New Product Development - Tips from Shed to Shop. For a FREE downloadable version please visit www.incrementa.co.uk

1. From Shed to Shop
New Product Development

2. Definition
Development of original
products, product
improvements, product
modifications, and new
brands through the
firm’s own
R & D efforts

3. Why do NPD?
• Research has shown that 40% of new consumer products, 20% of new
industrial products and 18% of new services related products have failed
completely as products.
• To avoid development of a new product that will not be a success in a market
and to minimize the costs of such a development a NPD Roadmap can be
used.
• through a series of logical steps, starting from the process of idea generation
and ending at the launch of the product into a market

4. Product Life Cycle – why do NPD

5. Product Lifecycle - why do NPD
Time
Product
Develop-
ment
Introduction
Profits
Sales
Growth Maturity Decline
Losses/
Investments
Sales and
Profits

6. Why do NPD?
• The product life cycle concept can be applied to a:
− Product class (soft drinks)
− Product form (diet colas)
− Brand (Diet Dr. Pepper)
− Using the PLC to forecast brand performance or to develop marketing
strategies is problematic

7. Product Life Cycle

8. Product Lifecycle Stages
• Product development
• Introduction
• Growth
• Maturity
• Decline
• Begins when the company
develops a new-product idea
• Sales are zero
• Investment costs are high
• Profits are negative

9. Product Lifecycle Stages
• Product development
• Introduction
• Growth
• Maturity
• Decline
• Low sales
• High cost per customer
acquired
• Negative profits
• Innovators are targeted
• Little competition

10. Product Lifecycle Stages
• Product development
• Introduction
• Growth
• Maturity
• Decline
• Rapidly rising sales
• Average cost per customer
• Rising profits
• Early adopters are targeted
• Growing competition

11. Product Lifecycle Stages
• Product development
• Introduction
• Growth
• Maturity
• Decline
• Sales peak
• Low cost per customer
• High profits
• Middle majority are targeted
• Competition begins to decline

12. Product Lifecycle Stages
• Product development
• Introduction
• Growth
• Maturity
• Decline
• Declining sales
• Low cost per customer
• Declining profits
• Laggards are targeted
• Declining competition

13. What is the NPD roadmap

14. • 1. Generating New Ideas
• 2. Screening The Idea
• 3. Testing The Concept
• 4. Business Analytics
• 5. Marketability Tests
• 6. Technicalities & Development
• 7. Commercialise & Launch
• 8. Review & Update
The following eight
ingredients mixed into
your team’s new
product
developmental (NDP)
process will ensure
overall marketability,
accuracy and bring
products to market
quickly.

15. Generating New Ideas
What
prompts
innovation?
Customers
(Unmet
needs)
Gaps in the
Market
New
Technologies
Performance
Failures
New insights
and ideas
Cost and
Efficiency
Savings

16. Screening the Idea
• Product development costs increase substantially in later stages so poor ideas
must be dropped
• Set specific criteria that your idea has to meet based on business and technical
goals to weed out poor project ideas..
• Measure your new product idea against your top 3 competitor’s new innovation
and their market share.

17. Screening the Idea
• Once all viable ideas are gathered and managed, they must be further
developed, examined, prioritized and evaluated so that a single product idea is
selected for further development into a product concept. This whole process is
called screening and is the main problem to solve in this level using different
tools and techniques.

18. Screening the Idea
• Two potential risks in screening
• Dropping ideas too early means missed opportunities!
• Developing the "wrong" ideas means wasted resources in terms of time,
financial investments and may risk your activities with your current portfolio

19. Tools and Solutions
• Assessing New Product Feasibility
Is there a need?
Is it real?
Will the customers buy?
Will it satisfy the market?
Is the product real?
Can it be made?
Differentiation?
Can we win?
Low cost position?
Industry structure?
Company competitive?
Organizational effectiveness?
Is the return adequate?
Is it worth it?
Is the risk acceptable?
Supports company's objectives?
Satisfy other needs?
Other factors?

20. Market Research to help screening
Wider world
Industry
Competition
Customers

21. Tools and Solutions
• Step 1.
− Each concept or idea must be presented in a similar way having the same
amount detail
• Step 2.
− The participants must be then selected
• Step 3.
− Dots are allocated to each of the participants. Depending on the number of
concepts or ideas these can be 3 to 5. Different colored dots can be used to
indicate different things such as performance, functionality, design etc.
Participants can use his or her dots to indicate choice, by sticking them next to
the concept or idea drawing.

22. Dot Sticking (voting)
• Step 4.
− After all participants have used their corresponding dots, dots for each concept
or idea are summed and the best concept is declared. Also a second round of
dot sticking can take place by selecting the best 2 or 3 strongest concepts or
ideas.
• Step 5.
− It is sometimes helpful and necessary to understand the reason of the voting or
dot sticking. In this case the participants are required to indicate or note likes
and dislikes about the concepts by using post-it notes. This enables the design
team to keep strong features of rejected concepts in mind.

23. Concept Testing
• Different from marketing
• Concept development creates a detailed version of the idea stated in
meaningful consumer terms
• Conduct patent research, design due diligence, and other legalities with NDA’s
• Develop marketing message as part of concept testing
• Will consumers understand, need or want your product?

24. Concept Testing
For Product Marketing, a product concept test is conducted when the product is
in the conceptual stage, where only the core concept is defined, through a story
board, sketches, graphics, or even a product mock-up. The concept should be
developed to the point that it conveys the product attributes, the desired
positioning and the intended brand personality.

25. Concept Screening
• Identifies concept ideas that are sufficiently promising to merit further
consideration and development
• Criteria
− Believability, Relevance
− Perceived Uniqueness, Value
− Trialability: Potential for trial
− Performance Advantages

26. Pre-Market tests
• Measures attractiveness of a new product or service before its launching into
the market by identifying its strengths and weaknesses.
• Detects communication problems that may interfere with appropriate
comprehension by the target segment.
• Provides purchase intention indicators, with scenarios varying from most
optimistic to most conservative.
• Minimizes the risk of failure in the market by allowing product and
communications adjustments before launch.
• Possible with both qualitative and quantitative techniques.

27. How can concepts be tested?
• Focus Groups
• One-on-One Personal Interviews
• Phone Interviews
• Postal Surveys
• Internet Surveys
• Hybrids (e.g., phone-mail-phone)
• Prototyping & Rapid prototyping
• Alpha, Beta & Gama Tests

28. Marketing Strategy
• Arrange private test groups with beta versions and gather feedback from end--
‐users
• Allows last minute improvements and tweaks before commercializing
• Beta provides early product adoption momentum
• The target market, product positioning, and sales, share, and profit goals for
the first few years.
• Product price, distribution, and marketing budget for the first year.
• Long-run sales and profit goals and the marketing mix strategy.

29. Pricing new products or services
High
High
Low
Low
Promotion
Price
Rapid Skimming
Rapid
Penetration
Slow Skimming
Slow
Penetration
Premium products
Gradual entry
Premium products
Quick entry

30. Technicalities and Development
• Prototype development and testing
−Use, trial and test to destruction.
• Technical aspects can be perfected without alterations to post--‐beta products
• The production team can produces it, the marketing team can plan the
distribution and the finance team can back the product introduction monetarily

31. Launch and Commercialise
• New product has gone mainstream, consumers are purchasing your good or
services
• Refresh advertising during this stage to keep product name strong and planted
in the minds of buyers

32. Review & Update
• Revisit the NPD process and look for improvement areas
• Revisit your introductory pricing and service offerings to nail down the overall
value that customers will pay
• Continuously differentiate your product and adapt it to the lifecycle it is in
• Adjust for consumer needs, competition and profit models

33. Causes of New Product Failures
• Overestimation of Market Size
• Product Design Problems
• Product Incorrectly Positioned, Priced or Advertised
• Costs of Product Development
• Competitive Actions
• To create successful new products, the company must:
− understand it’s customers, markets and competitors
− develop products that deliver superior value to customers.

34. Summary
• New Product Development can be a costly, timely and ultimately unsuccessful
process
• Plan each stage of the process and do not underestimate the time the whole
process will take
• Listen to customer / potential feedback. Remember customers should be at
the heart of everything you do
• Do you need to do NPD? Can you innovate existing products or reach new
markets?