New Product Development

Definition
New product development (NPD) is the

complete process of bringing a new product to
the market till its consumption & feedback
from the end user of the business chain
It may be a new product, service or idea

Steps in Product Development
Market Research/Opportunity Scan
Concept Testing
Prototype Development
Market Testing
Product Launch
Why New Products?
New product development is essential to any
business that must keep up with market trends
and changes
Approximately one-third of the revenue a
business generates is coming from products
they did not sell five years ago
Changing environment creates new demands
and needs
Selection of Product
Must be alert to quickly develop opportunities
Focus on markets or product categories

consistent with organization’s objectives,
resources, capabilities and strengths
Securing a competitive advantage

New Product Ideas
Company sources other than R&D 36.2%
Analysis of the competition 27.0%
Research & Development 24.3%
Product users 15.8%
Supplier suggestions 12.5%
Product user research 10.5%
Published information 7.9%
Purpose of New Product
A way of getting new and keeping old
customers
Effective way of obtaining a competitive

advantage
Source of growth and excitement

New Product Categories
New to the world products
New product lines
Product line extensions
Improvements and revisions to existing
products
Repositionings
Cost reductions
Product Development Process
Product
Launch
Test
Marketing
Prototype
Development
Concept
Testing
Market research
and
Opportunity scan
Marketing
Very important to product development success
Key to successful marketing is imaginative,

effective, creative communication
Marketing Strategies
Increase the number of customers
Increase the average transaction
Increase the frequency of repurchase

Marketing Concepts
Customer-oriented Strategy
Customer service-oriented Business
Profit-oriented Pricing Strategy
Social Benefits
Market Research
Who is my target audience?
Are there enough members of this target group to
make the business worthwhile?
How large is the potential market and how much of
that potential market can I capture?
Who is my competition and what would make
someone choose my product over their current?
Market Opportunity and Threats
Societal Focus Economic Realities
•GNP
•Population Shifts
•Disposable Income
•Values
•Discretionary Income
•Attitudes
•Competition
•Trends
Technological
Development
•Advance in Legal & Regulatory
technology Condition
•Market receptiveness •Laws
to technology •Regulations
Market Placement
1) Identify target markets
Size and growth potential
Ability and ease of reaching segment
Good fit with organizational objectives
Greatest revenue generation with least investment
Market Placement
2) Determine opportunity
Segment size
Annual usage potential
Anticipated annual growth rate
Margin
Value in use
3) Evaluate competition
Strengths/Limitations
Implications
Concept Testing
Concept testing is the process of using
quantitative methods and qualitative methods
to evaluate consumer response to a product
idea prior to the introduction of a product to
the market
Concept Testing
Determine
Critical success factors
Financial objectives
Marketing mix strategies
Product, Pricing, Promotion, Placement
Marketing plan initiatives
Activity, Budget, Timing
Prototype Development
Prototype development is the process of
preparing a device, technique or system that
demonstrates the feasibility of a solution to a
problem.
1) Experimentation and learning in the
product development process
2) Testing and proofing product concepts
3) Communicating concepts to the product
development team members, management and
customers
Test Marketing
Test marketing is an experiment conducted in
a field laboratory (test market) comprising of
actual stores and real-life buying situations,
without the buyers knowing they are
participating in an evaluation exercise
Test marketing may last from few weeks to

several months
Prototype and Test Marketing
Do you prefer this product over your current

product?
Does this product meet the need you thought it
would?
Does the way the product works provide an
important benefit?
Promotion and Product Launch
Publicity
Trade journals
Conferences
Personal selling
Word of mouth
Reasons For New Product Failures
Poor marketing research
Technical problems
Insufficient marketing effort
Bad timing
The wrong group was targeted
Unrealistic forecast
Insufficient level of awareness

New Product Development

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Definition

New product development (NPD) is the

It may be a new product, service or idea

Must be alert to quickly develop opportunities

Focus on markets or product categories

Securing a competitive advantage

Effective way of obtaining a competitive

Source of growth and excitement

Key to successful marketing is imaginative,

Increase the number of customers

Increase the average transaction

Increase the frequency of repurchase

Test marketing may last from few weeks to

Do you prefer this product over your current

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