PRODUCT DEVELOPMENT AND DESIGN

MODULE I

INTRODUCTION
The economic success of most firms depends on their ability to identify the needs of customers and to quickly
create products that meet these needs and can be produced at low cost. Achieving these goals is not solely a
marketing problem, nor is it solely a design problem or a manufacturing problem; it is a product development
problem involving all of these functions.
A product is something sold by an enterprise to its customers. A product can be a service or an item. It can be
physical or in virtual or cyber form. Every product is made at a cost and each is sold at a price. The price that can
be charged depends on the market, the quality, the marketing and the segment that is targeted. Each product has
a useful life after which it needs replacement, and a life cycle after which it has to be re-invented.
Product development is the set of activities beginning with the perception of a market opportunity and ending in
the production, sale, and delivery of a product.

CLASSIFICATIONS OF PRODUCTS
A. Consumer Products:
Consumer products are the products purchased for ultimate consumption by the consumers for satisfying their
needs. For example soaps, shoes, clothes, tooth pastes etc. They can further be divided on the basis of durability
and shopping efforts involved.

1. Durability of Products:
The consumer goods can be classified into three parts on the basis of durability.
(a) Non-Durable Products:
Non-durable products are those consumer products which are consumed in one or few uses for example soap,
toothpaste, shampoo, fruits, vegetables etc. These goods have a small profit margin, need heavy advertisement
and should be easily available.
(b) Durable Products:
Durable products are the products with longer consumption period and uses. For example TV, refrigerator, coolers
etc. These goods provide high profit margin, require greater personal selling efforts, after sales services etc.
(c) Services:
Services are intangible in form and refer to those activities, benefits or satisfactions which are offered for sale. For
example postal service, hair cutting, tailoring, transportation etc.
Following are their main features:
 Services are intangible in nature.
 Services can’t be stored.
 Services are highly variable in that the quality of service provided by different people is different.
 A service can’t be separated from its source.
2. Shopping Efforts Involved:
Consumer products can be categorized into following three parts on the basis of the time and efforts buyers are
willing to spend for the purchase of a product.
(a) Convenience Products:
These products require minimum time and effort and are purchased frequently by the customers. For example
bread, medicines, salt, sugar, jam etc.
 These products are easily available and require minimum time and effort.
 They are available at low prices.
 These are essential goods; so their demand is regular and continuous.
 They have standardized price.
 The supply of these goods is more than the demand; therefore competition for these products is very
high.
 Sales promotion schemes such as discount, free offer, rebate etc. help in marketing of these products.
(b) Shopping Products:
These are the products that require considerable time and effort. For example clothes, jewelry, televisions etc.
Before making final purchase, a consumer compares the quality, price, style etc. at several stores.
Following are the main features of these products:
 They are durable in nature
 These goods have high unit price as well as profit margin.
 Before making final purchase, consumer compares the products of different companies.
 Purchases of these products are pre planned.
 An important role is played by the retailer in the sale of shopping products.
(c) Specialty Products:
Specialty Products refer to those products which have certain special features due to which the buyers are willing
to spend a lot of time and effort on the purchase of such products. These products have brand loyalty of highest
order. For example designer clothes, hair styling, antique products, jewellery etc.
Following are the main features of specialty products:
 The demand for such products is relatively infrequent.
 These products are very costly.
 These are available for sale only a few places.
 An aggressive promotion is essential for the sale of such products.
 Many of the specialty product require after sales service too.
(d) Unsought Products:
Unsought products are those consumer products that a consumer either does not know about or knows about but
does not consider buying under normal conditions. Most new innovations are unsought until consumers become
aware of them. Other examples of these types of consumer products are life insurance, pre-planned funeral
services etc. As a consequence of their nature, unsought products require a lot more advertising, personal selling
and marketing efforts than other types of consumer products.
B. Industrial Products:
The products which are used as inputs to produce consumer products are known as industrial products. For
example raw material, machinery, tools, lubricants etc. These products are used for non-personal & business
purposes. Manufacturers, transport agencies, banks & insurance companies, mining companies etc. are the main
parties involved, in marketing of industrial products.
Following are the main features of Industrial products:
 Number of Buyers: Industrial Products have limited number of buyers as compared to consumer goods.
 Channel Levels: Since the number of buyers is limited, the sales take place with the help of shorter
channels of distribution.
 Geographic Concentration: The demand for industrial products is concentrated at certain fixed
geographical locations.
 Derived Demand: The demand for industrial products depends upon the demand for consumer goods,
therefore the demand for industrial products is known as derived demand. For example demand for
cotton fiber increases when there is increased demand for cotton suits, bed sheets etc.
 Role of Technical Considerations: Technical consideration plays an important role in the purchase of
industrial goods because these products are purchased for use in business operations.
 Reciprocal Buying: A company may purchase some raw material from another company and also may sell
its finished good to the same company. Such a practice is known as reciprocal buying. For example, Tata
may buy tires and tubes from Ceat which may in turn purchase Tata’s trucks.
 Leasing Out: The prices of the industrial products are very high; therefore the companies prefer to take
them on lease instead of buying.
Types of Industrial Product are as follows:
1. Materials and Parts:
These refer to the goods that completely enter into the manufacture of a product.
These are of two types:
(a) Raw Material:
These are of two types (i) agricultural products like sugar cane, wood, rubber etc. and (ii) natural products like iron
ore, crude petroleum etc.
(b) Manufactured Materials and Parts:
These are of two types (i) component material like glass, iron, plastic etc. and (ii) component parts like steering,
battery, bulb etc.
2. Capital Items:
These are the goods that are used in producing finished goods. They include tools, machines, computer etc. Capital
items are classified into (a) installations like elevators, mainframe computers etc. and (b) equipment like hand
tools, fax machine etc.
3. Supplies and Business Services:
These include goods like paints, lubricants, computer stationary etc. which are required for developing or
managing the finished products. These are classified into (a) maintenance and repair items like paints, nails,
solutions etc. and (b) operating supplies like oils, lubricants, ink etc.

C. Persons, Organizations, Ideas & Places:

The marketing entities named persons, organizations, ideas & places are also included in the category of products
recently. The organization sells itself by carrying out certain activities like creating, maintaining & changing the
behavior & attitude of customers for an organization. Similarly, people also perform certain activities for
development, maintenance & change of behavior & attitude towards certain people through person marketing.
Similarly the ideas & places are also regarded as products.

SPECIFICATIONS OF PRODUCTS
(“Product requirements”, “engineering characteristics”, or “technical specifications”)
Written statement of an item's required characteristics documented in a manner that facilitates its procurement or
production and acceptance.
Customer needs are generally expressed in the “language of the customer.” Customer needs such as “the
suspension is easy to install” or “the suspension enables high-speed descents on bumpy trails” are typical in terms
of the subjective quality of the expressions. However, while such expressions are helpful in developing a clear
sense of the issues of interest to customers, they provide little specific guidance about how to design and engineer
the product. They simply leave too much margin for subjective interpretation. For this reason, development teams
usually establish a set of specifications, which spell out in precise, measurable detail what the product has to do.
Product specifications do not tell the team how to address the customer needs, but they do represent an
unambiguous agreement on what the team will attempt to achieve in order to satisfy the customer needs. For
example, in contrast to the customer need that “the suspension is easy to install,” the corresponding specification
might be that “the average time to assemble the fork to the frame is less than 75 seconds.” Product specifications
mean the precise description of what the product has to do.
A specification (singular) consists of a metric and a value. Values are always labeled with the appropriate units
(e.g., seconds, kilograms, joules). Together, the metric and value form a specification. The product specifications
(plural) are simply the set of the individual specifications.
In an ideal world, the team would establish the product specifications once early in the development process and
then proceed to design and engineer the product to exactly meet those specifications. For some products, such as
soap or soup, this approach works quite well; the technologists on the team can reliably concoct a formulation that
satisfies almost any reasonable specifications. However, for technology-intensive products this is rarely possible.
For such products, specifications are established at least twice. Immediately after identifying the customer needs,
the team sets target specifications. These specifications represent the hopes and aspirations of the team, but they
are established before the team knows what constraints the product technology will place on what can be
achieved. The team’s efforts may fail to meet some of these specifications and may exceed others, depending on
the product concept the team eventually selects. For this reason, the target specifications must be refined after a
product concept has been selected. The team revisits the specifications while assessing the actual technological
constraints and the expected production costs. To set the final specifications, the team must frequently make hard
trade-offs among different desirable characteristics of the product.

The concept development process. The target specifications are set early in the process, but setting the final
specifications must wait until after the product concept has been selected.

The process of establishing the target specifications contains four steps:

1. Prepare the list of metrics.
2. Collect competitive benchmarking information.
3. Set ideal and marginally acceptable target values.
4. Reflect on the results and the process.
As the team finalizes the choice of a concept and prepares for subsequent design and development, the
specifications are revisited. Specifications that originally were only targets expressed as broad ranges of values are
now refined and made more precise.
Finalizing the specifications is difficult because of trade-offs—inverse relationships between two specifications that
are inherent in the selected product concept. Trade-offs frequently occur between different technical
performances metrics and almost always occur between technical performance metrics and cost.
A five-step process:
1. Develop technical models of the product.
2. Develop a cost model of the product.
3. Refine the specifications, making trade-offs where necessary.
4. Flow down the specifications as appropriate.
5. Reflect on the results and the process.
Because of the need to utilize the best possible knowledge of the market, the customers, the core product
technology, and the cost implications of design alternatives, the specifications process requires active participation
from team members representing the marketing, design, and manufacturing functions of the enterprise.

PRODUCT LIFE CYCLE

The product life cycle is an important concept in marketing. It describes the stages a product goes through from
when it was first thought of until it finally is removed from the market. Not all products reach this final stage. Some
continue to grow and others rise and fall.
The main stages of the product life cycle are:
Research & development - researching and developing a product before it is made available for sale in the market
Introduction – launching the product into the market
Growth – when sales are increasing at their fastest rate
Maturity – sales are near their highest, but the rate of growth is slowing down, e.g. new competitors in market or
saturation
Decline – final stage of the cycle, when sales begin to fall
This can be illustrated by looking at the sales during the time period of the product.
Extending the Product Life Cycle

For successful products, a business will want to do all it can to extend the growth and maturity phases of the life
cycle, and to delay the decline phase.

What can businesses do to extend the product life cycle?

To do so, it may decide to implement extension strategies - which are intended to extend the life of the product
before it goes into decline.

Examples of extension strategies are:

Advertising – try to gain a new audience or remind the current audience

Price reduction – more attractive to customers

Adding value – add new features to the current product, e.g. improving the specifications on a smartphone

Explore new markets – selling the product into new geographical areas or creating a version targeted at different
segments

New packaging – brightening up old packaging or subtle changes

Evaluating the Product Life Cycle Model

The product life cycle model is by definition simplistic. It is used to predict a likely shape of sales growth for a
typical product.

Whilst there are many products whose sales do indeed follow the classic shape of the life cycle model, it is not
inevitable that this will happen.

For example, some products may enjoy a rapid growth phase, but quickly move into a decline phase if they are
replaced by superior products from competitors or demand in the market overall declines quickly.

Other products with particularly long life cycles seem to enjoy a maturity phase that lasts for many years.

PRODUCT MIX

Definition: The Product Mix also called as Product Assortment, refers to the complete range of products that is
offered for sale by the company. In other words, the number of product lines that a company has for its customers
is called as product mix.

The Product Line refers to the list of all the related products manufactured or marketed by a single firm. The
number of products within the product line are called as the items, and these might be similar in terms of
technology used, channel employed, customer’s needs and preferences or any other aspect. For example, the
product lines of ITC are FMCG, Hotels, Paper Board and Packaging, Agribusiness.
The product mix has four dimensions: Breadth, Length, Depth, and Consistency. The Breadth of a product mix
shows the different kinds of product lines that firm carries. Simply, it shows the number of items in the product
line. This dimension of the product mix represents the extent to which the activities of the firm are diversified. In
the example below, there are 4 product lines that show the width of the ITC.

The Length of a Product mix refers to the number of items in the product mix. In the example below the length is
11. As in the foods line, the number of items is 3, in cigarettes is 3 and so on. On adding all the items, we get the
length of a product.

The Depth of a product mix refers to the variants of each product in the product line. For example, in the example
below, curry, pastes, biryanis, conserves, etc. shows the depth of the foods product line.
The Consistency of a product mix shows the extent to which the product lines are closely related to each other in
terms of their end-use, distribution requirements, production requirements, price ranges, advertising media, etc.
In the above example, it is clear that ITC’s product lines are less consistent as these perform different functions for
the buyers.

These terms in a product assortment help the firm to take a decision regarding the addition or removal of the
product items in the product lines. Generally, the firms introduce a new product item into the existing product line
as it is easy to gain the customer support for the new product due to the customer’s familiarity with the existing
product line.
 Product Design and Development

Chapter-1 Product Design Introduction

Product is something which is sold by an enterprise to its customers.

Product development is a set of activities which begins with market opportunity and
ends with the production, sale, and delivery of the product.

Characteristics of Successful Product Development

 Product quality
o How good is the product resulting from development?
o Does it satisfy customer needs?
o Is it robust and reliable?
o Product quality is reflected in market share?
 Product cost
o What is the manufacturing cost?
o It includes capital equipment and tooling ?
 Development time
o How long did the PD effort take?
 Development cost
o How much spent in PD effort?
 Development capabilities
o Did the team/firm acquire any experience for future projects?

Factors affecting Product design and development

 Product identification related factors

o Gap in demand – demand> supply

o Under-utilized resources- contract manufacturing, lending of facilities.

o Diversification – limited customer base.

o New product ideas- friends, co-workers, environment.

 Marketing related factors

o Prestigious of company

o Technologically sound product

o Customer’s requirement

o Market potential

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 Product Design and Development

o Product life

o Competition

 Legal factors

o Environmental pollution

o Import restrictions on capital goods

o Restrictions in finance

 Finance related factors

o Capital investment –manufacturing resources, plant and machinery .

o Cash generation

 Govt. support

 Shares

 Fixed deposits

 Organization related factors

o Skill requirement- workers and managers both

o Availability of labor, managers etc.

o Salary and wages of workers – cost implications

 Manufacturing related factors

o Availability of technological know how – its cost , related equipments.

o Cost of manufacturing facilities

o Quality of manufactured products – customer requirements.

o Rate of production- market demand.

 Distribution related factors

o Availability of distributors-reputation, facilities, manpower.

o Availability of ware houses- space requirements, facilities, cost.

o After sale service- maintenance, repair, spares, cost

o Sales personnel – marketing skills, implementation of sale promotional

schemes etc

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 Product Design and Development

Product life cycle

Who Designs and Develops Products?

 Marketing
 Design
o Mechanical
o Electrical
o Software
o Industrial
 Manufacturing
o Operations
o Warehouse
o Supply Chain

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 Product Design and Development

3 measures of design

Quality

Duration may vary from 1 yr to 10yrs or greater

Challenges of product development

1. Global Competition

Global competition is often a major factor impacting the challenges of new product
development. Since the playing field is large and diverse, often spanning the globe, it may
be very difficult for companies to gather intelligence on competitors. A company may
invest heavily in a new product, yet be unaware that an overseas competitor is set to
release a similar product imminently. As a result, shepherding a new product from
concept to market is often done under intense time pressure, as product developers
attempt to bring the product to market ahead of their competition.

Case-

Mahindra & Mahindra scored its first SUV hit with bolero in 2000. Building on this
success, in 2002 it launched the Scorpio, a model that signalled M & M had finally
achieved the right mix of design, power,and price. Not it was a looker and a performer;
it cost less than its rivals. The Xylo,launched in 2009 and the XUV500 in 2011 have
helped M&M consolidate its position.

2. Time

The companies today are facing time as one of the critical challenges in new product
challenge.Introducing the new product at the right time reduces the ambiguity about the
failure of the product. Giving the market a product at a time when there the need for such a
product/service is not required is surely a planned way to head for the edge.

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 Product Design and Development

Case-

Spanish apparel brand ZARA takes just two weeks to create a new product line out of high
street fashion design and ship it to stores making it the world‟s most popular „fast fashion‟
brand. Zara has replicated a model that has worked for it globally - creating
affordable, copycat versions of the latest fashions or designer-wear and making them
available to shoppers in doublequick time. Zara is known for its fresh fashion delivery
every week. Their weekly delivery supply chain is the best in the world.

3. MARKET POTENTIAL

A company needs to know their current and future competitors. In today’s economic
climate only two products will be successful in any given market. Unless your product is far
superior to your competition, you will not be able to enter a market successfully or retain
your leadership in the market. While it is initially fine to get to know your
competition from searching online, it cannot replace feedback from customers who use the
product. Knowing your future competitors will help you to develop a strategy to retain
your competitive advantage.

Case-

The social media network Facebook has taken the world by storm since it was
introduced to the web in 2004. The Harvard student Mark Zuckerberg had no way
of knowing how quickly and readily accepted his social networking site would be. An
app, known as Instagram, was developed to make photo-sharing easier and quicker for
users. Not only could users share their photos quickly, but they could edit them and add
special effects to their photosbefore sharing them. With 1 million iPhone and Android
users being added each and every day,Facebook saw Instagram as its fastest growing
competitor and decided to take control before it became a problem for Facebook.
Facebook acquired Instagram for $ 1 billion which was not an easy or cheap process, but
it eliminated the stress of a future competitor, or even worse, the app being acquired
by an already powerful competitor such as Google or Twitter.

4. TECNOLOGICAL CHANGE

Rapid advancement of technology may be considered by many to be among the top

challenges of new product development. A technological arms race may put product
developers in a precarious position of uncertainty. Product developers may not know what
the next development might be. If a firm chooses a pathway to creating functionality
using a form of technology that may be soon obsolete, the company’s investors could
lose a sizable investment.

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 Product Design and Development

Case-

Without question, nearly everyone believes the equation Apple = Innovation is a

fundamental truth. Starting from the first Macintosh to the ipod, ipad, iphone , the list is
still growing and apple has time again proved that innovation is the ultimate success of
a new product. That‟s why the company stands out of the crowd when it comes to its
innovation. The company is a leader in producing innovating products and amazing the
customers and making them think that this is it, but not for Apple. This year, Apple will
spend $10 billion investing in its future innovations. The company is ranked number
5 in The World‟s Most Innovative Companies as per the Forbes list.

5. DISTRIBUTION

Who's going to sell the product? Can you use the same distribution channels you currently
use? Can you use the same independent representatives or sales force? Is there
sufficient sales potential in the new product to convince a distributor, retailer, or agent to
take on the new line? There are significant up-front selling costs involved in introducing
new products. Everyone in the channel wants some assurance that the investment of time
and money will be recovered.

Case-

Taking the first step towards its longawaited entry into India, US coffee chain Starbucks on
said it has signed a pact with Tata group firm Tata Coffee for a possible alliance that
could include retail operations and sourcing. Starbucks Coffee Company and Tata
Coffee signed a non-binding Memorandum of Understanding (MoU) to collaborate in
sourcing of coffee beans and roasting facilities, relating to Starbucks entering retail
operations in India initially. The collaboration would also explore other Asian countries
over a period of time. The two companies will also collaborate on the promotion of
responsible agronomy practices, including training for local farmers, technicians and
agronomists, to improve their coffee-growing and milling skills. The brand‟s ranking
is 54th in the most powerful brands of the world.

6. NEW FEATURES

Competitive advantage needs to be articulated to your customers: how does the

product (or attributes of the product) meet your customers’ unmet need that no other
product can. This is the reason why customers will use your product over any other
product. Knowing your competition will validate or invalidate your competitive advantage
and potential market leadership.Adding new features can increase your overall product
value and consequently, increase your market share. What makes new product
development different from product development? While new product development can

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 Product Design and Development

be revolutionary, product development (i.e. adding new features) is an evolutionary

process.

Case-

Google is a leader in both areas. The search giant develops revolutionary products
(i.e. new product development) and finds ways of improving upon them (i.e. product
development). Gmail is one of many Google products that illustrate this point. Once
Google mastered the end product, the search giant was able to add new features to
increase the products overall value. For instance, enables users to make large
changes, such asadding a customized inbox skin or SMS through Gmail chat, and
small adjustments, such as YouTube e-mail previews. The company is ranked 7th in
the most innovative company.

7. CRITICAL UNMET NEEDS

Statistics on the success rates of new products show that for every four new products that
enter development, only one becomes a commercial success. Research by Calantone
and Cooper shows that the number one reason for a new product to fail is the lack of
attention paid to the real needs and wants of the marketplace.There are three key elements
to meeting a customer’s need when developing new products or services.

Desirability: the new product or service must be desirable, i.e. a person wants to use it

Purpose: the new product or service must have a useful purpose, i.e. a person will use it

User Experience: the new product or service must provide customer satisfaction, i.e. a
person is happy using it.

When creating and designing a new product or service it is important to consider the use of
the product (what does the product do), the level of usability of the product (how does it
work, can it be used comfortably) and the meaning that the product conveys.

Case-

Considering that the Men cosmetic segment was still untouched in India and thinking
of a fairness cream as a unmet need of the customers EMAMI introduced the fair and
handsome cream particularly targeting the men consumers. The brand has rightly
positioned itself in the new segment though it now faces competition from Vaseline
and Garnier. Though communications of this type have raised criticisms from some
sectors of the society arguing that fairness of skin implies better acceptability, the
market is growing by over 10% per annum.

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 Product Design and Development

8. MARKET SIZE

It is also important to keep an eye on the market size as well as the market
potential for the product in meeting the business goals of the company. The last thing you
want to find out is that there is no market for the product or that the customer isn’t buying
the product. In addition to meeting a critical unmet need you need to be in a market where
you sell a significant amount of product to develop more products and expand your
business. It often makes sense to outsource to someone who can determine the size of the
market and the market potential for the product in meeting the business goals of the
company through market research and talking to potential customers.

9. PRICE

Setting the right price of the product before introducing it in the market is also a challenge
for the organisation. Suppose you set the price of your product almost same as that
of your competitor and assuming the product is similar in quality and features and the
competitor holds a good position in the marketplace, then the success of your product will
depend on the market and in my opinion your‘LUCK’. Well good luck if you believe your
luck is good. Else anyone would surely believe that the product has hardly any chances
of survival. Thus setting your product at the right price at the right time is a challenge.

CASE-

When MICROMAX recently introduced its smartphone model CANVAS. Knowing that it
faces a tough competition from the large market leaders like APPLE, SAMSUNG, the
company has introduced a beautiful and striking product which is not only unique from
its other products but is also economical in meeting the Indian customer needs. The
ultimate success of the product was its price which not only ensured the longevity of the
product but also opened gamut of opportunities for the company. Currently the mobile is
giving a slight competition to Samsung SIII and is quickly running out of stock.

10. PROMOTION

Promoting a new product in the new market or in the current market is the job of every
marketer and the utmost requirement for the longevity of the product in the market.
Firms who hardly promote their product are rarely recognised by the market and thus
remain a mystery product for the consumers. Promotion techniques adopted by the firms
from print media to social websites is all a one step of the staircase approach of NPD.
Thus promotion is must process for the new product hit.

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 Product Design and Development

CASE-

RA ONE was a kind of new product in itself for the Indian movie watchers. Knowing that
the movie wasn‟t upto the mark, the producers adopted a first of its kind
advertisement strategy. Newspapers, popular websites, magazines, music channels etc.
were and are all flooded with advertisement posters of the movie, showcasing to the
people the unique characters much before the movie was released. Tie-ups with
popular brands such as McDonalds, KFC was done as a part of co-branding and
increasing the credibility of the movie.

Even before its release, Ra One managed to earn a revenue of Rs132 crore simply by giving
away the rights of the movie. The cost of the movie was 100 crores and 52 crore were spent
only in its promotion.

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 THE NEW PRODUCT DEVELOPMENT PROCESS
(NPD) – OBTAIN NEW PRODUCTS
In order to stay successful in the face of maturing products, companies have to obtain new ones
by a carefully executed new product development process. But they face a problem: although they
must develop new products, the odds weigh heavily against success. Of thousands of products
entering the process, only a handful reach the market. Therefore, it is of crucial importance to
understand consumers, markets, and competitors in order to develop products that deliver superior
value to customers. In other words, there is no way around a systematic, customer-driven new
product development process for finding and growing new products. We will go into the eight
major steps in the new product development process.

The 8 steps in the New Product Development Process

1. Idea generation – The New Product Development Process

The new product development process starts with idea generation. Idea generation refers to the
systematic search for new-product ideas. Typically, a company generates hundreds of ideas,
maybe even thousands, to find a handful of good ones in the end. Two sources of new ideas can
be identified:

 Internal idea sources: the company finds new ideas internally. That means R&D, but also
contributions from employees.
 External idea sources: the company finds new ideas externally. This refers to all kinds of external
sources, e.g. distributors and suppliers, but also competitors. The most important external source
are customers, because the new product development process should focus on creating customer
value.
 2. Idea screening – The New Product Development Process
The next step in the new product development process is idea screening. Idea screening means
nothing else than filtering the ideas to pick out good ones. In other words, all ideas generated are
screened to spot good ones and drop poor ones as soon as possible. While the purpose of idea
generation was to create a large number of ideas, the purpose of the succeeding stages is to
reduce that number. The reason is that product development costs rise greatly in later stages.
Therefore, the company would like to go ahead only with those product ideas that will turn into
profitable products. Dropping the poor ideas as soon as possible is, consequently, of crucial
importance.

3. Concept development and Testing – The New Product

Development Process
To go on in the new product development process, attractive ideas must be developed into a
product concept. A product concept is a detailed version of the new-product idea stated in
meaningful consumer terms. You should distinguish

 A product idea à an idea for a possible product

 A product concept à a detailed version of the idea stated in meaningful consumer terms
 A product image à the way consumers perceive an actual or potential product.

Let’s investigate the two parts of this stage in more detail.

Concept development
Imagine a car manufacturer that has developed an all-electric car. The idea has passed the idea
screening and must now be developed into a concept. The marketer’s task is to develop this new
product into alternative product concepts. Then, the company can find out how attractive each
concept is to customers and choose the best one. Possible product concepts for this electric car
could be:

 Concept 1: an affordably priced mid-size car designed as a second family car to be used around
town for visiting friends and doing shopping.
 Concept 2: a mid-priced sporty compact car appealing to young singles and couples.
 Concept 3: a high-end midsize utility vehicle appealing to those who like the space SUVs provide
but also want an economical car.

As you can see, these concepts need to be quite precise in order to be meaningful. In the next
sub-stage, each concept is tested.
Concept testing
New product concepts, such as those given above, need to be tested with groups of target
consumers. The concepts can be presented to consumers either symbolically or physically. The
question is always: does the particular concept have strong consumer appeal? For some concept
tests, a word or picture description might be sufficient. However, to increase the reliability of the
test, a more concrete and physical presentation of the product concept may be needed. After
exposing the concept to the group of target consumers, they will be asked to answer questions in
order to find out the consumer appeal and customer value of each concept.

4. Business analysis – The New Product Development Process

Once decided upon a product concept and marketing strategy, management can evaluate the
business attractiveness of the proposed new product. The fifth step in the new product
development process involves a review of the sales, costs and profit projections for the new
product to find out whether these factors satisfy the company’s objectives. If they do, the product
can be moved on to the product development stage.

In order to estimate sales, the company could look at the sales history of similar products and
conduct market surveys. Then, it should be able to estimate minimum and maximum sales to
assess the range of risk. When the sales forecast is prepared, the firm can estimate the expected
costs and profits for a product, including marketing, R&D, operations etc. All the sales and costs
figures together can eventually be used to analyse the new product’s financial attractiveness.

5. Product development – The New Product Development

Process
The new product development process goes on with the actual product development. Up to this
point, for many new product concepts, there may exist only a word description, a drawing or
perhaps a rough prototype. But if the product concept passes the business test, it must be
developed into a physical product to ensure that the product idea can be turned into a workable
market offering. The problem is, though, that at this stage, R&D and engineering costs cause a
huge jump in investment.

The R&D department will develop and test one or more physical versions of the product concept.
Developing a successful prototype, however, can take days, weeks, months or even years,
depending on the product and prototype methods.
 Also, products often undergo tests to make sure they perform safely and effectively. This can be
done by the firm itself or outsourced.

In many cases, marketers involve actual customers in product testing. Consumers can evaluate
prototypes and work with pre-release products. Their experiences may be very useful in the
product development stage.

6. Test marketing – The New Product Development Process

The last stage before commercialisation in the new product development process is test marketing.
In this stage of the new product development process, the product and its proposed marketing
programme are tested in realistic market settings. Therefore, test marketing gives the marketer
experience with marketing the product before going to the great expense of full introduction. In
fact, it allows the company to test the product and its entire marketing programme, including
targeting and positioning strategy, advertising, distributions, packaging etc. before the full
investment is made.

The amount of test marketing necessary varies with each new product. Especially when
introducing a new product requiring a large investment, when the risks are high, or when the firm
is not sure of the product or its marketing programme, a lot of test marketing may be carried out.

7. Commercialisation
Test marketing has given management the information needed to make the final decision: launch
or do not launch the new product. The final stage in the new product development process is
commercialisation. Commercialisation means nothing else than introducing a new product into the
market. At this point, the highest costs are incurred: the company may need to build or rent a
manufacturing facility. Large amounts may be spent on advertising, sales promotion and other
marketing efforts in the first year.

Some factors should be considered before the product is commercialized:

 Introduction timing. For instance, if the economy is down, it might be wise to wait until the following
year to launch the product. However, if competitors are ready to introduce their own products, the
company should push to introduce the new product sooner.
 Introduction place. Where to launch the new product? Should it be launched in a single location, a
region, the national market, or the international market? Normally, companies don’t have the
confidence, capital and capacity to launch new products into full national or international
distribution from the start. Instead, they usually develop a planned market rollout over time.
In all of these steps of the new product development process, the most important focus is on
creating superior customer value. Only then, the product can become a success in the market.
Only very few products actually get the chance to become a success. The risks and costs are
simply too high to allow every product to pass every stage of the new product development
process.

8. Review of market performance

The company must review the marketing performance of the new product.

It must answer the following questions:

Is the new product accepted by the consumers?

Are the demand, sales and profits high?

Are the consumers satisfied with the after-sales-service?

Are the middlemen happy with their commission?

Are the marketing staffs happy with their income from the new product?

Is the Marketing manager changing the marketing mix according to the changes in the environment?

Are the competitors introducing a similar new product in the market?

The company must continuously monitor the performance of the new product. They must make
necessary changes in their marketing plans and strategies else the product will fail.
INNOVATIVE THINKING

Innovation can be broadly thought of as new ideas, new ways of looking at things, new methods or
products that have value. Innovation contains the idea of output, of actually producing or doing
something differently, making something happen or implementing something new. Innovation almost
always involves hard work; persistence and perseverance are necessary as many good ideas never get
followed through and developed. Innovative thinking is an active process necessarily involved in
innovation.

Morphology of design
A design project goes through a number of time phases. Morphology of design refers
to the collection of these time phases. Morris Asimow was among the first to give a
detailed description of the complete design process in what he called the morphology
of design.The morphology of design as put forward by Morris Asimow can be
elaborated as given below.
It consists of seven phases.
1. Feasibility study
2. Preliminary Design
3. Detail design
4. Planning for manufacture
5. Planning for distribution
6. Planning for use
7. Planning for retirement
 Phase I. Feasibility Study.
Conceptual design is the process by which the design is initiated, carried to the point
of creating a number of possible solutions, and narrowed down to a single best
concept. It is sometimes called the feasibility study. Conceptual design is the phase
that requires the greatest creativity, involves the most uncertainty, and requires
coordination among many functions in the business organisation. The purpose and
activities during feasibility study are to ascertain there really exists a need [the
existence of need must be supported by necessary evidences, rather than the
outcome of one’s fancy]
Search for a number of possible solutions with some basic questions.
Evaluate the solutions of those questions.
is it physically realisable?
Is it economically worthwhile?
Is it within our financial capacity?
Phase II. Preliminary (Embodiment) Design.
This is the stage art which the concept generated in the feasibility study is carefully
developed. Structured development of the design concept occurs in this engineering
design phase. It is the place where flesh is placed on the skeleton of the design
concept. An embodiment of all the main functions that must be performed by the
product must be undertaken. It is in this design phase that decisions are made on
strength, material selection, size, shape, and spatial compatibility. The important
activities done at this stage are:
* Model building & testing
* Study the advantages and disadvantages of different solutions.
* Check for performance, quality strength, aesthetics etc.
Phase III: Detail Design
Its purpose is to furnish the complete engineering description of the tested product. In
this phase the design is brought to the stage of a complete engineering description of
a tested and producible product. Missing information is added on the arrangement,
form, dimensions, tolerances, surface properties, materials, and manufacturing
processes of each part. This results in a specification for each special-purpose part
and for each standard part to be purchased from suppliers. Finally, complete prototype
is tested.
Phase IV: Planning for manufacture
This phase includes all the production planning and control activities necessary for the
manufacture of the product. A great deal of detailed planning must be done to provide
for the production of the design. A method of manufacture must be established for
each component in the system. As a usual first step, a process sheet is created; it
contains a sequential list of all manufacturing operations that must be performed on
the component. Also, it specifies the form and condition of the material and the tooling
and production machines that will be used. The information on the process sheet
makes possible the estimation of the production cost of the component. High costs
may indicate the need for a change in material or a basic change in the design. Close
interaction with manufacturing, industrial, materials, and mechanical engineers is
important at this step.
 Preparation of process sheet, i.e. the document containing a sequential list of
manufacturing processes.
 Specify the condition of row materials.
 Specify tools & machine requirements.
 Preparation of process sheet, i.e. the document containing a sequential list of
manufacturing processes.
 Specify the condition of row materials.
 Specify tools & machine requirements.
 Estimation of production cost.
 Specify the requirement in the plant.
 Planning QC systems.
 Planning for production control.
 Planning for information flow system etc.
Phase V: Planning for Distribution
The economic success of a design depends on the skill exercised in marketing. Hence,
this phase aims at planning an effective distribution system. Important technical and
business decisions must be made to provide for the effective distribution to the
consumer of the products that have been produced. In the strict realm of design, the
shipping package may be critical. Concepts such as the shelf life of the product may
also be critical and may need to be addressed in the earlier stages of the design
process.
A system of warehouses for distributing the product may have to be designed if none
exists. The economic success of the design often depends on the skill exercised in
marketing the product. If it is a consumer product, the sales effort is concentrated on
advertising in print and video media, but highly technical products may require that the
marketing step be a technical activity supported by specialised sales brochures,
performance test data, and technically trained sales engineers.
Different activities of this phase are
* Designing the packing of the product.
* Planning effective and economic warehousing systems.
* Planning advertisement techniques
* Designing the product for effective distribution in the prevailing conditions.
Phase VI Planning for Consumption/use
The purpose of this phase is to incorporate in the design all necessary user- oriented
features. The use of the product by the consumer is all-important, and considerations
of how the consumer will react to the product pervade all steps of the design process.
The following specific topics can be identified as being important user-oriented
concerns in the design process: ease of maintenance, durability, reliability, product
safety, convenience in use (human factors engineering), aesthetic appeal, and
economy of operation. Obviously, these consumer-oriented issues must be
considered in the design process at its very beginning. They are not issues to be
treated as afterthoughts.
The various steps are
* Design for maintenance
* Design for reliability
* Design for convenience in use
* Design for aesthetic features
* Design for prolonged life
* Design for product improvement on the basis of service data.
Phase VII: Planning for Retirement.
This is the phase that takes into account when the product has reached the end of
useful life. The final step in the design process is the disposal of the product when it
has reached the end of its useful life. Useful life may be determined by actual
deterioration and wear to the point at which the design can no longer function, or it
may be determined by technological obsolescence, in which a competing design
performs the product’s functions either better or cheaper. In consumer products, it may
come about through changes in fashion or taste.
A product may retire when
 It does not function properly
 Another competitive design emerges
 Changes of taste or fashion
The various steps in this phase are
 Design for several levels of use
 Design to reduce the rate of obsolescence.
 Examine service-terminated products to obtain useful information.