The document discusses new product development, including strategies for organic and inorganic growth. It outlines six categories of new products and reasons some companies are more innovative. New product success or failure can result from market, financial, timing, technical, organizational, or environmental factors. The document also provides examples of idea generation techniques, concept development and testing methods, and outlines the product development process through commercialization.

1. New Product Development
• New Product
(a) Acquisition
1.Buy Other Company 2 Acquire patents,
3. Buy Franchise
(b)Development

2. An Insight
• Organic growth represents the true growth
for the core of the company. It is a good
indicator of how well management has
used its internal resources to expand
profits. Organic growth also identifies whether
managers have used their skills to improve the
business.

3. Inorganic Growth
• A growth in the operations of a business that
arises from mergers or takeovers, rather than
an increase in the companies own business
activity. Firms that choose to grow
inorganically can gain access to new markets
and fresh ideas that become available through
successful mergers and acquisitions.

4. Types of New products
• New to the World products:
• Fewer than 10-15% product are truly
innovative or new.
• Amul Prolife Probiotic Wellness Ice cream.
• Modifying and Improving existing products:
• LML Vs (Bajaj, Hero Honda, TVS)

5. Some Links
• http://www.pcworld.com/article/130207/the
_50_best_tech_products_of_all_time.html

6. Worlds Most Innovative Company
• 1. Apple
• 2. Google
• 3. Toyota Motors
• 4.General Electric
• 5. Microsoft.

7. Six categories of NEW PRODUCT
• New to the world of products
• New Product Lines
• Addition to the existing product lines
• Improvements and revisions of existing
products
• Repositioning's
• Cost Reductions

8. WHY Do Some Only?
• Innovation in their businesses
• Positive Attitude towards business
• Risk Takers
• Routinized Innovation
• Practice teamwork
• Allow their people to experiment and fail
• They understand continuous innovation is
necessary.

9. New Product Success
• Incremental Innovation: Established
Company
• Disruptive technologies: Newer Companies
• Cooper & Kleinschmidt Study:
• Domestic product designed only for domestic
market show a higher failure rate rather than
product with international orientation.

10. New Product Failure
1. Market/marketing failure
Small size of potential market.
No clear product differentiation
Poor positioning
Misunderstanding customer needs.
2. Financial failure
Low return on investment

11. New Product Failure
3.Timing failure
 Late in the market
“Too” early –market yet not developed
4. Technical Failure
Product did not work
Bad design

12. NPF
5.Organizational failure
Poor fit with the organizational culture
Lack of Organizational support.
6. Environmental failure
Government regulations
Macroeconomic factors.

13. Budgeting for NPD
Stage Number of Ideas Pass Ratio Cost Per Total Cost $
Product Idea $
1.Idea 64 1:4 1000 64,000
screening
2.Concept 16 1:2 20000 320,000
testing
3. Product 8 1:2 200,000 1,600,000
Dev
4. Test Mktg 4 1:2 500,000 2,000,000
5.National 2 1:2 5,000,000 10,000,000
Launch Tot 5,721,000 Tot 13,984,000

16. IDEA GENERATION
• Attribute Listing
• Forced Relationships
• Reverse Analysis
• New Contexts
• Mind mapping

17. Idea Screening
• DROP ERROR – Fault Finding
Chester Carlson copying machine IBM and
Eastman Kodak rejected it.
IBM thought PC market was small.
• Go ERROR – Poor Idea Launched
Iridium Project

18. Concept Development and Testing
• Listening Music while walking.
• Powder to add to milk to increase nutritional
value.
Who will use this product.
What is the primary benefit
When will they consume the product.

19. Concept Development and Testing
Expensive Inexpensive
Slow Quick
Product Positioning MAP
High Price/Gram Low Price/ Gram
Low in Calories High in calories
Brand Positioning Map

20. Concept Testing
• Rapid Prototyping
• Virtual Reality
• What is looked at
1. Need Level
2. Gap Level
3. Perceived Value
4. Purchase intention
5. User Targets

21. Marketing Strategy
• First Part – Market Size, Structure and
behaviour, sales, market share, and profit
goals sought in few years.
• Second part – Planned Price, distribution
strategy and marketing budget.
• Third Strategy- Long Run sales and profit goals

22. Business Analysis
0y 1 2y 3y 4y 5y
y
Sales Revenue
Cost of Goods Sold
Gross margin
Development Cost -3500
Marketing Cost
Allocated Overhead
Gross Contribution -3500
Supplementary
Cont.
Discounted Cont --3500
Cumulative -3500
Discounted cashflow

23. Product Development
• Quality Function deployment – Customer
attributes + Engineering Attributes

24. Market Testing
• Sales Wave Research
• Simulated test market
• Controlled Test marketing
• Test Markets

25. Commercialization
• When – First Entry , Parallel Entry, Late Entry
• Where –Market Potential, Company Local
reputation, Cost of the filling of the pipeline,
Competitve penetration.
• Whom – Early adpoters, Innovators

26. Diffusion Theory

27. Diffusion of Innovation