New product development
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Product development involves decisions around what to manufacture, packaging, pricing, and sales. The product planner identifies customer needs, aligns capabilities with market demands, and determines if a product is ready to launch or needs more information. New product development consists of creating ideas, evaluating sales potential and profitability, designing production facilities, and marketing the product. The stages include generating ideas, screening ideas, assessing commercial feasibility, product design/evaluation, test marketing, and launching the product. Product failure occurs when a product does not meet sales and profit targets due to declining volume, margins, or higher than expected costs.
New product development
- 3. Product Development Product development includes a no. of decisions, namely, what to manufacture or buy, how to have its packaging, how to fix its price and how to sell it?
- 4. Tasks of the Product Planner • Identify specific customers needs & expectations. • Align company’s capabilities with changing market demands. • Whether to move on to the next stage. • To abandon the product. • To seek additional information.
- 6. New Product Development New Product Development consists of the • creation of new ideas, • their evaluation in terms of sales potentials and profitability, • production facilities, • resources available, • designing and production testing • And marketing of the product.
- 7. Stages in New Product Development Generation of Product Ideas Screening of Ideas Commercial Feasibility Product Designing & Evaluation Test Marketing Launching the Product
- 8. Generation of Product Ideas • The Product planners visualise new product ideas. • Product ideas may come from: • Professional designers • Scientists • Customers • Sales force • Dealers • Competitors • Brainstorming sessions of mgmt. • Consumer complaints • Private research org. • Trade associates • Commercial laboratories • Industrial users
- 9. Detailed study of New Products Ideas • Ideas generated are examined. • Elimination of ideas which have no potential. • Idea screening is done. • Evaluating the company’s capabilities w. r. t scientific knowledge and technical skills.
- 11. Commercial Feasibility • The product planners evaluate the nature and importance of market needs. • Evaluating new ideas in the light of the company’s capability w. r. t scientific knowledge and technical skills and financial skills. • Only most feasible and profitable ideas are picked-up for further detailed investigation. • Market research is critical during this phase since it reveals the changing behavior of buyers, strategies, competitors and availability of new technological ideas.
- 13. Product Designing & Evaluation • This phase relates to actual development of the new product • A programme is made for the proper development of the product data evaluation system – First, precise description of the features of the product should be studied. – Then, selected consumers may be called upon to offer their comments on the proposed product. – Decisions regarding branding, packaging, labeling, etc., are also made.
- 14. Test Marketing • Test Marketing is necessary to find out viability of marketing programme for large scale distribution. • Before the product is widely distributed, it is tried in a selected market. • It is also known as mini market testing. • It allows greater control over the new product. • It is generally done by consumer goods companies . • It is supposed to test the complete plan, not simply the product concept.
- 16. Benefits of Test marketing • It offers an opportunity to examine the product in natural marketing environment. • It can identify weakness in the product or in overall marketing plan. • Helps mgmt. to develop a profile of potential customers & their purchasing habits. • Helps to evaluate alternative marketing plan. • It offers an opportunity to compare consumer reactions to the test product and competing products.
- 17. Launching the Product / Commercialisation • Here, the firm proceeds to finalize all features of the product. • Promotions & campaigns are launched. • Distribution channels are selected for distribution . • After this, the life cycle of the product starts and strategies are made to maximize sales volume. • Necessary improvements are made.
- 19. Product Failure When a product does not reach the target of sales and profits, it is said to fail. Symptoms of Product Failure are as follows :- i. Declining sales volume ii. Declining profit margins iii. Higher than expected costs iv. Higher than expected investment costs
- 21. Total Quality Management (TQM) • Quality may be described as the fitness of a product for use. • Total Quality Management (TQM) refers to meeting the requirements of the customer consistently by continuous improvement in the quality of work of all employees. • Essentials for achieving total quality :- 1. Meeting customers’ requirement 2. Continuous improvement through management process. 3. Involvement of all employees.
- 22. ISO : 9000 The International Standards Organisation (ISO) was founded in 1946 . Its headquarters is at Geneva, Switzerland. It has emerged in91 countries. The major thrust of ISO is quality systems and well knitted procedures for stringent quality standards. The series of specifications are commonly known as ISO- 9000 It is not only for the quality of products but also for the systematised planning and management of an organisation as a whole.