Discuss issues arising from new product development (NPD).
 |
| New Product Development |
New product development (NPD) is the term used to describe the complete process of bringing a new product service to market. There are two parallel paths involved in the NPD process: one involves the idea generation, product design and detail engineering; the other involves market research and marketing analysis. Definition of new product is new to the world products, new product lines, additional to existing product lines, improvement and revisions on existing products, repositioning and cost reduction. NPD is a process which is designed to develop, test and consider the viability of products which are new to the market in order to ensure the growth or survival of the organization.
Types of new product:
• New to the world products – innovative products, i.e. high tech definition TV, iPod, flat screen TV.
• New product lines – to allow the firm to enter the existing market, i.e. mars ice cream
• Additions to product line – to supplement the firm existing product line, i.e. Weetabix launched Fruitibix
• Improvement or revision of existing products, i.e. new car model
• Repositioned products – existing product targeted at new market
• Cost reductions – new products that provide similar performance at lower cost.
 |
| New Product Development: Development of a new product from idea to launch |
The successfully launching a new product, the steps are:
• The idea generation; the idea can be generated from the marketing feedback.
• The idea screening which to screen out the best idea from all the feedback from the customers,
• Chooses the best idea from the pool,
• The firm have to conduct the conceptual development testing,
• The firm have to evaluate the new product if acceptable and material usage and analyze the capability of the firm to proceed with the new product.
• Later market strategy development comes in to determine the target market and the expected market share for the new product.
• From the market strategy development, business analysis is to be done to analyze if the target market and the demand is able to pay of the NPD cost if the business development is appropriate only the new product development
• Firms may produce prototype for market testing purpose and for improvement before actual commercialization.
Example new product is 3D consider New to Malaysian market but once it is "New" to US Market too....it just that this 3D technology takes time to come into Malaysia Market. Further, 3D is also being brought to the TV where nowadays, TV is added with 3D features for better viewing pleasure. Like Universal Studio, 3D is also being built in their games for better experience in the 3D world.
New products are developed for many reasons:
• To add product port folio
• To creates stars and cash cow for the future
• To replace declining products, i.e. new source of energy to replace fuel.
• To take advantage of new technology.
• To maintain/increase market share
• To defeat rivals
• To keep up with rivals
• To maintain competitive advantage
• To fill a gap in the market
• To bring in new customers
To expand the market share, the company would need to face the risk on the new product introduction. that's the reason that the company will not end the existing products when they are introducing a new product, this is part of market strategy in order to test the market on the new products, and at the same time, convey a market survey on the new products, and will have improvement in improving the new products until meet customers' need. However, there are issues arising from NPD, risk in loss on current products, or loss of interest from the customers with this new products, risk of customers in changing to other brands or tastes meaning that when the new products attracted more customers, customers taste will switch to the new products from current products, and as such, sales on current products will reduced or loss.
What about the fact that at least 70% of new products fail in the marketplace? The reasons of failure of launched products:
• Neglect of market research
• Inaccurate market research
• Poor marketing after launch
• Poor distribution
• Product performance below expectation
• Product too complex
• Unforeseen events
• Market not ready for the product
• Inadequate support for the product
 |
| Design Thinking: New Product Development Essentials from the Pdma |
Costing of NPD, the high cost usually becomes a put off for companies especially the smaller one. You all mentioned that joint venture with other organizations may help to decrease the cost involved. Why do you need to go all out for NPD when you know that you cannot afford it?
High cost may cause the longer time for Return on Investment (ROI) and for companies that not having a strong cash flow may not able to take such business risk. Joint – Venture (JV) is one of the ways to secure the future business and minimize the business risk. Company need growth to continue survives and every product has the life cycle. To sustain the business, continuously launch of new product is the only way to grow the business.
 |
| Racoon Anti Rayap Racun Kontak ARAP Quick Action RACOON 500 ml |
Reference:
Tutor2u. (n.d). retrieved from http://tutor2u.net/business/presentations/marketing/newproductdevelopment/default.html.
Forum C, 21/09.2010.
