Strategies for new product development

34th PAPU Administrative Council
24 May – 3 June, 2015, Khartoum, Sudan
PAPU/AC/QIBD/MWG/2015 - Doc N°
Strategies for New Product Development
(Agenda item 5)
Strategies for new product development
Decision expected
- Take note of the paper.
In business, New Product Development (NPD) is the complete process of bringing a new product to
market or to improve an already established product. New Product Development can therefore be
described as the transformation of a market opportunity into a product available for sale and it can be
tangible (that is, something physical you can touch) or intangible (like a service, experience, or belief).
Success Factors
For the success of a new product, a good understanding of the following factors is a necessity:
 customer needs and wants,
 the competitive environment and
 the nature of the market
Cost, time and quality are the main variables that drive the customer needs. Aimed at these three variables,
companies develop continuous practices and strategies to better satisfy the customer requirements and
increase their market share by development of new products.
Product Development strategy
What is it about?
Developing new products;
Modifying existing products so they appear new and
Offering those products to current or new customers.
With a well-considered New Product Development (NPD) strategy, you can avoid wasting time, money and
business resources. An NPD strategy will help you organize your product planning and research, capture
your customers' views and expectations, and accurately plan and resource your NPD project. Your strategy
will also help you avoid:
overestimating and misreading your target market;
launching a poorly designed product, or a product that doesn't meet the needs of your target
incorrectly pricing products;
spending resources you don't have on higher-than-anticipated development costs;
exposing your business to risks and threats from unexpected competition.
Possible strategies for product development
The following are possible strategies for product development:
1. Product Development Diversification Strategy
This strategy is employed when a company's existing market is saturated, and revenues and profits are
stagnant or falling. There is little or no opportunity for growth. A product development diversification
strategy takes a company outside its existing business and a new product is developed for a new market.
2. Product Modification Strategy
Product modification strategies are generally aimed at existing markets, although a side benefit may be the
capturing of new users for the new product.
3. Revolutionary Product Development
Revolutionary products are those for which there was no real prior need. Computers and cell phones are
good examples. Before these products appeared on the market, consumers did not know they needed
What product development strategy for the Post in Africa
Our core product, the mail, can no longer sustain our business. Volumes are falling, revenues are
decreasing, customers have drastically moved away from mail for faster alternatives like telephones, SMS,
e-mail. As a result of these alternatives, there is a declining market share and stagnant or falling profits.
The question is, “what is the best alternative product development strategy for our posts?”
It is clear that the post in Africa needs a Product Diversification Strategy.
There are several important steps you will need to plan into your NPD strategy.
1. Define your product
An accurate description of the product you are planning will help keep you and your team focused and
avoid NPD pitfalls such as developing too many products at once, or running out of resources to develop
the product.
2. Identify market needs
Successful NPD requires a thorough knowledge of your target market and its needs and wants. A targeted,
strategic and purposeful approach to NPD will ensure your products fit your market. Ask yourself.
Draw on your existing market research. You may need to undertake additional research to test your new
product proposal with your customers. For example, you could set up focus groups or a customer survey.
3. Establish time frames
You need to allow adequate time to develop and implement your new products. Your objectives for
developing new products will inform your time frames and your deadlines for implementation. Be thoughtful
and realistic.
4. Identify key issues and approaches
There are many tasks involved in developing a product that is appropriate for your customers. The nature
of your business and your idea will determine how many of these steps you need to take. You may be able
to skip or duplicate certain stages, or start some of them simultaneously. Key tasks include:
generating and screening ideas
developing and screening concepts
testing concepts
analyzing market and business strategy
developing and market testing products
implementing and commercializing products.
Way Forward
Benchmarking the Process.
Having identified the strategy, there is need to benchmark along the way. Many Post offices around the
world have successfully diversified into new products and the Post in Africa can easily benchmark.
Consumers Front and Center
Post offices need to put the consumer at the fore front of the product development strategy and process.
Consumers need to be front and center and involved in the process from start to finish. Focusing on
customer needs will lead to a successful strategy. Set aside enough budget for consumer evaluation of the
new product at all product stages.
It is recommended that post offices develop a Product Diversification Strategy to ensure their sustainability
in the communications market. They should come up with products that are more inclined to modern
technology and will appeal to new consumers.
New product development is an important way for businesses to stay ahead of the competition and
continue to appeal to the changing needs of existing customers. In addition, new product development can
open up new marketing channels and help to increase market share. However, there is need to have the
right strategies in place to provide unifying and successful direction.