23512347 New Product Development Report

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MARKETINGPROJECT New Product Development & Pricing

1 Students of BS A/F (HONS) Session (2007-2011)

Department of Commerce, Bahauddin Zakariya University Multan

CHANGE IS THE ONLY CONSTANT IN TODAY'S MARKETPLACE

New Product Development & Pricing

Launch of NEW PRODUCT

Members:

Faseeh Ur Rehman - - - BAF-07-60

Nousherwan Akbar - - - BAF-07-14

Umer Farooq - - - BAF-07-39

Muhammad Waqas - - - BAF-07-34

Javeria Zia - - - BAF-07-17

Ayesha Siddiqui - - - BAF-07-18

Instructor:

Mr. Khurram Javed Paracha


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Executive Summary

Report is the practical part of the theoretical subject marketing of our BS

Accounting & Finance (Hons) Program. The sole objective is to familiarize the

students with the practical manipulation of business organization. This report

has been written to know about the causes that lead to the launching new

Product.

In the first phase of the report there is the general introduction about the New

Product Development.

In the next part; we took into account the objectives that are behind this. We

illustrate the objective one by one according to their priority. To understand

and specify the objectives is necessary to understand the variable, which affect

this issue. We define only the key variable. After this we collect the data from

different sources and analyze it, interpret it, and show the diagrammatical

representation for easy understanding. More over this we make someconclusion and offer our suggestions for improvements with some limitations

that we face. In the next phase the feasibility report of A.G Detergent with the

SWOT analysis, target market, market segmentation and the detail of 7ps of

marketing mix etc.

Authors


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Acknowledgment

We are very thankful to AlmightyAllah who has all the powers in the world

and who also give us power to perform the assigned task, which otherwise wecan't perform.

We are great full to Hazrat Muhammad (S.A.W.W) who remains an examplein every aspect of life

We are also very thankful to our parents. We are very thankful to our honorable

instructorMr. Khurram Javed Paracha for providing us with such an

opportunity to explore the practical aspects of the Marketing that refined our

theoretical concepts and would help us in the practical field.

We are also thankful to all of our respondents especially Mr. Allah Ditta who

co-operated with us in conducting the research and sorting out the cause of the

problem. We are especially thankful to our class fellows who help us fromevery aspect.


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Table of Contents

Introduction

Major Stages in New-Product Development

Idea generation ... Idea screening ..... Concept Development and Testing

Product Idea .... Product Concept ..... Product Image..

Marketing strategy development Business analysis. Test marketing. Commercialization...Key success factors in New Product Development

Operating Philosophy.. Organization Structure. The Experience Effect.. Management Style ...The Product Life Cycle

Product development . Introduction ... Growth ... Maturity.. Decline ...


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New-Product Failures

1. Faulty Product Idea ...2.

Distribution Related problems ..3. Poor Timing of Launch ....

4. Improper Positioning 5. Others ...

PRICINGPricing Objective

Profit oriented goal ..

Sale oriented goal .

Maintain & increase market share ...

Status Quo goals

Pricing Decision

Cost-orientated ..

Demand-orientated

Competitor-orientated

Influences on Pricing Decisions

Company Objective ..

New Competitors ..

Suppliers / Distributers .

Cost

Existing Competitor ..

Customer

Management Culture ..

Company Market Stance


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Pricing Strategies

Market Skimming

Penetration Pricing ..Value Pricing ...

Going Rate (Price Leadership) .....

Captive Product Pricing ...

Product-bundle pricing

Promotional pricing.

Geographical Pricing

Contribution Pricing .

Pricing Variations...

Premium Pricing

Ten ways to increase prices without increasing price

Case Study Self Made


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Introduction

What is a new product?

A product that opens an entirely new market. A product that adopts or replaces an existing product. A product that significantly broadens the market for an existing product . An old product introduced in a new market. An old product packaged in a different way. An old product marketed in a different way.

Types of new product

Innovative products New product linesto allow the firm to enter an existing market Addition to product lineto supplement the firms existing product line Improvements and revisions of existing product Repositioned productsexisting products targets at new market Cost reduction new product that provide similar performance at lower cost

Examples of new products

New to the worldhigh definition TV, iPod, flat screen TV, Probiotic Ice Cream Product improvement & replacement :SPEED by BPCL Cost reduction new product: Moser Baer.


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New product can be used to

Increase/defend market share by offering more choice or updating older products Appeal to new segments Diversify into new markets Improve relationship with distributors Maintain the firms reputation a leading edge company Even out peaks and troughs in demand Make better use of the organization's resources

Why develop New Product?

To create stars and cash cows for the future To replace declining product To take advantage of new technology To defeat rivals To maintain/increase market share To keep up with rivals To maintain competitive advantage To fill gap in the market

New product development

In business and engineering, new product development (NPD) is the

term used to describe the complete process of bringing a new product or

service to market.
http://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Engineeringhttp://en.wikipedia.org/wiki/Product_(business)http://en.wikipedia.org/wiki/Product_(business)http://en.wikipedia.org/wiki/Engineeringhttp://en.wikipedia.org/wiki/Business


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There are two parallel paths involved in the NPD process:

The idea generation, product design, and detail engineering;

Involves market research and marketing analysis.

Companies typically see new product development as the first stage in

generating and commercializing new products within the overall strategic

process ofproduct life cycle management used to maintain or grow their

market share.

OR

Development of original products

Product improvements

Product modifications

New brands through the firms own R & D efforts

OR

New product development is a process which is designed to develop,

test and consider the viability of products which are new to the market in

order to ensure the Growth or survival of the organization.
http://en.wikipedia.org/wiki/Product_designhttp://en.wikipedia.org/wiki/Marketinghttp://en.wikipedia.org/wiki/Product_life_cycle_managementhttp://en.wikipedia.org/wiki/Product_life_cycle_managementhttp://en.wikipedia.org/wiki/Marketinghttp://en.wikipedia.org/wiki/Product_design


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1

Students of BS A/F (HONS) Session (2007-2011)


MajorStages inNPD

There are 7 Stages of New Product Development

IDEA GENERATIONThe "fuzzy front end" of the New Product Development process

Idea Generation is the Systematic Search for New Product Ideas Obtained

Internally From Employees and Also From:

Ideas for new products can be obtained from basic research using a

SWOT analysis (OPPORTUNITY ANALYSIS), Market and consumer

trends, company's R&D department, competitors, focus groups, employees,

salespeople, corporate spies.

IDEA SCREENINGProcess to spot good ideas and drop poor ones

Many companies have systems for rating and screening ideas which estimate:

Market Size

Product Price

Development Time & CostsManufacturing Costs

Rate of Return
http://en.wikipedia.org/wiki/SWOThttp://en.wikipedia.org/wiki/SWOThttp://en.wikipedia.org/wiki/SWOT


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OR

The screeners must ask these questions:

Will the customer in the target market benefit from the product?

What is the size and growth forecasts of the market segment/target market?

What is the current or expected competitive pressure for the product idea?

What are the industry sales and market trends the product idea is based on?

Is it technically feasible to manufacture the product?

Will the product be profitable when manufactured and delivered to the

customer at the target price?

Then, the idea is evaluated against a set of general company criteria .

Concept Development and TestingDevelop the marketing and engineering details

Product I dea: idea for a possible product that the company can see itself

offering.

Product Concept:detailed version of the idea stated in meaningful

consumer terms.

Product Image:the way consumers perceive an actual or potential product.

Purposes of Concept Testing

To identify very poor concepts so that they can be eliminated.

To estimate (at least crudely) the sales or trial rate the product would enjoy

(buying intentions, early projection of market share).

To help develop the idea (e.g. make tradeoffs among attributes).


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MARKETING PROJECT New Product Development & Pricing


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Procedure for a Concept Test

Prepare concept statementClarify specific purposes

Decide format(s)

Select commercialization

Determine price(s)

Select respondent type(s)

Select response situation

Define the interview

Conduct trial interviews

Interview, tabulate, analyze

Marketing Strategy DevelopmentEssentially a pattern or plan that integrates your organization's major goals

Includes development of three part strategy plan

Describes Overall

Describe the markets size, structure, and behavior, the planned

product positioning, and the sales, market share, and profit goals for first fewyears.

Describes Short-Term

Outlines the planned price, distribution strategy, and marketing budgetfor the first year

Describes Long-Term

Describes the long-run sales and profit goals and marketing-mix

strategy over time


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MARKETING PROJECT New Product Development & Pricing


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Business AnalysisEstimate likely selling price based upon competition and customer feedback

Business analysis is the discipline of identifying business needs anddetermining solutions to business problems.

Solutions often include a systems development component, but may

also consist of process improvement or organizational change or strategic

planning and policy development.

The person who carries out this task is called a business analyst or BA

There are a number of techniques that a Business Analyst will use

when facilitating business change & in NPD there are two important

techniques used names MOST & SWOT

MOST

This is used to perform an internal environmental analysis by defining

the attributes of MOST to ensure that the project you are working on is

aligned to each of the 4 attributes.

The four attributes ofMOST

Mission (where the business intends to go)

Objectives (the key goals which will help achieve the mission)

Strategies (options for moving forward)

Tactics (how strategies are put into action)

SWOT

This is used to help focus activities into areas of strength and where

the greatest opportunities lie. This is used to identify the dangers that take

the form of weaknesses and both internal and external threats.

The four attributes ofSWOT

Strengths - What are the advantages? What is currently done well?

Weaknesses - What could be improved? What is done badly?

Opportunities - What good opportunities face the organization?

Threats - What obstacles does the organization face?
http://en.wikipedia.org/wiki/List_of_academic_disciplineshttp://en.wikipedia.org/wiki/Business_analysthttp://en.wikipedia.org/wiki/SWOThttp://en.wikipedia.org/wiki/SWOThttp://en.wikipedia.org/wiki/SWOThttp://en.wikipedia.org/wiki/SWOThttp://en.wikipedia.org/wiki/Business_analysthttp://en.wikipedia.org/wiki/List_of_academic_disciplines


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There come two Conditions after reviewing this analysis

IfNo, Eliminate Product Concept

IfYes, Move to Product Development

Test Marketing

Involves placing a product for sale in one or more selected areas

Test Marketing is the Stage Where the Product and Marketing

Program are Introduced into More Realistic Market Settings

In this we also

Produce a physical prototype or mock-up

Test the product (and its packaging) in typical usage situations

Conduct focus group customer interviews or introduce at trade show

Make adjustments where necessary

Produce an initial run of the product and sell it in a test market area to

determine customer acceptance
http://en.wikipedia.org/wiki/Packaginghttp://en.wikipedia.org/wiki/Packaging


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CommercializationConsidered post-New Product Development

Commercialization is the Introduction of the New Product into the Marketplace

Must decide on timing (i.e., when to introduce the product).

Must decide on where to introduce the product (e.g., single location, state,

region, nationally, internationally).

Must develop a market rollout plan.

Each successive set of consumers behaves differently

New Product Adoption Process is also known as the Diffusion Process.

The Consumer-Adoption Process/ Innovation diffusion process

Adopters of new products move through five stages

Awareness Interest EvaluationTrialAdoptionCommercialization involves implementing a total marketing plan and full

production

Launch the product

Produce and place advertisements and otherpromotions

Fill the distributionpipeline with product

Critical path analysis is most useful at this stage
http://en.wikipedia.org/wiki/Advertisinghttp://en.wikipedia.org/wiki/Promotionhttp://en.wikipedia.org/wiki/Distribution_%28business%29http://en.wikipedia.org/wiki/Critical_path_analysishttp://en.wikipedia.org/wiki/Critical_path_analysishttp://en.wikipedia.org/wiki/Distribution_%28business%29http://en.wikipedia.org/wiki/Promotionhttp://en.wikipedia.org/wiki/Advertising


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Key Success Factors inNPD

Operating Philosophy Organization Structure The Experience Effect Management StyleOperating Philosophy

Successful companies are more committed to growth through new

products developed internally.They are more likely to have had a formal new product process in

place for a longer period of time than unsuccessful companies. They are

more likely to have a strategic plan that includes a certain portion of

company growth from new products.

Organization Structure

Successful companies are more likely to house the new product

organization in R&D or engineering and are more likely to allow themarketing and R&D functions to have greater influence on the new product

process

The experience Effect

Experience in introducing new products enables companies to

improve new product performance.

New product development costs conform to the experience curve: The

more you do something, the more efficient you become at doing it. This

experience advantage stems from the acquisition of knowledge of the marketand of the steps required to develop a new product.


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Management Style

Successful companies appear not only to select a management style

appropriate to immediate new product development needs but also to reviseand tailor that approach to changing new product opportunities

The Product Life Cycle

There are five main Strategies of PLC

Product developmentDiscussed in Detailed Previously

Introduction

Growth

Maturity

Decline

Not all products follow this cycle

Fads

Styles

Fashions


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Introduction

Growth Stage of PLC


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Maturity Stage of PLC

Declining Stage of PLC


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23512347 New Product Development Report

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