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1. DEVELOPING NEW PRODUCTS
Learning Objectives
Students should be able to discuss :
i. What is a New Product?
ii. Creating and Nurturing an Innovative Culture
iii. Organizing effectively for New Product Development
iv. Managing the New Product Development Process

2. PROMOTION-ADVERTISING
INTRODUCTION
 The life blood of corporate success is bring new products to the market
place.
 Changing customer tastes, technological advances and competitive
pressures mean that companies cannot afford to rely on past product
success.
Invention Vs Innovation
Invention- Is the discovery of new ideas and methods.
Innovation- occurs when an invention is commercialised by bringing it to the
market.

3. What Is A New Product
Some new products are fundamentally different from products that already
exist that they reshape the markets and competition.
Product Replacement
these account for about 45% of all new product launches , and include revisions
and improvements to existing products e.g. S9 replacing S8…
Additions to Existing Lines
These account for about 25% of new product launches and take the form of
new products that add to a company’s existing product lines.
This produces a greater product depth.
New Product Lines
These total around 20% of new product launches and represent a move into
new markets. This strategy widens a company’s product mix.
New-To-The-World-Products
These total around 10 percent of new product launches and create entirely new
markets.

4. Creating And Nurturing An Innovative Culture
The foundation for successful NPD is the creation of a corporate culture that
promotes and rewards innovation.
Attitudes And Actions That Can Foster A Culture Of Innovation

5. Organizing Effectively For New Product Development
The second building block of successful innovation is an appropriate
organisation structure.
Most companies use one or a combination of the following methods:
i. Project teams
ii. Product and brand managers
iii. New product departments
iv. New product committee
Project Teams
Involve the bringing together of staff from areas like R & D, engineering, finance
and marketing to work on a new product development project.
Specialised skills are combined to form an effective team to develop the new
product concept.

6. Organizing Effectively For New Product Development
Product And Brands Manager
 Entails the assignment of product managers to product lines and/or
brand managers to individual brands.
 These managers are then responsible for their success and have the
task of coordinating functional areas (e.g. sales, advertising and
marketing research).
 They are also often responsible for new product development,
including the creation of new product ideas and improving existing
products.
New Product Departments and Committees
These oversee the process and services to give projects a high corporate
profile through the stature of its membership.

7. Managing The New Product Development Process
There are three inescapable facts new product
development:
a) It is expensive
b) It is risky
c) It is time-consuming.

8. Managing The New Product Development Process
NPD PROCESS

9. Managing The New Product Development Process
New Product Strategy
Involves providing clear guidelines about which products/markets the
company is interested in serving.
This provides a focus on areas of idea generation and that helps in resource
allocation.
Idea Generation
Gather product ideas from:
i. inside the organisation
ii. Customers
iii. sales representatives
iv. channel partners
v. Suppliers
vi. competitive materials and
vii. other sources.

10. Managing The New Product Development Process
Screening
Screen product ideas to eliminate those that are inappropriate or not
feasible, given the organisation’s strengths, core competencies and resources.
Some companies use formal checklist to help them judge whether the
product idea should be rejected or accepted for further evaluation.
Concept Testing
Research reaction to find out whether customers (and perhaps influential
channel members) perceive value in the remaining ideas and respond
positively to the concepts.
Concept testing thus allows the views of the customers to enter the new
product development process at an early stage.

11. Managing The New Product Development Process
Business Analysis
Analyse the business case for introducing each new product, including
associated marketing strategies, to gauge the contribution toward achieving
organizational objectives- breakeven point, costs, projected product
acceptance, etc.
Product Development
Develop the actual product to see whether the concept is practical, cost-
effective and capable of meeting customers’ needs and expectations.
Market Testing
 Test market the product, with associated marketing strategies, to assess
the likelihood of market acceptance and success.
 This is the time to try different marketing activities, evaluate customer
response, anticipate competitors’ reactions and adjust the product (and its
marketing) for maximum effectiveness.

12. Managing The New Product Development Process
Commercialisation
Launch the product commercially with an understanding of the
Diffusion of Innovation Process- This explains how a new
product spreads throughout a market over time.

13. Managing The New Product
Development Process

14. Managing The New Product Development Process
Innovators
 These are buyers who are always at the forefront of the market.
 They buy new products as they like to experiment and be seen to be first.
These people are the "opinion leaders" of society.
 If this category can be convinced of the value of a product, and they buy,
there will almost certainly be a growth rate for the product.
 It is also likely that if this category do not take up a product, then success
will be limited and the product will die at birth or very soon afterwards.
Early Adopters
 These buyers are never the first to try new products, but they always
follow opinion leaders fairly closely.
 They are not confident or adventurous enough to be leaders, but like to be
"fashionable".
 They need to see that a product has some value before they buy.

15. Managing The New Product
Development Process
Early Majority
 Once a product is established, the early majority will take it up and buy.
 By the time the early majority are buying, the product has been on the
market for some time and has been proven to be successful or useful in
some way.
Late Majority
 The late majority buyers are those who wait until the product is almost at
maturity stage.
 They require much persuasion and it is often only when a product is
widely available that they will buy.
 They are conservative buyers who need reassurance of performance.

16. Managing The New Product Development Process
Laggards
 These buyers are behind the time.
 They buy products when they are going out of fashion or may even have
been outdated by new technology.
 They are the most resistant buyers to convince as they are the most risk-
aversive.
 Products in the decline stage which have been reduced in price may be
attractive to these buyers, but a marketer would not necessarily devote
very much attention to them.