However, competition escalated and consumers became more skeptical and selective about the types of products they purchased. Marketers found it increasingly difficult to rely on persuasive sales techniques to move products. Retailers grew restless when these products did not move off shelves as quickly as planned. Companies had to know more about their target markets. What were the wants and needs of the people who were buying their products? How could their firm satisfy these wants and needs?
The second stage was marked by the emergence of the market as the driver of Innovation. Instead of being technology- river, new product development evolved into a market-led process in which new products emerged from well-researched customer needs. The new product development process was placed in the hands of marketers who knew consumers’ wants and needs. Customer demand “pulled” the product through the development process. Modern new product development is a blending of these two orientations into a “dual-drive” approach to innovation.
Companies recognize that innovation is a complex process that requires sound investment in research and development, as well as significant marketing expertise that focuses on satisfying consumers’ wants ND needs. The rapid pace of change that engulfed businesses toward the end of the twentieth century put an even greater burden on companies to build adaptive capableness Into their organizations. Global competition means there are more competitors capable of world-class performance. This has made competition more intense, rigorous, and aggressive than ever before.
Fragmenting and more sophisticated markets mean that consumers demand more from products in terms of quality, differentiation, and “meaningfulness. ” New technologies have had two important outcomes in regards to innovation. First, new technologies are responsible for this new market sophistication in which consumers have more choices and are thus more demanding. Secondly, new technology has increased manufacturers’ capabilities for rapid response to shifting market needs. Finally, product life cycles have become more compressed as the skills required for developing new products increase In complexity.
For example, consider the development of a new type of computer software. The expertise needed to develop the software from conception to centralization might take years. The product’s life cycle In such a competitive ND turbulent environment might last only a few months. Therefore, companies have needed to develop these products are a much more persistent requirement for success. Instead of the mono-approach, in which technology or markets drive innovation, new product development now requires a convergence of technology, marketing, product design, engineering, and manufacturing capabilities.
Speed, efficiency, and quality in product development are the challenges that new product development faces in today’s intense competitive environment. TYPES AND SOURCES OF NEW PRODUCTS There are five categories of new products. New-to-the-world products or services are new inventions like in-line skates and health maintenance organizations. New category entries, such as sport utility vehicles, are products or services that are new to a firm. Additions to product lines add products or services to a firm’s current markets. For example, when a powder laundry detergent offers a liquid version it is considered a line extension.
Product improvements are another type of new product and are common to every product category. Repositioning target products to new markets or for new uses. Firms can obtain new products internally or externally. External sourcing means the company acquires the product or service, or obtains the rights to market the product or service, from another organization. Internal development means the firm develops the new product itself. This is riskier than external development because the company bears all of the costs associated with new product development and implementation.
The process begins with idea generation. For every successful new product, many new product ideas are conceived and discarded. Therefore, companies usually generate a large number of ideas from which successful new products emerge. Idea screening, the second step, considers all new product ideas in the idea pool and eliminates ones that are perceived to be the least likely to succeed. Not only should the firm’s manufacturing, technology, and marketing capabilities be evaluated at this stage, but also how the new idea fits with the company’s vision and strategic objectives.
The third stage, concept development and testing, requires formal evaluations of the product concept by Figure 1 New Product Development Process, Factors and Strategies consumers, usually through some form of marketing research. New product ideas with low concept test scores are discarded or revised. While the Internet is making it easier to gather consumer data, there are limitations. As people get deluged with an increasing number of surveys and solicitations, it is possible that they will grow tired of helping marketers. The business analysis stage is next.
At this point the new stages an idea may be discarded once marketing and manufacturing costs are analyzed, due to limited potential for profitability or commercial success. Throughout these four stages, the new idea has remained on paper with a relatively small investment required. The fifth stage, prototype development, is the first stage where new product costs begin to escalate. Because of this, many companies have placed greater emphasis on the first four stages and reduced the proportion of new products that reach the prototype stage from about 50 percent to around 20 percent.
At this stage the concept is converted into an actual product. A customer value perspective during this phase means the product is designed to satisfy the needs expressed by consumers. Firms may use quality function deployment (SF) as they develop the prototype. SF links specific consumer requirements such as versatility, durability, and low maintenance with specific product characteristics (for example, adjustable shelves, a door-mounted ice and water dispenser, and touch controls for a refrigerator).
The customer value perspective requires the new product to satisfy customer needs and meet desired quality levels at specified production costs. Test marketing tests the prototype and marketing strategy in simulated or actual market situations. Because of the expense and risks associated with actual test markets, marketers use them with caution. Products that test poorly are pulled back and recapitulated or discarded. Centralization, the final stage, is when the product is introduced full scale. The level of investment and risk are highest at this stage.
New product innovation requires structure that optimizes direction and guidance. Structure that facilitates internal information exchange, decision making, and materials flow is essential. A “fast-cycle” structure allows more time for planning and implementing activities to gain competitive advantage. This type of structure also cuts costs because production materials and information collect less overhead and do not accumulate as work-in- process inventory. Autonomy refers to the amount of decision making allowed at lower levels of management.
The coordination of the engineering, product design, manufacturing, and marketing functions in the new product development process is vital. Leadership influences strategy, culture, and the firm’s overall ability to undertake new product development. Top management can demonstrate involvement in the development process by providing career advancement for entrepreneurial skills and encouraging broad employee participation. Clarity and vision are crucial to ensuring that new product ideas are good strategic fits for the company.
The degree to which leadership allows trial and error and promotes individual initiative positively influences the development of new products. This are crucial in order for innovation to flourish. New products emerge in a variety of ways and their development does not always proceed in rational and consistent manners. It is necessary for leadership to view the process as iterative and dynamic, and to foster adaptation and flexibility. Management flexibility and responsiveness to change also are needed.
This type of leadership is particularly important to the project manager who must coordinate and integrate the various parts of the new product development process so that a coherent system emerges that produces a product with compelling value. Initiative encourages creativity and problem-solving skills. Teams provide mechanisms for breaking down functional biases created by a strict adherence to structure. The amount of interdepartmental conflict in the organization, the social cohesion among team members, and the frequency and directionality of interdepartmental communication influence team building.
Through shared understanding of the objectives and purposes of the project, as well as the tasks required in the development process, teams can shape the project and influence how work gets done in the organization. IMPROVING SPEED, EFFICIENCY, AND QUALITY New products often fail because of unanticipated market shifts that result in missed opportunities and misused channels of distribution. Failures also occur because companies miscalculate their own technological strengths or the product’s technological challenges.
These potential problems often crop up in the latter stages and result in delays, redesigns, or poor quality products. Companies are constantly seeking ways to avoid these pitfalls. One solution is new product development maps that chart the evolution of a company’s product lines. This historical perspective alps the firm to identify and analyze functional capabilities in a systematic, repetitive fashion that allows for the development of linkages and the identification of resources for new endeavors.
These maps can direct the firm to new market opportunities and point out technological challenges. Aggregate plans for projects offer another solution. Rather than viewing each new product development project individually, they consider all of the new product development projects under consideration by the firm. This is particularly important in firms with hundreds of new product development projects going on at the same time. Projects are categorized according to resources required and contribution to the firm’s bottom line.
Aggregate project plans enable management to improve the management of new product development by providing greater control over resource allocation and utilization. These plans help to point out where capabilities need to be improved, how sequencing projects may help, and how projects fit with the firm’s development strategies. Return maps graphically represent the contributions of all team members to product success in terms of time and money. Their focus is on the point at which reduce sales generate sufficient profit so that the firm’s initial investment in development is returned.
Return maps show team members the time and money needed to complete their tasks in the development process so that they may estimate and re-estimate their investment in the process. In doing this return maps illustrate the impact of their actions on the project’s overall success. Another way to improve the speed and efficiency with which new products are introduced is to involve into the development project team, quality may increase, time to market entry may decrease, investment in inventory may diminish, and costs may significantly crease.
Technology continues to change and create new opportunities and threats. Customer requirements and expectations continue to shift and create new demands. Old channels of distribution are becoming obsolete and new channels are opening new opportunities. Some competitors are falling by the wayside while others are surging to the forefront by making new and unexpected moves to gain advantage. The very structure of industry is changing. A key to success in this tumultuous environment will continue to be the ability to sustain a competitive advantage through innovation.
However, speed, efficiency, and quality in product voltmeter will be paramount. Building capabilities in all aspects of product creation and implementation, overcoming uncertainty and facilitating decision- making, ensuring these innovations are strategically linked to the firm’s vision, and doing this on a continuous basis is the challenge of new product development in the next century. SEE ALSO: Innovation ; Product Design ; Product Life Cycle and Industry Life Cycle Charles M.
Mayo Revised by Deborah Hauser Product Development Strategy Definition Developing new products or modifying existing products so they appear new, and offering those products to current or new markets is the definition of product development strategy. There is nothing simple about the process. It requires keen attention to competitors and customer needs now and in the future, the ability to finance prototypes and manufacturing processes, and a creative marketing and communications plan. There are several subsets of product development strategy.
Product Development Diversification Strategy This strategy is employed when a company’s existing market is saturated, and revenues and profits are stagnant or falling. There is little or no opportunity for growth. A product development diversification strategy takes a company outside its existing business and a new product is developed for a new market. An example of financial education program aimed at college students. The new product is not revolutionary as there are other companies producing similar products, but it is new to the company producing it.
Product Modification Strategy Product modification strategies are generally aimed at existing markets, although a side benefit may be the capturing of new users for the new product. An example of this strategy is toothpaste. Toothpastes that promote whitening ability or anti-cavity tributes are built on existing plain toothpastes that only promise clean teeth. Related Reading: Retail Product Strategy Revolutionary Product Development Revolutionary products are those for which there was no real prior need. Computers and cell phones are good examples.
Before these products appeared on the market, consumers did not know they needed them. But, the germ of an idea on how to better communicate resulted in products that have changed the world and have drastically changed the competitive landscape. Benchmarking the Process Whatever strategy is employed, the new product development process must be ruefully thought through. It also requires a series of benchmarks along the way. These evaluate whether the process should be continued as new product development is usually expensive and time consuming.
For example, if a company is in the process of developing a new product and a competitor beats that company to market with a similar new product, the company must make a “go/no go” decision about its own product development options. Consumers Front And Center Whatever product development strategy a company selects, consumers need to be front and center and involved in the process from start to finish. Set aside enough edged for consumer evaluation of the new product at the concept, prototype and the final product stage.
Make sure you not only include those consumers who represent your primary market, but also those to whom your company might appeal to secondarily. New product development From Wisped, the free encyclopedia [hide]This article has multiple issues. Please help improve it or discuss these issues on the talk page. This article may require cleanup to meet Wisteria’s quality standards. The specific problem is: article is overly business- and marketing-centric; does not adequately cover the technical/engineering side of New product voltmeter. See Talk page.. May 2009) This article needs attention from an expert in Economics. (November 2008) process of bringing a new product to market. New product development is described in the literature as the transformation of a market opportunity into a product available for sale[l] and it can be tangible (that is, something physical you can touch) or intangible (like a service, experience, or belief). A good understanding of customer needs and wants, the competitive environment and the nature of the market represent the top required factors for the success of a new product. 2] Cost, time and laity are the main variables that drive the customer needs. Aimed at these three variables, companies develop continuous practices and strategies to better satisfy the customer requirements and increase their market share by a regulate development of new products. There are many uncertainties and challenges throughout the process which companies must face. The use of best practices and the elimination of barriers to communication are the main concerns for the management of NYPD process.
Contents 1 NYPD Process Structure 2 NYPD Models 3 Marketing considerations 3. 1 The eight stages 3. 2 Fuzzy Front End 3. 3 Other approaches NYPD organizations 5 NYPD strategies 6 Managing New Product Development 7 Related fields 8 See also 9 Notes and references NYPD Process Structure The NYPD process consists of a series of activities that firms employ in the complex process of delivering new products to the market. Every new product will pass through a series of stages from ideation through design, manufacturing and market introduction.
The development process basically has three main phases: 1. Fuzzy front-end (FEE) is the set of activities employed before the formal and well defined NYPD or stage-gate process[3] 2. Product design starts with the development of the ewe product and it ends at pre-centralization analysis stage. 3. Fuzzy back-end or centralization phase represent the action steps where the production and market launch occur. The front-end phase have been very well researched, with valuable models proposed. Peter Keen et. Al. Revised a five step front end activity called front end innovation: opportunity identification, opportunity analysis, idea genesis, idea selection, and idea and technology development. He also includes an engine in the middle of the five front end stages and the possible outside barriers that can influence the process outcome. The engine represents the management driving the activities described. The front end of the innovation is the greatest area of weakness in the NYPD process. This is mainly because the FEE is often chaotic, unpredictable and unstructured. 4] Engineering design is the process whereby a technical solution is developed to solve a given problem[5] The design stage is very Previous research shows that 70% – 80% of the final product quality and 70% of the product entire life-cycle cost are determined in the product design phase, therefore the design-manufacturing interface represent the greatest opportunity for cost reduction. 6] Design projects last from a few weeks to three years with an average of one year. [7] Design and Centralization phases usually start a very early collaboration.
When the concept design is finished it will be sent to manufacturing plant for prototyping, developing a Concurrent Engineering approach by implementing practices such as SF, UDF/DEAF and more. The output of the design (engineering) is a set of product and process specifications – mostly in the form of drawings, and the output of manufacturing is the product ready for sale. [8] Basically, the design team will develop drawings with technical specifications representing the true product, and will send it to the manufacturing plant to be executed.
Solving product/process fit problems is of high priority in information communication design because 90% of the development effort must be scrapped if any changes are made after the release to manufacturing. [8] NYPD Models Conceptual models have been designed in order to facilitate a smooth process. The concept adopted by DIED, a successful design and consulting firm, is one of the most researched processes in regard to new product development and is a five step procedure. 9] These steps are listed in chronological order: 1 . Understand and observe the market, the client, the technology, and the limitations of the problem; 2. Synthesize the information collected at the first step; 3. Visualize new customers using the product; 4. Prototype, evaluate and improve the concept; 5. Implementation of design changes which are associated with more technologically advanced procedures and therefore this step will require more time.
One of the first developed models that today companies still use in the NYPD process is the Bozo, Allen and Hamilton (BAH) Model, published in 1982. [10] This is the best known model because it underlies the NYPD systems that have been put forward later. 1 1] This model represent the foundation of all the other models that have been developed afterwards. Significant work has been conducted in order to propose better models, but in fact these models can be easily linked to BAH model.
The seven steps of BAH model are: new product strategy, idea generation, screening and evaluation, business analysis, development, testing, and centralization. A pioneer of NYPD research is Robert G. Cooper. Over the last two decades he conducted significant work in the area of NYPD. The Stage-Gate model developed in the sass’s was proposed as a new tool for managing new products development processes. 12] The 2010 APPC benchmarking study reveals that 88% of U. S. Businesses employ a stage-gate system to manage new products, from idea to launch.
In return, the companies that adopt this system are reported to receive benefits such as improved team work, shorter cycle time, improved success rates, earlier detection of failure, a better launch, and even shorter cycle times – reduced by about These findings highlight the importance of the stage-gate model, making it the single most important discovery in the area of new product development. Marketing considerations There have been a number of approaches proposed for analyzing and responding to takes process of Keen[clarification needed] and a process known as the fuzzy front end. The eight stages 1.
Idea Generation is often called the “NYPD” of the NYPD process. [3] Ideas for new products can be obtained from basic research using a SOOT 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 generated about the new product. Out of these ideas many are implemented. The ideas are generated in many forms.
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[citation needed] The object is to eliminate unsound concepts prior to devoting resources to them. The screener 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? 3. Idea Development and Testing[citation needed] Develop the marketing and engineering details Investigate intellectual property issues and search patent databases 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? Testing the Idea may involve asking a number of prospective customers to evaluate the idea 4. Business Analysis[citation needed] Estimate likely selling price based upon competition and customer feedback Estimate sales volume based upon size of market and such tools as the Fourth-Woodcock equation Estimate profitability and break-even point 5.
Beta Testing and Market Testing[citation needed] 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 6. Technical Implementation[citation needed] New program initiation Resource estimation Requirement publication Publish technical communications such as data sheets Engineering operations planning
Department scheduling Supplier collaboration Logistics plan Resource plan publication Program review and monitoring Contingencies – what-if planning 7. Centralization (often considered post-NYPD)[citation needed] Launch the product Produce and place advertisements and other promotions Fill the distribution pipeline with product Critical path analysis is most useful at this stage 8. New Product Pricing[citation needed] Impact of new product on the entire product portfolio Value Analysis (internal & external) Competition and alternative competitive technologies Differing value segments (price, value and need)
Product Costs (fixed & variable) Forecast of unit volumes, revenue, and profit These steps may be iterated as needed. Some steps may be eliminated. To reduce the time that the NYPD process takes, many companies are completing several steps at the same time (referred to as concurrent engineering or time to market). Most industry leaders see new product development as a proactive process where resources are allocated to identify market changes and seize upon new product opportunities before they occur (in contrast to a reactive strategy in which nothing is done until problems occur or the competitor introduces an innovation).
