New product Development

Dr. B. Anil
Director, CERD

What Industry leaders say

It is proactive process
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Resources are allocated to identify market changes and seize upon new product opportunities (in contrast to a reactive strategy in which nothing is done until problems occur or the competitor introduces an innovation).
referred to as continuous development the entire organization is always looking for opportunities

It is as an ongoing process
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Product Life Cycle

Product Development Cycle

Key Steps in Product Development

Idea Generation Product Screening Concept Testing Business & Financial Analysis Product Development Test Marketing Commercialisation

Product Development Phases

Phase
Goal
0 Sell Ideas 1 Plan 2 Develop Advance idea to product 3 Validate Proof of specs 4 Qualify Proof of build 5 Produce Robust process Generate Develop many ideas Plan

Process Develop
Ideas into Proposal

Plan the Engineer work for the Functional Team Models Gantt Chart Working Modules & Prototypes Core Team

Test Proto Build & Test Release units Pilot units Product to Sell Solid System Proto Working Product Quality Product

Main Artifact Owner

Initial Project Summary Project Champion

Extended or Core Team Member

Approaches
These steps may be iterated as needed Some steps may be eliminated. To reduce the time that the NPD process takes, many companies are completing several steps at the same time Concurrent engineering

Front-end elements
Opportunity Identification Opportunity Analysis Idea Genesis Idea Selection Concept and Technology Development

Koen et al., Providing clarity and a common language to the fuzzy front end. Research Technology Management, 44 (2), pp.46-55 (2001)

Idea Generation
Is a continuous systematic search for new product opportunities Involves delineating sources of new ideas and methods for generating them

Ideas for new products

SWOT analysis Market and consumer trends Company's R&D department Competitors Focus groups Employees Salespeople Corporate spies Trade shows Ethnographic discovery methods (searching for user patterns and habits)

Methods of generating Ideas

Dimensional Analysis
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Lists all characteristics of a product. Ask why is it so ? How it can be improved ? (eliminate, combine, modify) Is a need assessment technique Determines the benefits & Characteristics desired by customers Identifies opportunities in projected future

Problem Analysis
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Benefit Structure Analysis Scenario Analysis

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NMI Discipline
NameIt: If a process is not defined then you do NOT know what to do MeasureIt: You cannot measure a process unless you have defined it ImproveIt: A process cannot be improved unless you can measure it

Idea Screening
The object is to eliminate unsound concepts prior to devoting resources to them. Ask: Will the customer benefit from the product? What is the size and growth of the market segment ? What is the expected competitive pressure ? What are the industry sales and market trends ? Is it technically feasible to manufacture the product? Will the product be profitable when manufactured and delivered to the customer at the target price ?

Comparison
Screening check lists are prepared The attributes of the ideas compared

Concept Testing
Presents the consumer with the proposed product and measures attitudes and intentions. Testing the Concept by asking a sample of prospective customers what they think of the idea. Usually via Choice Modelling.

Business Analysis
Estimate likely selling price based upon competition and customer feedback Estimate sales volume based upon size of market Estimate profitability and break-even point (Demand projections, Cost projections, Competition, Required investment, Profitability)

Product Development
Converts product concept into physical form and identifies basic marketing strategy Involes
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Product construction Packaging Branding Product positioning Usage testing

Beta Testing and Market Testing

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

Helps in evaluating the product Pre test marketing effort in real setting To get actual customer behaviours Learn about competitor reaction Response of channel members

Technical Implementation
New program initiation Finalize Quality management system Resource estimation Publish technical communications such as data sheets Engineering operations planning Department scheduling Supplier collaboration Prepare Logistics plan Resource plan publication Program review and monitoring Contingencies - what-if planning

Commercialization
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

New Product Pricing

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