The document discusses the new product development process. It involves 7 key steps: 1) idea generation, 2) idea screening, 3) concept development and testing, 4) marketing strategy development, 5) business analysis, 6) product development, and 7) test marketing. The goal is to create new products that offer benefits to customers and satisfy market needs. Various techniques are used to evaluate ideas and concepts at each step to select the most viable new product options.

2.  The New Product Development process
is defined as “ Creation of product with
new or different characteristics that
offer new or additional benefits to the
customer. It may involved modification of
an existing product or its presentation, or
formulation of an entirely new product
that satisfies a new defined customers
want or market niches.”

3.  New to the world
 New product lines
 Addition to the existing products lines
 Improvement & revisions of existing
products.
 Repositioning.
 Cost reduction.

4.  Idea Generation and Screening
 Concept Development and Testing
 Marketing Strategy
 Business Analysis
 Product Development
 Test Marketing
 Commercialization

5. New Product Development Process
Step 1. Idea Generation
Systematic Search for New Product
Ideas
Internal sources
Customers
Competitors
Distributors
Suppliers

6. New Product Development Process
Step 2. Idea Screening
 Process to spot good ideas and drop
poor ones
 Criteria
› Market Size
› Product Price
› Development Time & Costs
› Manufacturing Costs
› Rate of Return

7. New Product Development Process
Step 3. Concept Development & Testing
1. Develop Product Ideas into
Alternative
Product Concepts
2. Concept Testing - Test the
Product Concepts with Groups
of Target Customers
3. Choose the Best One

8. New Product Development Process
Step 4. Marketing Strategy Development
Marketing Strategy Statement Formulation
Part One - Overall:
Target Market
Planned Product Positioning
Sales & Profit Goals
Market Share
Part Two - Short-Term:
Product’s Planned Price
Distribution
Marketing Budget
Part Three - Long-Term:
Sales & Profit Goals
Marketing Mix Strategy

9. New Product Development Process
Step 5. Business Analysis
Step 6. Product Development
Business Analysis
Review of Product Sales, Costs,
and Profits Projections to See if
They Meet Company Objectives
If No, Eliminate
Product Concept
If Yes, Move to
Product Development

10. New Product Development Process
Step 7. Test Marketing
Standard
Controlled
Test Market
Test Market
Full marketing campaign A few stores that have
in a small number of agreed to carry new
representative cities. products for a fee.
Simulated
Test Market
Test in a simulated
shopping environment
to a sample of
consumers.

11.  Faulty product Idea.
 Distribution related problems.
 Poor timing of Launch.
 Improper Positioning.
 Some other reasons of product failure.
 Technical problems in the product.
 Competitors fighting back harder than expected.
 Poor market research.
 Poor marketing plan.
 Poor timing.
 Poor product quality.
 Non delivery of promised benefits of product.
 Rapid change in market (economy)
 Faulty estimate of production.

12.  According to Philip Kotler
“ Test Marketing is the stage at which the
product and Marketing Programs are
introduce into more realistic market
settings”
 According to Mason and Rath
“ Test marketing means marketing goods
experimentally to consumers in several
carefully selected areas before releasing
them into wide scale”

13.  To
know the Reaction of the
consumers.
 To Know the Alternatives.

14.  To evaluate a complete market plan
including advertising, distribution,
sales, pricing, etc
 To determine the media mix channels.
 To forecast the sales volume.
 To ascertain the various uses of the
product, classes or category of users
and the motives that prompt the users
or buyers.

15.  To determine the number of cities.
 Selection of Cities.
 Duration of the test.
 To Collect the Necessary Information.
 Launching the New Product.

16.  The collection of businesses (products) is
called the business portfolio of the
company. Most companies operate several
businesses, in terms of ‘products’.
 A business can be defined in terms of three
dimensions; customer groups, customer
needs, and technology. Large companies
normally manage quite different business as
Strategic Business Units (SBUs)
 The best business portfolio is one that fits the
company's strengths.

17.  SBU can be either an entire medium size company
or a divisions of a large company, as long as it
formulates its formulates its own business level
strategy & has separate objectives from the parent
company
B. It is a single business or collection of related
businesses that can be planned separate
objectives from the parent company.
C. It has its own set of competitors.
D. It has a manager who is responsible for strategic
planning and profit performance and who controls
most of the factors affecting profits.

18.  Companies needs to classify their businesses
into SBUs to unable them to analyze their
performance and develop separate
strategies for each SBU. Two of the best
analytical tools available to classify their
businesses by profit potential, are the Boston
Consulting Group Model and the General
Electric Model.

19.  BOSTON CONSULTING GROUP (BCG)
MATRIX is developed by BRUCE
HENDERSON of the BOSTON
CONSULTING GROUP IN THE EARLY
1970’s.
 According to this technique, businesses
or products are classified as low or high
performers depending upon their market
growth rate and relative market share.

21. • Market share is the percentage of the total market
that is being serviced by your company, measured
either in revenue terms or unit volume terms.
• RELATIVE MARKET SHARE
• RMS = Business unit sales this year
Leading rival sales this year
• The higher your market share, the higher proportion
of the market you control.

22.  Market growth is used as a measure of a market’s
attractiveness.
 MGR = Individual sales - individual sales
this year last year
Individual sales last year
 Markets experiencing high growth are ones where
the total market share available is expanding, and
there’s plenty of opportunity for everyone to make
money.

23.  It is a portfolio planning model which is based on
the observation that a company’s business units
can be classified in to four categories:
 Stars
 Question marks
 Cash cows
 Dogs
 It is based on the combination of market growth
and market share relative to the next best
competitor.

25.  Stars are leaders in business.
 They also require heavy investment,
to maintain its large market share.
 It leads to large amount of cash
consumption and cash generation.
 Attempts should be made to hold the
market share otherwise the star will
become a CASH COW.

26. Low growth , High market share
 They are foundation of the company
and often the stars of yesterday.
 They generate more cash than
required.
 They extract the profits by investing as
little cash as possible
 They are located in an industry that is
mature, not growing or declining.

27.  Dogs are the cash traps.
 Dogs do not have potential to bring in
much cash.
 Number of dogs in the company
should be minimized.
 Business is situated at a declining
stage.

28.  Most businesses start of as question
marks.
 They will absorb great amounts of cash if
the market share remains unchanged,
(low).
 Why question marks?
 Question marks have potential to
become star and eventually cash cow
but can also become a dog.
 Investments should be high for question
marks.

29. To assess :
 Profiles of products/businesses
 The cash demands of products
 The development cycles of products
 Resource allocation and divestment
decisions

30.  Identifying and dividing a company into
SBU.
 Assessing and comparing the prospects
of each SBU according to two criteria :
1. SBU’S relative market share.
2. Growth rate OF SBU’S industry.
 Classifying the SBU’S on the basis of BCG
matrix.
 Developing strategic objectives for each
SBU.

31.  BCG MATRIX is simple and easy to
understand.
 It helps you to quickly and simply screen
the opportunities open to you, and helps
you think about how you can make the
most of them.
 It is used to identify how corporate cash
resources can best be used to maximize
a company’s future growth and
profitability.

32.  BCG MATRIX uses only two dimensions,
Relative market share and market
growth rate.
 Problems of getting data on market
share and market growth.
 High market share does not mean profits
all the time.
 Business with low market share can be
profitable too.

33. A
c
t
2
Market attractiveness & Competitive
strength is also important.

34. Stars ?
•Hotels •FMCG- Others
•Paperboards/
Packaging.
•Agri business.
Cows Dogs
•FMCG-Cigarettes •Maybe ITC
Infotech.

35.  In order to overcome the weaknesses of BCG
portfolio matrix, General Electric Company of USA
has developed a nine cell grid with the help of
McKinsey and Company of USA, Leading consulting
firm.
 GE Grid differ from BCG model in two respects ,
which are as follows;
3. The GE grid has considered a number of factors in
assessing the industry attractiveness and businesses
strength instead of single measure for each of two
dimensions – market share and market growth.
4. The GE grid considered three dimensions –high,
medium and low – as compared to degrees –high
and low.

36.  GE consider market share, profit margin, ability to
compete, customer and market knowledge,
competitive position, technology and management
caliber to measure the business strength and
importance of different factors for being successful in
an industry. The degree of strength and importance
mat be assigned rating and weight subjectively based
on personal experience.
Industry Attractiveness Factors and Measurement
 It includes market size and growth rate industry profit
margin, competition, seasonality and cyclicality,
economies of scale, technology & social environment,
legal and human factors. These factors can be
quantified as same way as has been in the case of
business strength factors