Product or Service Development Process
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The document discusses key aspects of new product development including defining what constitutes a new product, the new product development process, and reasons for developing new products. It describes the typical stages in the new product development process as idea generation, screening, evaluation, development, and commercialization. It also discusses topics like product life cycles, marketing strategies for different stages of the life cycle, forming a project team, estimating investment and development costs, standardization, and analyzing new product opportunities.
Product or Service Development Process
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- 2. JAWWAD HASSAN JASKANI ROLL NO 12 STUDENT MBA THE ISLAMIA UNIVERSITY OF BAHAWALPUR 2
- 5. What is a Product? A product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need 5
- 6. What is new product? A product that is entirely new in market A product that adapts up or replace an existing product Old product in new market Old product packaged in different way Old product marketed in new way 6
- 7. New product development Is a process which is design to develop, test and consider the viability of product which are new to the market in order to ensure the growth and survival of the organization Development of original products, product improvements, product modifications, and new brands through the firm’s own R & D efforts. 7
- 8. Why we develop new product? To add to product portfolio To create star and cash cow for future To replace the declining product To take advantage of new technology To maintain /increase market share To defeat rivals To keep up with rivals To make competitive advantage 8
- 9. Product Development Process A Product Development process is the entire set of activities required to bring a new concept to a state of market readiness. A design process is the set of technical activities within a product development process. It does not include business, financial, or marketing activities. 9
- 10. An Organized New Product Development Process is Critical 10
- 11. Step 1: Idea Generation 11
- 13. Step 3: Idea Evaluation 13
- 16. Topic Difference between product and Services Activities, Reasoning and objectives of product design 16
- 17. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall. New Service or Product Development Design Analysis Development Full Launch Service or product not profitable Need to rethink the new offering or production process Post-launch review
- 18. Major factors in strategy ◦ Cost ◦ Quality ◦ Time-to-market ◦ Customer satisfaction ◦ Competitive advantage Product and Service Design
- 19. Tangible – intangible Services created and delivered at the same time Services cannot be inventoried Services highly visible to customers Services have low barrier to entry Location important to service Differences Between Product and Service Design
- 20. Product or Service Design Activities Translate customer wants and needs into product and service requirements Refine existing products and services Develop new products and services Formulate quality goals Formulate cost targets Construct and test prototypes Document specifications
- 21. Reasons for Product or Service Design Be competitive Increase business growth & profits Avoid downsizing with development of new products Improve product quality Achieve cost reductions in labor or materials
- 22. Objectives of Product and Service Design Development time and cost Product or service cost Resulting product or service quality Capability to produce or deliver a given product or service
- 24. Life Cycles of Products or Services Time Incubation Growth Maturity Saturation Decline Demand
- 25. Product Life-Cycle Strategies 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 25 PLC Stages
- 26. Product Life-Cycle Strategies Product development Introduction Growth Maturity Decline Low sales High cost per customer acquired Negative profits Innovators are targeted Little competition 26 PLC Stages
- 27. Marketing Strategies: Introduction Stage Product – Offer a basic product Price – Use cost-plus basis to set Distribution – Build selective distribution Advertising – Build awareness among early adopters and dealers/resellers Sales Promotion – Heavy expenditures to create trial 27
- 28. Product Life-Cycle Strategies Product development Introduction Growth Maturity Decline Rapidly rising sales Average cost per customer Rising profits Early adopters are targeted Growing competition 28 PLC Stages
- 29. Marketing Strategies: Growth Stage Product – Offer product extensions, service, warranty Price – Penetration pricing Distribution – Build intensive distribution Advertising – Build awareness and interest in the mass market Sales Promotion – Reduce expenditures to take advantage of consumer demand 29
- 30. Product Life-Cycle Strategies Product development Introduction Growth Maturity Decline Sales peak Low cost per customer High profits Middle majority are targeted Competition begins to decline 30 PLC Stages
- 31. Marketing Strategies: Maturity Stage Product – Diversify brand and models Price – Set to match or beat competition Distribution – Build more intensive distribution Advertising – Stress brand differences and benefits Sales Promotion – Increase to encourage brand switching 31
- 32. Product Life-Cycle Strategies Product development Introduction Growth Maturity Decline Declining sales Low cost per customer Declining profits Laggards are targeted Declining competition 32 PLC Stages
- 33. Marketing Strategies: Decline Stage Product – Phase out weak items Price – Cut price Distribution – Use selective distribution: phase out unprofitable outlets Advertising – Reduce to level needed to retain hard-core loyalists Sales Promotion – Reduce to minimal level 33
- 34. Topic Project team Investment and Development cost 34
- 35. CREATING A PROJECT TEAM Every potential new product or service requires a dedicated development team. creating your team you need to include people with a variety of skills. All team members should understand your business' objectives and be committed to them. There are many forms of effective team working and the right one for you will depend on your business' needs. For example, team members might: work as a unit dedicated to one project, reporting to a project manager work exclusively on one project but remain in separate departments reporting to department heads who are under the project manager work on several projects at once with both a department head and project manager to monitor progress Teams need someone in a project management role to lead, co- ordinate and motivate the team.
- 36. INVESTMENT &DEVELOPMENT New products and services is an naturally risky process. You must plan any investment carefully and strictly control your costs. Factors considering in future investment. plan exactly where this investment will be directed. justify the expenditure on every project. Manage your cost. Before making investment decisions, consider how much your business stands to gain from a completed product or service. Weigh this against the risks you face. Phasing new product development. One way to minimize your risks is to phase investments in projects. By reviewing a project at the end of each phase or stage of development.
- 37. A range of government grants and tax breaks is available for research and new product development. It's essential to keep a close eye on costs when you develop new products and services to control cost. You should: estimate development costs in advance. monitor expenditure throughout the development process introduce phased investment. There are two main ways to estimate costs: a top-down approach where you consider previous comparable projects and use them as a benchmark a bottom-up approach where all team members agree on the costs they expect to incur with one project manager, who will then estimate the total cost Remember that your costs could include staffing, materials, technology, product design and market research.
- 39. Standardization A uniform identification that is agreed on is called a standard Two types exist: ◦ Industrial standardization --- the process of establishing agreement on uniform identifications for definite characteristics of quality, design, performance, quantity, service, and so on ◦ Managerial standardization --- deals with such things as operating practices, procedures, and systems 396-39
- 40. • 100% standardization is rare • Usually starts with a core product as the foundation • Various features are added, these may differ according to the country market • Can also involve modular design, where various features are packaged as modules, different assembly combinations in different markets What to Standardize? 40
- 41. Advantages of Standardization (Cont’d) Fewer parts to deal with in inventory & manufacturing Reduced training costs and time More routine purchasing, handling, and inspection procedures 41
- 42. Advantages of Standardization Orders fill able from inventory Opportunities for long production runs and automation Need for fewer parts justifies increased expenditures on perfecting designs and improving quality control procedures. 42
- 43. Disadvantages of Standardization Designs may be frozen with too many imperfections remaining. High cost of design changes increases resistance to improvements. Decreased variety results in less consumer appeal. 43
- 45. ANALYSIS 7 questions you must ask before launching a new product
- 46. Is my business already on a solid foundation ?
- 47. What is the size of the market ?
- 48. How should I price it ?
- 49. How much revenue can I expect to generate within a specified time period (usually one year) ?
- 50. What will it take to realize this additional revenue and profit ?
- 51. Where is the break even point and what is the potential profit ?
- 52. Is this new direction in line with my overall Business Vision and Long Term Goals ?
- 53. CONCLUSION The conclusion of this overall topic is to develop a product requires ◦ Its designing ◦ Analysis of market as well as its cost and required investment ◦ A very fine development process ◦ And finally its publicity and its approach to the target population