7new product developments 1

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MEANING

According to Arch Paton, A new product is a product

that opens up an entirely new market, replaces an insisting

product or significantly, broadens the market for anexisting products.


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10%New to the world

20%New ProductLines

26%addition to

existing product Lines

26% improvements

11%Repositioning

7%Cost Reduction70%Changes within

existing product

lines

30%New to

org.

New

Product Line

20%

New to the

world

10%

Addtion to

existingproduct

lines

product

modification

26%

repositionin

g

11%

cost

reduction

7%

New Product Line

New to the world

Addtion to existing

product lines

product

modification

repositioning

cost reduction

MEANING:-


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BOOZ & ALLENhas identified

six categories of new products:-New to the world

New product lines

Addition to existing product lines

Improvements & revisions of existing products

Repositioning

Cost reductions


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New product development

process:-Idea generation.(is the idea

worth considering?)

Screening of New Ideas

Product Concept

Development & Testing

Business analysis

Product Development

Test Marketing

Commercialization


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Idea Generation

The new product planning process starts with generation

of ideas. New product ideas usually generate with the

reorganization of consumer needs. An alert market canget some ideas from the customers for possible new

products to perceive those needs, which are so far

unexpressed.


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Sources of new product ideas

Internal Sources

External Sources


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InternalSources

Research and Development Deptt.

Manufacturing People

Sales People

Top Management


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ExternalSources

Secondary Sources

Customers

Competitors

Resellers

Foreign Markets

Investors

Animation Films


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Screening ofNew Ideas

After receiving a number of ideas good or bad from the

first stage, the next step in the new product development

process is to screen & evaluate them.There are two widely accepted methods for screening the

ideas:-

Check list method

Idea rating method


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Check list method

Product very good good fair poor very poor

characteristics

1.Sales volume2.Type & no. of competitors

3.Technical opportunity4.Patent protection

5.Raw material requirements

6.Available manufacturing capacity7.Potential profitability

8. Similarity to existing business

9.Effect on present products

Total


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Idea Rating method

Area of performance A(r.w) B(s.r) C(A x B)

1.Companys goodwill2.Research & dev.3.Marketing4.Personnel

5.Finance

6. Production7. Purchasing & Supply8.Public Policy

Total

0.200.20

0.200.015

0.10

0.050.050.05

0.1.2.3.4.5.6.7.8.9.10

x

xx

x

x

xx

x

1.00

.140

.180

.140.90.90

.45.35.30

.750


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ProductConcept Development

& TestingA product concept is a detailed version of the idea stated in

meaningful consumer terms.

During this stage of product concept development &testing, the marketer must incorporate the consumer

meaning into their product ideas:-To measure the need level of the consumer.

To measure the consumer targets & purchase

frequency

To measure the gap level between the new product

& existing products in the market.

To measure the perceived values.


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MarketingStrategy

DevelopmentIf the concept testing is successful, the next stage is to

develop a preliminary marketing strategy plan for the

introducing of the new product. The marketing strategy

development consists of three parts:- Target market size,structure & behavior,product

positioning, & the expected sales, profits.

Planned price,distribution strategy & marketing budget

Long run sales & profit goals & marketing mix strategy

product in the target market.


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Business Analysis

Business analysis may be defined as an evaluation of

product idea in depth with a view to demand analysis, cost

analysis & profitability analysis.

the management mainly performs the following acts:-Identifying the product characteristics

Production capability

Production facilities

Estimating cost of production

Estimating profits & sales

Programme for new product development


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Product development

During business analysis,if the product is found to be

economically feasible, it enters the next stage if product

development where the new product idea is converted into

a product. The product development includes the

following steps:-

Engineering Research

Developing Models

Consumers Preference Testing

Developing Marketing Mix


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TestMarketing

Test marketing provides important clues about theproduct,product weakness &deficiencies and also provides

an opportunity to understand the working & relative

importance of the product components of the marketing mix


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Commercialization

If the product is found to be suitable as a result of analysis

& study of the result of test marketing with or without themodification, it is ready to be launched in the market.

After test marketing, if sales is satisfactory to be excellent

then the company will go to launch the product.


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7new product developments 1

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