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JAWWAD HASSAN JASKANIROLL NO 12
STUDENT MBA THE ISLAMIA UNIVERSITY OF BAHAWALPUR
Product and Service Development
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Topic
Product Product development process
What is a Product?
A product is anything that can be offered to a market for
attention, acquisition, use or consumption that might satisfy a
want or need
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What is new product?
A product that is entirely new in market
A product that adapts up or replace an existing product
Old product in new marketOld product packaged in different
way Old product marketed in new way
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New product development
Is a process which is design to develop, test and
consider the viability of product which are new to the market in order to ensure the growth and survival of the
organization
Development of original products, product improvements, product modifications, and
new brands through the firm’s own R & D efforts.
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Why we develop new product?
To add to product portfolioTo create star and cash cow for futureTo replace the declining productTo take advantage of new technologyTo maintain /increase market shareTo defeat rivalsTo keep up with rivalsTo make competitive advantage
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Product Development ProcessA Product Development
process is the entire set of activities required to bring a new concept to a state of market readiness.
A design process is the set of technical activities within a product development process. It does not include business, financial, or marketing activities. 9
An Organized New Product Development Process is Critical
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Step 1: Idea Generation
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Step 2: Screening
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Step 3: Idea Evaluation
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Step 4: Development
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Step 5: Commercialization
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Topic
Difference between product and Services
Activities, Reasoning and objectives of product design
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall.
New Service or Product Development
Design
Analysis
Development
Full Launch
Service or product not profitable
Need to rethink the new offering or production process
Post-launch review
Major factors in strategy◦Cost◦Quality◦Time-to-market◦Customer satisfaction◦Competitive advantage
Product and Service Design
Tangible – intangibleServices created and delivered at the
same timeServices cannot be inventoriedServices highly visible to customersServices have low barrier to entryLocation important to service
Differences Between Product and Service Design
Product or Service Design Activities
Translate customer wants and needs into product and service requirements
Refine existing products and servicesDevelop new products and servicesFormulate quality goalsFormulate cost targetsConstruct and test prototypesDocument specifications
Reasons for Product or Service Design
Be competitive
Increase business growth & profits
Avoid downsizing with development of new products
Improve product quality
Achieve cost reductions in labor or materials
Objectives of Product and Service Design
Development time and costProduct or service costResulting product or service qualityCapability to produce or deliver a given
product or service
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Topic
New product development process
Life Cycles of Products or Services
Time
Incubation
Growth
Maturity
Saturation
Decline
Dem
an
d
Product Life-Cycle Strategies
Product development
IntroductionGrowthMaturityDecline
Begins when the company develops a new-product idea
Sales are zeroInvestment costs
are highProfits are
negative
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PLC Stages
Product Life-Cycle Strategies
Product development
IntroductionGrowthMaturityDecline
Low salesHigh cost per
customer acquired
Negative profitsInnovators are
targetedLittle
competition 26
PLC Stages
Marketing Strategies: Introduction Stage
Product – Offer a basic productPrice – Use cost-plus basis to setDistribution – Build selective
distributionAdvertising – Build awareness among
early adopters and dealers/resellersSales Promotion – Heavy expenditures
to create trial27
Product Life-Cycle Strategies
Product development
IntroductionGrowthMaturityDecline
Rapidly rising sales
Average cost per customer
Rising profitsEarly adopters
are targetedGrowing
competition28
PLC Stages
Marketing Strategies: Growth Stage
Product – Offer product extensions, service, warranty
Price – Penetration pricingDistribution – Build intensive distributionAdvertising – Build awareness and
interest in the mass marketSales Promotion – Reduce expenditures
to take advantage of consumer demand
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Product Life-Cycle Strategies
Product development
IntroductionGrowthMaturityDecline
Sales peakLow cost per
customerHigh profitsMiddle majority
are targetedCompetition
begins to decline30
PLC Stages
Marketing Strategies: Maturity Stage
Product – Diversify brand and modelsPrice – Set to match or beat
competitionDistribution – Build more intensive
distributionAdvertising – Stress brand differences
and benefitsSales Promotion – Increase to
encourage brand switching31
Product Life-Cycle Strategies
Product development
IntroductionGrowthMaturityDecline
Declining salesLow cost per
customerDeclining profitsLaggards are
targetedDeclining
competition32
PLC Stages
Marketing Strategies: Decline Stage
Product – Phase out weak itemsPrice – Cut priceDistribution – Use selective
distribution: phase out unprofitable outlets
Advertising – Reduce to level needed to retain hard-core loyalists
Sales Promotion – Reduce to minimal level
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TopicProject team
Investment and Development cost
CREATING A PROJECT TEAM
Every potential new product or service requires a dedicated development team.
creating your team you need to include people with a variety of skills.
All team members should understand your business' objectives and be committed to them.
There are many forms of effective team working and the right one for you will depend on your business' needs. For example, team members might:
work as a unit dedicated to one project, reporting to a project manager
work exclusively on one project but remain in separate departments reporting to department heads who are under the project manager
work on several projects at once with both a department head and project manager to monitor progress
Teams need someone in a project management role to lead, co-ordinate and motivate the team.
INVESTMENT &DEVELOPMENT
New products and services is an naturally risky process. You must plan any investment carefully and strictly control your costs.
Factors considering in future investment. plan exactly where this investment will be directed. justify the expenditure on every project. Manage your cost. Before making investment decisions, consider how
much your business stands to gain from a completed product or service. Weigh this against the risks you face.
Phasing new product development. One way to minimize your risks is to phase investments
in projects. By reviewing a project at the end of each phase or stage of development.
A range of government grants and tax breaks is available for research and new product development.
It's essential to keep a close eye on costs when you develop new products and services to control cost. You should:
estimate development costs in advance. monitor expenditure throughout the development process introduce phased investment. There are two main ways to estimate costs: a top-down approach where you consider previous
comparable projects and use them as a benchmark a bottom-up approach where all team members agree on
the costs they expect to incur with one project manager, who will then estimate the total cost
Remember that your costs could include staffing, materials, technology, product design and market research.
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Topic
Standardization
StandardizationA uniform identification that is
agreed on is called a standardTwo types exist:
◦Industrial standardization --- the process of establishing agreement on uniform identifications for definite characteristics of quality, design, performance, quantity, service, and so on
◦Managerial standardization --- deals with such things as operating practices, procedures, and systems
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• 100% standardization is rare
• Usually starts with a core product as the foundation
• Various features are added, these may differ according to the country market
• Can also involve modular design, where various features are packaged as modules,
different assembly combinations in different markets
What to Standardize?
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Advantages of Standardization (Cont’d)
Fewer parts to deal with in inventory & manufacturing
Reduced training costs and time
More routine purchasing, handling, and inspection procedures
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Advantages of Standardization
Orders fill able from inventory
Opportunities for long production runs and automation
Need for fewer parts justifies increased expenditures on perfecting designs and improving quality control procedures.
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Disadvantages of Standardization
Designs may be frozen with too many imperfections remaining.
High cost of design changes increases resistance to improvements.
Decreased variety results in less consumer appeal.
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Topic Analysis
ANALYSIS
7 questions you must ask before launching a new product
Is my business already on a solid foundation
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What is the size of the market
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How should I price it
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How much revenue can I expect to generate within a specified time period (usually one year)
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What will it take to realize this additional revenue and profit
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Where is the break even point and what is the potential profit
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Is this new direction in line with my overall Business Vision and Long Term Goals
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CONCLUSIONThe conclusion of this overall
topic is to develop a product requires◦Its designing◦Analysis of market as well as its cost
and required investment ◦A very fine development process◦And finally its publicity and its
approach to the target population