New product development & its process

 A product is anything that can be offered to a
market to satisfy a want/need.
 Philip Kotler defines PRODUCT
“as anything that can be offered to a marketer for
attention, acquisition, use of consumption that
might satisfy a want or need. It includes physical
object, services persons, places organizations and
ideas” .
What is a PRODUCT ?
Wednesday, June 18, 2014
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 Product development means making changes in
the size, design, color, shape, characteristics,
packing etc. of the product.
 It may include addition of a new product line,
addition of a new product item in a particular
product line, elimination of existing product or
product line & changes in the size, color, design,
packing, characteristics, and prices of the product
& discontinuation of the unprofitable item or
product line.
WHAT IS PRODUCT DEVELOPMENT ?
Wednesday, June 18, 2014 3

 A new product is any product which is
perceived by the customer as being new.
What Is A New Product ?
Reasons For New Products ?
 1st, new products become necessary for meeting the changes in
consumer needs.
2nd, new products become necessary for making new profits.
3rd, new products become necessary for combating environmental
threats.

According to BOOZ, ALLEN & HARMILTON
have identified 6 categories of new products,
such as:
1: New to the world.
2: New to the product lines.
3: Additions to the existing product line.
4: Improvements & revisions of existing products.
5: Repositioning.
6: Cost reductions.

 These products are truly new because they create
a totally new market and are only a small
percentage of the new product category.
 Examples-: Microwave ovens, microprocessors
and copiers. A cell phone with a better touch
screen is derivative of prior products
1: New to the world.

2. New to the product lines.
When a company offers a product from a new category
that they haven't previously offered, then it would be a
new product line. Example -: Recent examples include
digital music players, such as Apple’s iPod,
3. Additions to existing product lines
It occur when a company adds a new product that solidifies its
area of product offerings. This is because people are more likely
to purchase products from brands with which they are already
familiar. For example, a frozen pizza company may wanted to
increase its market share by adding frozen breadsticks and
frozen pastas to its product line

4. IMPROVEMENTS OR REVISIONS OF EXISTING
PRODUCTS
Ninja Tech uses the ad words 'New and Improved' on their
packaging to increase consumer awareness and create
interest. Most new and improved products are only slight
changes, such as flavors, scents or maybe even slightly more
product.
5. REPOSITIONED PRODUCTS
If a product is successfully re launched using a different marketing
strategy (perhaps by changing the emphasis of product benefits) then
it can be called a new product, even if its physical characteristics
have not substantially altered
Lifebuoy is known for its germ-killing action. While the brand
launched two other sub-brands, Lifebuoy Gold and Lifebuoy Double
Action (these brands have been repositioned as international),Wednesday, June 18, 2014 8

• Lifebuoy itself has undergone a repositioning on the
health platform (the original Lifebuoy was a carbolic
soap which was perceived to be different from the
regular cosmetic soaps).
• Lifebuoy re-launched itself on the ‘health’ proposition
as a family soap with a change in the product
composition (with more of cosmetic fragrance) and a
different packaging with the visual of a family.
• Maruti repositioned its Maruti 800 (‘no-frill’ economy
car) as the ‘dream car’ for ‘middle-class’ consumers who
were wanting to upgrade from a two-wheeler. Red Label,
an established brand of tea repositioned itself on product
attributes, adding vitamins.

These types of products perform similar to competing brands at lower prices.
NEW PRODUCT DEVELOPMENT PROCESS

The new product development process starts with the search for
ideas. Consumer’s problems are the most fertile ground for the
generation of new product ideas. New product ideas come from
interacting with various groups & from using creativity
generation techniques like BRAINSTORMING, SYNECTICS
etc.
BRAINSTORMING is a process, where a small group of people
are encouraged to came up with their ideas on a specified
problem.
Whereas in SYNECTICS, the real problem is kept away initially
from the group & only a broader framework of the problem is
given to them. The group is encouraged to think in all possible
dimensions and slowly the problem will be made clear to them, &
their ideas would get refined.
STEP 1:IDEA GENERATION

The purpose of screening stage is to drop poor ideas as early as
possible. Thus an idea committee is formed to classify the
proposed ideas into 3 categories, such as: promising, marginal &
rejects. Every promising idea is kept together for rigorous
screening by product evaluation committee.
In screening ideas, the companies normally face 2 serious errors &
they must try to avoid these mistakes as far as possible, those 2
serious errors are: DROP ERROR & GO ERROR. Let’s clarify:
DROP ERROR: error which occurs when the company rejects
one really good idea having potential.
GO ERROR: error which occurs, when the company permits &
facilitates a poor idea to move onto further development stages &
commercialization.

A concept is an elaborated version of a product idea expressed in
meaningful consumer terms. Example: a leading soft drink company, if
wants to add a new product, i.e. fruit juice to its product lines, then the
following concepts can came across:
CONCEPT 1: FRUIT JUICE FOR YOUNG & GROWN UPS AS A FUNNY THIRST
QUENCHING ITEM.
CONCEPT 2: FRUIT JUICE FOR CHILDREN AS A HEALTH SUPPLEMENTS.
CONCEPT 3: FOR ADULTS AS A NUTRITIONAL ENERGY SUPPLEMENTS.
From the above 3 concepts, the 1st one looks to be attractive &
promising.
After the product concept has been developed, the stage is now set for
testing them. It is here the prospective consumer understand the
product idea. Here whether they are receptive towards the idea & their
willingness to try out such product is tested.

This stage will decide whether from financial as well
as marketing point of view, the project is beneficial
or not. The projects overall impact on the
corporation’s financial position with & without the
new product are estimated & compared.
Here management needs to prepare sales as well as
cost & profit projections to determine whether they
satisfy company objectives.

At this stage the company will determine whether the
product idea can be translated into technically &
commercially feasible product. Its goal is to find a
prototype that consists the key attributes described in
the product concept & that performs safely under
normal use & conditions and that can be produced
within the budgeted cost.
Here the companies conduct 2 types of major testing’s,
such as: ALPHA TESTING & BETA TESTING.
ALPHA TESTING: testing within the firm to see its function.
BETA TESTING: It includes listing a set of customers to use
the prototype & give feedback.

The product here is actually tested in the
selected market segments. Based on the
outcomes of the test marketing, the marketer
lunches large scale manufacture of the new
product. It is a controlled marketing
experiment to decide the soundness &
feasibility of fully fledged marketing of the
product.

 It involves technical feasibility, search for new
available technologies & its economic alternatives
if available. It also includes the technological
relevance of current technologies, the firm’s
knowledge & experience of the techniques,
manpower in handling those technologies etc.

At this stage the company takes decision to go in for
large scale production & marketing of the new
product. Various marketing strategies are employed by
the company at this stage, when it starts
commercialization of a new product idea.
The important factors to which strategists should focus
here are:
Market entry timing period.
Whether to lunch the product in a single locality, a
region, several regions, nationally or internationally,
i.e. geographic strategy.
To whom the new product should target for i.e.
targeting & segmenting.

Every year millions of rupees are being spent on R&D for
new products development. Such a huge investment is
necessary as new products are the only means of survival of
a firm.
New product development provides a number of
advantages to the enterprise.
 It helps in producing goods & services of best quality.
 It helps in providing maximum customer satisfaction,
because it is developed in the view of customer
specification.
 It helps in expanding the market of the products of the
enterprise.
 It helps in achieving stability in product demand.

New product development & its process

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New product development & its process