NEW PRODUCT DEVELOPMENT PROCESS

New Product Development

New product development (NPD) is the term used to describe the complete process of bringing a new product or service to market. There are two parallel paths involved in the NPD process: one involves the idea generation, product design and detail engineering; the other involves market research and marketing analysis. Companies typically see new product development as the first stage in generating and commercializing new products within the overall strategic process of product life cycle management used to maintain or grow their market share.

A product can be considered new under the following situations:

New-to-the-world products New product lines Additions to existing product lines Improvements and revisions of existing products Repositioning Cost reduction

Why Develop New product:

To replace declining products. To take advantages of new products. To maintain/increase market share. To defeat rivals. To keep up with rivals. To maintain competitive advantage. To fill a gap in the market. To bring a new customers.

New Product Development Process

Idea Generation: Companies seek new ideas to enhance the performance of the existing product and to innovate new ideas for new product. This stage is called idea generation stage. There are many sources for idea generation such as The main source of idea generation is the customer by their grievances, compliments and feedback. Employee throughout the company can also be a source of idea. Companies also find good ideas by searching competitors products and services. Idea Screening: Screeners should ask several questions:

Will the customer in the target market benefit from the product? What is the size and growth forecasts of the market segment/target market? What is the current or expected competitive pressure for the product idea? What are the industry sales and market trends the product idea is based on? Is it technically feasible to manufacture the product? Will the product be profitable when manufactured and delivered to the customer at target price?

Concept Development & Testing: All ideas that survive in the process of screening will be studied in details. They will be developed into mature products. At this stage, the idea is submitted for the external evaluation to get a feedback from the market. It helps a firm or organization to collect important information like customer initial reaction towards the product development.

Marketing Strategy: Following a successful concept test, the new product manager will develop a preliminary strategy plan for introducing new product in the market. The plan consists of three parts.

The first part describes the target market size, structure and behavior for the first few years.

The second part outlines the planned price distribution strategy and marketing budget for the 1st year.

The third part of marketing strategy plan describes the long run sales and profit goals and the marketing mix strategy over time.

Business Analysis: Business Analysis involves Estimating likely selling price based upon competition and customer feedback. Estimating sales volume based upon size of market and such tools as the Fourt-Woodlock equation Estimate profitability and break-even point.

Product Development: In this stage, detailed technical analysis is conducted to know whether the product produced at costs is low enough to make the final price attractive to the customer. Here a working model or a prototype is developed to disclose all tangible and intangible attributes of the product. A product protocol is prepared which is a detailed downiest containing the important attributes that are expected in the product. Once the protocol has been developed, it is handed over to the research the development department to develop the prototype of the product.

Market Analysis: Market analysis involves

Producing a physical prototype or mock-up. Testing the product (and its packaging) in typical usage situations.
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Conducting focus group customer interviews or introduce at trade show. Making adjustments where necessary. Producing an initial run of the product and sell it in a test market area to determine customer acceptance.

Commercialization:

Launching the product. Producing and placing advertisements and other promotions. Filling the distribution pipeline with product. Critical path analysis is most useful at this stage.

Challenges in NPD:

To develop innovative products. To bring new ideas to market ahead. To integrate regulatory compliance into product lifecycle processes to reduce business risk and sell products in global markets.

To effectively manage the global manufacturing supply chain to ensure on-time, on-cost and quality product delivery.

Stages of Development of iPod

Stages of Development of iPod

Idea Generation: In 2000, digital music players were either big and clunky or small and useless with equally terrible user interfaces. Tony Fadell, former employee of General Magic and Phillips, envisioned a brand new MP3 player. Unlike the bulky flash memory-based MP3 players from Rio and other companies, Fadell wanted to deliver a small hard drive-based player that was linked with accontent delivery system where users could legally obtain and download music. The need for the first iPod resulted from Apples recognition that the development of digital products were moving at a fast pace for many new digital devices such as organizers, digital camera models and so on, but use of digital music remained tied to older technology based devices The iPod originated with a business idea dreamed up by Tony Fadell, an independent inventor. Fadell's idea was to take an MP3 player, build a Napster music sale service to complement it, and build a company around it. Apple hired Fadell in early 2001 and assigned him a team of about 30 people, including designers, programmers and hardware engineers. October 23rd 2001 a day that revolutionized the digital music world, Apple Computer now known as Apple Inc. released their first MP3 Player, the iPod.

Idea Screening: The need of making downloaded music easily portable was created, and what eventually has made the product category of mp3-players (of descent memory capacity) viable is that data storage discs have become small enough for this use.
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The target market for the iPod to be from middle school ages to adults. That would mean everyone who has access to and knows how to use a computer. The iPod is for those persons who like to listen to music, take pictures, and have easy access to what they enjoy most. Downloading music is rapidly growing and those that like to have the latest music want it easy and fast.

Concept Development & Testing: The iPod line came from Apple's "digital hub" category, when the company began creating software for the growing market of personal digital devices. Digital cameras, camcorders and organizers had well-established mainstream markets, but the company found existing digital music players "big and clunky or small and useless" with user interfaces that were "unbelievably awful, so Apple decided to develop its own. As ordered by CEO Steve Jobs, Apple's hardware engineering chief Jon Rubinstein assembled a team of engineers to design the iPod line, including hardware engineers Tony Fadell and Michael Dhuey,and design engineer Jonathan Ive. The product was developed in less than one year . Some of the features that were implemented to make the iPod stand out among the other music players were: Quicker transfer time. Small Fashionable design. Easy-to-use interface. Small hard drive-based player instead of bulky flash memory-based MP3 players. Bluetooth headphone system Large playlist Music equalizers Byzantine interfaces Easy navigation Good Battery life.
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Apple did not stop there, they continued to be that much better, they used better hardware, software, packaging, and marketing techniques than anyone else. The iPod was also more durable than its competing products due to Apples use of better parts which, in return made it more reliable.

Business Analysis: Before entering a market, Apple skimmed its market. Because of how it first started its business in the High-Tech industry, it has needed to restrict its market. Indeed Apple tried to compete with its biggest rival Microsoft by selling High-Tech products costlier because of their better design. In a very calculated fashion, Apple has leveraged its traditional designer and educational segments against the world market at large in the hopes that the emulation of their cool design factor could be successfully packaged and sold; and though without no regards to its limitation as being a high price tag. Apple was not looking for the wealthier customers but for the most valuable ones. The iPod was touted to be a symbol of change; it is not only a MP3 player but a change in people way of listening to music and way of attitude towards to the Music World industry. Apple does not care about local market conditions. Its reputation and popularity give it the capacity to enter any kind of market with its own price. Moreover, the iPod wanted to be merely seen as a luxury product as everyone cannot afford one. Apple wanted consumers to buy iPod as a must have fashion accessory defined by uniqueness. Apple knows who its customers are: the early adopters who are eager to get the new Apple gadget. Apple made research to know who would be the next interested in the new iPod. Thus few may pay a premium for good design but when they do so, they valid Apples selling strategy: paying the price of coolness and stylishness. The iPod was launched to attract new MP3

users, at a more affordable price. Still it costs a certain price comparing to a casual MP3.The iPod was not to be a casual MP3; it was to be known for Apple product design and quality.

Commercialization: To launch the iPod as a surprise product, it was not pre-announced. This strategy was used by Apple for launching all the generations of iPod. Extensive advertising and marketing was undertaken for the iPod. A series of innovative advertising campaigns via television commercials, print ads, posters in public places, wrap advertising etc were used. The case also describes how Apple created an iconic image for iPod that attracted the young and the old alike. It was positioned as a 'cool' product for the present generation. Apple advertised extensively for iPod. Just when iPod was launched, an introductory campaign which would explain an unfamiliar product was needed. For this, Jobs thought a traditional campaign was preferable. Hence, the first iPod's commercial showed a man listening to the songs on his iPod and dancing. The commercial illustrated iPod's portability and ability to easily play songs downloaded from one's computer. All media channels including television, print, hoardings, posters and wrap advertising were used to advertise iPod. The advertisements and commercials of iPod focused on the 'coolness' aspect as it made the viewers believe that having one would make them accepted among their peers. Analysts commented that the hype surrounding iPod was created due to its unique advertising, word of mouth publicity by the users and the look and design of the product.

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