Presented by:- Neeraj Sharda & Priya Sharma

INTRODUCTION:Companies need to grow their revenue over time by developing new products and services and expanding into new markets.

New product development shapes the future of the company. But the low success rate of new products and services points to the many challenges involved.

Types of New Product

New to the World Products that create new market at one end

New Product Lines

Additions to Existing Product Lines

Improvements in or Revisions of Existing Products

for example At Sony,80 % of new products are modified and improved products.

Organizing for New Product Development

Most companies ,Today use Customer driven engineering to design new products.

This strategy gives most preferences in final design.

importance

to

customer

New product development requires support from top management and budget allocation.

Large

companies

often

establish

new

product

department headed by a manager who has authority and access to top management

Idea Generation
All products begin with an idea whether from:

Customers,
Competitors

Suppliers
Employees

Top management

For example:Toyota claims its employees submit 2 million ideas annually(about 35 suggestions per employee), over 85% of which are implemented. Microsoft studied 13 to 24 year olds- the Net Gen-and Developed its three degrees software product to satisfy their instant messaging needs. Former CEO of Intel ANDY GROVE, takes personal responsibilities for technological innovation in their company

Other techniques are Brain Storming, Reverse assumption analysis, In which we list all the assumptions and then reverse the assumptions. Also through lateral marketing that combines two products or ideas to create a new offering. For example-: Gas-Station Stores = Gas Station + Food. Sony Walkman = Audio + Portable

Idea Screening
The aim of screening is to reject the poor ideas as early

as possible because the costs of new product

development keep rising sharply with each successive development phase.

Ideas should be treated against the customer needs and preferences

A drop-error occurs ,when company dismisses a good

idea.

A GO- error occurs when company allows a poor idea to

move into development and commercialization.

Concept Testing
Concept testing of a new product idea refers to a more

detailed version of the idea.

It involves describing the product concept through oral or written description and the benefits to a small number of potential customers, and make an assessment of their

responses regarding the product.

With conjoint analysis, the respondents see various offers made by combining varying level of attributes, then rank the various offers.

Then Management can identify the most appealing offer and its estimated market share and profit.

For Example:RPG enterprises - for designing their supermarket chainlaunched under the name of Food World -later changed to SPENCERS- conducted market research on the basis

of conjoint analysis to understand the importance of

relative attributes such as location of shop, extra

facilities like home delivery, credit facility, price ,quality

and so on.

Business Analysis
It is an assessment to determine the new products potential contribution to the companys sales, costs, and profits and for this reason a financial analysis is necessary. The simplest method of business analysis is BREAKEVEN analysis, which estimates how many units the company must sell or how many years it will take to break even with the given price and cost structure.

Product Development
This stage refers to when the new product concept moves to test stage.

The company determines the technical feasibility to produce it at costs low enough to sell it at reasonable price.

For Example:Boeing designed its 777 aircraft on a totally digital basis.

Engineers ,Designers and more than 500 suppliers

designed the aircraft on a special computer network connected by an extranet enabling them to

communicate, share ideas and work on the design at a

distance. Such computer designing allowed designers to remove spot design errors which would have remain undiscovered in a physical prototype.

Test Marketing

Test marketing is essentially a limited introduction in some carefully selected geographic area that is viewed as representing the intended market.

Test marketing is a sample launching of the entire marketing mix.

Companies use various testing methods. Some of the more popular ones are:

Sales-Wave ResearchConsumers who initially tried the product at no cost are reoffered it, or a competitors product, at slightly reduced prices and companies notes that how many customers selected the product again and their level of satisfaction.

Controlled Test Marketing:A research firm manages a panel of stores ,that will

carry products for a fee.

The company with the new product specifies the number of stores and geographic area it wants to test. It allows the company to test the impact of in store factors and limited advertising on buying behavior.

Simulated Test Marketing:-

It is about finding 30 to 40 qualified shoppers and questioning them about the brand preferences in a specific segment.
This method gives accurate results on advertisement effectiveness.

Test Market:The company chooses a few representative cities and puts on a full advertising and marketing campaign similar to one it will use for national marketing.

Commercialisation
The decision to commercialize involves the largest costs to a company.

Market entry time is critical in commercializing.

i.e. Whether its First Entry, Parallel Entry or Late Entry.

Geographic Strategy i.e. where to launch the new

product.

Target Market Prospects i.e. Company must target its initial distribution and promotion to best prospect group.

Introductory Market Strategy i.e. the company must

develop an action plan for introducing the new product

into market.

New Product Adoption Process

New product introductions and their adoption,

particularly in case of new-to-the-world products often

takes a very long time.

Customers are sometimes suspicious, even sceptible

about adopting new products.

It is followed by the consumer Loyalty Process.

Adoption Decision

The adoption of an innovation requires that an individual or a group of consumers decide buying a new product.

Stages in adoption Process:It is the set of mental steps through which an individual passes from first hearing about an innovation to final adoption
Awareness

Knowledge

Evaluation

Trial

Adoption

Rate of Diffusion

Everett Rogers defines the Innovation Diffusion

Process as the spread of a new idea from its source of

invention or creation to its ultimate users or adopters

Time of Adoption
There are five categories of adopters classified by time of adoption: 1. Innovators. 2. Early Adopters. 3. The Early Majority. 4. The Late Majority. 5. Laggards.

Product Lifecycle Phases of Adopter Groups:PLC stages Introduction Growth Maturity Decline

Adopter groups

Innovators

Early adopters

Early majority

Late majority

Laggards

Percentages

(2.5%)

(13.5%)

(34.0%)

(34.0%)

(16.0%)

Innovators
Innovators constitute, on an average the first 2.5 per cent of all those consumers who adopt the new product and are technology enthusiasts.

Early Adopters
Early adopters tend to be opinion leaders in local reference groups who search for new technologies that might give them a dramatic competitive advantage And represent, on an average the next 13. 5 per cent who adopt the new product.

The Early Majority The early majority tend to be deliberated and cautious with respect to innovations and represents 34.0 per cent.

These accept the new technology when its benefits are proven and a lot of adoption has already takes place.

They make up the main stream market.

The Late Majority

The late majority (34.0 per cent) are somewhat Scepticel

about innovative products.

They are conservative, wary of progress, rely on tradition and generally adopt innovations in response to group norms and social pressure, or due to decreased availability of the previous product rather than positive evaluation of the innovation.

Laggards

Laggards represent the last 16.0 per cent of adopters.

Like innovators, they are the least inclined to rely on the

groups norms.
Laggards are tradition bound, tend to be dogmatic and

make decisions in terms of the past.