New Product
Development
Strategy
WHY DEVELOP NEW PRODUCTS?
In 1982 Timex turned down the opportunity to market
"Swatches".
Timex was resting on its laurels, simple low cost watches.
Digitalisation revolutionized industry while Timex stuck with
analog.
DID NOT KEEP UP WITH WATCHES EVOLUTION FROM A
FUNCTIONAL OBJECT TO A FASHION ACCESSORY.
Today Global consumer owns 5 watches up from 1.5 watches 30
years ago.
Move from chronometer to fashion accessory
Timex then acquired Guess and Monet Jewellers
Why New Products Fail?
Lack of differentiating advantage – RASna JUc FIT,
HLL Ayush
Poor marketing plan – Yamaha RX -100, Real Value
Vaccumiser, Appy, Evita, Appy, HLL Max Biscuit
Target market too small – Viruddh, Livon
Poor product quality – Annapoorna RTEC, Dandi
Namak, Real Juice
New Product – Value Proposition
Value
Proposition = Perceived Differential Advantage
Consumer Buying Process
Need
Recognition
Information
Search
Evaluation
of
Alternatives
Purchase
Post-Purchase
Behavior
Successive Sets Involved in
Customer Decision Making
Total
Set
Philips
LG
Samsung
Sansui
Onida
Videocon
Sony
BPL
Hitachi
Akai
National
Aiwa
Awareness
Set
LG
Samsung
Sansui
Onida
Videocon
Sony
BPL
Akai
Aiwa
Consideration
Set
LG
Samsung
Sansui
Onida
Videocon
Aiwa
Choice
Set
Sansui
Onida
Videocon
Decision
?
FISHBEIN MULTI-ATTRIBUTE MODEL FOR BUYING
Differentiation Variable- Product
After-sales
Features
Style
Design
Packaging
Branding
Delivery
New Product Development
Six categories of new products
•New-to-the-world products
•New product lines
•Additions to existing product lines
•Improvements and revisions of existing products
•Repositioning
•Cost reductions
NEW PRODUCTS - TYPES OF INNOVATION
A new product can be:
Continuous Innovation.
Dynamic Continuous Innovation
Discontinuous Innovation
NEW PRODUCT DEVELOPMENT PROCESS
Idea Generation
Caution : Go Error / Drop Error
Idea Screening
Concept Development
Category concept / Brand Concept
Concept Testing
Marketing Strategy
Business Analysis
Product Development
Market Testing
How many test cities? Which cities?
Length of test?
What information?
What action to take?
Commercialisation When / Where / Whom / How ?
Product-Idea Rating Device
Relative
Weight
Product
Score
Product
Rating
Key Success Factors
(a)
(b)
(c = a x b)
Level of Differentiation
.35
7
2.45
Value for Money
.25
8
2.00
Marketing strength
.25
6
1.50
Competitive Intensity
.15
6
.90
Total
1.00
Rating scale: 0 - 3.0 poor
Minimum acceptance rate: 6.1
3.1 - 6.0 fair
6.85
6.1 - 8.0 good.
New Product –Innovation Diffusion
Awareness
Interest
Trial
Evaluation
Adoption
New Product Adoption
RATE OF ADOPTION AFFECTED BY
 Relative advantage
 Compatibility
 Complexity
 Divisibility
 Communicability
New Product Adoption
ADOPTER CATEGORIES
The Product Life Cycle
A life cycle plots sales of an offering or a
product class over a period of time.
There are FOUR main stages:
1.
Introduction
2.
Growth
3.
Maturity (Saturation)
4.
Decline
The Product Life Cycle
Sales
Sales
Profits
Introduction
Growth
Maturity
Decline
LIFECYCLE STRATEGIES
INTRODUCTION
GROWTH
MATURITY
DECLINE
Marketing
Objective
Market
Development
Build Brand
Loyalty
Convert the
Competitor’s
Customer
Reduce
Inventory
Sales
Low
High
High
Low
Costs
High
Moderate
Low
Low
Profits
Low
Moderate
High
Low
Competitors Very Few
Increasing
Many
Few
Product
Basic Product
Differentiate
Line Extensions
Reduce
Variants
Price
Penetration/
Skimming
Maintain
Prices
Lower Prices
Lower Prices
Place
Selective
Distribution
Extensive
Distribution
Extensive
Distribution
Selective
Distribution
Promotion
High Advertising
Sales Promotion
Moderate
Advertising
PR/Publicity
High Advertising
Trade Promotion
Low
The Product Life Cycle
Product hierarchy
Need family
 Product family
 Product class
 Product line
 Product type
 Item
