TOPICS -1.Introduction , 2. Product Development Strategies , 3.Characteristics of successful product development , 4. Importance of NPD , 5. Process , 6. NPD Organisations ,7. Managing New Product Development .
1. INTRODUCTION :
In business , new product development (NPD) is the complete process of bringing a new product to market.
New product development is described in the literature as the transformation of a market opportunity into a product available for sale and it can be tangible (that is, something physical you can touch) or intangible (like a service, experience, or belief).
NEW PRODUCT PLANNING :
As a firm’s offerings enter the maturity and decline stages of the product life cycle, it must add new items to continue to prosper.
–Alternative Product Development Strategies :
2. PRODUCT DEVELOPMENT STRATEGIES :
Developing new products or modifying existing products so they appear
new, and offering those products to current or new markets.
1. Product positioning:
Consumers’ perceptions of a product’s attributes, uses, quality, and advantages and disadvantages in relation to those of competing brands.
2.Cannibalization:
A loss of sales of the current product due to competition from a new product in the same line.
3 .Adoption process:
Stages that consumers go through in learning about a new product, trying it, and deciding whether to purchase it again.
–Awareness.
–Interest.
–Evaluation.
–Trial.
–Adoption or rejection.
People who
purchase new products almost as soon as the products reach the market
5. Diffusion process:
5. Diffusion process:
Process by
which new goods or services are accepted in the marketplace.
Successful
companies are more likely to have house to new product organization in R& D
and engineering and more likely to allow the marketing and R & D functions
to have greater influence to the new product process.
3. CHARACTERISTICS : SUCCESSFUL PRODUCT DEVELOPMENT
1.Management Style:
Successful
companies are not only to select management style appropriate to immediate new product development needs
but also to revise and tailor that
approach to changing new product opportunities.
2.Experience Effect:
Experience
in introducing new product enables companies to improve new product
performance. New product development cost confirm the experience curve: the
more you do something ,the more efficient you become at doing it. this
experience advantage stem from the acquisition
of a knowledge of the market and of the step required to develop the new
product.
3.Organizational
Structure:
4.Operating
Philosophy:
Successful companies are
more committed to growth through new products development internally. they are
more likely to had a formal new product process in place of a longer period of
time than unsuccessful companies. They are more likely to have strategic plan
that includes a certain portion of the company growth from new products.
4. IMPORTANCE OF NPD :
(i) To replace obsolete products;
(ii) To maintain and increase the growth rate/sales revenue of the firm;
(iii) To utilise spare capacity;
(iv) To employ surplus funds or borrowing capacity; and
(v) To diversify risks and face competition.
(ii) To maintain and increase the growth rate/sales revenue of the firm;
(iii) To utilise spare capacity;
(iv) To employ surplus funds or borrowing capacity; and
(v) To diversify risks and face competition.
5. PROCESS : NEW PRODUCT DEVELOPMENT
Step 1: Generating
Utilizing basic internal and external SWOT analyses, as well as current marketing trends, one can distance themselves from the competition by generating ideologies which take affordability, ROI, and widespread distribution costs into account.Lean, mean and scalable are the key points to keep in mind. During the NPD process, keep the system nimble and use flexible discretion over which activities are executed. You may want to develop multiple versions of your road map scaled to suit different types and risk levels of projects.
Step 2: Screening The Idea
Wichita, possessing more aviation industry than most other states, is seeing many new innovations stop with Step 2 – screening. Do you go/no go? Set specific criteria for ideas that should be continued or dropped. Stick to the agreed upon criteria so poor projects can be sent back to the idea-hopper early on.Because product development costs are being cut in areas like Wichita, “prescreening product ideas,” means taking your Top 3 competitors’ new innovations into account, how much market share they’re chomping up, what benefits end consumers could expect etc. An interesting industry fact: Aviation industrialists will often compare growth with metals markets; therefore, when Boeing is idle, never assume that all airplanes are grounded, per se.
Step 3: Testing The Concept
As Gaurav Akrani has said, “Concept testing is done after idea screening.” And it is important to note, it is different from test marketing.Aside from patent research, design due diligence, and other legalities involved with new product development; knowing where the marketing messages will work best is often the biggest part of testing the concept. Does the consumer understand, need, or want the product or service?
Step 4: Business Analytics
During the New Product Development process, build a system of metrics to monitor progress. Include input metrics, such as average time in each stage, as well as output metrics that measure the value of launched products, percentage of new product sales and other figures that provide valuable feedback. It is important for an organization to be in agreement for these criteria and metrics.Even if an idea doesn’t turn into product, keep it in the hopper because it can prove to be a valuable asset for future products and a basis for learning and growth.
Step 5: Beta / Marketability Tests
Arranging private tests groups, launching beta versions, and then forming test panels after the product or products have been tested will provide you with valuable information allowing last minute improvements and tweaks. Not to mention helping to generate a small amount of buzz. WordPress is becoming synonymous with beta testing, and it’s effective; Thousands of programmers contribute code, millions test it, and finally even more download the completed end-product.Step 6: Technicalities + Product Development
Provided the technical aspects can be perfected without alterations to post-beta products, heading towards a smooth step 7 is imminent. According to Akrani, in this step, “The production department will make plans to produce the product. The marketing department will make plans to distribute the product. The finance department will provide the finance for introducing the new product”.As an example; In manufacturing, the process before sending technical specs to machinery involves printing MSDS sheets, a requirement for retaining an ISO 9001 certification (the organizational structure, procedures, processes and resources needed to implement quality management.)
In internet jargon, honing the technicalities after beta testing involves final database preparations, estimation of server resources, and planning automated logistics. Be sure to have your technicalities in line when moving forward.
Step 7: Commercialize
At this stage, your new product developments have gone mainstream, consumers are purchasing your good or service, and technical support is consistently monitoring progress. Keeping your distribution pipelines loaded with products is an integral part of this process too, as one prefers not to give physical (or perpetual) shelf space to competition. Refreshing advertisements during this stage will keep your product’s name firmly supplanted into the minds of those in the contemplation stages of purchase.Step 8: Post Launch Review and Perfect Pricing
Review the NPD process efficiency and look for continues improvements. Most new products are introduced with introductory pricing, in which final prices are nailed down after consumers have ‘gotten in’. In this final stage, you’ll gauge overall value relevant to COGS (cost of goods sold), making sure internal costs aren’t overshadowing new product profits. You continuously differentiate consumer needs as your products age, forecast profits and improve delivery process whether physical, or digital, products are being perpetuated.- See more at: http://www.innovationexcellence.com/blog/2013/05/27/8-step-process-perfects-new-product-development/#sthash.mhG2FZAV.dpuf
Step 1: Generating
Utilizing basic internal and external SWOT analyses, as well as current marketing trends, one can distance themselves from the competition by generating ideologies which take affordability, ROI, and widespread distribution costs into account.Lean, mean and scalable are the key points to keep in mind. During the NPD process, keep the system nimble and use flexible discretion over which activities are executed. You may want to develop multiple versions of your road map scaled to suit different types and risk levels of projects.
Step 2: Screening The Idea
Wichita, possessing more aviation industry than most other states, is seeing many new innovations stop with Step 2 – screening. Do you go/no go? Set specific criteria for ideas that should be continued or dropped. Stick to the agreed upon criteria so poor projects can be sent back to the idea-hopper early on.Because product development costs are being cut in areas like Wichita, “prescreening product ideas,” means taking your Top 3 competitors’ new innovations into account, how much market share they’re chomping up, what benefits end consumers could expect etc. An interesting industry fact: Aviation industrialists will often compare growth with metals markets; therefore, when Boeing is idle, never assume that all airplanes are grounded, per se.
Step 3: Testing The Concept
As Gaurav Akrani has said, “Concept testing is done after idea screening.” And it is important to note, it is different from test marketing.Aside from patent research, design due diligence, and other legalities involved with new product development; knowing where the marketing messages will work best is often the biggest part of testing the concept. Does the consumer understand, need, or want the product or service?
Step 4: Business Analytics
During the New Product Development process, build a system of metrics to monitor progress. Include input metrics, such as average time in each stage, as well as output metrics that measure the value of launched products, percentage of new product sales and other figures that provide valuable feedback. It is important for an organization to be in agreement for these criteria and metrics.Even if an idea doesn’t turn into product, keep it in the hopper because it can prove to be a valuable asset for future products and a basis for learning and growth.
Step 5: Beta / Marketability Tests
Arranging private tests groups, launching beta versions, and then forming test panels after the product or products have been tested will provide you with valuable information allowing last minute improvements and tweaks. Not to mention helping to generate a small amount of buzz. WordPress is becoming synonymous with beta testing, and it’s effective; Thousands of programmers contribute code, millions test it, and finally even more download the completed end-product.Step 6: Technicalities + Product Development
Provided the technical aspects can be perfected without alterations to post-beta products, heading towards a smooth step 7 is imminent. According to Akrani, in this step, “The production department will make plans to produce the product. The marketing department will make plans to distribute the product. The finance department will provide the finance for introducing the new product”.As an example; In manufacturing, the process before sending technical specs to machinery involves printing MSDS sheets, a requirement for retaining an ISO 9001 certification (the organizational structure, procedures, processes and resources needed to implement quality management.)
In internet jargon, honing the technicalities after beta testing involves final database preparations, estimation of server resources, and planning automated logistics. Be sure to have your technicalities in line when moving forward.
Step 7: Commercialize
At this stage, your new product developments have gone mainstream, consumers are purchasing your good or service, and technical support is consistently monitoring progress. Keeping your distribution pipelines loaded with products is an integral part of this process too, as one prefers not to give physical (or perpetual) shelf space to competition. Refreshing advertisements during this stage will keep your product’s name firmly supplanted into the minds of those in the contemplation stages of purchase.Step 8: Post Launch Review and Perfect Pricing
Review the NPD process efficiency and look for continues improvements. Most new products are introduced with introductory pricing, in which final prices are nailed down after consumers have ‘gotten in’. In this final stage, you’ll gauge overall value relevant to COGS (cost of goods sold), making sure internal costs aren’t overshadowing new product profits. You continuously differentiate consumer needs as your products age, forecast profits and improve delivery process whether physical, or digital, products are being perpetuated.- See more at: http://www.innovationexcellence.com/blog/2013/05/27/8-step-process-perfects-new-product-development/#sthash.mhG2FZAV.dpuf
NPD PROCESS STRUCTURE
The NPD process consists of a series of activities that firms employ in the complex process of delivering new products to the market. Every new product will pass through a series of stages from ideation through design, manufacturing and market introduction. The development process basically has three main phases:- Fuzzy front-end (FFE) is the set of activities employed before the formal and well defined NPD or stage-gate process.
- Product design starts with the development of the new product and it ends at pre-commercialization analysis stage.
- Fuzzy back-end or commercialization phase represent the action steps where the production and market launch occur.
STEPS : NEW PRODUCT DEVELOPMENT :
1. Idea Generation .
2. Screening .
3. Concept Development .
4. Business Analysis .
5. Product Development .
6. Market Testing .
7. Commercialization .
1. IDEA GENERATION :
Every
new product starts its life as an idea. In some cases the idea comes
out of a brainstorming session, while other ideas develop as a direct
response to a need in the market or a response to a competitor product.
Ideas for new products can be obtained from basic research using a SWOT analysis (Strengths, Weaknesses, Opportunities & Threats).
Ideas for new products can be obtained from basic research using a SWOT analysis (Strengths, Weaknesses, Opportunities & Threats).
Market and consumer trends, company's R&D
department, competitors, focus groups, employees, salespeople,
corporate spies, trade shows, or ethnographic discovery methods
(searching for user patterns and habits) may also be used to get an
insight into new product lines or product features.
Lots of ideas are generated about the new product. Out of these ideas many are implemented. The ideas are generated in many forms.
Many
reasons are responsible for generation of an idea.
2. SCREENING :
Once the idea generation phase ends, the ideas must undergo a screening
process to implement the best ideas.The object is to eliminate unsound concepts prior to devoting resources to them.
The screening process typically includes a variety of general projections including cost, market reception and profitability.
The screening process typically includes a variety of general projections including cost, market reception and profitability.
It is based on following questions :
- Will the customer in the target market benefit from the product?
- What is the size and growth forecasts of the market segment / target market?
- What is the current or expected competitive pressure for the product idea?
- What are the industry sales and market trends the product idea is based on?
- Is it technically feasible to manufacture the product?
- Will the product be profitable when manufactured and delivered to the customer at the target price?
3.CONCEPT DEVELOPMENT /TESTING
The concept development and testing phase seeks to gauge consumer reaction to the overall idea of the new product.
Large companies often use focus groups to collect data about whether consumers would buy the product, how often they might purchase and acceptable price levels.
Small-business owners can use focus groups, though informal questions to existing customers can also yield valuable information about interest in a new product.
It is based on the questions :
- Who is the target market and who is the decision maker in the purchasing process?
- What product features must the product incorporate?
- What benefits will the product provide?
- How will consumers react to the product?
- How will the product be produced most cost effectively?
- Prove feasibility through virtual computer aided rendering and rapid prototyping
- What will it cost to produce it?
MAJOR TECHNIQUES OF CONCEPT DEVELOPMENT:
•Problem
based Ideation: This start with the understanding of needs of problems of
target market. This can be achieved by systematic analysis of internal
documents of the company.
•Attribute
based Ideation: As name suggests that any change or modification in product is
due to altering one or more culture products attributes. In this method panel
are employed to forced a change in all the possible attributes of the product. In which we mainly use relationship analysis.
4.BUSINESS ANALYSIS :
In general, this analysis encompasses production costs and expected profit margin, as well as total market size for the product. Businesses must also weigh the product's position within the business brand.
ESTIMATE THE FOLLOWING -
- Likely selling price based upon competition and customer feedback.
- Sales volume based upon size of market and such tools as the Fourt-Woodlock equation.
- Profitability and break-even point.
5. PRODUCT DEVELOPMENT
Most businesses also consider and develop marketing materials during this phase. The product development phase often follows a rinse-and-repeat model of refining the product and marketing, then testing again with customers or focus groups.
6. MARKET TESTING
Produce a -
- Physical prototype or mock-up AND test the product (and its packaging) in typical usage situations.
- An initial run of the product and sell it in a test market area to determine customer acceptance.
This step emphasis on making adjustments where necessary.
Conduct focus group customer interviews or introduce at trade show.
In short, market testing takes the product and offers it to a limited group or geographic region. Large companies may also use computer simulations to mimic customer responses.
For small businesses that typically cater to a small geographic region or a specific market segment, the market testing phase is often skipped.
7. COMMERCIALIZATION
This step involves-
1. Launching the product.
1. Launching the product.
2. Producing and placing advertisements and other promotions.
3. Filling the distribution pipeline with product.
3. Filling the distribution pipeline with product.
The
commercialization phase is considered as post development phase and consists of making the product available to the
customer base at large and launching a marketing effort to support it.
Commercialization includes producing enough of the product to cover initial demand or having sufficient staff to provide the new service.
Critical path analysis is most useful at this stage.
Commercialization includes producing enough of the product to cover initial demand or having sufficient staff to provide the new service.
Critical path analysis is most useful at this stage.
6. NPD ORGANIZATIONS
- Product Development and Management Association (PDMA)
- Association of International Product Marketing & Management
- ISPIM (The International Society for Professional Innovation Management)
- Society of Concurrent Product Development (SCPD)
1. Product Development and Management Association (PDMA)
PDMA is a non-profit professional society that organizes and publishes information about the development of new products.
| Founded | 1976 |
|---|---|
| Type | Professional society |
|
Area served
|
Worldwide |
| Method | Certification, industry standards, conferences, publications |
|
Members
|
Over 3500 |
|
Key people
|
Bob Johnston(Chair) Lee Shaeffer (Vice-Chair) Edmund M Ziegler (Secretary/Treasurer) |
PDMA operates a training program leading to the New Product Development Professional (NPDP) certification.
2.Association of International Product Marketing & Management
The Association of International Product Marketing & Management (AIPMM) is a professional association for product managers founded in 1998.
It has approximately 8,000 members worldwide. It runs certification courses for product managers and product marketing managers in addition to running educational conferences and publications.
3. ISPIM (The International Society for Professional Innovation Management)
ISPIM originated in an initiative taken by Professor Knut Holt at
the University of Trondheim in 1973. Wishing to initiate a modern approach to innovation management research, Professor Holt started a programme of studies on Needs Assessment and Information Behaviour: the NAIB Program.
The objective was to present tools and guidelines for practical application to product innovation processes, which was a new field of enquiry at the time.
During this period an international group formally founded ISPIM and held the first international conference on product innovation management. In the years since then, ISPIM has organised scientific and managerial publications, conferences and symposia.
The objective was to present tools and guidelines for practical application to product innovation processes, which was a new field of enquiry at the time.
During this period an international group formally founded ISPIM and held the first international conference on product innovation management. In the years since then, ISPIM has organised scientific and managerial publications, conferences and symposia.
ISPIM has 400 members, holds scientific gatherings and produces scientific publications in innovation management research
4. Society of Concurrent Product Development (SCPD)
SCPD exists to stimulate a community of thinkers who act with
intent to effectively innovate big solutions that will create a healthy
future.
The Society of Concurrent Product Development (SCPD) is a non-profit 501 (c) (6) organization incorporated in the Commonwealth of Massachusetts.
SCPD helps organizations to improve the productivity of new product creation through synergistic leveraging of concurrent engineering, parallel execution processes, innovation, technology, tools, and best practices.
The Society of Concurrent Product Development (SCPD) is a non-profit 501 (c) (6) organization incorporated in the Commonwealth of Massachusetts.
SCPD helps organizations to improve the productivity of new product creation through synergistic leveraging of concurrent engineering, parallel execution processes, innovation, technology, tools, and best practices.
7. MANAGING NEW PRODUCT DEVELOPMENT :
Companies must take a holistic approach to managing this process and
must continue to innovate and develop new products they want to grow and
prosper.
The ways of managing NPD are -
1. CUSTOMER CENTERED New Product Development
It focuses on:
- Finding new ways to solve customer problems.
- Create more customer-satisfying experience
The most successful companies are the ones that:
2. TEAM BASED New Product Development
- Differentiated from others.
- Solved major customer problems.
- Offered a compelling customer value proposition.
- Engaged customer directly.
2. TEAM BASED New Product Development
An approach: To deserving new products in which various company’s departments
work closely together overlapping the steps in the product development
process in order to:
Save time and Increase effectiveness .
Company departments work closely together in cross functional teams
overlapping the steps in the product development process (to save time
and increase effectiveness).
Those departments are: legal, marketing, finances, design and manufacturing, suppliers and customer companies.
If there is a problem, all the company can work.
3. SYSTEMATIC New Product Development
Then, there is a Cross-Functional Innovation Management Committee which:
Evaluate new products ideas
Help bringing good ideas.
3. SYSTEMATIC New Product Development
Development process should be holistic (alternative) and systematic not to good ideas die.
This process is installed on Innovation Management System that collect,review, evaluate new product ideas and manage .
The company appoints to a senior person to be the Innovation .
Manager
who encourage all the company :employees,suppliers, distributors and
dealers to become involved in finding and developing new products.
Then, there is a Cross-Functional Innovation Management Committee which:
Evaluate new products ideas
Help bringing good ideas.
Step 1: Generating
Utilizing basic internal and external SWOT analyses, as well as current marketing trends, one can distance themselves from the competition by generating ideologies which take affordability, ROI, and widespread distribution costs into account.Lean, mean and scalable are the key points to keep in mind. During the NPD process, keep the system nimble and use flexible discretion over which activities are executed. You may want to develop multiple versions of your road map scaled to suit different types and risk levels of projects.
Step 2: Screening The Idea
Wichita, possessing more aviation industry than most other states, is seeing many new innovations stop with Step 2 – screening. Do you go/no go? Set specific criteria for ideas that should be continued or dropped. Stick to the agreed upon criteria so poor projects can be sent back to the idea-hopper early on.Because product development costs are being cut in areas like Wichita, “prescreening product ideas,” means taking your Top 3 competitors’ new innovations into account, how much market share they’re chomping up, what benefits end consumers could expect etc. An interesting industry fact: Aviation industrialists will often compare growth with metals markets; therefore, when Boeing is idle, never assume that all airplanes are grounded, per se.
Step 3: Testing The Concept
As Gaurav Akrani has said, “Concept testing is done after idea screening.” And it is important to note, it is different from test marketing.Aside from patent research, design due diligence, and other legalities involved with new product development; knowing where the marketing messages will work best is often the biggest part of testing the concept. Does the consumer understand, need, or want the product or service?
Step 4: Business Analytics
During the New Product Development process, build a system of metrics to monitor progress. Include input metrics, such as average time in each stage, as well as output metrics that measure the value of launched products, percentage of new product sales and other figures that provide valuable feedback. It is important for an organization to be in agreement for these criteria and metrics.Even if an idea doesn’t turn into product, keep it in the hopper because it can prove to be a valuable asset for future products and a basis for learning and growth.
Step 5: Beta / Marketability Tests
Arranging private tests groups, launching beta versions, and then forming test panels after the product or products have been tested will provide you with valuable information allowing last minute improvements and tweaks. Not to mention helping to generate a small amount of buzz. WordPress is becoming synonymous with beta testing, and it’s effective; Thousands of programmers contribute code, millions test it, and finally even more download the completed end-product.Step 6: Technicalities + Product Development
Provided the technical aspects can be perfected without alterations to post-beta products, heading towards a smooth step 7 is imminent. According to Akrani, in this step, “The production department will make plans to produce the product. The marketing department will make plans to distribute the product. The finance department will provide the finance for introducing the new product”.As an example; In manufacturing, the process before sending technical specs to machinery involves printing MSDS sheets, a requirement for retaining an ISO 9001 certification (the organizational structure, procedures, processes and resources needed to implement quality management.)
In internet jargon, honing the technicalities after beta testing involves final database preparations, estimation of server resources, and planning automated logistics. Be sure to have your technicalities in line when moving forward.
Step 7: Commercialize
At this stage, your new product developments have gone mainstream, consumers are purchasing your good or service, and technical support is consistently monitoring progress. Keeping your distribution pipelines loaded with products is an integral part of this process too, as one prefers not to give physical (or perpetual) shelf space to competition. Refreshing advertisements during this stage will keep your product’s name firmly supplanted into the minds of those in the contemplation stages of purchase.Step 8: Post Launch Review and Perfect Pricing
Review the NPD process efficiency and look for continues improvements. Most new products are introduced with introductory pricing, in which final prices are nailed down after consumers have ‘gotten in’. In this final stage, you’ll gauge overall value relevant to COGS (cost of goods sold), making sure internal costs aren’t overshadowing new product profits. You continuously differentiate consumer needs as your products age, forecast profits and improve delivery process whether physical, or digital, products are being perpetuated.- See more at: http://www.innovationexcellence.com/blog/2013/05/27/8-step-process-perfects-new-product-development/#sthash.mhG2FZAV.dpuf
