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Product or Service Development Process

The Islamia University od Bahawalpur (Pakistan)

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Product or Service Development Process

  1. 1. 1
  3. 3. Product andService Development
  4. 4. 4TopicProductProduct development process
  5. 5. 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
  6. 6. 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
  7. 7. 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
  8. 8. 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
  9. 9. 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
  10. 10. An Organized New Product Development Process is Critical10
  11. 11. Step 1: Idea Generation11
  12. 12. Step 2: Screening12
  13. 13. Step 3: Idea Evaluation13
  14. 14. Step 4: Development14
  15. 15. Step 5: Commercialization15
  16. 16. TopicDifference between product andServicesActivities, Reasoning and objectives ofproduct design16
  17. 17. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall.New Service or Product DevelopmentDesignAnalysisDevelopmentFull Launch Service orproduct notprofitable Need to rethinkthe new offeringor productionprocess Post-launchreview
  18. 18.  Major factors in strategy◦ Cost◦ Quality◦ Time-to-market◦ Customer satisfaction◦ Competitive advantageProduct and Service Design
  19. 19.  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
  20. 20. 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
  21. 21. 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
  22. 22. 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
  23. 23. 23TopicNew product developmentprocess
  24. 24. Life Cycles of Products or ServicesTimeIncubationGrowthMaturitySaturationDeclineDemand
  25. 25. Product Life-Cycle Strategies Productdevelopment Introduction Growth Maturity Decline Begins when thecompany developsa new-product idea Sales are zero Investment costsare high Profits are negative25PLC Stages
  26. 26. Product Life-Cycle Strategies Productdevelopment Introduction Growth Maturity Decline Low sales High cost percustomer acquired Negative profits Innovators aretargeted Little competition26PLC Stages
  27. 27. Marketing Strategies: IntroductionStage Product – Offer a basic product Price – Use cost-plus basis to set Distribution – Build selective distribution Advertising – Build awareness among earlyadopters and dealers/resellers Sales Promotion – Heavy expenditures tocreate trial27
  28. 28. Product Life-Cycle Strategies Productdevelopment Introduction Growth Maturity Decline Rapidly rising sales Average cost percustomer Rising profits Early adopters aretargeted Growingcompetition28PLC Stages
  29. 29. Marketing Strategies:Growth Stage Product – Offer product extensions, service,warranty Price – Penetration pricing Distribution – Build intensive distribution Advertising – Build awareness and interestin the mass market Sales Promotion – Reduce expenditures totake advantage of consumer demand29
  30. 30. Product Life-Cycle Strategies Productdevelopment Introduction Growth Maturity Decline Sales peak Low cost percustomer High profits Middle majority aretargeted Competition beginsto decline30PLC Stages
  31. 31. 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
  32. 32. Product Life-Cycle Strategies Productdevelopment Introduction Growth Maturity Decline Declining sales Low cost percustomer Declining profits Laggards aretargeted Decliningcompetition32PLC Stages
  33. 33. 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
  34. 34. TopicProject teamInvestment and Development cost34
  35. 35. 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.
  36. 36. 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.
  37. 37.  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.
  38. 38. 38TopicStandardization
  39. 39. 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
  40. 40. • 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
  41. 41. Advantages of Standardization (Cont’d) Fewer parts to deal with in inventory &manufacturing Reduced training costs and time More routine purchasing, handling, andinspection procedures41
  42. 42. 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
  43. 43. 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
  44. 44. TopicAnalysis44
  45. 45. ANALYSIS7 questions you must ask beforelaunching a new product
  46. 46. Is my business already on a solidfoundation?
  47. 47. What is the size of the market?
  48. 48. How should I price it?
  49. 49. How much revenue can I expect togenerate within a specified timeperiod (usually one year)?
  50. 50. What will it take to realize thisadditional revenue and profit?
  51. 51. Where is the break even point andwhat is the potential profit?
  52. 52. Is this new direction in line with myoverall Business Vision and LongTerm Goals?
  53. 53. 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