2. Importance of new products
• Business firms expect to get high percentage of
their sales with new product.
• Top-performing firms gain over 49 percent of
current sales from new products.
• Half of the successful products with 2 years of
payback achieved 33% return on investment and
other half achieved 35% back on market shares.
• The firms that maintain their commitment to new
product tend to do well even in poor business
environment.
3. Globalization and New Product
Development
• New Product Development has become a global process.
• Success or failure of a new product can be judged by its
performance on the global market .
• Globalization of new products provides opportunity on the
international markets and helps increasing efficiency and
effectiveness of innovation.
• Top global firms spends more than 55% of their R&D money
on foreign countries.
• Reason 1 – talented R&D engineers and cheap labor force.
• Reason 2 – increased globalization of the innovating firms.
4. Globalization and New Product
Development
• To effectively operate its global operations, multinational firms form -
• 1)Global innovation culture - To efficiently manage global operations.
• Able to better integrate global knowledge, manage R&D and has
advantage in implementing global launches which improves global
new product performance.
• 2)Global new product teams - To strengthen their skills across
countries and gain competitive advantage in market.
• Team consists of engineers that are responsible for design and
development of the product, a marketing team that analyzes target
markets and culture differences and management who leads the
project to its objectives and facilitate this project.
• Ex of such firms – P&G, Apple, Ikea, Bungie Studios
5. How product development is different ?
• Product development needs lot of time coordinating and
working closely with people from other functional areas.
• New product development team is a cross functional team
comprising people from design, engineering, manufacturing
production, R&D, marketing etc.
• Need strong creative contribution & how best to develop and
market them.
• Most of the decisions are made on grossly inadequate facts or
intuition.
• Have to deal with people under intense pressure, making
tough decisions under impossible conditions.
• Product innovation.
• Application - Sometimes the new product process is
accidental
6. What is a product ?
• It can be goods, services, know-how or information.
• New products can be categorized in terms of how new they
really are to the world.
• New-to-the-world products
• New-to-the-firm products
• Additions to existing product lines / Line extensions
• Improvements and revisions to existing products
• Repositioning
• Cost reductions
7. What leads to success of a new
product ?
• Not all new products are innovations.
• Risks & uncertainty involved with success of category 1 and 2
of new products is higher.
• Each new product category needs to be managed differently.
• Long term competitive advantage lies with only true
innovations which provide enhanced value to customers.
• A greater commitment of human and financial resources is
often required to bring the most innovative new products to
market successfully.
