NEW PRODUCT DEVLOPEMENT

&
TECHNOLOGY MANAGMENT

Presented by - Amol D. Amrale Roll no - 12115B0034

Objectives
Understand how companies find and develop newproduct ideas. Learn the steps in the new-product development

process.
Know the stages of the product life cycle.

Understand how marketing strategies change during

the products life cycle.

Definition
New Product Development Development of original products, product improvements, product modifications, and new brands through the firms own R & D efforts.

New-Product Development Strategies

Strategies for Obtaining New Product Ideas
Acquired Companies Original Products

Acquired Patents

Product Improvements

Acquired Licenses

Product Modifications

New Brands

New Product Development Process

Marketing Strategy Concept Development and Testing Idea Screening Idea Generation Business Analysis Product Development

Test Marketing Commercialization

New Product Development Strategy

New Product Development Process: Stage 1: Idea Generation Internal idea sources:

R & D
External idea sources: Customers, competitors, distributors, suppliers

NPD WITH TECHNOLOGY MANGMENT

3Ms corporate culture encourages, supports, and rewards new product ideas and innovation

New Product Development Process Step 2. Idea Screening

Many companies have systems for rating and screening ideas which estimate: Process to spot good ideas and drop poor ones as soon as possible. Market Size Product Price Development Time & Costs Manufacturing Costs Rate of Return Then, the idea is evaluated against a set of general company criteria.

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

New Product Development Process Test Marketing

Test Marketing is the Stage Where the Product and Marketing Program are Introduced into More Realistic Market Settings.
Budget Levels Product Elements that May be Test Marketed by a Company Positioning

Packaging
Branding

Advertising Distribution

Pricing

TECHNOLOGY MANAGMENT

Sensable Video Clip

Computer modeling is being used to aid in product design

10- 11

New Product Development Process Step 7. Test Marketing

Controlled Test Market
A few stores that have agreed to carry new products for a fee.

Standard Test Market

Full marketing campaign in a small number of representative cities.

Simulated Test Market

Test in a simulated shopping environment to a sample of consumers.

New Product Development Process Step 8. Commercialization

Commercialization is the Introduction of the New Product into the Marketplace.

When?

Where?

To Whom?

How?

Causes of New Product Failures

Overestimation of Market Size Product Design Problems Insignificant difference Product Incorrectly Positioned, Priced or Advertised Costs of Product Development Competitive Actions No access to the market Bad timing To create successful new products, the company must: understand its customers, markets and competitors develop products that deliver superior value to customers.

Product Life-Cycle Strategies

The product life cycle concept can be applied to a: Product class (soft drinks) Product form (diet colas) Brand (Diet Dr. Pepper) Using the PLC to forecast brand performance or to develop marketing strategies is problematic

Product Life-Cycle Strategies PLC Stages

Product development Introduction Growth Maturity Decline Begins when the company develops a new-product idea Sales are zero Investment costs are high Profits are negative

Product Life-Cycle Strategies PLC Stages

Product development Introduction Growth Maturity Decline

Low sales High cost per customer acquired Negative profits Innovators are targeted Little competition

Product Life-Cycle Strategies PLC Stages

Product development Introduction Growth Maturity Decline
Rapidly rising sales Average cost per customer Rising profits Early adopters are targeted Growing competition

Product Life-Cycle Strategies PLC Stages

Product development Introduction Growth Maturity Decline
Sales peak Low cost per customer High profits Middle majority are targeted Competition begins to decline

Product Life-Cycle Strategies PLC Stages

Product development Introduction Growth Maturity Decline
Declining sales Low cost per customer Declining profits Laggards are targeted Declining competition

Marginal Costing Definition:

Marginal Costing is a costing method that includes only variable manufacturing costsdirect materials, direct labor, and variable manufacturing overhead

in unit product cost. Marginal costing is also called

variable costing and direct costing. Marginal cost of the product = Direct materials cost + Direct labor cost + Variable manufacturing overhead cost

Standard costing
Standard costing is an important subtopic of cost accounting. Standard costs are usually associated with a manufacturing company's costs of direct material, direct labor, and manufacturing overhead. Rather than assigning the actual costs of direct material, direct labor, and manufacturing overhead to a product, many manufacturers assign the expected or standard cost. This means that a manufacturer's inventories and cost of goods sold will begin with amounts reflecting the standard costs, not the actual costs, of a product. Manufacturers, of course, still have to pay the actual costs. As a result there are almost always differences between the actual costs and the standard costs, and those differences are known as variances.

Conti
Standard costing and the related variances is a valuable management tool. If a variance arises, management becomes aware that manufacturing costs have differed from the standard (planned, expected) costs. If actual costs are greater than standard costs the variance is unfavorable. An unfavorable variance tells management that if everything else stays constant the company's actual profit will be less than planned. If actual costs are less than standard costs the variance is favorable. A favorable variance tells management that if everything else stays constant the actual profit will likely exceed the planned profit.