The document discusses new product development (NPD) processes and challenges. It describes the typical 5 phase NPD process: 1) opportunity identification, 2) concept generation, 3) concept evaluation, 4) development, and 5) launch. It also discusses concurrent engineering across functions, ensuring products contribute to business goals, and managing multiple projects. Common reasons for new product failure include small markets, poor fit with company strengths, lack of benefits, and inadequate support. Not all new products come from planned processes, as some result from accidental discoveries later recognized as opportunities.

1. New Product Development.NPD

2. Overview

3. The Basic New Product ProcessThe Basic New Product ProcessPhase 1: Opportunity Identification/SelectionPhase 1: Opportunity Identification/SelectionPhase 2: Concept GenerationPhase 2: Concept GenerationPhase 3: Concept/Project EvaluationPhase 3: Concept/Project EvaluationPhase 4: DevelopmentPhase 4: Development Phase 5:LaunchPhase 5: Launch

5. NPI Process Stages…The simultaneous engineering and concurrence of activities in the development of a new product:In the development of a product, several activities happen simultaneously in numerous functions, departments and locations across the organization.These activities usually have some kind of a relationship or dependency with another activity happening elsewhere. This means that the outcome of activity in one function could have a bearing on one or more activities happening concurrently at another location or function or on an activity at a different point of time.The simultaneous engineering and concurrence of activities in the development of a new product:

7. Making sure every new product contributes towards the overall business goals of the company:Making sure every new product contributes towards the overall business goals of the company:

8. Handling multiple projects at any given point in time:

9. The Stage Or (Phase-Gate Process):

10. Stage-Gate SystemStage-Gate SystemDetailedInvestigation(BusinessCase)PreparationFullProduction& MarketLaunchPreliminaryAssessmentTesting &ValidationDevelopmentGateGateGateGateGateStageStageStageStageStageInitialScreenSecondScreenDecisiononBusinessCasePost-Develop-mentReviewPre-Comm-cializationBusinessAnalysis

11. Product Life CyclesDeclineMaturity

12. Product Life CyclesProduct Life CyclesPRODUCT DEVELOPMENT:Product Development: StagesNew ideas/possible inventionsMarket analysis – is it wanted? Can it be produced at a profit? Who is it likely to be aimed at?Product Development and refinementTest Marketing – possibly local/regionalAnalysis of test marketing results and amendment of product/production processPreparations for launch – publicity, marketing campaign

13. Product Life CyclesProduct Life CyclesINTRODUCTION/LAUNCH:Introduction/Launch:Advertising and promotion campaignsTarget campaign at specific audience?Monitor initial salesMaximise publicityHigh cost/low salesLength of time – type of product

14. Product Life CyclesProduct Life CyclesGrowth:Increased consumer awarenessSales riseRevenues increaseCosts - fixed costs/variable costs, profits may be madeMonitor market – competitors reaction?GROWTH:

15. Product Life CyclesProduct Life CyclesMATURITY:Maturity:Sales reach peakCost of supporting the product declinesRatio of revenue to cost highSales growth likely to be lowMarket share may be highCompetition likely to be greaterPrice elasticity of demand?Monitor market – changes/amendments/new strategies?

16. Product Life CyclesProduct Life CyclesSaturation:New entrants likely to mean market is ‘flooded’Necessity to develop new strategies becomes more pressing:Searching out new markets:Linking to changing fashionsSeeking new or exploiting market segmentsLinking to joint ventures – media/music, etc.Developing new usesFocus on adapting the productRe-packaging or formatImproving the standard or qualityDeveloping the product rangeSATURATION:

17. Product Life CyclesProduct Life CyclesDECLINE AND WITHDRAWL:Decline and Withdrawal:Product outlives/outgrows its usefulness/valueFashions changeTechnology changesSales declineCost of supporting starts to rise too farDecision to withdraw may be dependent on availability of new products and whether fashions/trends will come around again?

18. Product Life Cycles:Product Life CyclesDevelopmentGrowthMaturityDeclineIntroductionSaturationSalesTime

19. What Is a New Product?What Is a New Product?New-to-the-World ProductsPolaroid camera, in-line skates, Kevlar, word-processing softwareNew Category EntriesHewlett-Packard PCs, Hallmark gift items, Discover CardAdditions to Product Linesline extensionsProduct Improvementsfrozen yogurt, Miller Lite, Windows 98, plain-paper faxRe-positioningsArm & Hammer baking soda

20. Types of NPD Projects:Types of NPD Projects:20%New productlines (e.g. AT&T Universal Card)10%HighNew-to-the-world(e.g. laser printer)26%26%Additions to existingproduct line (e.g. Bud light)Newness to the companyRevisions/improvement toexisting products (e.g. MS Excel ‘00)11%7%Cost reductions (e.g. Low-end PC)Repositionings (e.g. A&H Deodorizer) LowNewness to the marketLowHighSource: New Products Management for the 1980’s (New York: Booz, Allen &Hamilton, 1982

21. What Is a Successful New Product?Although you may hear much higher percentages, careful studies supported by research evidence suggest that about40% of new products fail -- somewhat higher for consumerproducts, somewhat lower for business-to-business products.

22. Classic Brand Names>>BudweiserIvoryCoca-ColaMaxwell HouseKodakGeneral ElectricSteinwayWrigleyKleenexWaterfordL.L. BeanFordJohn DeereMaytagJCPenneySearsColgateHersheyGilletteTiconderoga

23. QualityValueTimeCostThe Conflicting Masters of New Products Management:Three inputs to the new products process: the right quality product, at the right time, and at the right cost.These conflict with each other but may have synergies too.Issue: how to optimize these relationships in a new product situation.

24. Challenges in New Product Development:Failure occurs frequently- Studies have shown that 40%-45% of NPD projects introduced to the market fail Inefficiencies are pervasive*- Only 59% of products intro’ed were successful- Only 6.6 new product ideas lead to 1 success - More innovative projects took 23.8 mos. Very expensive - Tens of $millions to several $billions* 1995 PDMA Best Practices Survey

25. Market Uncertainty:Market Uncertainty:Consumer fear, uncertainty, and doubt (FUD)

26. Customer needs change rapidly and unpredictably Customer anxiety over the lack of standards and dominant design Uncertainty over the pace of adoption

27. Uncertainty over/inability to forecast market sizeTechnology Uncertainty:Technology Uncertainty: Uncertainty over whether the new innovation will function as promised Uncertainty over timetable for NPD

28. Ambiguity over whether the supplier will be able to fix customer problems with the technology Concerns over unanticipated/unintended consequences Concerns over obsolescenceCompetitive Uncertainty:Competitive UncertaintyUncertainty over who will be future competitors

29. Uncertainty over competitor’s strategies

30. Uncertainty over product form competition (competition between product classes vs. between different brands of the same product)

31. NPD MythsFirst to market wins!Company reputation, a strong brand name and a good selling effort will make almost any new product a success.Having a low price is critical to winning.