New Product Development Newproduct development is the part of company strategies which allows com- nies to deliver the essential value propositions to the customers on perpetual basis and meet the desired growth objectives. several recognizable categories of new products are: @ Products that are really innovative, i.e. truly unique. In recent years due to technological breakthrough, there is a flood of new product offering providing unknown functions and services. Smart phones, Smart tele- vision, i-Pad, | phone are performing radically new functions, serving non-existent, newly created needs. @ Replacements that are significantly different from existing products in terms of form, functionand benefits provided. Disposable contactlenses, e-rickshaws, digital cameras are replacing predecessors as the newer products deliver new or added benefits desired by buyers, Imitative products that are new to a particular company but not new to the market. Annual model of automobiles are appropriately placed in this category. In another situation, a firm may simply want to capture part ofan existing market with ‘me too’ product. Liquid detergent or flat n TV is a new product of this kind. ive that a given offer is significantly different from competitive appearance or performance, then it is a new product. Now a days digital is especially appealing to customers. Thus, digital has 129emda terrane domipnet ic’ etc, Deva been 5, lights, mus| Opme ached es, televisions, lapedan ™ at to eect dered, planned, develop: dang intro ane ipa e three main Ptions to eng caretuiy to the market, Organizations hav sa Stream of new products: from other suppliers, or license the Use of oa ™. finished products from ; oon for specific periods of time. * Develop products through collaboration with suppliers or even cg a tors, * Develop New innovative products, often through R&D orthrough Adapt, current products through minor design and engineering Changes atever the preferred route, the procedure of new Product develo Opt @d by the Company reflects its attitude to risk, Strategy, 8nd its Pment 4. =PProach to customer relationships. a Product anq Markey The New Product Development Process The Sevelopment of new Products is complex and inv. Banies “sually adopt a Procedural approach. The Phases that enable Progress to be the results analyz. ‘Olves high tisk, so com. Procedure Consists of Several Monitored, test trials to be Conducted, and ed before there is any commitment to the Market, New Product development requires Scientifj ic Management Of two t * tshould be entrusted Toup or department. New product opment should bea Casual activity, ie, anew department should ™Med and an individual Should be assigned the Charge of taking us the task. hings: €s from the idea stage to a Stages. a Stage, marketer decide oo 7 BE and seek the desired set 0 eo Or not”, 9. Wall Street Journal. September 199 rent a ee 588s. Industria Marketing Manag———. Now Product Development oe = Idea Con screeni -» = M in jarketiny tio" 8 eeeoeioan = ae 4 e testing development ee »> Product: development Commercial- ization Test Marketing FIGURE 6.1: STAGES IN THE NEW PRODUCT DEVELOPMENT sand decisions in the new , ante product development process are: eneration of a new product idea: eect stage of new prod 3 ne Bie ides ee uct development is the systematic search for roau s. Management at thi i n rasized market f is stage defines the product and ascemp Beier et(s) and defines the objectives of developing new ducts. i ‘in however, need to estimate the amount of effortis d to developing breakthrough products, modifying existing prod- ys and copying competitor s products. Internal sources and external ch as customers, scientists, employees, competitors, channel r source of new product pI devote sources SU members an ideas.” @ Customers: In several cases, customers 0! product ideas. Technical and companies offering products to busi- ness users can take new ideas from customers as their customers are relatively few, firms can follow their use of products closely and solicit suggestions and ideas to improve these products either by using 2 formal approach, such as focus groups, interviews, OF surveys, OF through more informal discussions. The firm’s de- velopment team then works on these suggestions, sometimes in consultation with the customer. This joint-effort between the company and the customer significantly increases the probability that customer eventually will buy the new product, they might also spread favourable word of mouth. iployees, scientists, engineers, designers: Compa ny’sworkforce be source of ideas for improving production and developing irms innovate to have ways to motivate their em- ideas. Many companiesare going beyond their evelopment departments in order to seek id top management are the majo! ffer clues that led tonew yen nnavation’salesond Morenng Management. M. “The Buzz 00 Customer DriImmRENNRESA New Product Development _ a aaa - oduct development. New Product + innove w pr innovative ideas for ne ; Ss, Marketi a can come from inventors, patent attorneys, ng resean’ firms and it is the responsibility of the development team ty Ble serious attention to each Idea. A new product idea can also emerge from the top managemen, asin the case of the Tata Nano-a small, affordable, four Passenge, city car with a rear engine. In metros and towns a father Ariving a two wheeler with the older child standing in front and the wit. holding a baby at the back is a very common sight and forceg Ratan Tata to create a safer form of family transport. The idea was to offer a safer and affordable means of personal transport to 3 family of four that usually used a scooter’. *@ Competitors: Companies can find good ideas by following the competitor’s products. They can find out what customers like and dislike about competitor’s products by buying them and building better ones. Company sales representatives are also a good source of ideas as they have first-hand exposure to customers and are the first to learn about competitive developments. Suppliers and Intermediaries: Suppliers provide information about new concepts, techniques and materials for developing new products. Intermediaries like distributors and retailers since are close to the market, they are always in an advantage position to gauge the market and provide information about consumer problems, needs and complaints. An increasing number of com- panies, therefore, invest in training and reward Programmes for their sales representatives, intermediaries and suppliers to keep them motivated and also to provide better insights of the market. sdea-Generation Techniques: Several creative idea-generating techniques can help individual and groups to generate ideas by stimulating creativity®. *@ Attribute listing: technique calls for listing on existing product’s major attributes and then modifying each attribute in the search for an improved product. For example, replacing the wooden handle of a screwdriver with plastic and adding different screw heads. relationships: in this technique, several objects are con- d in relation to one another to create a new product. For otors.com, December 2008. defence and Valie af Analogical Thinking during New-Product idean,.” — a hee _ __New Product Development ee “ous stages of PLCand their appropriate marketing strategies are as follows introduction stage he introduction stage starts when the new product is launched. As making oduct available in several markets so as to fill the dealer's pipelines takes fie, sates growth is aptto be slow at this tage”. In Indian market Frozen foods ok many years before they entered a stage of rapid growth. The concept of froren foods was mainly not in sync with Indian food habits of cooking fresh and therefore it required a change in the mind set of Indian consumers to adopt products like high zen food as a new category of food products. Expensive h due to small number of fro’ definition television sets had retarded sales growt buyers who can afford the product. this phase is characterized by high operational costs, mainly due to inefficient production levels, high learning time, unwillingness of middlemen to deal in new products, extended credit terms. Due to low sales and heavy distribution and promotion expenses the profits at this stage tend to be negative or low. promotional expenditures are at their highest ratio to sales as high level of promotional effort is required to create awareness about new product, induce trial of the product and secure distribution in retail outlets””. Prices tend to be high due to low costs and high margins required to support heavy promotional expenditures. Marketing strategies during introduction stage requires consideration of each marketing variable. Since the objective of the marketer at the introduction stage is to create product awareness and trial for the new product, initially firm offers limited version of the product. It offers tangible benefits to the cus- tomers so that they can switch from existing products to try the new one. One of the most crucial decisions taken in this stage is pricing strategy for the new product. The firm opts for either market skimming or market penetration. With the skimming pricing strategy, firm enters the market with high price, taking advantage of early entry and relative novelty of the product. High prices help the firm to recover as much profit per unit as possible. With the penetration pricing strategy, firm goes for low prices aimed at securing larger market share. Low price encourage rapid product acceptance especially if the market is highly price sensitive. Distribution strategy during introduction stage shouldbe selective one, Another crucial area demanding attention at this stage is promotion. Firm ——— 9. Wright 15, and Goldstucker J, eds. New Ideas for Succe: ir : Ameri PC aeSGitat. ‘for Successful Marketing. Chicago: American Marketing 10, Chandy, TellisG.R., Macinnis DJ. and Thaivanich P, “What a “What to Say When: Advertisi Markets’. Journal of Marketing Research. 38. November, 2001 7.399.814, revocableea os Poss Deore Spends heavily on advertising so as to build awareness among early adopter, hd Beaters, Firms also spend heavily on sales promotion so as to induce trials, Growth stage The growth stage isa stage marked by increasing sales as early adopters like the Product is followed by other consumers who also start buying the product, As Sales ahd Profits go up, competitors enter the market with new and improveg versions of the product. More intermediaries are willing to help the produc; thereby expanding the distribution chain. Firms now operate at economica) tevels as there are lesser production bottlenecks resulting in lower costs. Price ‘of the product at this stage either remain same or fall slightly depending on the Merease in demand. Profit increases due to growth in sales and fall in unit manufacturing costs. The rate of growth eventually changes from an accelerated rate tO @ Gecelerated rate making firms to prepare new strategies. During this stage firms uses several marketing strategies to maximize market share and sustain rapid market growth to the extent possible. Firm further t™proves product quality, adds new product features and also tends to offer product extensions, service and warranty. Prices fall slightly to penetrate the market. Distribution coverage is increased by entering new channels. There is 2 shift from product awareness advertising to product preference advertising. The firm that pursues these strategies will strengthen its competitive position. By spending money on product improvement, promotion and distribution, firm are thus able to capture a dominant position. Maturity Stage Products that survive competition enter a stage of relative maturity. PI Tate of sales growth slowdown. This stage is most difficult and lasts lon; other stages. Slow down in the rate of sales growth creates overcapacity eventually leads to intensified competition. Cut-throat competition tel narrow down prices. Profits and margin are on decline as firm contin invest resources to maintain its competitive position in the market. Marketing objective at this stage is to maximize profit while defending m consider strategies of market, product and market Firms abandon their weaker products and prefer to conce: ces on profitable products. Diversify brands; service augment @ new value image are used as tools to retain the compet to match or beat competition. Prices should be lowered thre or easier credit schemes. More intensive distrib Is should be explored. Company should try to retail outlets. Firm can lunch a better acNew Product Development deals, coupons, ssive sales promotion techniques like trade yse agere ee warranties, gifts and contests to meet competition, Revising $4 é ate atories and incentives may help marketers to improve customer ba : og o loi product sales start declining as there could be some technolop i «shifts in consumer tastes and preferences and also increase in com ‘gis eventually leads to increased price cutting and profit erosion of rofits decline, number of competing firms also gets reduced an i ners are left with limited product versions. y for the firm the marketing objec s, it is, therefore, vercome the carrying @ weak product is very costl - ygtoreduce expenditure through phasing out weak item feasible for the firm to keep new products ready so as to of an existing product. Firms go selective in distribution by phasing out able outlets. Promotion efforts are reduced toa minimal level to retain rehard core loyal. picis an important strategic tool in marketing. As a planning tool it helps ing manager in developing different marketing opportunities during aferent phases of products existence by considering products sales trend pver a period of time. Shape and duration of the life cycle curve of a product could be altered by promoting more frequent usage of existing product, by developing varied uses of the product among current users OF by finding new yses of the product. PLC can also be used as'a control tool by a marketer as it helps the firm in measuring product performance against similar products. By being sensitive to changes in the market place, a firm an effectively use PLC in its strategic planning. u mean by new product development? What stages are used by eter in development of new product?” ceting strategies that could be used by the marketer during product life cycle? 3) pt of product life cycle with the help of suitable diagram vis ous et] concept testing and test marketing. Explain why should,