This study examines the impact of new product development (NPD) on organizational performance in the banking sector, involving 250 participating banks. It highlights that factors such as firm image, brand strength, product innovativeness, and product quality positively influence new product performance and customer satisfaction. The findings underscore the significance of effective NPD for achieving strategic competitiveness and improved relational performance.

1. New Product Development
and Performance in the
Banking Industry
Sook-Fun Fong
May-Chiun Lo PUNEET D. SINGH
T. Ramayah 1416FM028

2. Abstract
• Objective of the articles is to hypothesis the impact of new product
development on organization performance
• 250 banks participated in this study
• Test hypothesis that comprised of firm image, brand strength,
market sensing capability ,product innovativeness and new product
quality on new product performance and subsequently
bootstrapping was conducted to investigate the standard error of
the estimate and t-value
• The findings revealed that four types of new product development
factors namely firm image, brand strength, product innovativeness
and new product quality were found positively related to new
product performance

3. Introduction
• Project management assist organizations to plan,ensure,repeatable
sales and market-driven product and services to suit the needs and
wants of the customers(jhonson,2009)
• Past studies have indicated that many large companies have a high
product failure rate of new product development at more than 65
percent(adams,2010)
• One of the reasons for the failure is the introduction of an
unattractive new product in the market(Euchner.2008)
• New product development is a difficult process but it has ben
identified as an important precursor to performance
(bendoly,bharadwaj &bharadwaj,2012)

4. Conceptual background and hypotheses
• New product management
new product management is an important function in an origination. As it helps to
identify and quantify problems and opportunities in the market segment According to
windley(2002), product management focuses on customer’s needs and wants rather than
on the organization's assets, such as technology, and employee skills
• Firm image
Firm image is an intuitively appealing concept where a favorable image can boost sales
through increased customer satisfaction and loyalty
• Brand strength
Brand represents a product’s position in the mind of the customers i.e. CSR
• Market-sensing capability
Market-sensing capability is one of the firm’s rate rare valuable and difficult-to-imitate
resources that can be used to achieve superior business performance
• Product innovativeness
An organization's innovativeness can be defined as product newness, product advantages,
product-company fit and innovation-market fit.

5. • New product development
Quality can be segregated into objective quality and perceive quality in
which objective quality is defined as actual technical excellence of the
product that can be verified and measured
• Performance measurement
Performance measurement serves the purpose of ensuring that an organization
pursues strategies that will lead to achievement of the overall goals and
objectives
• New product performance
New product performance is the outcome of new product in the market
that depends on the design to specifications and the ability to translate
the customers needs into product specifications

6. • Relational performance
• Relational performance shows how smooth the interactions are carried out
and how easy the barriers across organizations can be overcome
• Customer satisfaction
• Customer satisfaction indicates how well the product-use experience
compares to the customer’s value expectation

7. Development of hypotheses
• Firm image and performance measurement
there are researchers who hypothesized that corporate reputation and company
image is positively related to firm superior performance. Hence following
hypotheses have been developed.
• H1:Firm image is positively related to new product performance
• H2:Firm image is positively related to new relational performance
• H3:Firm image is positively related to new customer satisfaction
• Brand strength and performance measurements
Brand can in fact be a source of achieving a firm’s superior performance such as
abnormal returns. Hence the following hypotheses have been develop
• H4:Brand strength is positively related to new product performance
• H5:Brand strength is positively related to new relational performance
• H6:Brand strength is positively related to new customer satisfaction

8. • Market-sensing capability
• Market-sensing capability is recognized as the most important determinant of
sustainable competitive advantage and superior business performance
• H7:market-sensing is positively related to new product performance
• H8:market-sensing is positively related to new relational performance
• H9:market-sensing is positively related to new customer satisfaction
• Product innovativeness and performance measurements
• Atuahene-gima(1996) hypothesized that there are positive associations
between a firm’s innovativeness, market success and a project on the firm’s
overall performance
• H10:product innovativeness is positively related to new product performance
• H11:product innovativeness is positively related to new relational
performance
• H12:product innovativeness is positively related to new customer
satisfaction

9. • New product quality and performance measurements.
Performance of the product such as product quality can be identified through the positive
market response and improvement in the product attributes itself
• H13:New product developments positively related to new product performance
• H14:New product development is positively related to new relational performance
• H15:New product development is positively related to new customer satisfaction

10. UNDERLYING THEORY
• Resource-based theory
• Popular theory for competitive advantage
• 3distinct sub groups
 Tangible assets
Plant, equipment's, etc.
 Intangible assets
Trademarks,brands,patents
 Capabilities
Skills, of individual and group

11. • Comparative advantage theory
• Exist when offering provide superior value and can be produce at low price
• Few foundations
• Firstly, the demand in the market is heterogeneous and dynamics and this
can be identified by the organization ability to sense the market in order to
achieve a favorable new product performance, good relational performance
and customer satisfaction
• Secondly, the origination objective is to achieve superior financial
performance such as high profit .as a result, an origination that has a good
image will lead to favorable new product performance and good relation
with the stake holders and customers
• Third, Resources are tangible and intangible entities, Intangible resources
such as firm image, market-sensing capability, relationship management,
skill and knowledge can be used to apply

12. Methodology
• Respondents where the [persons who have been with the
local banks in Malaysia for more than a year
• A total 250 pairs of questionnaires where distributed
• 1section to collect the personal profile and demographic
data
• Section 2 required the respondent to rate 51 items on how
product development such as firm image, brand strength,
market-sensing capability, product innovativeness and
new product development attempted to influence
performance, relational performance and customer
satisfaction in banking sectors

13. findings
• Assessment of the measurement model
• Conducted when the relationship among the conceptual
factors of interest and underlying construct were measured
• TABLE 1,2 & 3 more than 0.60
• Assesment of the structural model

16. Implications
• This study has a number of theoretical and practical implicational for
both scholar and practitioners, particularly in the domain of new
product development
• First- few study has been made on nod in banking sectors
• Better understanding of NPD such as firm image, brand strength…….
• Second-provide useful guidance for those interested in Debut the
research is still limited in its ability to provide an unequivocal
guidance
• As highlighted by yam(2010) NPD serves an important strategy and
function in org that enables org to achieve to achieve strategic
competitiveness and earn above-average returns

17. Implications and directions for
future research
• There are several limitation
• 1-the study focus on the customer who have been to
Malaysian bank for mare than one year
• 2-the study is a cross-sectional study ,where the data were
obtained from the respondents at a single period of time
and can only provide a static perspective on fit

18. Conclusion
NPD plays an important role
Effective and efficient NPD lead to overall product and
relational performance and customer satisfaction
The findings of this study have offered considerable
insights into the effective measurements
The study revealed the customer perception about the
relationship of new product development on the
performance measurements