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•Product means any marketable thing with
some utility in it, produced either by a labour
or through series of automated processes.
•Development is an act of making or
achieving a continuous progress in
something by someone. Progress transit
from an earlier policy (traditional approach)
to an advanced policy (modern approach).
What is Product Development? Meaning
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Product development is a specializedactivity. It is done to improve the
existing product or to introduce a new product in the market. It is also done
to improve the earlier features ortechniques or systems .
What is Product Development? Meaning
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New-product development means to introduce abrand-new product in the market. It means to add
a fresh product to an existing line of products.
Normally, a company starts with one or two
products. However, after some time it has fewmore products in its line (say from 15 to 20). This
is possible only because of new-product
development.
What is Product Development? Meaning
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Product Development is a creation, innovation,
utility enhancement or continuous improvement ofearlier features design, service, etc.) of an
existing product or developing manufacturing) anentirely new kind of product to satisfy the
requirements of its end-users consumers).”
Definition of Product Development
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Product development takes place, works orfunctions as under:
Creation of an entirely new product or upgradingan existing product by exploring all possibilitiesand outcomes.
Innovation of a new or an existing product todeliver better and enhanced services to end-users.
Continuous improvement of a new product orenhancing an existing product by givingpreference to satisfy the demand of end-users.
Enhancing the utility of a new product orupgrading features of an existing product, for thepersonal and/or commercial use, to expand thedefined goal (objective).
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What is a new product ?
A product that opens an entirelynew market
A product that adopts or replacesan existing product
A product that significantlybroadens the market for anexisting 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 product
Innovative products
New product lines – to allow the firm to enter an existingmarket
Addition to product line – to supplement the firm’s existingproduct line
Improvements and revisions of existing product
Repositioned products – existing products targets at new
market Cost reduction new product that provide similar
performance at lower cost
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Why develop New Product ?
To create stars and cash cows for the future
To replace declining product
To take advantage of new technology To defeat rivals
To maintain/increase market share
To keep up with rivals
To maintain competitive advantage
To fill gap in the market
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Product development involves risk
of investing precious time, money
(capital) and intellectualresources. Therefore, it is
necessary that it is well-planned.
A good product developmenthelps to:
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Create new business opportunities and
bring growth.
Boost productivity and profitability of the
entrepreneurs.
Enhance the satisfaction levels of the
consumers.
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Example of Product Development
Packing wheat flour in retail bags for
household consumption.
Packing cooking oil in retail pouches for
household consumption.
Converting land line phones into wireless
handsets for easy portability and full-time
access to communication.
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Example of Product Development
Modify desktop computers into light-weight
laptops to ease portability.
Transform a traditional library into an e-library
to facilitate faster searching and accessibility of
electronic books and other digital documents.
Convert a simple airplane into a fighter jet to
achieve a greater speed.
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Stages in New product development Idea Generation
Idea Screening
Concept developmentand testing
Market strategydevelopment
Business Analysis Test marketing
Commercialization
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An Organized New Product Development Process is Critical
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Step 1: Idea Generation
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Idea Generation
Idea generation is continuous,systematic search for new productopportunities. It involvesdelineating sources of new ideas
and methods for generating them. Ideas for new products can beobtained from basic researchusing a SWOT analysis(OPPORTUNITY ANALYSIS),
Marketand consumer trends, company'sR&D department, competitors,focus groups, employees,salespeople, corporate spies,
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Step 2: Screening
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Idea Screening
The object is to eliminate unsoundconcepts prior to devoting resources tothem.
The screeners must ask these questions: Will the customer in the target
market benefit from the product?
What is the size and growthforecasts of the marketsegment/target market?
What is the current or expectedcompetitive pressure for the productidea?
What are the industry sales andmarket trends the product idea isbased on?
Is it technically feasible tomanufacture the product?
Will the product be profitable when
manufactured and delivered to thecustomer at the target price?
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Step 3: Idea Evaluation
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Concept testing
Concept testing present the consumer witha proposed product and measure attitudesand intention at this early stage of
development.
Concept testing of prototypes can help
avoid costly mistakes.
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Step 4: Development
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Market Strategy Development
2. Outlines the planned price,distribution strategy, andmarketing budget for the first
year.
3. Describes thelong-run sales andprofit goals and marketing-mix
strategy over time.
1. Describe the market’s size, structure, and behaviour,the planned product positioning, and the sales, market
share, and profit goals for first few years.
Includes development of three part strategy plan
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Business financial Analysis
Estimate likely selling
price based upon
competition and customer
feedback
Estimate sales volume
based upon size ofmarket
Estimate profitability
and breakeven point
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Test Marketing
Test marketing involves placing a product
for sale in one or more selected areas and
observing its actual performance under theproposed marketing plan
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Step 5: Commercialization
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Commercialization
Commercialization involves implementing a
total marketing plan and full production
Launch the product Produce and place advertisements
and other promotions
Fill the distribution pipeline with
product
Critical path analysis is most useful
at this stage
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CONCEPT OF PRODUCT LIFECYCLE
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The concept
Every product has a life cycle, just as in case
of human beings.
A Product after being introduced in to the
market, goes through different stages which iscategorised on the basis of product, profit,
competition and market behaviours.
It is rather a managerial tool for forecasting &strategic planning.
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The Product Life Cycle
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Product Life Cycle Template
Introduction Growth Maturity Decline
Product
Extension
S a l e s
TIME
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Introduction stage
Product is Introduced in the market for the first
time.
Slow growth rate
Negative or low profits
Huge marketing expenses
No competition
Highly volatile in nature
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Market Introduction – Investing in the Future
+
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Market Introduction – Investing in the Future
Market Growth Profits Go Up & Down
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Monopolistic CompetitionDevelopsMonopolistic CompetitionDevelops
Innovation AttractsCompetitionInnovation AttractsCompetition
Market Growth – Profits Go Up & Down
Profits Peak and ThenDecline
Don’t Ignore Long-Term Competitive Trends!
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Growth Stage
Sales rises at an increasing rate
Profitable returns from the market
Reduced promotional expenses
Hard work for the firm to establish dealerships
& distribution outlets
Competitors starts to explore the market
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Persuasive, More Costly
Promotion
Brands Are More Similar
Greater Price
Competition/Price Sensitivity
Persuasive, More Costly
Promotion
Brands Are More Similar
Greater Price
Competition/Price Sensitivity
Market Maturity – Sales Level Off,
Profits Continue Down
Maturity May Last a Long
Time
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Maturity Stage
Sales are still increasing, but at a decreasing
rate.
Severe competition
Profits fall in line with falling prices, which isunavoidable to retain market share.
Investments in promotional measures to
differentiate the product New distribution strategies & alliances
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Sales Decline – A Time of Replacement
+
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Saturation Stage
Sales are stable
Profits fall drastically
Competition is at the peak
Continued need for promotion to maintain
sales
Firm has to plan product modifications
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The old TV is getting replaced
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The old TV is getting replaced
by..
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Decline
Characterised by falling sales for the whole
industry.
Prize cutting is continued and profit is at zero
level. Firm has to take a major strategic decision
whether to continue with the product or
abandon it.
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