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8/9/2019 18981370 New Product Development Process
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NEW PRODUCT AND NEWPRODUCT DEVELOPMENT
PROCESS
Prepared by:
Muhammad Roman Alvi
M.Com Section AGulshan Campus
Federal Urdu University
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What is a new product ? A product that opens an entirely new
market
A product that adopts or replaces anexisting product
A product that significantly broadensthe market for an existing product
An old product introduced in a newmarket
An old product packaged in a differentway
An old product marketed in adifferent way
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Types of new product
Innovative products New product lines to allow the firm
to enter an existing market
Addition to product line to
supplement the firms existing productline
Improvements and revisions ofexisting product
Repositioned products existingproducts targets at new market
Cost reduction new product thatprovide similar performance at lower
cost
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Examples of new products
New to the world high definition
TV, ipod, flat screen TV, Probiotic
Ice Cream
Product improvement & replacement
:SPEED by BPCL
Cost reduction new product: Moser
Baer.
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New product can be used to
Increase/defend market share byoffering more choice or updating olderproducts
Appeal to new segments
Diversify into new markets Improve relationship with distributors
Maintain the firms reputation a leading
edge company
Even out peaks and troughs in demand Make better use of the organization's
resources
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Why develop New Product ?
To create stars and cash cows forthe future
To replace declining product
To take advantage of newtechnology
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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New product planning
This is the strategic stage
The firm assesses
It current productportfolio
Opportunities and threats
The firm then determines thetype of product which wouldbest fit in with the corporatestrategy
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New product development
New product development isa process which is designed
to develop, test and considerthe viability of productswhich are new to the marketin order to ensure the
Growth or survival of theorganisation.
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Stages in New product development
Idea Generation
Idea Screening
Concept development andtesting
Market strategy development
Business Analysis
Test marketing Commercialization
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Idea Generation
Idea generation is continuous,systematic search for new productopportunities. It involves delineatingsources of new ideas and methods for
generating them. Ideas for new products can beobtained from basic research using aSWOTanalysis(OPPORTUNITY ANALYSIS), Market
and consumer trends, company's R&Ddepartment, competitors, focusgroups, employees, salespeople,corporate spies,
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Idea Screening The object is to eliminate unsound concepts
prior to devoting resources to them. The screeners must ask these questions:
Will the customer in the target marketbenefit from the product?
What is the size and growth forecasts ofthe market segment/target market?
What is the current or expectedcompetitive pressure for the product idea?
What are the industry sales and markettrends the product idea is based on?
Is it technically feasible to manufacturethe product?
Will the product be profitable whenmanufactured and delivered to thecustomer at the target price?
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Concept testing
Concept testing present theconsumer with a proposedproduct and measure attitudes
and intention at this early stageof development.
Concept testing of prototypes
can help avoid costly mistakes.
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Market Strategy Development
2. Outlines the planned price,
distribution strategy, and marketingbudget for the first year.
3. Describes thelong-run sales andprofit goals and marketing-mixstrategy over time.
1. Describe the markets size, structure,and behaviour, the planned product
positioning, and the sales, marketshare, and profit goals for first fewyears.
Includes development of three partstrategy plan
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Business & financial Analysis
Estimate likely selling price
based upon competition and
customer feedback Estimate sales volume based
upon size of market
Estimate profitability andbreakeven point
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Test Marketing
Test marketing involves placing
a product for sale in one or
more selected areas andobserving its actual
performance under the
proposed marketing plan
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Commercialization
Commercialization involves implementinga total marketing plan and full
production
Launch the product
Produce and place advertisements
and other promotions
Fill the distribution pipeline with
productCritical path analysis is most useful
at this stage
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Key success factors in New Product
Development
Operating Philosophy
Organization Structure
The Experience Effect
Management Style