fdp new product development-mm
TRANSCRIPT
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NEW PRODUCT
DEVELOPMENT
Prof Milind A Marathe
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INTRODUCTION
James Culliton coined the expression MarketingMix and described Marketing Manager as a mixer
of ingredients,
whois a decider and an artist who sometimes
follows a recipe prepared by others
Sometimes adopts a recipe ingredients
immediately available,
Sometimes invents some new ingredients &
Sometimes experiments with ingredients as no one
else has tried before
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FOUR PS
It was Jerome McCarthy,well knownProfessor of marketing ,who described the
variables of Marketing Mix in terms of Four Ps- 4Ps
Product
Place
Price
Promotion
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What is a product?
It is a vehicle by which a company
provides customer satisfaction.
A bundle of expectations to consumers and
society.
A product is a set of tangible and
intangible attributes.
A product is anything that satisfies a need
or want and can be offered in an exchange.
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Why new product?Extension of PLCAnsoff classic model of growth strategies
ROUTESOF NEW PRODUCTDEVELOPMENT
1)Technology:-Launch of PC2)Penetration of new market:- ITC entry into hotel
3)New product line-godrej from toiletries torefrigerators
4)Product line extension:-Bata sportswear, industrials
5)Cost reduction:-Nirma detergent6)Repositioning or product relaunch-Good day
biscuits, Pan Parag, Tata Tea
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WHAT IS A NEW PRODUCT?
Cost reduction-7%
Repositioning=11%-Milkmade
Product Modification=26%-New Lux
Product line extension=26%-Bata shoes
New Product Line=20%-
Breakthrough Product=10% $$$$$
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New Product Development
New Product Adoption Process
Innovators
Early Adopters
Early Majority
Late Majority
Laggards
Area under curve sums horizontally to form first three stages of the
product life cycle.
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NEW PRODUCT ADOPTION1)Innovators:-Consumption pioneers, locate and identify this
group-Target new product
2)Early Adopters:-opinion Leaders-sizable segment-Mktg
should penetrate this segment
3)Early Majority:-Positive approach, try out earlier thanaverage person of the community
4)Late Majority;-By and Large skeptical in their approach
,generally try the product only after a lot of people adopt
the product.5)Laggards:-Tradition bound,will take a product when it
becomes known and accepted product throughout the
market
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ADOPTERS OF NEW
PRODUCT Innovators-2.5%
Early adopters-13.5%
Early majority-34 %
Late majority-34 %
Laggards-16%
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EXTENT OF NEWNESS OF
PRODUCT
Low priority item for consumer
High priority item for consumer A Luxury product
A convenience Product
A product that meets currently felt need
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New Product Development
Changing needs of Customers
Dynamic Marketing Environment
New ,Superior ,Cost Effective Products
Essential for Growth Strategy
Stiff competition
Essential for corporate Planning
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Successful New Products
Goodknight Mosquito Repellent Mats
Parle Maaza
Sony Walkman
Maggi Noodles
Rexona Deodorant
Rasna
Pan Parag
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New Product Development
Demands on time,Efforts,Talent
Attitude,Money and
Risk involved is high
Failure of new product is .
30 to 40% for consumer products
50 to 60% for industrial products
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Stages in New Product Development
Cumulative Time
NO
O
f
St
e
p
s
Idea Generation
Idea Screening
Concept Testing
Business Evolution
Product Development
Test Marketing
Launch
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Steps in NPD
1)Idea Generation
2)Idea Screening
3)Concept Testing
4)Business Evolution
5)Product Development
6)Test Marketing
7)Launching
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Idea Generation
Sources are:-
Employees-Sales force,R&D
Overseas
Competitors
Consumers
Consultants/agencies/
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Lateral Marketing-source of New
Product Ideas-combination of 2concepts
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Idea Screening
Is there a felt need for the new product?
Is it an improvement over existing
Product? Is it close to current line of Business?
Can the existing resources handle the
product?
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DROP-error
A drop error occurs when the companydismisses an otherwise good idea. It isextremely easy to find fault with other
peoples ideas . Some companies shudderwhen they look back at ideas they dismissedor breathe sighs of relief when they realizehow close they came to dropping what
eventually became a huge success. This wasthe case with the television show Friends.
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Friends
The NBC situation comedy Friends
enjoyed a 10 year run from 1994to 2004 as
a perennial ratings powerhouse. But theshow almost didnt see the light of the day
. According to an internal NBC research
report, the pilot episode was described as
not very entertaining, clever, or original
and was given a failing grade, scoring 41
out of100.
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Go-error
A Go-error when the company permits a
poor idea to move into development and
commercialization. An absolute productfailure looses money, its sales do not cover
variable costs. A partial product failure
loses money, but its sales cover all its
variable costs and some of its fixed costs.
A relative product failure yields a profit
that is less than the companys target rate
of return.
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Idea Screening
At Titan Industries every idea is made topass through a stringent 5 point testcovering
Styling
Costing
Sourcing
Schedules
Resource Requirements
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Checklist for Screening New
Product Ideas-Yes- No Idea represents high value added products not
commodity products..
It is not a major capital investment for consumer The product utilizes existing distribution
channels?
There is an extended product Life cycle
Product can be building block for a multiproducts line or business
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CONCEPT TESTING
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Concept Development and
TestingA large food processing company gets the
idea of producing a powder to add to milk to
increase its nutritional value and taste.This is a product idea but consumers do not
buy product idea-they buy product concepts.
A product idea can be turned into several
concepts.The question is who will use this
product?The powder can be aimed at
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Concept Development and
Testing
Concept1-An instant breakfast drink foradults who want a quick nutritious breakfastwithout preparation
Concept2:-A tasty snack drink for children todrink as a midday refreshment
Concept 3:-A health supplement for olderadults to drink in the late evening before theygo to bed.
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Concept Development and
Testing Each concept represents a category concept
that defines the products competition.
An instant breakfast drink would competeagainst hot milk,corn flakes with coldmilk,bread and toast
A tasty snack drink would compete against
soft drinks, fruit juice and other thrustquenchers
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Concept Development and
Testing If the concept of instant breakfast drink
looks best, then the task is to show where
this product would stand in relation toother breakfast products-fig a
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Product concept when
turned into a Brand
concept- A brand
positioning map-it showspositions of existing
brands-company need to
decide on calorific value
and price to be charged tomake the brand distinctive
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Concept Testing
Whether Customers understand the idea?
Whether they are receptive to idea?
Whether they actually need a product?
Whether they will try out such a product?
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Business Evolution
Estimate of Demand
Seasonal Pattern of Consumption
Competition
Market segmentation
Marketing Channels
Marketing Organisation
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Business Evolution
Estimate of Demand
A)Substitution Method
New product displaces old product
Eg:-Nylon replaces cotton,rayon,coir jute ..
B)End Use Method
Altogether new products
End use of product and locate potential customersfor product,aggregate of potential customers ineach use category is taken as potential demand
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New Product Development ProcessStep 5. Business Analysis
Step 6. Product Development
New Product Development ProcessStep 5. Business Analysis
Step 6. Product Development
Business Analysis
Review of Product Sales, Costs,
and Profits Projections to See if
They Meet Company Objectives
If Yes, Move to
Product Development
If No, Eliminate
Product Concept
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Product Development
A pilot production facility is setup
Production and Marketing Depts
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Product Development
At Bajaj Auto ,product development is about fiveactivities like product definition anddesign,manufacturing process,
development,marketing planning and toolingM&M has benchmarked Scorpio against Tatasumo for passenger comfort, against MarutiGypsy for ease of driving against Tata sierra for
acceleration. Philips applies the fault mode effect analysis
technique to check things with product and findoptimum solution.
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Test Marketing
Risk Control Tool
New Product with choosen Mktg mix
Launched in selected markets
HLL organics shampoo-30 million sachets
Metropolitan Shirts 6 months Banglore
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New Product Development ProcessStep 7. Test Marketing
New Product Development ProcessStep 7. Test Marketing
StandardTest Market
Full marketing campaign
in a small number ofrepresentative cities.
StandardTest Market
Full marketing campaign
in a small number ofrepresentative cities.
SimulatedTest Market
Test in a simulatedshopping environment
to a sample ofconsumers.
SimulatedTest Market
Test in a simulatedshopping environment
to a sample ofconsumers.
ControlledTest Market
A few stores that have
agreed to carry newproducts for a fee.
ControlledTest Market
A few stores that have
agreed to carry newproducts for a fee.
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Software testing
Software testing is a process used to identify thecorrectness, completeness and quality ofdeveloped computer software. Actually, testing
can never establish the correctness of computersoftware, as this can only done by formalverification. It can only find defects, not provethat there are none. There are a number of
different testing approaches that are used to dothis ranging from the most informal ad hoctesting, to formally specified and controlledmethods such as automated testing.
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Software testing
Alpha testing
In software development, testing is usually
required before release to the general public. In-
house developers often test the software in what
is known as 'alpha' testing which is often
performed under a debugger or with hardware-
assisted debugging to catch bugs quickly. Thistechnique is known as white box or glass box
testing.
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Software testing
Beta testing
Following that, limited public tests known as
beta-versions are often released to groups of
people so that further testing can ensure the
product has few faults or bugs. Sometimes, beta-
versions are made available to the open public to
increase the feedback field to a maximal numberof future users.
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Software testing
Gamma testing
There are companies that introduced the
so-called gamma tests, which meansfeature-completed, but the software did not
run through all the in-house quality checks.
Some cynics refer to software release as
"gamma testing".
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Test Marketing
Process
1)City selection
2)select sales representatives
3)Duration of the test
4)Select suitable data
5)Implementation
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Test Marketing
Marketing
achievements in test market are recorded
and then projected nationwide for example Monthly volume in 2 % of country were
Rs 4000/-,
then total volume projected would be4000/0.02=Rs 2,00,000/-
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Launching/Commercialisation
Large scale manufacturing
Marketing
Firm fully commits itself to commercialisethe product with required investment
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Launching /Commercialisation
1)Immediate National Launch
To overcome competition,save on costs of launch
if considerable promotion is carried out it will bedifficult for competition to overcome.
2)Rolling Launch
Starting with one or two recognized distributionareas then gradually adding new regions
Coca cola,Kelloggs and HUL use this strategyeffectively
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NPD india
1996
Hindustan motors-Mitsubishi Lancer
Timex set up independent showrooms Mcdonalds launched in india
Anchor Health and beauty Care Pvt ltd(Anchor
group) launched Anchor white Toothpaste
Nirma chemicals launched Nirma toothpaste
Lakme launched Elle 18-lipstick ,nail enamels
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NPD india
1997
Titan launched sonata
Dabur launched Tomato juice Nirma launched Nirma Lime fresh
Reckett and Colman India ltd launched
shaving cream and Gel under Dettol label Raymond introduced denim
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Failed New Products
Kinetic Merlin TV
Cool Cats-PolarFan
Montage Soap Videocon PIP TV
Cibaca Lime Tooth Paste
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How not to launch a product
Unilever heavily promoted its new detergent called Persil power in UK andOmno Power elsewhere
The launch was a Europe-wide extravaganza
P&G research noticed that the new detergents pinkish granules contained
manganese. It could clean clothes well-perhaps too well but eventually the
substance was found to damage clothes
P&G released the laboratory reports, an independent Netherlands basedorganization confirmed that the detergent weakens fibers
Unilever claimed that the British textile technology group(BTTG) found no
physical damage to clothes. But the laboratory subsequently stated that its
favorable report is preliminary and it does not contain fabric safety data.
Even though Unilever officials spent three years testing the product in
laboratory the product was tested nether efficiently nor appropriately
Finally Unilever had to instead change the formula and the instructions for
its use
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New Product Fails Because It
Fails to match customer requirements
Fails to meet competition
Fails to meet opportunities and threats Has a Wrong design
Has a Wrong pricing strategy
Has a Poor time of Launch