New Product Development (NPD) - PowerPoint PPT Presentation

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New Product Development (NPD)

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Title: Slide 1 Author: BRAY Last modified by: dkilburn Created Date: 9/17/2006 4:50:02 PM Document presentation format: On-screen Show (4:3) Company – PowerPoint PPT presentation

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Title: New Product Development (NPD)


1
New Product Development (NPD)
  • 3 inescapable facts about NPD It is expensive,
    risky and time consuming
  • For example, Gillette spent in excess of 100
    million over more than ten years developing its
    sensor razor brand
  • Had the brand failed, Gillettes position in the
    shaving market could have been damaged
    irreparably.

2
New Product Development
  • Managing the process of NPD is an important
    factor in reducing cost, time and risk
  • Studies have shown that having a formal process
    with review points, clear new product goals and a
    strong marketing orientation underlying the
    process leads to greater success, whether the
    product is a physical good or a service

3
New Product Development
  • An eight step new product development process to
    provide these characteristics is shown in the
    next slide.
  • Each stage leads to a greater likelihood of
    developing a product that not only works but also
    confers customer benefits.

4
New Product Development- 8 stage NPD process
New product strategy
  • .

Idea generation
Screening
Concept testing
Business analysis
Product development
Market testing
Commercialisation
5
New product strategy
  • Marketing Directors value strategic guidance from
    senior management about their vision and
    priorities for NPD.
  • Key objectives such as profitability,
    technological leadership, etc. impact and help to
    evaluate decision making.
  • Example of a clearly developed new product
    strategy Mars which developed ice cream
    products that capitalized on the brand equity of
    its confectionery brand names, such as Twix, Mars
    and Milky Way

6
Idea generation
  • Successful new product ideas are not
    necessarily based on technological innovation.
  • Often based on novel applications of existing
    technology (e.g.velcro poppers on disposable
    nappies)
  • Levi Strauss vision of repositioning jeans,
    which were originally used as working clothes, as
    a fashion statement through its 501 brand
  • Brainstorming is a technique often used to create
  • new ideas
  • Consumers also are a rich source of ideas

7
Screening
  • New ideas need to be screened to evaluate their
    commercial worth. Some companies use formal
    checklists to help them judge whether the product
    idea should be rejected or accepted for further
    evaluation.
  • Other criteria focus on cost/benefit analysis,
    expected return on investment, uniqueness of the
    product, and primary market research results

8
Concept testing
  • Once the product idea has been accepted as worthy
    of further investigation, it can be framed in a
    specific concept for testing with potential
    customers.
  • Group discussion can be used to develop and test
    product concepts
  • A questionnaire is often used to ascertain the
    extent of liking/disliking, the kind of
    person/organization that might buy the product,
    its price acceptability, and how likely they
    would be to buy the product.

9
Business analysis
  • Based on the results of the concept test and
    considerable management judgement, estimates of
    sales, costs and profits will be made.
  • Business analysis will focus on the target
    market, its size and projected product acceptance
    over a number of years. Sales and profit
    forecasts will also be calculated.
  • If the product concept appears commercially
    feasible, marketing and product development
    budgets will be established to gain customer
    awareness and trial, and the work required to
    turn the concept into a marketable product.

10
Product development
  • There are 6 key principles
  • Mission senior management must agree to a clear
    mission through a project charter that lays out
    broad objectives
  • Organisation the appointment of an experienced
    project leader and a core team consisting of one
    member for every core function in the company.
  • Project plan creation by the project leader and
    core team of a contract book, which includes a
    work plan, resource requirements and objectives
    against which it is willing to be evaluated.

11
Product development
  • Project leadership project leader becomes a
    product champion and spends time talking to
    customers, distributors and key influencers
  • Responsibilities all core members share
    responsibility for the overall success of the
    project as well as their own functional
    responsibilities
  • Executive sponsorship an executive sponsor in
    senior management is required to act as a channel
    for communication with top management and to act
    as a coach and mentor for the project and its
    leader

12
Commercialization
  • Commercialization is all about launching the new
    product and ensuring that the target market,
    segmentation and positioning are all correctly
    researched and selected.
  • The optimal marketing strategy has to be selected
    to provide a differential advantage in the
    marketplace.

13
New Product Development (NPD)
  • In groups of two, discuss products that have been
    a complete flop and explain why this is so.
  • In your groups discuss products that have been
    real winners and explain why this is the case.
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