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What is a Product?A product is anything that can beoffered to a market for attention,acquisition, use or consumptionthat might satisfy a want or need5
What is new product? A product that is entirely new inmarket A product that adapts up or replace anexisting product Old product in new market Old product packaged in different way Old product marketed in new way6
New product developmentIs a process which is design to develop, test andconsider the viability of product which are new to themarket in order to ensure the growth and survival of theorganizationDevelopment of original products, productimprovements, product modifications, andnew brands through the firm’sown R & D efforts.7
Why we develop new product? To add to product portfolio To create star and cash cow for future To replace the declining product To take advantage of new technology To maintain /increase market share To defeat rivals To keep up with rivals To make competitive advantage8
Product Development Process A Product Development process isthe entire set of activities required tobring a new concept to a state ofmarket readiness. A design process is the set oftechnical activities within a productdevelopment process. It does notinclude business, financial, ormarketing activities.9
An Organized New Product Development Process is Critical10
Major factors in strategy◦ Cost◦ Quality◦ Time-to-market◦ Customer satisfaction◦ Competitive advantageProduct and Service Design
Tangible – intangible Services created and delivered at thesame time Services cannot be inventoried Services highly visible to customers Services have low barrier to entry Location important to serviceDifferences Between Productand Service Design
Product or Service Design Activities Translate customer wants and needs intoproduct and service requirements Refine existing products and services Develop new products and services Formulate quality goals Formulate cost targets Construct and test prototypes Document specifications
Reasons for Product or Service Design Be competitive Increase business growth & profits Avoid downsizing with development ofnew products Improve product quality Achieve cost reductions in labor ormaterials
Objectives of Product and ServiceDesign Development time and cost Product or service cost Resulting product or service quality Capability to produce or deliver a givenproduct or service
Marketing Strategies:Maturity Stage Product – Diversify brand and models Price – Set to match or beat competition Distribution – Build more intensivedistribution Advertising – Stress brand differences andbenefits Sales Promotion – Increase to encouragebrand switching31
Marketing Strategies: DeclineStage Product – Phase out weak items Price – Cut price Distribution – Use selective distribution:phase out unprofitable outlets Advertising – Reduce to level needed toretain hard-core loyalists Sales Promotion – Reduce to minimal level33
TopicProject teamInvestment and Development cost34
CREATING A PROJECT TEAM Every potential new product or service requires a dedicateddevelopment team. creating your team you need to include people with a varietyof skills. All team members should understand your business objectives andbe committed to them. There are many forms of effective team working and the right onefor you will depend on your business needs. For example, teammembers might: work as a unit dedicated to one project, reporting to a projectmanager work exclusively on one project but remain in separate departmentsreporting to department heads who are under the project manager work on several projects at once with both a department head andproject 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 strictlycontrol 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 howmuch your business stands to gain from a completedproduct or service. Weigh this against the risks youface. Phasing new product development. One way to minimize your risks is to phase investmentsin projects. By reviewing a project at the end of eachphase or stage of development.
A range of government grants and tax breaks is available forresearch and new product development. Its essential to keep a close eye on costs when you developnew 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 previouscomparable projects and use them as a benchmark a bottom-up approach where all team members agree onthe costs they expect to incur with one project manager, whowill then estimate the total cost Remember that your costs could include staffing, materials,technology, product design and market research.
Standardization A uniform identification that is agreedon is called a standard Two types exist:◦ Industrial standardization --- the processof establishing agreement on uniformidentifications for definite characteristicsof quality, design, performance, quantity,service, and so on◦ Managerial standardization --- deals withsuch things as operating practices,procedures, and systems396-39
• 100% standardization is rare• Usually starts with a core product as thefoundation• Various features are added, these may differaccording to the country market• Can also involve modular design, where variousfeatures are packaged as modules, differentassembly combinations in different marketsWhat to Standardize?40
Advantages of Standardization (Cont’d) Fewer parts to deal with in inventory &manufacturing Reduced training costs and time More routine purchasing, handling, andinspection procedures41
Advantages of Standardization Orders fill able from inventory Opportunities for long production runsand automation Need for fewer parts justifies increasedexpenditures on perfecting designs andimproving quality control procedures.42
Disadvantages of Standardization Designs may be frozen with too manyimperfections remaining. High cost of design changes increasesresistance to improvements. Decreased variety results in lessconsumer appeal.43
How much revenue can I expect togenerate within a specified timeperiod (usually one year)?
What will it take to realize thisadditional revenue and profit?
Where is the break even point andwhat is the potential profit?
Is this new direction in line with myoverall Business Vision and LongTerm Goals?
CONCLUSION The conclusion of this overall topic isto develop a product requires◦ Its designing◦ Analysis of market as well as its cost andrequired investment◦ A very fine development process◦ And finally its publicity and its approach tothe target population