New product development, types of new product, new product line, product line extensions, improvements and revision to existing products, re-positioning, cost reductions.

1. NEW PRODUCT DEVELOPMENT
Presented by- Apurv kumar maurya
MONIRBA (ALLAHABAD)

2. NEW PRODUCT DEVELOPMENT
New product development is a task taken by the
company to introduce newer products in the
market. Regularly there will arise a need in the
business for new product development.
It is a process of taking a product or service from
conception to market.
Every product goes through a number of stages
before being introduced in the market.

3. TYPES OF NEW PRODUCTS:
1. New to the world products.
2. New product lines.
3. Product line extensions.
4. Improvements and revision to existing products.
5. Repositioning
6. Cost reductions.

4. WHY NEW PRODUCTS?
• New product development is essential to any
business that must keep up with market trends
and changes.
• Changing environment creates new demands an
needs.
• A way of getting new and keeping old customers.
• Effective way of obtaining a competitive
advantage.
• Source of growth and excitement.

5. Company can add new products by:
1.ACQUSITION :
• Company can buy other company.
• Can acquire patents from other companies.
• Buy license or franchise from other company.
2.New product development – developments
of products within the company.
• Develop new product on its own.
• Contact independent researchers or new products
development firms to develop specific new product.

6. SUCCES RATE OF NEW PRODUCT
• 30,000 new consumer products are launched
annually, 95% of them fail. The failure rate for
new products launched in the grocery sector is
70 to 80 percent, according to Inez Blackburn
of the University of Toronto. Ask anyone what
percentage of new products fail. The usual
answer is somewhere between 70-90 percent.

7. WHY NEW PRODUCTS FAIL?
• Product Failure can be:
1. Absolute product failure: a new product introduction
which does not manage to recover its production and
marketing costs; the company incurs a financial loss.
2. Relative product failure: A type of new
product failure in which a company earns some
profits that is less than the company’s target rate of
return. It does not reach profit goals.

8. WHY NEW PRODUCTS FAIL?
Reasons for failure:
• Marketing Failures: small size of the potential
market. No clear product differentiation, poor
positioning.
• Financial Failures: Low return on investment.
• Timing Failures: Late or too early in the market.
• Technical Failures: Product did not work, bad design.
• Organizational Failures: Lack of organizational
support.
• Environmental Failures: Government regulations,
macroeconomic factors.

9. NEW PRODUCT DEVELOPMENT
APPROACH
1.Sequential approach: In this approach, each
department in the company works on the new
product separately at each stage of development
and then passes it on to the next department for
the successive stage.
This approach is often used to control risky and
complicated projects.
The major disadvantage of this approach is that it is
very slow and not appropriate for fast-changing and
highly competitive markets.

10. NEW PRODUCT DEVELOPMENT
APPROACH
2.Simultaneous approach: An approach to new
product development in which various departments
in a company work closely together so that there is
some overlap in the development stages in order to
save time and increase effectiveness.
Companies that practice Simultaneous Product
Development achieve the closest possible
collaboration between designers and the rest of the
development chain.

11. STAGES OF NEW PRODUCT
DEVELOPMENT

12. There are eight stages involved in the product
development :-
1. Idea generation.
2. Idea screening.
3. Concept of testing.
4. Business analysis
5. Product Development.
6. Test Marketing.
7. Commercialization.
8. Review of market performance

13. 1.Idea generation
The first stage of the New Product Development is the idea generation.
Ideas come from everywhere, can be of any form, and can be
numerous.
This stage involves creating a large pool of ideas from various
sources amongst which, here are few :-
i. Marketing research
ii. Internal sources
iii. SWOT analysis
iv. Competitors

14. 2. Idea Screening
Ideas can be many, but good ideas are few. This second step of new
product development involves finding those good and feasible ideas
and discarding those which aren’t.
There are certain factors which play an important role in the
filtration of the ideas. Some of them are as follows :-
I. The necessity to launch a product.
II. Ability of the existing plant and machinery to produce the product.
III. The ongoing needs of the consumers.
IV. Affordability, on the part of the organization as well as consumers.
V. Expected return on the investment (ROI) and more.

15. Businesses need to perfect their product screening
process in order to avoid making either of the following
errors:
1.Drop Error : It occurs when a business errors in deciding
to abandon a product idea that, in hindsight, may have
been successful if developed. Too many drop errors
indicate a conservative approach to product screening.
2.Go Error : It occurs when a business fails to identify a
poor product idea that has already moved into the
development and commercialization stages. Too many go
errors indicate a young, ambitious yet inexperienced
approach to product screening.

16. 3. Concept Development and Testing
Basically, when an idea is developed in every aspect so as to make it
presentable, it is called a concept. This concept (or the developed ideas) is
now brought to the target market. Some selected customers from the target
group are chosen to test the concept. Information is provided to them to help
them visualize the product. It is followed by questions from both sides.
The idea that passes the screening stage, are turned into concepts for
testing purpose. Under this stage, an organization tries to understand and
analyze that
-- Whether the consumers understand the product’s idea or not?
– Whether the product will be demanded by consumers or not?
– Whether the consumers will accept the product or not?
– Does the product fulfills consumer’s needs and wants?
The feedback of the consumers help the business to develop the
concept further.

17. 4) Marketing Strategy Development/Business analysis :-
Under this stage, the organization finds out whether the
new product is commercially profitable or not.
Under business analysis, the company finds
out :-
• Profitability of the product.
• Cost of the new product.
• Estimates demand.
• Demand pattern.
• Competitors .
• Total sales.
• Expenses on marketing.

18. 5.Product Development
At this stage, the organization decides to introduce the new product in
the market and it will take all necessary steps and co-ordinate every
department in the production and distribution of the new product. The
production department, will make plans to produce the product. The
marketing department, will make plans to distribute the product. The
finance department, will provide the finance for introducing the new
product. The advertising department, will plan the advertisements for
the new product. Once the product is developed, functional tests are
then conducted under laboratory and field conditions to ascertain
whether the product performs safely and effectively. However, all this is
done in a small scale for Test Marketing.

19. 6.Test Marketing
• Test marketing gives, marketer an opportunity to tweak the
marketing mix before the going into the expense of a product
launch.
• The amount of test marketing varies with the type of product. Costs
of test marketing can be enormous and it can also allow competitors
to launch a “me-too” product or even sabotage the testing so that
the marketer gets skewed results. Hence, at times, management
may decide to do away with this stage and proceed straight to the
next one:

20. 7) Commercialization
If the test marketing is successful, then the company introduces
the new product on a large scale, say all over the country. The
company makes a large investment in the new product. It
produces and distributes the new product on a huge scale. It
advertises the new product on the mass media like TV, Radio,
Newspapers and Magazines, etc.

21. 8. Review of market performance
The company must review the marketing performance of the new product.
It must answer the following questions:
• Is the new product accepted by the consumers?
• Are the demand, sales and profits high?
• Are the consumers satisfied with the after-sales-service?
• Are the middlemen happy with their commission?
• Are the marketing staffs happy with their income from the new product?
• Is the Marketing manager changing the marketing mix according to the changes
in the environment?
• Are the competitors introducing a similar new product in the market?
The company must continuously monitor the performance of the new
product. They must make necessary changes in their marketing plans and strategies
else the product will fail.

22. Thank you