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					New-Product Development
New-Product Development
Strategy

 Strategies for Obtaining New-Product Ideas


Acquisition of:             New Products:
                            New Pdt. Lines
 Companies
                           Add. to existing
                             Pdt. Lines
   Patents
                            Improvements
   Licenses                  Modifications
                            Repositioning
                                              8-2
   New-Product Failures
• Only 10% of new products are still on the
  market and profitable after 3 years
• Failure rate for industrial products is as high as
  30%
• Why?
  – Overestimation of market size, Design problems
  – Shortened PLC
  – Incorrect market & timing
  – Pushed despite poor marketing research findings
  – Development costs
  – Competition & Govt hurdles                        8-3
Major Stages in New-Product
Development




                              8-4
Organizing New-Product
Development

• Sequential Approach: each stage
 completed before moving to next phase of
 the project

• Simultaneous Approach: Cross-functional
 teams work through overlapping steps to
 save time and increase effectiveness.


                                            8-5
1. Idea Generation: sources

   Company Employees

       Customers

      Competitors

       Distributors

        Suppliers
                              8-6
Idea Generation
When Heinz asked kids
what would make the
product more fun, they
said, “Change the color!”
so, Heinz developed and
launched EZ Squirt, now
in a variety of colors
targeted at kids.
Innovation :
Color
Packaging                   8-7
• Idea Generation techniques
  – Brain storming sessions
  – Synectics : accidental discovery of ideas
  – Attribute listing : improve the existing pdt
  – Forced relationship : diverse pdts.
  – Morphological analysis : rational solution to
    the problem
  – Need problem identification
     • High customer involvement




                                                    8-8
2. Idea Screening
• Purpose – filter ideas
• Process to spot good ideas and drop poor ones
• Develop system to estimate: market size,
    product price, development time and costs,
    manufacturing costs, and rate of return
•   Idea Rating : Evaluate these findings against set
    of company criteria for new products
•   Degree to which pdt. can cannibalize sales of
    existing products

                                                        8-9
Errors that may occur


• Drop error – when a company rejects a
 new idea

• Go error – when a company selects a poor
 idea



                                             8-10
3. Concept Development and
Testing
• Idea subject to external evaluation
• Pdt Idea – quality, price, attributes & unique
  features
• Watch
  – Who is the TG : children, adults, women, men
  – Why : time keeping, accessory, gift , low cost
  – When : any time, birthdays, festive occasions,
• Acceptance : competing pdt categories
  – Children toys with watch                         8-11
• Perceptual maps : nutritional drinks
            High Price

Low         a            b         High
                                   Nutrition
Nutrition   c

            Low price

                                               8-12
Concept Development and
Testing

a. Business Analysis

b. Market Strategy Development

c. Total Sales Estimation


                                 8-13
• Product Idea: idea for a possible product
 that the company can see itself offering

• Product Concept: detailed version of the
 idea stated in meaningful consumer terms

• Product Image: the way consumers
 perceive an actual or potential product

                                              8-14

				
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Description: New product development
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