Lesson 1 NPD

7/30/2019 Lesson 1 NPD

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New Product Development

Marketing Presentation


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Marketing Concepts Marketing Mix --- 4 Ps

Product

Place

Price

Promotion

Customer oriented Corresponding 4 C

Product --- Valued by Customer

Place ------- Convenient to Customer

Price -------- Costing to Customer

Promotion ---- Communicate to Customer

New Product Development 2


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Marketing Concepts

Positioning Differentiating from your competitors

Value proposition- what value you have to offer?

Product dimension (features) - What do you stand do ? Eg how do youposition yourself in a meeting

Targetting/Segmenting Who are you positioning your product for?

Your Demographic segmentation

Gender,Age,Income,Education,Location,Marital Status and Culture

Marketing Strategy

Each product acording to its 4 P and 4 C and T n P require different

Strategy Summarize --- Mantra of marketing is CCDVTP

Creating, Communicating , Delivering . VALUE to Target Customer forProfit

Vedio of 2 minute market concepts

New Product Development 3


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New Product Development(NPD)

NPD is a process which is designed to develop, test andconsider the viability of products which are new to themarket in order to survival of the organization.

The complete process of bringing a new product orservice to market

Companies typically see new product development asthe first stage in generating and commercializing newproducts within the overall strategic process ofproductlife cycle management used to maintain or grow theirmarket share.

4New Product Development
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What is a new product?

A product that opens up an entirely new market.

A product that adapts or replaces an existing

product.

A product that significantly broadens the market

for a existing product.

An old product introduced in a new market.

An old product packaged in a different way.

An old product marketed in a different way.



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Types of new products

New to the world products-innovative products.

New product lines- to allow the firm to enter anexisting market

Additions to product-lineto supplement thefirms existing product line.

Improvements and revisions to existing products.

Repositioned productsexisting products

targeted at new markets. Cost reductions- new products that provide

similar performance at lower cost.



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Why develop new products?

To add to product portfolio

To create stars and cash cows for the future

To replace declining products

To take advantage of new technology

To maintain/increase market share To defeat rivals

To keep up with rivals

To maintain competitive advantage

To fill the gap in the market To bring new customers

PLC Management

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New products can be used to:

Increase/defend market share by offering morechoice or updating older products

Appeal to new segments

Diversify into new markets Improve relations with distributors

Maintain the firms reputation as a leading edge

company Even out peaks and troughs in demand

Make better use of the organisations resources



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Examples of new products

New to the world- high definition TV, ipod,

Flat screen TV

New product lines- Small car segment/TATA

Additions to the product line- Pulsar135

Product improvement and replacement- new

car models by Maruti/Tata



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New product planning

This is a strategic stage

The firm assesses

-its current product portfolio-opportunities and threats

The firm then determines the type of product

which would best fit in the corporate strategy



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Stages in NPD

Idea generation

Idea screening

Concept development and testing

Marketing strategy development

Business analysis

Product development

Test marketing

Commercialization



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Ideas generation

R and D department

Production department

Sales team

Employees

Customers

Competitors

External sources

Market research



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Screening Ideas

Screening of products to spot good idea and

drop poor ones as soon as possible

Ideas are checked for technical feasibility,

financial feasibility and marketability

The business analyses the product to evaluate

its demand, marketability and profit potential.

Given ideas rating according to marketing,

production and strategic factors.



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Criteria for evaluating new products

Is there sufficient demand?

Will it be profitable?

What is the likely payback period?

Does it fit the firms image?

Does it fit the firms product portfolio?

What is likely life cycle of the product?

What is the state of market and competition?

Does the firm posses the capability tosuccessfully produce and market the product?

How easy will it be to manufacture?



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NPD AND RISK

SAME

PRODUCT

EXTENDED

PRODUCT

RANGE

INCREMENTAL

CHANGE

TOTALLY NEW

PRODUCT

SAME MARKET LOW LOW MEDIUM MEDIUM

BETTER

MARKET

COVERAGE

LOW LOW MEDIUM MEDIUM

RELATED

MARKET

MEDIUM MEDIUM MEDIUM HIGH

TOTALLY NEW

MARKET

MEDIUM MEDIUM HIGH HIGH



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Product Concept

Know/understand the Problem develop a concept in form ofproduct/service so that Solution is there

Very important because Strategy will be decided accordingly

Example vedios of HUL and ITC

Product concept: Under this concept, the first thing that is considered isthe function that the product is going to serve.

Most of the time organization falls too much in love with their productthat they forgot about other productdevelopment, competition and otherexternal factors result in Marketing Myopia

Concept testing: testing new products concepts with a group ofconsumers to find out if the concepts have strong consumer appeal.

Concept testing is the process of using quantitativemethods and qualitative methods to evaluate consumer response to aProduct idea prior to the introduction of a product to the market.

http://en.wikipedia.org/wiki/Quantitative_marketing_researchhttp://en.wikipedia.org/wiki/Qualitative_marketing_researchhttp://en.wikipedia.org/wiki/Qualitative_marketing_researchhttp://en.wikipedia.org/wiki/Quantitative_marketing_researchhttp://en.wikipedia.org/wiki/Quantitative_marketing_researchhttp://en.wikipedia.org/wiki/Qualitative_marketing_researchhttp://en.wikipedia.org/wiki/Markethttp://en.wikipedia.org/wiki/Markethttp://en.wikipedia.org/wiki/Markethttp://en.wikipedia.org/wiki/Qualitative_marketing_researchhttp://en.wikipedia.org/wiki/Quantitative_marketing_researchhttp://en.wikipedia.org/wiki/Quantitative_marketing_research


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Marketing strategy development

Marketing strategy

Designing an initial marketing strategy for a new productbased on product concept

Formal market research is carried out to access the

products market potential. Written plan (usually a part of the overall corporate plan)

which combines product development , promotiondistribution, and pricing approach, identifiesthe firm'smarketinggoals, and explains how they will be

achieved within a stated timeframe.Marketing strategy determines the choice oftargetmarketsegment, positioning, marketing mix, and allocationof resources.

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Business analysis

A review of the sales, costs and profitprojections for a new product to find outwhether these factors satisfy the firms

objective. Estimate potential sales, income, break even

point, profit and return on investment fromnew ideas

Projecting probable costs and sales; willprofits reach the firms targets



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Product development

R and D turns idea into product

Engineering and production issues resolved.

Concerned with design, materials, production

processes, quality and safety. Developing the product concept into a physical

product to ensure that the product idea can beturned into a workable project.

Translating the idea into reality throughprototypes or simulations.

Involves development of a prototype.



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PD-Design mix

Formal Design -concerned with aesthetics.

Does the product look good?

Functional Design -concerned with

performance. Does it work? Is it reliable?

Economy of manufacture -does design allow it

to be made efficiently and at a cost which

allows for profit?



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Characteristics of good design

Fit for purpose

Reliable

Pleasing appearance

Easy to use

Convenient for user

Efficient to use

Easy to maintain

Safe to use

Safe to manufacture

Financially viable

Legal

Environmentally

friendly

Consistent with theneeds of the market



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Test Marketing

Launching a product in a small geographical area.

A field experiment in realistic market setting.

Releasing the product into a small but representativemarket where consumer reactions can be assessed and

marketing mix checked and adjusted. Aims

- To forecast likely results of a national launch

- To test the operational effectiveness of the marketing

plan.- To identify possible problems

- To assess customer reaction



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Problems of test marketing

The test market might not be a true indicator.

Environment might change between the test

and the national launch.

Competition may disrupt the test marketing

by engaging in exceptional marketing activity.

Test marketing alerts competitors.

Largely but not entirely replaced by simulated

test marketing



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Commercialization/product launch

Introducing a new product into the market.

Timing is critical for success.

There will be heavy promotional expenditureat the launch.

Choice of skim or penetration pricing.

The product has to well targeted and position.



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New product introduction

Three ways to introduce new products underthe auspices of existing products:-

Line extension using an existing brand name

or products within the same category. Brand extensionusing an existing brand

name on products in a new category but

within the same broadly defined market. Brand stretching - using an existing name on a

product in a different market.



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All products need a USP

The unique product benefit that a firmaggressively promotes to its target market.

The term unique selling proposition was

coined by advertising copywriter in 1940. The benefit usually reflects functional

superiority: best quality, best service, lowest

price, most advanced technology. If the product does not have a USP, why then

would anyone want to buy it?



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Factors in new product success

Development of a unique, superior product

Differentiation from rivals

Well conceived, properly executed launch

Top management backing Market attractiveness- the product should be

aimed at attractive markets

Resources must be in place

Speed and timely Quality

Market driven, customer focus



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Reasons for failure of launched

products

Neglect of market research

Inaccurate market research

Poor marketing after launch

Poor distribution Product performance below expectation

Product to complex

Unforeseen events

Market not ready for the product

Inadequate support for the product


Documents

Lesson 1 NPD