|NPD : New Product Development
Improving and updating product lines is crucial for the success for any organisation. Failure for an organisation to change could result in a decline in sales and with competitors racing ahead. The process of NPD is crucial within an organisation. Products go through the stages of their lifecycle and will eventually have to be replaced There are eight stages of new product development. These stages will be discussed briefly below:
They are usually templates or maps which can be used to describe and guide those activities require to bring a new product from an idea or opportunity to market launch.
There are different types of models
Departmental-stage models – NPD process is described by the functions of the departments- “relay” approach
Activity-stage models – similar to the previous models but focus on activities and interaction among departments
Decision-stage models – describe stages of activity, followed by review points
Conversion stage models – NPD is viewed as a black box. The inputs like customer requirements, technical ideas,etc. enter the black box and depending on a multiplicity of factors, including human, organizational and resource-related, the inputs ate converted into output.
Response models – focus on the individual’s or organizational response to change. How an idea or opportunity is selected
Network models – emphasize the external and internal linkages and activities that contribute to successful product development. NPD should be viewed as a knowledge accumulation process that requires inputs from a variety of sources
|Major Stages in NPD
Innovation/New Product Strategy
Idea generation or gathering
- Internal sources:Company employees at all levels
- External sources:Customers, Competitors,Distributors,Suppliers,Outsourcing
Concept development and testing
- Process used to spot good ideas and drop poor ones.
- Executives provide a description of the product along with estimates of market size, product price, development time and costs, manufacturing costs, and rate of return.Evaluated against a set of company criteria for new products.
Marketing Strategy Development
- Product Idea: idea for a possible product that the company can see itself offering.
- Product Concept:detailed version of the idea stated in meaningful consumer terms.
- Product Image: the way consumers perceive an actual or potential product.
- Part One:Describes the target market, planned product positions, sales, market share, and profit goals.
- Part Two:Outlines the product’s planned price, distribution, and marketing budget.
- Part Three:Describes the long-run sales and profit goals, marketing mix strategy.
Involves a review of the sales, costs, and profit projections to assess fit with company objectives. If results are positive, project moves to the product development phase.
- Develop concept into physical product.
- Calls for large jump in investment.
- Prototypes are made.
- Prototype must have correct physical features and convey psychological characteristics.
- Product and program introduced in more realistic market setting.
- Not needed for all products.
- Can be expensive and time consuming, but better than making major marketing mistake.
- Must decide on timing (i.e., when to introduce the product).
- Must decide on where to introduce the product (e.g., single location, state, region, nationally, internationally).
- Must develop a market rollout plan.
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