npd: new product development. why new products? sustain growth increase revenues and profits replace...
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NPD: New Product Development
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Why New Products?
• Sustain growth• Increase revenues and profits• Replace obsolete items• Innovative Firms– Apple– Google– Microsoft– IBM– Toyota
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New technologies lead to NPD
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New Products
• New to the world (discontinuous innovations)– Create an entirely new market– Smallest category
• New Product Lines• Additions to existing Product Lines• Modifications• Repositioned products• Lower-Priced
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NPD Process
• Idea Generation• Idea Screening• Business Analysis• Development• Test Marketing• Commercialization
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Idea Generation
• Customers• Employees• Distributors• Vendors• Competitors R&D• Consultants
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Idea Screening
• MOST IMPORTANT STEP• Weed out bad ideas• Another group performs a review• Concept testing– Does not predict success
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Business Analysis
• Survived Screening process• Estimate– Demand– Cost– Sales– Profitability
• CDSTEP
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Development
• Prototype by engineering– Start marketing strategy
• Can take a long time– Crest 10 years– Polaroid in color 15 years– Xenox 15 years– Minute Rice 18 Years
• Work out the kinks • All departments work at once - Simultaneous
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Test Marketing
• Limited introduction– Tests customer reaction– Marketing strategy
• Costly• Alternatives– Lab testing– Internet to assess demand
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Commercialization
• Decision to go full Launch• Manufacturing large scale– Order materials/equipment– Inventories– Shipping– Etc.
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Diffusion of Innovations
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Diffusion in numbers
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In a more serious tone…
• Innovators: eager to try new ideas; obsession
• Early adopters: group oriented, opinion leaders
• Early majority: weighs pros & cons
• Late majority: most of their friends have it
• Laggards: low SES; adopt when obsolete; luddites
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How Product influences adoption
• Complexity• Compatibility• Relative Advantage• Observability• Trialability
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Product Life Cycle
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Product Life Cycle