program to help a customer ‘ see how his or her kitschierwould look and work if remodeled with the company’s products. After beingexposed to the concept consumers then may be asked to react to at byanswering questions such as those. The answers will help the companydecide which concept has the strongest appeal For example the last questionasks about the consumers intention to buy Suppose 10 percent of theconsumers said they definitely would buy and another 5 percent said“obab1y ‘The company could project these figures to the full population inthis target group to estimate sales volume Even then the estimate is uncertainbecause people do not always carry out their stated intentions.Marketing Strategy developmentSuppose DaimlerChrysler finds that concept 3 for the fuel cell poweredelectric car tests is best The next step is marketing strategy developmentdesigning an initial marketing strategy for introducing this car to the market.The marketing strategy statement consists of three parts. The first partdescribes the tar get market the planned product positioning; and the sates,
  11. 11. market share, and profit goals for the first few years. Thus:The target market is younger well educated moderate to high incomeindividuals couples or small families seeking practical environmentallyresponsible transportation The car will be positioned as more economical tooperate, more fun to drive, and less polluting than today s internalcombustion engine or hybrid cars It is also less restricting than batterypowered electric cars which must be recharged regularly. The company willaim to sell 100 000 cars in the first year at a loss of not more than $15million In the second year the company wall aim for sales of 120,000 carsand a profit of $25 million.The second part of the marking strategy statement outlines the product splanned price distribution and marketing budget for the first year:The fuel cell powered electric car will be offered an three colors—red whiteand blue—and will have optional air-conditioning and power drive featuresIt will sell at a retail price of $20,000—with 15 percent off the list price todealers. Dealers who sell more than 10 cars per month will get an additionaldiscount of5 percent on each car sold that month An advertising budgetof$5Q million will be split 50-50 between a national media campaign andlocal advertising. Advertising will emphasize the car’s fun spirit and lowemissions. During the first year, $100,000 will be spent onmarketing research to find out who is buying the car and their satisfactionlevels.Business analysisOnce management has decided on its product concept and marketingstrategy it can evaluate the business- attractiveness of the proposal. Businessanalysis involves a review of the sales costs, and profit projections for anewproduct to find out whether they satisfy the company’s objectives. If they dothe-product can move to-the product development stage. To estimate sales,the company might look at the sales history of similar products and conductsurveys of market opinion. It can then estimate minimum and maximumsales to assess the range of risk. After preparing the sales forecast,management can estimate the expected costs and profits for the productincluding marketing R&D operations accounting and finance costs. Thecompany then uses the sales and costs figures to analyze the new product’sfinancial attractiveness.
  12. 12. o Estimate likely selling price based upon competition and customer feedback o Estimate sales volume based upon size of market and such tools as the Fourt-Woodlock equation o Estimate profitability and breakeven pointProduct developmentSo far for many new product concepts the product may have existed only asa word a thawing or perhaps a crude mock-up If the product concept passesthe business test it moves into product development Here R&D orengineering develops the product concept into a physical product. Theproduct development step however now calls for a large jump in investmentIt will show whether the product idea can be turned into a workable product. The R&D department will develop and test one or morephysical versions of the product concept R&D hopes to design a prototypethat will satisfy and excite consumers and that can be produced quickly aidat budgeted costs. Developing a successful prototype can take days,weeks, months, or even years. Often products under go rigorous tests tomake sure that they perform safely and effectively,or that consumers will find value in them. Here are some examples of suchproduct tests:Procter & Gamb1e (P&G)spends $150 million on 4,000 to 5 0O studies ayear test in everything from the ergonomics of picking up a shampoo bottleto how long women can keep their hands in sudsy water. On any given daysubjects meet an focus groups e11 their dirty laundry to researchers putprototype diapers on their babies bottoms and rub mysterious creams ontheir faces Last year one elementary school raised $17000 by havingstudents and parents take part in P&G product tests Students testedtoothpaste and shampoo and ate brownies while their mothers watchedadvertising for Tempo tissue P&G s paper wipes packaged to fit in a car.At Gillette almost everyone gets involved in new product testing. Everyworking day at Gillette, 200 volunteers from various departments come towork unshaven troop to the second floor of the company’s gritty SouthBoston plant and enter small booths with a sink and mirror. There they takeinstructions from technicians on the other side of a small window as towhich razor, shaving cream or after shave to use The volunteers evaluate
  13. 13. razors for sharpness of blade, smoothness of glide and ease of handling In anearby shower room women perform the same ritual on their legs,underarms and what the company delicately refers to as the bikini area. Webleed so you. 11 get a good shave at home says one Gilletteemployee.Test marketingIf the product passes functional and consumer tests, the next step is testmarketing the stage at which the product and marketing program areintroduced into more realistic market settings. Test marketing ’gives themarketer experience with marketing the product before going to the greatexpense of full ‘introduction. It lets the company test the product and itsentire marketing program-positioning strategy advertising distributionpricing branding and packaging and budget levels. The amount of testmarketing needed varies with each new product Test marketing costs can behigh, and it takes time that may allow competitors to gain advantages. o Produce a physical prototype or mock-up o Test the product (and its packaging) in typical usage situations o Conduct focus group customer interviews or introduce at trade show o Make adjustments where necessary o Produce an initial run of the product and sell it in a test market area to determine customer acceptance When the costs of developing and introducing the product are low or whenmanagement as already confident about the new product the company maydo little or no test marketing In fact test marketing by consumer package-goods firms has been declining in recent years Companies often do not testmarket simple line extensions or copies of successful competitor productsFor example. P&G introduced its Folgers’s decaffeinated coffee crystalswithout test marketing and Pillsbury rolled out Chewy granola bars andchocolate covered Granola Dips with no standard test market. Howeverwhen introducing a new product requires a big investment or whenmanagement is not sure of the product or marketing program a companymay do a lot of test marketing. For instance Lever USA spent 2 years testingits highly successful Lever 2000 bar soap in Atlanta before introducing itinternationally. Frito-Lay did 18 months of testing in three markets on atleast five formulations before introducing its Baked Lays line of low fat
  14. 14. snacks. And Nokia test-marketed its N-Gage cell phone/mobile game playerextensively in London before introducing it worldwide.Standard test MarketingUsing standard test markets, the company finds a small number ofrepresentative test cities conducts a full marketing campaign in these citiesand uses store audits consumer and distributor surveys, and other measuresto gauge product performance. The results are used to forecast national salesand profits discover potential product problems and fine tune the marketingprogram.Standard test markets have some drawbacks. They can be very costly andthey may take a long time—some last as long as 3 to 5 years Moreovercompetitors can monitor test market results or even interfere with them bycutting their prices in test cities increasing their pro motion or even buyingup the product being tested. Finally test market give competitors a look atthe company’s new product well before it is introduced nationally Thuscompetitors may have tune to develop defensive strategies and may evenbeat the company s product to the market For example while CLOROX®was still test marketing its new detergent with bleach in selected marketsP&G launched Tide with Bleach nationally Tide with Bleach quicklybecame the segment leader GLOROX® later withdrew its detergent Despitethese disadvantages standard test markets are still the most widely usedapproach for major in-market testing However many companies today areshifting toward quicker and cheaper controlled and simulated test marketingmethods.Control Test MarketingSeveral research firms keep controlled panels of stores that have agreed tocarry new products for a fee Controlled test marketing systems likeACNielsen’s Scan track and Information Resources Inc s (IRI) BehaviorScan track individual consumer behavior for new products from thetelevision set to the checkout counter.In each Behavior Scan market WI maintains a panel of shoppers who reportall of their purchases by showing an identification card at check-out inparticipating stores and by using a handheld scanner at home to recordpurchases at nonparticipating stores. With in test stores, IRI controls suchfactors as shelf placement price and ia-store promotions for the productbeing tested IRI also measures TV viewing in each panel household and
  15. 15. sends special commercials to panel member television sets Direct mailpromotions can also be tested.CommercializationCommercialization is the process or cycle of introducing a new product intothe market. The actual launch of a new product is the final stage of newproduct development, and the one where the most money will have to bespent for advertising, sales promotion, and other marketing efforts. In thecase of a new consumer packaged good, costs will be at least $ 10 million,but can reach up to $ 200 million. In general one can say that it will costabout a dollar for each dollar of sales turnover achieved.Commercialization is often confused with sales, marketing or businessdevelopment. The Commercialization process has three key aspects: 1. The funnel. It is essential to look at many ideas to get one or two products or business that can be sustained long-term 2. It is a stage-wise process and each stage has its own key goals and milestones 3. It is vital to involve key stakeholders early, including customersCommercialization of a product will only take place, if the following fourquestions can be answered:When?The company has to decide on the introduction timing. When facing thedanger of cannibalizing the sales of the company’s other products, if theproduct can be improved further, or if the economy is down, the launchshould be delayed.Every single bank in Nigeria today has been commercialized. But its sadenough to know that most of these banks are not straight forward in theirvarious dealings with their clines/customers.Where?The company has to decide where to launch its products. It can be in a singlelocation, one or several regions, a national or the international market. This
  16. 16. decision will be strongly influenced by the company’s resources, in terms ofcapital, managerial confidence and operational capacities. Smallercompanies usually launch in attractive cities or regions, while largercompanies enter a national market at once.Global roll outs are generally only undertaken by multinationalconglomerates, since they have the necessary size and make use ofinternational distribution systems (e.g., Unilever, Procter & Gamble). Othermultinationals use the “lead-country” strategy: introducing the new productin one country/region at a time (e.g. Colgate-Palmolive).To Whom?The primary target consumer group will have been identified earlier byresearch and test marketing. These primary consumer groups should consistof innovators, early adopters, heavy users and/or opinion leaders. This willensure adoption by other buyers in the market place during the productgrowth period.How?The company has to decide on an action plan for introducing the product byimplementing the above decisions. It has to develop a viable marketing mixand create a respective marketing budget.Test marketing gives management the information needed to make a finaldecision about whether to launch the new product. If the company goesahead with commercialization— introducing the new product into themarket—it will face high costs The company may have to build or rent amanufacturing facility. And it may have to spend in the case of a newconsumer packaged good between $10 million and $200 million foradvertising sales promotion, and other marketing efforts in the first year.The company launching a new product must first decide on introductiontiming. If DaimlerChrysler s new fuel cell electric car will eat into the salesof the company s other cars its introduction may be delayed If the car can beimproved further, or if the economy is down, the company may wait untilthe following year to launch it.Next, the company must decide where to launch the new product—in asingle location, a region the national market or the international market. Few
  17. 17. companies have the confidence capital and capacity to launch new productsinto full national or international distribution. They will develop a plannedmarket rollout over time. In particular small companies may enter attractivecities or regions one at a time Larger companies, however may quickly intro-1uce new models into several regions or into the full national market.There are the following step of commercialization. o Launch the product o Produce and place advertisements and other promotions o Fill the distribution pipeline with product o Critical path analysis is most useful at this stageOrganizing for new product DevelopmentMany companies organize their new product development process into theorderly sequence of starting-with idea generation and ending withcommercialization Under this sequential product development approach onecompany department works individually to complete its stage of the processbefore passing the new product along to the development next departmentand stage. This orderly step-by step process can help bring control tocomplex and risky projects. But it also can be dangerously slow. In fastchanging highly competitive works markets such slow but sure productdevelopment can result in pro4uct failures lost sales arid profits andcrumbling market positions Speed to market and reducing new productdevelopment cycle time have become pressing concerns to companies in allindustries.In order to get their new products to market more quickly many companiesare adopting a faster team-oriented approach called simultaneous productdevelopment (or team bad or collaborative product-development) Under thisapproach company departments work closely together through crossfunctional teams overlapping the steps in the product development processto save time and increase effectiveness Instead of passing the new productfrom department to department the company assembles a team -of peoplefrom various departments that Stays with the new product from start tofinish. Such teams usually include people from the marketing financedesign, manufacturing and legal departments and even supplier andcustomer companies.
  18. 18. top management gives the product development team general strategicdirection but no clear cut product idea or work plan It challenges the teamwith stiff and seemingly contradictory goals— turn out carefully plannedand superior new products but do it quickly —and then givers the teamwhatever freedom and resources it needs to meet the challenge In thesequential process a bottleneck at one phase can seriously slow the entireprotect In the simultaneous approach, if one functional area hits snags itworks to resolve them while the team moves on.
  19. 19. The Data CollectionPrimary DataBOOKS Principal of Marketing (Eleventh Edition) Part III Chapter# 9 Page # 274,276,280,282Web site www.infotrends.comSecondary DataOrganization P&G Pakistan Private (Ltd)Web site
  20. 20. Practical Study Procter & Gamble Pakistan Pvt LtdWHO WE AREThree billion times a day, P&G brands touch the lives of people around the world. We areone of the largest and strongest portfolios of trusted, quality, leadership brands. At P&G,the people who develop and build the brands are the foundation of our success. • Building Diversity in the Organization • Developing Skills and Nurturing Talent • Providing Quality Assurance, Meeting Safety StandardsOUR COMMITMENTAt P&G, we believe in giving back to the communities we live in. Corporate socialresponsibility is close to P&G’s heart. P&G develops and runs several initiatives andprograms aimed at helping communities and improving people’s lives, especiallychildren.OUR HISTORYP&G commenced operations in Pakistan in 1991. Headquartered in Karachi, our goal was to become the finest global consumer goods company operating locally in Pakistan. To fulfill this goal, we are serving Pakistani consumers with 12 brands that strive to make their everyday lives better.PRODUCT INFORMATION We are committed to providing products of consistently excellent quality and standards — products that have a positive effect on the lives of the worlds consumers. As we continue to succeed in this aim, we can keep growing as a marketing community.
  21. 21. PRODUCTS RANGEData Analysis
  22. 22. Why are some companies so successful at new product development? Andhow do some businesses make it seem so easy – one new product winnerafter another? Consider Procter & Gamble: Total sales at P&G increased by$8 billion in 2004, with new product winners playing a important role. TheIRI cites P&G as the clear winner in its annual New Product Pacesettersreport: In the non-food category, five P&G new products were in the top tenbest-sellers, with Prilosec OTC and Crest Whitestrips Premium in the #1 and#2 positions.Exceptional performance in product development in companies such as P&Gis no accident. Rather, it’s the result of a disciplined, systematic approachbased on best practices. This article highlights many of the key factors thatdistinguish best performing businesses, such as P&G, from the rest. To showproof that these best practices really do have an impact on performance,we present research conclusions from a recent major APQC study.2 Notsurprisingly, P&G, an exemplary company in new product development, hasimplemented many of these practices; thus, we use the company as a superba case illustration to show many of these best practices in action. Authors’notes: In this article, we use the term “new products” to mean any change tothe product visible to the consumer or customer; these include true new-to-world products as well as new items in an existing product line, significantmodifications and improvements, and extensions. The term “customer”means immediate customer, for example a retailer; and the term “consumer”means the end user.The Innovation or Initiatives Diamond to guide new product developmentFour major factors or forces drive a business’s new project performance,according to the APQC (American Productivity & Quality Center) bestpractices study. The Innovation Diamond3 in Exhibit 1 illustrates these fourpoints of performance: • Having a product innovation and technology strategy in place for the business. • Having an effective and efficient idea-to-launch process or Stage- Gate® system. • Resource commitment and focusing on the right projects – portfolio management. • People – having the right climate and culture, effective cross- functional teams, and senior management commitment to new product development.
  23. 23. Procter & Gamble’s management in the 1990s subsequently transformed thetriangle into their Initiatives Diamond, shown in figure P&G’s major “aha”was that there is no one key to success in product innovation, and thusmanagement stepped backfrom a focus on individual initiatives and looked at the broader picture. Forexample, having a great idea-to-launch process is not sufficient – it’s not astandalone driver of positive performance.P&G’s Initiatives Diamond serves as a guide for each business’s productinnovation efforts, and helps to focus management’s attention on what isimportant to success. Here’s what Bob McDonald, P&G’s Vice Chairman ofGlobal Operations, says: “The Initiative Diamond played a significant rolein improving the business results in P&G’s Fabric & Home Care globalbusiness unit. This work brought us a new discipline to manage ourinnovation programs, and yielded a major increase in the in-market successof our initiatives. We aligned our organization on how to use Stage-Gate®success criteria and portfolio and resource management to deliver betterinnovations for the consumers we serve.
  24. 24. About MarketingDid you know P&G invented the concept of brand, brand management andeven the Soap Opera (originally designed to showcase our soap powders onTV)? Over the years, we¹ve remained consistently on the cutting edge ofmarketing always finding new and exciting ways of reaching consumers. So,it’s not surprising that some of the world’s best marketing pros started here.Here, you will lead a brand’s strategic choices and vision, product andcommercial innovations, and marketing elements across all media, whilecollaborating with multi-function teams and agency partners. You will needto make tough calls to a build a brand’s market shares and deliver profit toP&G shareholders. Join us today if you¹re ready to challenge paradigms andpush creative boundaries to propel brand building to a new level. A degree isrequired.Concept DevelopmentThere is following example of concept development Procter & Gamble’sand Kimberly Clerks moist toilet papers tested after launch received an F inAcuPOLL Both companies spent millions to launch these products but havesince withdrawn them from the market Consumers saw Wet toilet paper asunique but didn’t find the benefit to be all that compelling AcuPOLL hasfound that-just being different doesn’t lead to market success.Product DevelopmentProcter & Gamb1e (P&G) spends $150 million on 4,000 to 5 0O studies ayear test in everything from the ergonomics of picking up a shampoo-bottleto how long women can keep their hands in sudsy water On any given daysubjects meet an focus groups e11 their dirty laundry to researchers putprototype diapers on their babies bottoms and rub mysterious creams ontheir faces. Last year one elementary school raised $17 000 by havingstudents and parents take part in P&G product tests Students testedtoothpaste and shampoo and ate brownies while their mothers watchedadvertising for Tempo tissue P&G s paper wipes packaged to fit in a car.
  25. 25. Conclusion &Recommendations
  26. 26. ConclusionThe strategy behind the developing and implementing of product is not aneasy thing most of organization struggling in this part of business. As Imention in my practical study Procter & gamble says this process theinitiative. The whole process is not based on well idea which can took fromresearch department internal or external sources of organization. Ideascreening is also very important it is essential to pick the positive values ofidea and refine the negative one. Marketing strategy and business analysis isalso significant potion. With out dealing market situation and competitormovement it is very dangerous to work some new product development.According to P&G initiative management diamond innovation strategy andmeasure is the top of this diamond. Product development is not an easy stageits contain different kind of planning like resources planning, strategicplanning. The resources of any organization play a vital role in productdeveloping big organization normally rely on there internal resources whichare much benefited for them. If we conceder all the part of test marketing itis the key of conclusion the organization understand who much they aregood in research or they have good idea of market. The organization alsoknow who much they are superior to read the market condition a bad resultof test marketing can create a bad effect of organization soil.Commercialization is also imperative. High class commercialization cancreate a huge impact and arrange fine plate foam for the product. P&G areworking in Pakistan from a wile there product developing process is totallyout of Pakistan but they lunch there product rapidly in this region and forthis they need high quality commercialization. In Pakistan P&G doing wellin product commercialization and the proof is there product success.In my opinion P&G is one of the best non food product organization whichnot only sell there product in Pakistan but they also introduce the new one.Recommendation As I already admire this P&G doing well in our region they workingon new product and introduce in our country. But they research in othercountries and in the result of there research they develop new productaccording to the research which is belong from that region where theresearch held. So P&G also lunch there research in Pakistan and develop theproduct. These product represent us and also it is according to our needs.
  27. 27. ReferencesBOOKS Principal of Marketing (Eleventh Edition) Part III Chapter# 9 Page # 274,276,280,282Website /productconcepttesting.html Way.pdf