new product development faqs

8/2/2019 New Product Development FAQs

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NEW PRODUCT DEVELOPMENT

What are the steps in New-Product Development Process?

Ans: the steps in New-Product Development Process are:

1.New Product design & Development strategy

First of all, the top management decides the purpose, objective and role of the new product.

These could be to become, competitive, market leader, follower, innovator etc. keeping this in

mind a strategy is determined.

2. Generation/ sources ofnew product ideas

The new product ideas are invited from many sources they are:

a)Customers: The customers are asked for the new product ideas , they want with itsfeatures.

b)Employees: Especially the sales & marketing employee have knowledge about the

demands of the customers and the new product ideas about the existing product.

c)Distributors: The Wholesalers. Dealers, Retailers do know a lot about what is the demand

of the consumers and which new product ideas can fare good in the market?

c)Competitors: Usually companies compete with the competitors in the market by launching

similar product in the market. Like Colgate launched New product Colgate Gel Against Close-

Up Gel to be competitive.

d)Consultants: These days many consultant organizations and professionals are providing

service on deciding new product ideas.

e)Research & Development: Every company spends on R & D so as to get efficient new

product ideas.,

f)Creative Thinking & Brainstorming: The process of getting a group to think of unlimited

ways to vary a product or solve a problem.

The Screening of the new product ideas:

The screening is a filter process where the new product ideas are processed and determined

if the idea could be developed with the given resources into a company product for

achievement oforganizational goal.

The objective of screening is to find an idea that is consistent with the criteria that organization

thinks important.


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Criteria for screening new product ideas

ANS Screening criteria are the evaluative standards in new product development.

These criteria have concern for three factors:

1. Markets: market size, Share: Market Growth, market positioning etc

2. Products: the availability of technology, organizational support, servicing

requirement.

3. Financial : Profitability, return on investment, cash flow;

Other important criteria are:

1. Similar product

2. Consistent with organizations resources.

3. Objective of the organization.

Management Tutorial -Economic Analysis

Management Tutorial Q: What is Economic Analysis of new Product development?

Ans:Economic analysis is an evaluative process to understand the attractiveness and future

of the new product.

Management Tutorial Q: What are the purposes of Economic Analysis?

Ans: The economic analysis serves the following purposes:

1. To understand the financial impact of the launch of the new product on organization

financial health.

2. To ascertain the sales revenue, costs and profit margins, return on investment etc.

Explain market Potential for new product?

Ans:Market potential for a product suggest the expected consumer market for the given

product.

Like The potential market for baby food product is no. of infants, the potential market for

fairness cream foe men is the male of age group 15 to 35yrs.

Management Tutorial Q: Explain market demand for new product?


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Ans: The market demand for a product is the total volume of sale in a given market in a given

marketing environment.

The market demand for new product is as follows:

1. if similar product already present in the market, chances of estimating sales or marketdemand is much easier.

2. If the product is an innovative product then accessing market demand is very difficult

as no previous market idea about acceptance and rejection of the new product.

3. The market demand for the improved and modified products is predictable.

Management Tutorial Q: Explain the sales estimation in context of new product?

Ans: Estimating sales ofnew product is an important part of economic analysis.

The company should estimate the average sales of the new product in different stages of its

PLC.

Management Tutorial Q: What are the sales forecasting methodologies for new

product?

Ans: The sales forecasting methodologies for new product.

1. Forecasting via Judgmental Estimates

Usually the executives especially Sales force of the organization like sales executive, sales

manager or even dealers can help in forecasting sales.

The Consumers are also surveyed for the same purpose.

2. Forecasting via Awareness-trial-repeat Purchase.

This method can be learnt with an example.

Lets say the market size is 10000customers.

Awareness rate is 40% i.e. 4000 customers.

Trial is the 50% of aware ones I.e. 2000 customers.

Repeat purchase is 70% of those who tried i.e.1400 customers.

1. Forecasting via Mathematical Models


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The sales is forecast equal to the .percentage of market share.

Management Tutorial Q: What is Break even Analysis?

Ans: in Break even Analysis a marketer estimates that how many units of goods to be sold to

reach break even, or no profit, no loss situation with the given price and cost structure.

The formula used to determine the break eve analysis is FC/1-VC/SR where

FC is Fixed Costs like land, machine, Technology etc

VC is Variable costs Office maintenance, wage etc.

SR is Sales revenue total value of sales in monetary terms.

Management Tutorial Q: What is Return on investment for a new product?

Ans: Every company aims for higher profits but return on investment is always considered to

be a better measure of business performance.

Return on investment includes four factors: Amount of return, duration, timing, and risk.

The common methods of calculating return on investment are payback, Rate of return and

Discounted cash flow.

organising for new product development

Management Tutorial Q: What is organising for new product development?

Ans: A new Product of the organization has effect on all functional area s such as marketing,

manufacturing, Human Resource and Finance , therefore the development of new product is

duly contributed by all functional areas. This increases the planning and coordination for each

of the department in the organization.

Studies have shown that the organization which measured the greatest success in new

product development are the ones that have given the greatest care to organizing for

developing those products.

Setting responsibility for new product development


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responsibility for new product development set at the corporate level, the divisional level or the

operating level.

new product development for corporate level

the involvement of corporate level executives like MD,CEO,GM and others When the newproduct is an ambitious and highly valued project for the company otherwise Between CEO

and Divisions there are Units Which are extensively involved into Research and development

and new product development as well.

Advantage

The involvement of corporate level brings greater effectiveness and control of innovative

activities.

Disadvantage

Since the executives of the operating know the customers need and demands their knowledge

goes in vain.

New product development at the Divisional Level

Advantages

It allows the day-to-day activities to go smoothly without any disturbance without putting the

task away from top management.

Disadvantage

Since the executives at divisional level are dreamer and unaware with ground realities may not

justify with the given job. As good as executives of Operating level.

New product development at the operating Level

At this level the responsibility of new product development goes to either any of the functional

departments lets say Marketing or assign it to product manager.

1. New Product development in functional department.Usually the responsibility of new

product development is assigned between marketing and research and development. It is

preferred because marketing people know well about sales, prices, competitive actions,

distribution, and services.

New product development responsibility of product manager


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Such arrangements are done when the organization has many product lines with many

variants. To avoid the extra burden on CEO and Chief marketing executive the whole

responsibility is assigned to the brand manager who develops the product and commercializes

it.

Structural Units for new product development

IN small companies the new product development is often handled by the existing units.

Whereas in large company a new unit is opened for this task.

New Product Department

This unit is at either the corporate or divisional, or operational level.

At corporate level this unit serves all the divisions and reports the top management.

At divisional level, the department coordinates new product development for a divisions

product line

New Product Committee.

It is usually at divisional or corporate level. Its role is advisory, where the members are from

different organizations working part time and also enjoy good status.

Ad hoc Committee.

This committee can be at all the levels, they are composed of specialists like product testing,

screening, coordinating test marketing etc. and after completion of the task it is dissolved.

Lessons in Physical development of the product.

This is the first activity to develop the product idea into its physical form. This requires

designing, prototyping, testing and manufacturing the product.

During this process all functional department are involved.

Management Tutorial Q:What is Product architecture?

Ans: The product architecture is the arrangement of the different functional parts of a product

into physical blocks.

The physical parts of a product are the components that are assembled and subassemblies

that ultimately implement the products function.

The elements or parts of Television are Picture tube, volume controller, speakers, channel

tuners etc.


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Management Tutorial Q:What are the Implications of Architecture?

Ans: Implications of Architecture are as follows:

1. Product Change: Since the functional elements are assembled in architecture design to

suit the product requirement of appearance, efficiency and functions. Any change is possibleonly through architecture.

Some of the motives of product change are:

Upgradation of the product

Adding new features or functions to the product.

Incase of wear and tear of product.

Product Variety

Product performance

Manufacturability.

Management Tutorial Q: What is Industrial Designing in Product Development?

Ans: It deals with creating and developing product concept to optimize the function, value and

appearance of the product.

The objective of Industrial Designing in Product Development is:

1. To make the use of product safe, easy, and understandable for the consumers.

2. To give the pleasing look to the product.

3. To make it so good that it can be maintained and repaired easily

4. The cost of the final product should be affordable for the consumers.

The product design should communicate the corporate mage of the company.

Importance of industrial Design

1. Ease of use

2. Ease of maintenance

3. User Friendly

4. Convenient and comfortable for new user.


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5. It makes the product differentiable.

6. It makes the Ownership pride by creating good image etc.

Product prototyping

Prototype is a tangible form of a product concept to approximate the product. It exhibits some

of the functions of the desired product. It can also be called a functional model of a product.

Types of prototypes

1. Physical prototype: Physical prototypes are the models created which shows all

functions of the desired product. This is built for testing and experimentations.

2. Analytical prototype: This is the intangible representation of the product usually in

mathematical manner like computer simulations, equations. Geometrical dimensions etc.

Uses of Prototypes

1. Learning: The prototype answers the questions.

1. Will it work?

2. How well does it meet customer expectations?

For this analytical prototypes are generally generated.

1. Communications: Through this prototype the top management, vendors, team

members, customers are communicated for the product features.

2. Integration: The prototype ensures that components and subsystem of product

prototype works as per expectation.

3. Milestones: this is also use to show off the performance level a product or prototype

achieves.

Management Tutorial Q: What is Concurrent engineering?

Ans: The systematic designing and development of concerned departments during productdesigning and development to minimize time-loss, minimize unnecessary expenses and

increase interdepartmental cooperation is called Concurrent Engineering.

Concurrent Engineering includes concurrent design, which is parallel.

*Design of the product


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*Design of evaluation of the product

*Design of prototyping of the product

*Design of the production of the product

*Design of the test of the product

*Design of the operation of the product

*Design of the management of the product

*Design of the support of the product etc.

new product development faqs

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