NEW PRODUCT DEVELOPMENT

PROCESS
Deepa .M

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INDEX

INTRODUCTION TO NEW PRODUCT DEVELOPMENT.3

INTRODUCTION TO APPLE7

INVENTION OF iPOD.. .8

STAGES OF DEVELOPMENT PROCESS OF iPOD....9

REFERENCES....15

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INTRODUCTION OF NEW PRODUCT DEVELOPMENT

New product development (NPD) is the term used to describe the complete
process of bringing a new product or service to market. There are two
parallel paths involved in the NPD process: one involves the idea generation,
product design and detail engineering; the other involves market research
and marketing analysis. Companies typically see new product development
as the first stage in generating and commercializing new products within the
overall strategic process of product life cycle management used to maintain
or grow their market share.

A product can be considered new under the following situations:-

New-to-the-world products
New product lines
Additions to existing product lines
Improvements and revisions of existing products
Repositioning
Cost reduction

Why Develop New product:

To replace declining products.

To take advantages of new products.
To maintain/increase market share.
To defeat rivals.
To keep up with rivals.
To maintain competitive advantage.
To fill a gap in the market.
To bring a new customers.

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New Product Development Process:
Stages in New product development process

1.IDEA GENERATION:
Idea Generation is often called the "fuzzy front end" of the NPD
process
Ideas for new products can be obtained from basic research using a
SWOT analysis (Strengths, Weaknesses, Opportunities & Threats),
Market and consumer trends, company's R&D department,
competitors, focus groups, employees, salespeople, corporate spies,
trade shows, or Ethnographic discovery methods (searching for user
patterns and habits) may also be used to get an insight into new
product lines or product features.
Lots of ideas are being generated about the new product. Out of these
ideas many ideas are being implemented. The ideas use to generate in
many forms and their generating places are also various. Many
reasons are responsible for generation of an idea.
Idea Generation or Brainstorming of new product, service, or store
concepts - idea generation techniques can begin when you have done
your OPPORTUNITY ANALYSIS to support your ideas in the Idea
Screening Phase (shown in the next development step)

2. IDEA SCREENING :
The object is to eliminate unsound concepts prior to devoting resources to
them. screeners should ask several questions:
Will the customer in the target market benefit from the product?
What is the size and growth forecasts of the market segment/target
market?
What is the current or expected competitive pressure for the product
idea?
What are the industry sales and market trends the product idea is
based on?

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 Is it technically feasible to manufacture the product?
Will the product be profitable when manufactured and delivered to
the customer at target price?

3. CONCEPT DEVELOPMENT TESTING:

Develop the marketing and engineering details
Investigating intellectual property issues and search patent data bases
Who is the target market and who is the decision maker in the
purchasing process?
What product features must the product incorporate?
What benefits will the product provide?
How will consumers react to the product?
How will the product be produced most cost effectively?
Prove feasibility through virtual computer aided rendering, and rapid
prototyping
What will it cost to produce it?

4. MARKETING STRATEGY DEVELOPMENT:

Following a successful concept test, the new product manager will develop a
preliminary strategy plan for introducing new product in the market. The
plan consists of three parts.

The first part describes the target market size, structure and behavior
for the first few years.
The second part outlines the planned price distribution strategy and
marketing budget for the 1st year.
The third part of marketing strategy plan describes the long run sales
and profit goals and the marketing mix strategy over time.

5 .BUSINESS ANALYSIS :
Business Analysis involves
o Estimating likely selling price based upon competition and
customer feedback

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 Estimating sales volume based upon size of market and such
tools as the Fourt-Woodlock equation
Estimate profitability and break-even point

6. PRODUCT DEVELOPMENT:

In this stage, detailed technical analysis is conducted to know whether the

product produced at costs is low enough to make the final price attractive to
the customer. Here a working model or a prototype is developed to disclose
all tangible and intangible attributes of the product. A product protocol is
prepared which is a detailed downiest containing the important attributes
that are expected in the product. Once the protocol has been developed, it is
handed over to the research the development department to develop the
prototype of the product.

7. MARKET ANALYSIS:
Market analysis involves
Producing a physical prototype or mock-up
Testing the product (and its packaging) in typical usage situations
Conducting focus group customer interviews or introduce at trade
show
Making adjustments where necessary
Producing an initial run of the product and sell it in a test market area
to determine customer acceptance

8. COMMERCIALISATION (often considered post-NPD) involves:

Launching the product
Producing and placing advertisements and other promotions
Filling the distribution pipeline with product
Critical path analysis is most useful at this stage

Challenges in NPD:

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 To Develop innovative products.
To Bring new ideas to market ahead.
To Integrate regulatory compliance into product lifecycle
processes to reduce business risk and sell products in global
markets.
To Effectively manage the global manufacturing supply chain
to ensure on-time, on-cost and quality product delivery.

Introduction

Apple

Apple Inc. is an American multinational corporation that designs and

markets consumer electronics, computer software, and personal computers. The
company's best-known hardware products include the Macintosh line of computers,
the iPod, the iPhone and the iPad. Apple software includes the Mac OS X operating
system; the iTunes media browser; the iLife suite of multimedia and creativity
software; the iWork suite of productivity software; Aperture, a professional
photography package; Final Cut Studio, a suite of professional audio and film-
industry software products;Logic Studio, a suite of music production tools;
the Safari internet browser; and iOS, a mobile operating system.

Invention of iPod

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Apples iPod has taken the world by storm. Nearly omnipresent, it has
changed not only the way people listen to music, but it has transformed its
parent company Apple into an entertainment giant. In order to understand
how this change came about, well take a look at Apples ongoing efforts to
make iPod synonymous with hip.

When you mention MP3 Player, the first thing that comes to most peoples
minds is iPod. The words MP3 Player and iPod are almost synonymous in
todays society. The iPod has revolutionized the MP3 Player market since its
initial release and has continued to do so in following releases.

Few people know - and few market analysts too - that the iPod + iTunes
business idea was not conceived inside Apple, but was proposed to Apple by
an outside source, a music lover and Engineer named TonyFadell, who was
later hired by Apple. Fadell had approached other companies before Apple,
including Microsoft, and Microsoft had turned away Fadell and discarded
the project as Uninteresting. Microsoft executives turned down Fadell and
the iPod + iTunes business idea saying: " This will not make any money .
The iPod was developed by Tony Fadell and his team in just 12 months. The
name iPod was proposed by Vinnie Chieco, a copywriter who was called by
Apple to figure out howto introduce the new player to the public. After
Chieco saw a prototype, he thought of the movie "2001:A Space Odyssey"
and the phrase "Open the pod bay door, Hal!"

October 23rd 2001 a day that revolutionized the digital music world,
Apple Computer now known as Apple Inc. released their first MP3 Player,
the iPod.

iPod is a line of portable media players designed and marketed

by Apple and launched onOctober 23, 2001. The product line-up currently
consists of the hard drive-based iPod Classic, the touchscreen iPod Touch,
the compact iPod Nano, and the ultra-compact iPod Shuffle. Storage
capacity varies by model, ranging from 2 GB for the iPod Shuffle to 160 GB
for the iPod Classic

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 While everyone else was making an MP3 player that was
better/cheaper/faster, Apple was making electronic jewelry that also played
MP3s. Never focusing on price, they brought to market more value, more
style, and new ways of interacting with digital media. says David Taber a
marketing consultant who then goes on to explain that strategy really does
matter. Apple knew what they were doing when they designed the iPod; they
made it work better on the Mac than on a PC for obvious reasons to get
people to buy more Apple computers, both iPod and Mac sales benefited
from this strategy.

Stages of Development in iPOD

IDEA GENERATION

Tony Fadell

In 2000, digital music players were either big and clunky or small and
useless with equally terrible user interfaces.

Tony Fadell, former employee of General Magic and Phillips, envisioned a

brand new MP3 player. Unlike the bulky flash memory-
based MP3 players from Rio and other companies, Fadell wanted to deliver
a small hard drive-based player that was linked with a content delivery
system where users could legally obtain and download music.

The need for the first iPod resulted from Apples recognition that that the
development of digital products were moving at a fast pace for many new
digital devices such as organizers, digital camera models and so on, but use
of digital music remained tied to older technology based devices

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The iPod originated with a business idea dreamed up by Tony Fadell, an
independent inventor. Fadell's idea was to take an MP3 player, build a
Napster music sale service to complement it, and build a company around it.
Apple hired Fadell in early 2001 and assigned him a team of about 30
people, including designers, programmers and hardware engineers.

October 23rd 2001 a day that revolutionized the digital music world, Apple
Computer now known as Apple Inc. released their first MP3 Player, the iPod

Steve Jobs announced that listening to music will never be the same again,
and for once the hype wasnt far short of the mark. Apple may not have
invented the digital music player but it did turn the MP3 player into a
fashion icon and build a legitimate digital music industry around it. It also
set standards for product design and ushered in an era of glossy, strokable
technology.

IDEA SCREENING :

The need of making downloaded music easily portable was created, and
what eventually has made the product category of mp3-players (of descent
memory capacity) viable is that data storage discs have become small
enough for this use.

The target market for the iPod to be from middle school ages to adults. That
would mean everyone who has access to and knows how to use a computer.
The iPod is for those persons who like to listen to music, take pictures, and
have easy access to what they enjoy most. Downloading music is rapidly
growing and those that like to have the latest music want it easy and fast.

The next step in the development :

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 Does the iPOD add value for the customer? Does it satisfy a market
need?
Can the product be made within a stated time period to get it to market
when needed?

How many units of it will sell and at what price compared to the other
MP3 players?

Can Apple manufacture and sell the product within budget and still
make money?

Does Apple need to provide the customer with after-sales service? If

so, do we have the resources to do that?

Does the product fit Apples and corporate strategy?

CONCEPT DEVELOPMENT AND TESTING

The iPod line came from Apple's "digital hub" category, when the company
began creating software for the growing market of personal digital devices.
Digital cameras, camcorders and organizers had well-established
mainstream markets, but the company found existing digital music players
"big and clunky or small and useless" with user interfaces that were
"unbelievably awful, so Apple decided to develop its own. As ordered by
CEO Steve Jobs, Apple's hardware engineering chief Jon
Rubinstein assembled a team of engineers to design the iPod line, including
hardware engineers Tony Fadell and Michael Dhuey,and design
engineer Jonathan Ive.The product was developed in less than one year .

Some of the features that were implemented to make the ipod stand out
among the other music players were :

o Quicker transfer time.

o Small Fashionable design.

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 o Easy-to-use interface.

o Small hard drive-based player instead of bulky flash memory-based

MP3 players.

o Bluetooth headphone system

o Large playlist

o Music equalizers

o Byzantine interfaces

o Easy navigation

o Good Battery life .

Apple did not stop there, they continued to be that much better, they used
better hardware, software, packaging, and marketing techniques than anyone
else. The iPod was also more durable than its competing products due to
Apples use of better parts which, in return made it more reliable.

BUSINESS ANALYSIS

Before entering a market, Apple skimed its market. Because of how it first
started its business in the High-Tech industry, it has needed to restrict its

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market. Indeed Apple tried to compete with its biggest rival Microsoft by
selling High-Tech products costlier because of their better design.

In a very calculated fashion, Apple has leveraged its traditional designer and
educational segments against the world market at large in the hopes that the
emulation of their cool design factor could be successfully packaged and
sold; and though without no regards to its limitation as being a high price
tag. Apple was not looking for the wealthier customers but for the most
valuable ones.

The iPod was touted to be a symbol of change, it is not only a MP3 player
but a change in people way of listening to music and way of attitude towards
to the Music World industry.

Apple does not care about local market conditions. Its reputation and
popularity give it the capacity to enter any kind of market with its own price.
Moreover, the iPod wanted to be merely seen as a luxury product as
everyone cannot afford one.

Apple wanted consumers to buy iPOD as a must have fashion accessory

defined by uniqueness. Apple knows who are its customers: the early
adopters who are eager to get the new Apple gadget. Apple made research to
know who would be the next interested in the new iPod. Thus few may pay a
premium for good design but when they do so, they valid Apples selling
strategy: paying the price of coolness and stylishness. The iPod was
launched to attract new MP3 users, at a more affordable price. Still it costs a
certain price comparing to a casual MP3.

The iPOD was not to be a casual MP3 ,It was to be known for Apple product
design and quality.

COMMERCIALISATION

To launch the iPOD as a surprise product, it was not pre-announced. This

strategy was used by Apple for launching all the generations of iPod.
Extensive advertising and marketing was undertaken for the iPod.

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A series of innovative advertising campaigns via television commercials,
print ads, posters in public places, wrap advertising etc were used. The case
also describes how Apple created an iconic image for iPod that attracted the
young and the old alike. It was positioned as a 'cool' product for the present
generation.

Apple advertised extensively for iPod. Just when iPod was launched, an
introductory campaign which would explain an unfamiliar product was
needed. For this, Jobs thought a traditional campaign was preferable. Hence,
the first iPod's commercial showed a man listening to the songs on his iPod
and dancing.

The commercial illustrated iPod's portability and ability to easily play songs
downloaded from one's computer. All media channels including television,
print, hoardings, posters and wrap advertising were used to advertise iPod.

The advertisements and commercials of iPod focused on the 'coolness'

aspect as it made theviewers believe that having one would make them
accepted among their peers. Analystscommented that the hype surrounding
iPod was created due to its unique advertising, word of mouth publicity by
the users and the look and design of the product.

NEW PRODUCT PRICING

Apples pricing strategy is Aggressive pricing and overwhelming features. IN

2001 pricing for all iPods has become significantly more expensive , and had a
very high premium that the company has typically commanded for its
products.

The initial price of the iPhone was set at:

Model Price

4gb model $499

8gb model $599

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Introduced in June 2001 at a top price of $599 in the United States, the
iPhone was one of the most anticipated electronic devices of the decade.
Despite its high price, consumers across the country stood in long lines to
buy the iPhone on the first day of sales. Just two months later, Apple
discontinued the less-expensive $499 model and cut the price of the
premium version from $599 to $399.
REFERENCES

http://www.besttechie.net/2008/03/01/the-ipod-success-thank-the-marketing-
department/
http://www.oppapers.com/subjects/ipod-and-itunes-price-strategy-page1.html
http://christophe.benavent.free.fr/IMG/pdf/AINI_2008_Apple_s_Pricing_Strategy
.pdf
http://news.worldofapple.com/archives/2006/10/18/apple-targets-myspace-in-
ipod-marketing-campaign/

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