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New Product Decision
ProcessChapter IV
New Product Decision Process Types of
new products Test Marketing of anew product, Packaging Purpose, Types
and New Trends in packaging
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New Product Decision
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Change is the only constant thingin this world
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New Product - Definition
A new product is any product which is
perceived by the customer as being new.
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Factors contributing to New
Product Development
Changing customer preferences
Technological changes
Government Policy
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New product options
Make (organic growth)
Buy (Inorganic growth)
Buy other companies Buy a license / brand or franchise of other
company
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New-Product Development
Strategies
New-Product Development
Strategies
OriginalProducts
Original
Products
Product
Improvements
Product
Improvements
Product
Modifications
Product
Modifications
New
Brands
New
Brands
AcquiredCompaniesAcquiredCompanies
Acquired
Patents
Acquired
Patents
Acquired
Licenses
Acquired
Licenses
Strategies for Obtaining New Products
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Examples
Speed Petrol
Probiotic Ice cream from AMUL
Moser baer CD/DVD Hippo baked snacks
Aliva Low calorie snacks
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Type of New Products
New to organization (30%)
New to the world
New product lines
Changes within existing products (70%)
Addition to existing product line
Revision or improvements
Repositioning
Cost reductions
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Causes of new product
failures
Causes of new product
failures Overestimation of Market Size Product Design Problems
Product Incorrectly Positioned, Priced or Advertised
Costs of Product Development
Competitive Actions
To create successful new products, the companymust:
understand its customers, markets and
competitors develop products that deliver superior value to
customers.
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Reasons of new product failures
Market / Marketing failure No clear product
differentiation (retail)
Small size of potentialmarket
Poor positioning
Misunderstanding ofcustomer needs
Financial failure
Low return on investments Timing failure
Too early (Kellogg's)
Too late
Technical failure Product did not work
Bad design
Organizational failure
Lack of organizationalsupport
Poor fit with organizationculture
Environmental failure
Regulations (Pharmaproducts)
Macro economic factors
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The Worlds
Most Innovative Companies
Apple
Toyota
General Electric
Microsoft
Procter & Gamble
3M
Walt Disney
IBM
Sony
Wal-Mart
Honda
Starbucks
Target
BMW
Samsung
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Seven Notions of Innovation
See the future through the eyes of yourcustomer
Intellectual property and brand power are keyassets
Use digital technology to create tools forcustomers
Build a championship team
Innovation is a state of mind Speed is critical, so push your organization
Partner up if youre not the best
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Factors That Limit
New Product Development
Shortage of ideas
Fragmented markets
Social and governmental constraints Cost of development
Capital shortages
Faster required development time Shorter product life cycles
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What is a Venture Team?
A venture team is a cross-functional
group charged with developing a specific
product or business; intrapreneurs are
relieved of other duties and provided abudget and time frame.
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Criteria for Staffing Venture Teams
Desired team leadership style
Desired level of leader expertise
Team member skills and expertise Level of interest in concept
Potential for personal reward
Diversity of team members
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NPD Process
Idea Generation & Screening
Concept Development & Testing
Marketing strategy Feasibility analysis or business analysis
Product Development
Test Marketing Commercialization
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New Product Development
Process
New Product Development
Process
IdeaGeneration
IdeaScreening
ConceptDevelopment
and Testing
MarketingStrategy
BusinessAnalysis
ProductDevelopment
TestMarketing
Commercialization
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NPD Process
Step One - Idea generation & screening
Top management should clear about mission,
objectives & role of the new product.
In India NPD process is casual and Ad hoc.
Formal and continuous NPD is essential forevery organization to succeed in the ever
changing environment.
(Automobile, Pharmaceutical, IT, IT hardware,engineering Companies are evolving in this
regards)
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Sources of new ideas Changing customer needs and trends in consumer marketing (Customer
surveys, feedback through suggestions & complaints, problems) example WIMCO match box carbonized match sticks, Kenstar Automatic Machine Toploading, fully automatic, ultra compact, tumbling mechanism, Kenstar Le PureWater Purifier
Competitors following the leader(After Nano all auto makers realized the
need to develop low cost cars, Inspired from Kent RO, Aqua Guard come outwith RO offering) R & D Scientists (IIT, UDCT, CSIR) Laboratories Foreign Markets & media Employees especially sales representatives (Ford, Godrej, Thermax) Trade Channels
Internet Top Management (Product like Click Smokeless Tobacco, Calvin Care)
Not all sources are productive
(Customer needs, problems, expectations, feedback, R & D, competitors,sales executives are most vital)
NPD Process
Step One - Idea generation & Screening
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NPD Process
Step One - Idea generation & Screening
Techniques for generating new ideas
Group creativity techniques
Brain storming
Synectics
Need / Problem identification
Attribute listing
(Creativity is the key in generating ideas)
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Ways to Find Great New Ideas
Run informal sessions with customers
Allow time off for technical people to putter
on pet projects
Make customer brainstorming a part of
plant tours
Survey your customers Undertake fly on the wall research to
customers
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More Ways to Find Great Ideas
Use iterative rounds with customers
Set up a keyword search to scan trade
publications
Treat trade shows as intelligence missions
Have employees visit supplier labs
Set up an idea vault
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Drawing Ideas from Customers
Observe customers using product
Ask customers about problems with
products
Ask customers about their dream products
Use a customer advisory board or a brand
community of enthusiasts to discussproduct
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Idea Generation: Creativity
Techniques Attribute listing (list out the attributes and modify each
attribute) Forced relationships (list out various ideas & make
forced relationship with each other)
Morphological analysis (problem solution- breaksolution into processes various options for eachprocesses)
Reverse assumption analysis (reverse the oldassumptions and create offering in newer set ofassumptions)
New contexts (take familiar processes and change theircontexts)
Mind mapping (put series of thoughts on paper and mapthem )
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Idea Generation: Creativity
Techniques
Lateral Thinking
Gas station stores
Cyber cafes
Sony walkman
Nutribars
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NPD Process
Step One - Idea generation & Screening
Most important thing is You should not
dismiss good idea Drop error
(wedding shows)
Company permits a poor idea for further
development Go error
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NPD Process
Step One - Idea generation & Screening
Process to spot good ideas and drop poor ones as soon aspossible.
Many companies have systems for rating and screeningideas which estimate:
Market Size Product Price
Development Time & Costs
Manufacturing Costs
Rate of Return Then, the idea is evaluated against a set of general
company criteria.
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NPD Process
Step III - Concept Development & Testing
Product idea Possible product company
would offer to the market
Product concept elaborated version of
product idea which is spelled out in terms
of consumer.
Brand concept
N P d t D l t P
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CUST
OMERS
CUST
OMERS
COMPE
TITORS
COMPE
TITORS
DISTRI
BUTOR
S
DISTRI
BUTOR
S
SUPP
LIERS
SUPP
LIERS
New Product Development ProcessStep 1. Idea Generation
New Product Development ProcessStep 1. Idea Generation
Idea Generation is the SystematicSearch for New Product Ideas ObtainedInternally and From:
N P d t D l t P
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New Product Development ProcessIdea Screening
New Product Development ProcessIdea Screening
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N P d t D l t P
New Product Development Process
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New Product Development ProcessStep 4. Marketing Strategy Development
New Product Development ProcessStep 4. Marketing Strategy Development
Part Two Describes Short-Term:Products Planned Price
DistributionMarketing Budget
Part Two Describes Short-Term:Products Planned Price
Distribution
Marketing Budget
Part Three Describes Long-Term:
Sales & Profit GoalsMarketin Mix Strate
Part Three Describes Long-Term:
Sales & Profit GoalsMarketing Mix Strategy
Marketing Strategy Statement Formulation
Part One Describes Overall:Target Market
Planned Product PositioningSales & Profit GoalsMarket Share
Part One Describes Overall:Target Market
Planned Product PositioningSales & Profit GoalsMarket Share
N P d t D l t P
New Product Development Process
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New Product Development ProcessStep 5. Business Analysis
Step 6. Product Development
New Product Development ProcessStep 5. Business Analysis
Step 6. Product Development
Business Analysis
Review of Product Sales, Costs,
and Profits Projections to See if
They Meet Company Objectives
Business Analysis
Review of Product Sales, Costs,
and Profits Projections to See ifThey Meet Company Objectives
If Yes, Move to
Product Development
If Yes, Move to
Product Development
If No, EliminateProduct Concept
If No, Eliminate
Product Concept
N P d t D l t P
New Product Development Process
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New Product Development ProcessStep 7. Test Marketing
New Product Development ProcessStep 7. Test Marketing
StandardTest Market
Full marketing campaign
in a small number ofrepresentative cities.
StandardTest Market
Full marketing campaignin a small number ofrepresentative cities.
SimulatedTest Market
Test in a simulatedshopping environment
to a sample ofconsumers.
SimulatedTest Market
Test in a simulatedshopping environment
to a sample ofconsumers.
ControlledTest Market
A few stores that have
agreed to carry newproducts for a fee.
ControlledTest Market
A few stores that haveagreed to carry newproducts for a fee.
N P d t D l t P
New Product Development Process
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New Product Development ProcessStep 8. Commercialization
New Product Development ProcessStep 8. Commercialization
When?When? Where?Where? ToWhom?ToWhom? How?How?
Commercialization is theIntroduction of the New Product
into the Marketplace.
S di U
Speeding Up
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Speeding Up
Development
Speeding Up
Development
Step 1Step 1
Step 2Step 2
Step 3Step 3
Step 4Step 4
Step
1
S
tep
2
Step 3
Step 4
Sequential Simultaneous
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IMPROVING PRODUCT DEVELOPMENT
How well are wedoing? What improvementsare needed? Where do we
start? Should webenchmark?
Productplanning Integrated
productteams
Design formanufacturability
Projectplanning
Requirementsdefinition
Resourcemanagement
Solidsmodeling
Product data
management
Configurationmanagement
QFD
Earlyinvolvement
Analysis &simulation
Early supplierinvolvement
Empowerment
Designre-use
Top-downdesign
CAE
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Packaging
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