1. New Product
Development
-Dr. JP Verma

2. Definition
 New Product Development
 Development of original products,
product improvements, product
modifications, and new brands
through the firm’s own R & D
efforts.
9-2

3. New-Product Development
Strategies
Strategies for Obtaining New Product Ideas
Acquired Original
Companies Products
Acquired Product
Patents Improvements
Acquired Product
Licenses Modifications
New
Brands

4. New Product Development
Process
Marketing Business
Strategy Analysis
Concept Product
Development Development
and Testing
Idea Test
Screening Marketing
Idea Commercialization
Generation

5. New Product Development
Strategy
 New Product Development Process:
 Stage 1: Idea Generation
 Internal idea sources:
 R&D
 External idea sources:
 Customers,
competitors,
distributors, suppliers

6. New Product Development Process
Step 2. Idea Screening
 Many companies have systems for rating
and screening ideas which estimate:
 Process to spot good ideas and drop poor
ones as soon as possible.
 Market Size
 Product Price
 Development Time & Costs
 Manufacturing Costs
 Rate of Return
 Then, the idea is evaluated against a set of
general company criteria.

7. New Product Development Process
Step 3. Concept Development & Testing
1. Develop Product Ideas into
Alternative
Product Concepts
2. Concept Testing - Test the
Product Concepts with Groups
of Target Customers
3. Choose the Best One

8. New Product Development Process
Step 4. Marketing Strategy Development
Marketing Strategy Statement Formulation
Part One Describes Overall:
Target Market
Planned Product Positioning
Sales & Profit Goals
Market Share
Part Two Describes Short-Term:
Product’s Planned Price
Distribution
Marketing Budget
Part Three Describes Long-Term:
Sales & Profit Goals
Marketing Mix Strategy

9. New Product Development Process
Step 5. Business Analysis
Step 6. Product Development
Business Analysis
Review of Product Sales, Costs,
and Profits Projections to See if
They Meet Company Objectives
If No, Eliminate
Product Concept
If Yes, Move to
Product Development

10. New Product Development Process
Step 7. Test Marketing
Test Marketing is the Stage Where the Product and Marketing
Program are Introduced into More Realistic Market Settings.
Budget Levels Product
Packaging Positioning
Elements that
May be Test
Marketed by a
Branding Company Advertising
Pricing Distribution

11. New Product Development Process
Step 7. Test Marketing
Standard Controlled
Test Market Test Market
Full marketing campaign A few stores that have
in a small number of agreed to carry new
representative cities. products for a fee.
Simulated
Test Market
Test in a simulated
shopping environment
to a sample of
consumers.

12. Where is a good test market?
I. Factors to consider
 - Size
 - Demographics
 - Isolation from other cities
 - Media availability and cost
 - Retailer support
 2. Popular cities
 - Big cities:
Mumbai,Banguluru,Delhi,Kolkata
 - Small
cities:Ranchi,Raipur,dehradun,e.t.c.

13. New Product Development Process
Step 8. Commercialization
Commercialization is the
Introduction of the New Product
into the Marketplace.
To
When? Where? Whom? How?

14. Causes of New Product Failures
 Overestimation of Market Size
 Product Design Problems  Insignificant
difference
 Product Incorrectly Positioned, Priced or
Advertised
 Costs of Product Development
 Competitive Actions
 No access to the market
 Bad timing
To create successful new products, the company
must:
 understand it’s customers, markets and
competitors
 develop products that deliver superior value to
customers.

15. Alternatives to Development:
Acquire new Products
Develop "me-too"
products.
Revive old products