NEW PRODUCT DEVELOPMENT SRATEGIES

What is PRODUCT!
A product is a set of benefits offered for exchange Can be tangible or intangible.

What is New Product Development..!

Bringing new product in the market.

KEY STEPS IN NEW PRODUCT DEVELOPMENT

Idea Generation Idea Screening Concept Testing Business or Financial Analysis Product Development Test Marketing Commercialization

IDEA GENERATION
Search for new product opportunities. Delineating sources for new ideas

METHODS FOR GENERATING IDEAS

Dimensional Analysis Problem Analysis

Benefit Structure Analysis

Scenario Analysis

IDEA / PRODUCT SCREENING

The object is to eliminate unsound concepts prior to devoting resources to them. The 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? -Is it technically feasible to manufacture the product? -Will the product be profitable when manufactured and delivered to the customer at the target price?

CONCEPT TESTING
Investigate 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?

BUSINESS AND FINANCIAL ANALYSIS

Demand Projection Cost Projection Competition Required Investment

Profitability

PRODUCT DEVELOPMENT
Product Construction Branding Product Positioning And Usage testing

TEST MARKETING
Produce a physical prototype or mock-up. Test the product (and its packaging) in typical usage situations. Conduct focus group customer interviews or introduce at trade show.

Make adjustments where necessary.

Produce an initial run of the product and sell it in a test market area to determine customer acceptance.

COMMERCIALIZATION

Launch the product. Produce and place advertisements and other promotions. Fill the distribution pipeline with product.

Introduction
The life cycle refers to the period from the products first launch into the market until its final withdrawal and it is split up in phases. During this period significant changes are made in the way that the product is behaving into the market i.e. its reflection in respect of sales to the company that introduced it into the market.
Since an increase in profits is the major goal of a company that introduces a product into a market, the products life cycle management is very important.

PRODUCT LIFE CYCLE MODEL

The products life cycle - period usually consists of five major steps or phases:

Product development Product introduction

Product growth

Product maturity Product decline

Strategies of each product life cycle

Decline Development Introduction Growth Maturity

Strategi Make c Goal your

Acquire a product strong known market and position establish a test Almost not there

Maintain your market position and build on it Price and distribu tion chann el pressur

Defend market position from competit or and improve your product Establishme nt of competitive environmen t

Milk all remain ing profits from produ ct Some comp etitors are alread y withdr awing

Competiti on

Early entry of aggressiv e competit or

PRODUCT LIFE CYCLE TECHNIQUE EXAMPLE : PRODUCT CANNIBALISM Product cannibalization occurs when a company decides to replace an existing product and introduce a new one in its place, regardless of its position in the market. This is due to newly introduced technologies and it is most common in high tech companies.
In the normal case of cannibalization, an improved version of a product replaces an existing product as the existing product reaches its sales peak in the market.

Types Of CANNIBALIZATION

1. UNFAVORABLE CANNIBALIZATION

2. OFFENSIVE CANNIBALIZATION STRATEGIES 3. DEFENSIVE CANNIBALIZATION STRATEGIES

4. PRODUCT LIFE CYCLE IN RESPECT TO THE TECHNOLOGY LIFE CYCLE

1. UNFAVORABLE CANNIBALIZATION The new product contributes less to profit than the old one
The economics of the new product might not be favourable The new product requires significant retooling The new product has greater risks

2. OFFENSIVE CANNIBALIZATION STRATEGIES

For companies that are trying to gain market share or establish themselves into a market cannibalization is the way to do it A way to defend market share or size. A usual practice is the market leader to wait and do not cannibalize a product unless it has to. This strategy does not always work since delays will allow the competition to grab a substantial piece of the market before the market leader can react.

3. DEFENSIVE CANNIBALIZATION STRATEGIES Cannibalize before competitors do

Introduction of cannibalization as a means of keeping technology edge over competition Management of cannibalization rate through pricing
Minimization of cannibalization by introducing of the new product to certain market segments

4. PRODUCT LIFE CYCLE IN RESPECT TO THE TECHNOLOGY LIFE CYCLE

As a new technology matures so is the product or service that uses this technology. Early adopters and technology enthusiasts drive a market since they demand just technology.

As technology grows old, customers become more conservative and demand quick solutions and convenience.

Change in customers as technology matu

USE OF PRODUCT MANAGEMENT FOR SUCCESSFUL PRODUCT LIFE CYCLE

Understand how product management wor

Maintain a product / market balance Consider product management as a discipline

REFERENCES

Aaker D. Strategic Market Management, Willey, 1995. Avlonitis G. Strategic Industrial Marketing, Stanoulis, 2001. Business Studies The product Life Cycle, on-line http://www.learn.co.uk

Clifford D. Managing the Product Life Cycle, European Business Journal, July 1969.