SIIB

New Product Development

New Strategy and Cross Functional Teams in NPD

Scavenging Report Rohan Arora 12020241132 - Marketing

The point is, it is new, so it is often risky.

20/10/2013

What is a New Product?

New-to-the-world (really-new) products: Inventions that create a whole new market. Ex.: Polaroid camera, Sony Walkman, Palm Pilot, Rollerblade skates, P&G Febreze and Dryel. New-to-the-firm products: Products that take a firm into a category new to it. Ex.: P&G brand shampoo or coffee, Hallmark gift items, AT&T Universal credit card, Canon laser printer. Additions to existing product lines: Line extensions and flankers in current markets. Ex.: Tide Liquid, Bud Light, Apples iMac, HP LaserJet 7P. Improvements and revisions to existing products: Current products made better. Ex.: P&Gs continuing improvements to Tide detergent, Ivory soap. Repositioning: Products that are retargeted for a new use or application. Ex.: Arm & Hammer baking soda sold as a refrigerator deodorant; aspirin repositioned as a safeguard against heart attacks. Cost reductions: New products that provide the customer similar performance but at a lower cost. May be more of a new product in terms of design or production. Why New Product Development? Increasing global competition in all major markets: More new products from new competitors Shorter and shorter product lifecycles: Companies are forced to churn out new innovations and new products in shorter times and greater frequency

A New Strategy to New Product Development

NPD in todays world can be ddivided into two distinct stages: 1. A truth-seeking early stage, focused on evaluating novel products prospects and eliminating bad bets 2. A success-seeking late stage, focused on maximizing the value of products that have been cleared for development.
Various Activities to be performed at different Stages of Product Development

Early Reduce Risk Experiment

Late Maximize Value

Focus on the Product Commercialization Operate with high fixed costs, high capital Work in large, product based teams Refine the product

Focus on different Methods for the product Operate with low fixed costs, low capital. Work in small, experiment-based teams Undertake Testing

New Product Strategy The basic purpose of new product strategy is to provide unifying direction. It specifically notes and tempting development areas that are off limits; it clearly specifies those areas where effort is to proceed; and it adds any other direction appropriate and relevant to the firm. A firm going for NPD needs to keep in mind: Market and Technology Mix Degree of Innovation Price and Quality ranges Promotional requirements Strengths & Weakness of the firm Competitive environment and how to avoid it Production requirements If new technology, then Patent requirement Risk factors Market Research Break Even sales

Stages in New Product Development:

Key Success Factors: Cross-Functional teams

The primary key success factor of the development process is the use of cross-functional teams. The influence of cross-functional teams on product performance or the cost of product development and on the speed of product development has been demonstrated as a competitive advantage and is critical to the success to many companies. As a measure of successful product development, cost of development is viewed as much less significant as the advantage gained by rapid product development. A firm needs to have cross-functional teams to be successful, whether new product or no new product.

Bibliography
1. 2. 3. 4. 5. Product Design and Development by K. T. Ulrich and S. D. Eppinger Best practices in new product development by Roland Berger Success Factors Of New Product Development Processes By Schimmoeller, L., J. New Product Development by Springer A More Rational Approach to New- Product Development by Eric Bonabeau, Neil Bodick, and Robert W. Armstrong