New product development

New product development

• New product development is a sequential
process of finding ideas for new goods or
services and then transforming them into
commercially viable products or services that
can be launched in the market for serving the
needs of customers at a profit.
Objectives behind new product launch
• To satisfy the change in consumer demand.
• To counter the moves of competitors who have launched a new product.
• In accordance with the strategic decision of the organisation to expand the
product range or product line of the organisation.
• To remain aligned with the changes in technological environment, which are
enabling launch of new products
• To increase sales and profit of organisation.
• Single product businesses are likely to be more vulnerable in the globalised
environment in comparison to the multi product business, because sudden
developments in some part of the globe can have drastic implications for the
entire product category. By spreading investments across inter-related product
ranges, an organisation can reduce risk to the entire entity
• As per policy of organisation about planned product obsolescence.
• To prevent fluctuations in profit levels.
• To have new products coming up timely in order to keep the organisation going on.
New product development process
• Exploration stage
• Screening stage
• Detailed value offering evaluation
• Business analysis
• Product development
• Development of marketing mix
• Product testing
• Commercialisation or launch
 Exploration stage
• Focus – to generate different or as many as new product ideas as it
is possible
• Exploring and Forwarding new product ideas.
• Compile and assimilate all new product ideas on a single format.
• Translate or express ideas in the form of very basic product
concepts.
• The basic objective is to segregate the process of idea generation
and idea evaluation.
• Example 1.– TATA motors-entry level commercial vehicle for semi-
urban and rural market –between a three wheeler and pick-up-
truck.
• Example 2.- global chip major Intel-computers for rural market. It
can withstand adverse weather conditions including heat, dust and
humidity.
 Screening stage
• Filtering of ideas and suggesting of ideas
• Screening is executed by specialists form
different departments
1. Nature of demand
2. Compatablity
3. Resources
4. competition
 Detailed value offering evaluation
(product specifications)
• the product should be a need satisfying solution
• It should be simple and easy to use
• Convenient to store
• Tough and solid appearance
• Product must be affordable.
• As per rural product usage environment
TATA motors – decisions on product and price for commercial vehicle
for rural market.
1. Product –Sturdy four wheeler vehicle-loads upto 1.5 tonnes
2. Price – low price high performance vehicle. Focused on product
life cycle costs, which covered the purchase cost, operating cost
and resale price.
 Business analysis
• Financial analysis and competitive marketing
strengths of the markets
 Product development
• Must be executed in a research lab – product
prototype.
 Development of marketing mix
Product
• Example HCL personal computer - charged by pedaling a special
cycle with the dynamo connected to a car battery.
• Sampoorana brand name for televisions by LG is a word from the
four leading languages – Hindi, Tamil, Marathi, Bengali.
• Tata motors branded their vehicle as ACE.
Promotion –by selecting media vehicles, Unique Selling Proposition
(USP), punch line etc.
Price – retail price, dealer and retailer margins etc. are taken
Example – Ace, by being priced by TATA Motors at a slightly higher
price than three wheelers.
Place -accessible to final consumer. Example – TATA Motors – IS
outlets for the distribution of Ace. IS are retail outlets only for Ace
sales.
 Product testing
• Concept testing
• Test marketing
 Commercialisation or Launch
• Promotion strategy – TATA Motors launched
ACE(baby Elephant) – conducted road shows
• Pricing strategy
• Place strategy