New product development

3. Product Development
Product development includes a no. of decisions, namely, what
to manufacture or buy, how to have its packaging, how to fix
its price and how to sell it?

4. Tasks of the Product Planner
• Identify specific customers needs & expectations.
• Align company’s capabilities with changing market demands.
• Whether to move on to the next stage.
• To abandon the product.
• To seek additional information.

6. New Product Development
New Product Development consists of the
• creation of new ideas,
• their evaluation in terms of sales potentials and profitability,
• production facilities,
• resources available,
• designing and production testing
• And marketing of the product.

7. Stages in New Product Development
Generation of Product Ideas
Screening of Ideas
Commercial Feasibility
Product Designing & Evaluation
Test Marketing
Launching the Product

8. Generation of Product Ideas
• The Product planners visualise new product ideas.
• Product ideas may come from:
• Professional designers
• Scientists
• Customers
• Sales force
• Dealers
• Competitors
• Brainstorming sessions of mgmt.
• Consumer complaints
• Private research org.
• Trade associates
• Commercial laboratories
• Industrial users

9. Detailed study of New Products Ideas
• Ideas generated are examined.
• Elimination of ideas which have no potential.
• Idea screening is done.
• Evaluating the company’s capabilities w. r. t scientific
knowledge and technical skills.

11. Commercial Feasibility
• The product planners evaluate the nature and importance of
market needs.
• Evaluating new ideas in the light of the company’s capability
w. r. t scientific knowledge and technical skills and financial
skills.
• Only most feasible and profitable ideas are picked-up for
further detailed investigation.
• Market research is critical during this phase since it reveals the
changing behavior of buyers, strategies, competitors and
availability of new technological ideas.

13. Product Designing & Evaluation
• This phase relates to actual development of the new product
• A programme is made for the proper development of the product
data evaluation system
– First, precise description of the features of the product should be
studied.
– Then, selected consumers may be called upon to offer their
comments on the proposed product.
– Decisions regarding branding, packaging, labeling, etc., are also
made.

14. Test Marketing
• Test Marketing is necessary to find out viability of marketing programme
for large scale distribution.
• Before the product is widely distributed, it is tried in a selected market.
• It is also known as mini market testing.
• It allows greater control over the new product.
• It is generally done by consumer goods companies .
• It is supposed to test the complete plan, not simply the product concept.

16. Benefits of Test marketing
• It offers an opportunity to examine the product in natural
marketing environment.
• It can identify weakness in the product or in overall marketing
plan.
• Helps mgmt. to develop a profile of potential customers & their
purchasing habits.
• Helps to evaluate alternative marketing plan.
• It offers an opportunity to compare consumer reactions to the test
product and competing products.

17. Launching the Product / Commercialisation
• Here, the firm proceeds to finalize all features of the product.
• Promotions & campaigns are launched.
• Distribution channels are selected for distribution .
• After this, the life cycle of the product starts and strategies are
made to maximize sales volume.
• Necessary improvements are made.

19. Product Failure
When a product does not reach the target of sales and profits, it
is said to fail.
Symptoms of Product Failure are as follows :-
i. Declining sales volume
ii. Declining profit margins
iii. Higher than expected costs
iv. Higher than expected investment costs

21. Total Quality Management (TQM)
• Quality may be described as the fitness of a product for use.
• Total Quality Management (TQM) refers to meeting the
requirements of the customer consistently by continuous
improvement in the quality of work of all employees.
• Essentials for achieving total quality :-
1. Meeting customers’ requirement
2. Continuous improvement through management
process.
3. Involvement of all employees.

22. ISO : 9000
 The International Standards Organisation (ISO) was founded
in 1946 .
 Its headquarters is at Geneva, Switzerland.
 It has emerged in91 countries.
 The major thrust of ISO is quality systems and well knitted
procedures for stringent quality standards.
 The series of specifications are commonly known as ISO-
9000
 It is not only for the quality of products but also for the
systematised planning and management of an organisation as
a whole.