This document discusses various aspects of new product development, including replacing products in decline with new products. It describes different types of new products and the importance of core competencies. The document outlines the new product development process, from idea generation and screening to concept development, business analysis, product development, market testing, and commercialization. It also discusses sustaining innovation for demanding customers through incremental improvements versus disruptive innovation for less demanding customers through lower-cost, simpler products. Mass customization aims to deliver customized products and services with near mass production efficiency, driven by market demands, competition, and new technologies.

1. Prof. Abha Wankhede

2.  Profitability and Growth: Products in decline
stage (of PLC) are replaced with new products.
 Classification:
◦ New to world
◦ New to company
◦ Improvement to existing product same market
◦ Improvement to existing product additional market
◦ Repositioning existing product to new market
segment.
◦ Products with cost reduction without reducing
performance.

3.  Core Competencies: The root of Industrial
Products
◦ Product superiority and uniqueness.
 Product Quality: Touching the entire supply
chain.
 Market knowledge Product concept
Product development process.
 Technical and Production capabilities
translate the product concept product
development commercial production.

4.  Idea generation: sales person, industrial
customer, distributor/reseller, supplier, design
engineer, manager.
 Idea screening:
◦ Is the new product in line with the company’s long
term objectives and strategies?
◦ Do you have adequate resources (money, people,
skills)?
◦ Is it really useful to customers by providing certain
benefits, or solving a specific problem?
◦ Does it deliver more value than competing products?
◦ What is the future growth, market size, and
competition in the new product industry?

5. New product idea
significant factors
Importance
(Weightage)
Company
capabilities
for product
idea
New product
Idea Rating
1 Company objectives and
strategies
0.2 0.7 0.14
2 Marketing experience and
effectiveness
0.2 0.5 0.3
3 Production capabilities and
facilities
0.15 0.4 0.06
4 Research and Development
know-how
0.15 0.6 0.09
5 Availability of raw material
and supplies
0.1 0.7 0.07
6 Financial resources and
profitability
0.2 0.8 0.16
1.0 0.62

6.  Concept Development and Testing:
◦ Detailed version of product idea stated in
meaningful customer terms.
◦ Tested by getting reactions from customers and the
concept with strongest appeal is chosen.
 Physical presentation can increase the reliability of the
concept/ virtual reality can be used to get correct
feedback.

7.  Business Analysis:
◦ Projection of Sales, Cost and Profitability for 5-7
yrs.
 Investment in plant, equipment, working capital and
market development.
 Market forecast, customers and competitors analysis.
 Cost of Development, manufacturing and marketing
the product.
 Likely price levels, profitability and ROI analysis.

8.  Product Development: Design Process
Engineering Tooling Manufacturing testing Final
Product
 Market Testing:
◦ Alpha and Beta testing: Alpha-performance parameters and
operating cost internally, Beta-potential user site.
◦ Introducing the product at Trade shows
◦ Testing at distributor/dealer showroom
◦ Test marketing: in a limited geography area thru the sales
force.
 Commercialization: Training sales-force and customer
service, product catalogs, price list, introductory offer and
launch event/bash/advertisement, stock at warehouse and
dealer/distributor locations, customer service/call center
readiness, effective feedback systems.

9.  Demanding customers:
◦ Sustaining innovation make better products
(incremental product improvements or breakthrough
products) sell at higher margins.
 Less demanding customers:
◦ Disruptive innovation represents a product or service
that is not as good as currently available benefits
simpler, more convenient and less expensive.
 Low end strategy- There should be a customer at low end.
Eg; Southwest Airlines, Jet lite, Motorola low-cost phone
offers only voice and text messaging functions.
 New market strategy- large population who have historically
lacked the money, equipment or skill to acquire this product
or service. Eg; Canon desktop photocopier 1980s, Blackberry
relative to notebook computers.

10.  Solution Centered Perspective
◦ Begins with analysis of customer problems.
◦ Value proposition- creating and delivering superior
customer solutions
◦ Value creation- is co-created by the customer and
the firm.
◦ Designing offerings- start with customer problems
and assemble required products and services to
solve it.
◦ Company customer relationship- Interaction based.

11.  From a collaborative engineering perspective,
mass customization can be viewed as
collaborative efforts between customers and
manufacturers, who have different sets of
priorities.
 It aims to deliver product and services that
best meet customers’ needs with near mass
production efficiency

13.  The paradigm shift to mass customization is
mainly propelled by three forces :
 Market demand - ‘the mass market is dead and
segmentation has progressed to the era of mass
customization’ – Kotler(1989)
 Market competition - Product variety is
exploding while product life cycle is shortening
 Technological revolutions - Flexible
manufacturing systems allow manufacturers to
quickly adapt to changes without incurring high
penalty in terms of cost and lead time