NEW PRODUCT

DEVELOPMENT

Managing New
WAQAAS BHARTI Products
The Power of
Innovation
TEAM MEMBERS:
BHARTI HARDASANI
WAQAAS RUMANI
NEW INDUSTRIAL PRODUCT
 Definition of Industrial Product

Not only as physical entity but also as a complex set of economic,

technical, legal and personal relationship between the buyer and
the seller.

Product is a combination of:

Basic Properties
Enhanced Properties (Tangible attributes)
Augmented Properties (Intangible attributes)

E.g.: In software industry, SAP

 Need for New Product
 To add to product portfolio
 To create stars and cash cows
for the future
 To replace declining products
 To take advantage of new
technology
 To maintain/ increase market
share
 To maintain competitive
advantage
 To fill a gap in the market
 To bring in new customers
 To keep up with rivals
Classification of New Products
 New products can be used to:

 Increase/defend market share by offering more choice or

updating older products
 Appeal to new segments
 Diversify into new markets
 Improve relations with Clients
 Maintain the firms reputation as a leading edge company
 Even out peaks and troughs in demand
 Make better use of organization resources
 Examples of new products

 New to the world – High definition TV, I Pad, flat screen

TV, Ultra super-sonic engine
 New product line – M & M – From tractor Manufacturer,
going into Heavy Machinery
 Additions to product line – SAP Net weaver
 Product improvement and replacement – Adding additional
features based on SCM, CRM etc
 To bring something new to life

For the benefit of the company

For the Benefit of customer & solve his problem.

Distinguish Leader from Follower

 10 reasons WHY WE NEED INNOVATION???

 For business survival

 For better returns
 For a more constant flow of innovation
 To take advantage of opportunities
 To improve disappointing performances
 Desire for higher business revenues
 Cost cutting is not enough
 For competitive advantage
 For the progression of human
well being
 For economic growth
 New product planning

 A strategic stage
 Firm assesses:
 - its current product portfolio
 - opportunities and threats
 The firm then decide the type of product which would best
fit in with the corporate strategy
NEW PRODUCT DEVELOPMENT
 Introduction to NPD
NPD is a process which is designed to develop, test
and consider the viability of products which are new
to the market in order to ensure the growth or
survival of the organization
 Product life-cycle (PLC) strategies

PLC is the course followed by sales and profits during the

products lifetime.

PLC has five stages:

 PRODUCT DEVELOPMENT
 Introduction
 Growth
 Maturity
 Decline
 Basic Stages in NPD

 Idea Generation
 Idea Screening
 Concept development and testing
 Marketing strategy development
 Business analysis
 Product development
 Test Marketing
 Commercialization
 Comfort is Acceptance

Two Step Process – Small organizations

Four Step – Medium Size Organizations

Seven to Ten Step – Large Organizations

 Four-step process Seven-step process
Two-step process Idea Exploration & Idea Generation
Concept
Development
Identifying & Concept
Evaluating Development
NPC

Screening & Business Analysis

Business Analysis

Screening
Developing
Prototypes
Prototype
& Launch Prototype
Development &
Plans Development
Product Testing

Market Test

Market Test &

Commercialization Commercialization
New Product Development
Nine – Step Process
New Product Development
New Product Development
 Needs & Post Launch
Wants Monitoring
Exploration

Idea Generation Commercialization

Concept
Plant Scale-Up
Concept Screening & Prototype
& Market
Development Priority Development
Testing
Setting

Product
Business Performance &
Analysis Acceptance
Tests
 Differences Between B2B & B2C Consumers
 Technically Savvy.
 Emotional Buying.
 Supplier Dependency.
 Number of Buyers.
 Breadth of Application.

The 3 main Goals for B2B NPD

 Collaborate Deeply with Customers.
 Engage Customers to Pre-sell.
 Strategically aim resources.
 Idea Development
Idea Generation
 Now this can come from various sources.
 In Industrial products, an idea comes mostly from
customer feedback.
 Collaboration with Customer is most important.

Idea Screening
 Evaluate them for viability and score them
 Decide selection of ideas for further investigation
 Criteria to judge ideas
 Concept & Product Development
Product concept: detailed version of the idea defined in terms
that have a meaning for the client or consumer
Product image: the way in which the client perceives the
product
Once you get the idea, you try to develop the product based
on your core competencies.
For e.g. A company making turbines, for Ships and Aircrafts
can use its core competency to make turbines of different
specifications for Hydro Electric Power plants also
 Market & Business Analysis
Requirements of Hot Prospects
 Review sales, cost, and profit
 Projections
 Include marketing, R&D, production, accounting, and
financial costs
 If it survives, continue the development process
 Different Industry segments are targeted
 Testing and Performance Standards
 Stage in which the product is tested under real market
conditions
 Allows problem identification
 Useful for determining specifications and range
 Market testing is optional, depending on level of investment
and product advantages
 The product is introduced to a specific client
 Commercialization & Service
 No mass production
 Production is usually as per requirement and order received
 Depends on size of the organization
 Service becomes compulsory and complimentary part
 Consideration for Industrial products
 R&D should work in collaboration with Manufacturing.

 Product should be easy to commercially Manufacture.

New Product Structure

 Ideally Create a separate division for a totally New product.

 Else allocate a dedicated person for any line extensions.

 Division Vice
President

Marketing/Sales
R&D Director
Director

Product Product Product

Technical
Manager Manager Manager
Manager

New New New

Technician Engineer Engineer Product Product Product
Manager Manager Manager
 Types of New Product Development
System Based Approach Traditional Approach

 Systematic Improvement in design  Going for a total new product.

 Works on same line of product  Works on identifying & creating
 Focus is on product improvement a totally new category of
 product.
Faster process
  Works on collaboration of
Used by follower companies
intellectual data from various
sections of Company & market.
 Longer process.
 Usually preferred by market
leader companies.
 Organization for new product development
Development in sequence:
 facilitates project control
 may be too slow

Simultaneous development:
 new trend
 multidisciplinary
 saves time and is more efficient
Factors responsible for success of New Industrial
products
 Product superiority and uniqueness
 Market Knowledge/ Marketing Effectiveness
 Technical and Production capabilities
 Deep understanding of customers needs
 Larger amount of marketing expenditure
 Strong top management support
 Greater cross-functional teamwork
 Higher contribution margin
 Being the early entrant in the market
 Factors responsible for failure of New Industrial
product
30% to 55% of New Industrial products fail.

Reasons:
 Do not satisfy needs of many potential customers
 Not significantly different from existing products
 Do not deliver the expected performance
 Prices of New products are higher
 Weak NPD process beaten by competitors