What is product development and its process?

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Product Development Process

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1. What is Product Development?
2. Why? When and How?
3. 8 stages of Product Development
4. Case Study (Success)
5. Some Common Failure Reasons of Product Development
6. Case Study (Failure)
Agenda

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• Product Development is the total process that takes a
service or a product from conception to market.
• The creation of products with new or different
characteristics that offer new or additional benefits to the
customer.
• Product development may involve modification of an
existing product or its presentation, or formulation of an
entirely new product that satisfies a newly defined
customer want or market opportunity.
What is Product Development?

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It is also called New Product Management, a series of steps like Conceptualization, design,
development, and marketing of newly created and newly enhanced/improved products.
Types of Products:
• Innovative Products
• New Product Lines - To allow the firm to enter an existing market.
• Addition to Product Line - to supplement the existing product.
• Improvements in current products.
• Cost reduction products which give similar benefits to the user in less cost.

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Why Product Development:
• To maintain and build sales through replacement products
• To shape the Company’s future
• To fulfill the ever-changing customer's preferences
• To create stars and Cash Cows for the future Market
• To fill Gap in the Market
When Product Development:
• Once the company has segmented the market carefully
• Chosen its Target Group
• Identified their needs/ Preferences/ Requirements
Why? When? and How?

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How Product Development:
• New Products range from new-to-the world products that creates an entirely new
market o minor changes into the existing products which needs Employees
Contributions to study the Product deeply.
• Products can be added through:
– Acquisition
– New Product Development
– New-to-the World Product
– New Product Lines
Why? When? and How?

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8 Stages of Product Development

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• The Product Development Process starts with Idea Generation.
Idea generation refers to the systematic search for new-product
ideas. Typically, a company generates hundreds of ideas, maybe
even thousands, to find a handful of good ones in the end.
Following are the ways to find Ideas:
• R & D
• Senior/Top Management
• Customers
• Competition
• Crowdsourcing
Idea Generation

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• Ideas can be generated by the
following creative techniques:
– Attribute Listing
– Forced Relationships
– Customer Needs
– Brainstorming
Idea Generation Techniques

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• Ideas generated need to be screened for action. To start with
ideas are sorted into:
– Promising Ideas
– Marginal Ideas
– Rejects
• Promising Ideas are evaluated by a committee
• Surviving promising ideas are screened through a process
• The objective is to drop the poor ideas
• Ideas are screened through Project Ideas Rating Process
Idea Screening

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• Product Ideas should be refined into listable product concepts:
– Product Ideas
– Product Concept
– Picture Image
• Example: A company wants to make a food powder that is nutritious and tasty. Now to
convert to the concept there are a series of questions like For Whom, Primary benefit When
to take.
• Based on answers one can elaborate like
– C1 - Instant breakfast for working professionals who want quick food
– C2 - Tasty snack for children
– C3 - Lunch/Dinner item for elders
Concept Development

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• Concept Testing means presenting the Product to the target customers, physically or
symbolically, verbal/visual form and getting the reactions.
• After getting the responses researchers measure the product dimensions by having consumer
respond to question like:
– Communicability and Believability
– Need Level
– Gap Level
– Perceived Value
– Purchase Intention
– Purchase Frequency
Concept Testing

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• Marketing Strategy Statement consists of three parts:
• Part A
– Target Market Size/Structure/Behaviour
– Planned Product positioning
– Sales/Market Share/Profit objective in ⅔ years
• Part B
– Product Price Planned
– Marketing Budget
• Part C
– Long term sales/profit goals
Marketing Strategy Development

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• Listen to relevant social conversations for pain points and nonexistent solutions.
• Conduct your traditional research strategies such as A/B testing, polls, focus groups, and so
forth
• Check your competition to make sure your idea is unique and to analyze their failures.
• Start Product Marketing Early
• Share on Website and Social Media
• Get Your Team On Board
Tips for Marketing Strategy

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• Once decided upon a product concept and marketing strategy,
management can evaluate the business attractiveness of the
proposed new product.
• Business Analysis means to analyze the cost, sales, and profit.
• Estimating the sales depends upon how frequently, Infrequently
and One Time consumers can buy the product.
• Estimating Costs and Profits is done for the next 5 years.
• Cost Elements include Cost of Development, Marketing Cost,
Allocated overhead
Business Analysis

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• The company now sees that the product idea can be
technically or commercially feasible.
• The details related to the product are provided in detail to the
development team.
• Stages in Product Development
– Prototype Development
– Functional Testing
– Consumer Testing
Product Development

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• Brand Name, Logo are now been decided.
• Methods of Market testing
– Sales Wave Research
– Simulated Test Marketing
– Controlled Test Marketing
– Test Marketing
• Not all companies do this but Tata Indica has done this when they introduced Indica V2
Market Testing

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• Launching a Product on a commercial basis.
• For launching a Product following decisions to be taken:
– When to Launch
– Where to Launch
– To Whom
– How to Launch
• Commercialization Strategy:
– What’s the offering? (What are you trying to provide or create?)
– Business plan and forecast
– Commercialization risks & issues
– Don’t use a “Ready, Fire, Aim” commercialization strategy
Commercialization

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• iRobot Corp. (iRobot) put in efforts that helped
them develop and market their innovative product
– the iRobot Roomba, a floor-cleaning robot.
Efforts were undertaken by the founders of the
company to develop robots, which could be of use
in military, researches and commercial
environments. The focus later shifted to
commercial robots which were eventually led to the
innovation of the Roomba. The company marketed
the product, and later released many versions of
the Roomba as an open hardware platform for
further robotic development.
https://www.afrbiz.com.au/media/k2/attachments/Nike_Case_S
tudy_Ed_7.pdf
Case Study

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• When a high-level executive forces his favorite idea even when the research finding is
negative.
• In spite of good idea, the size of the targeted market is overestimated.
• Product Design is not well.
• Competitors fight back harder than expected.
• When the cost involved in the development of the product exceeds the estimation.
• When the product is positioned incorrectly in the market, or not advertised effectively or
when overpriced.
• Technical Problems in Product.
• Shortage of ideas in certain important areas.
Some Failure Reasons of Product Development

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• In April 2004, Coca-Cola India launched its new product the Vanilla
Coke, The Company’s first flavor extension in India. Blind tests done
before the launch of the product revealed that consumers liked the
taste. The concept of ice-cream floats in cola was quite common in
urban restaurants in India. The company targeted Vanilla Coke of
the urban teens, the young adults from the high and middle-income
groups. The 60-second ad was played on youth-centric channels
like MTV, Channel [V], HBO and AXN and even regional channels
like Sun TV. A relatively new celebrity, Vivek Oberoi was chosen for
the ad. According to retailers in south Mumbai, the product’s sales
were rapidly dropping. ‘Irrelevant’ advertising was one of the
reasons for failure. The other issues pointed out by the respondents
included “wrong positioning”, “no proper research”. Thus Vanilla
Coke failed to excite the Indian palate.

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What is product development and its process?

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