Q. Describe various stages in New Product Development.
OR
Describe the steps in NPD process.
Ans.: The many stages in NPD are:-
(1) Generating New Product Ideas : New product ideas can come from, dealers, customers in company sources by including the market research group and external research organization. Customer's problems are the mainly fertile ground for the generation of new product ideas. In a variety of product, ranging from meggi to computers, company workforce, R&D staff, market research staff & salesmen are also sources of new product thoughts.
Market research group are a specifically useful sources. They conduct common studies on the, products, consumers, competition etc. These studies frequently reveal product gaps- gaps among existing supply of products.
Gravity techniques like brainstorming and synaptic are also utilized for product idea generation. In brainstorming, a small group of people is encouraged to come up having ideas on a particular problem. In synaptic, the actual problems are initially kept away from the group and only a broader framework is given to them. Sometimes new product ideas come out only as a matter of happening.
For example: Portable stereo cassette player of Sony of Japan.
(2) Idea Screening: In this particular stage, several new products ideas are put under exact screening by evaluation committees. Answers are like:
If there a felt requirement for the new product? It is an development over the new product? Etc.
(3) Concept Testing: Concept testing is different from market test and test marketing. The product which is tested at this stage is the product concept itself, whether the prospective customers realize the product ideas, whether they are open forwards the ideas; whether they truly need a product. This work out helps the firm to thrash out much of the vagueness linked with the new product idea. Concept testing is of special significance when a totally new product in contrast to a "me too" product is being planned for introduction.
(4) Business / Market Analysis: This particular stage is of vital importance because various important decisions regarding the project are undertaken based on the analysis done at this particular stage.
This stage will decide whether from the marketing and financial pt of view the project is worth proceeding. Investment analysis and profitability analysis of the project under difference assumption are made at this stage.
(5) Estimating the Demand for New Product : Company usually take up estimating the demand for the new product as a element of business analysis/ market analysis. There are two methods to estimate demand of new products
1. End use method
2. Substitution method
In substitution way, the demand for the existing product is forecasted by using standard forecasting technique. Based on that, an idea of the demand for the new product is achieved. Analysis will show which products and market are open for substitution by the new product. The predictable demand for the existing product may serve as the maximum restriction for the demand for the new product.
In, end use technique, products that have an altogether new end use do come to the marketer once in a while. only way to assess the demand for such products is to define the end use of the new product and to locate the potential customers for it. Aggregate of potential customers in each use category is taken as the potential demand in that category. By adding the demand in the several use categories, 1 can get a hint of the totality potential demand for the new product. It is to be taken as the upper limit of potential. In this technique, the forecaster has to be specifically cautious in defining the end use for the product.
(6) Actual Development of the Product: In this stage, the firm develops the product. In the real development, production and marketing departments are actively involved besides R & D.
(7) Market Test: Now, the new product has to be tried out in elected market segments. Market test is in essence a risk control tool. It is experimental marketing at minimum price & risk. When firms decide on a full scale manufacturing and marketing of the product on the basis of the results of the experiment, it helps ignore costly business errors.
(8) Test Marketing: In test marketing, the new product, having the support of the selected marketing mix is in fact launched & marketed in few selected cities / towns / territories. Test marketing requires careful handling. Care is required in the first place in choosing the test markets. Test marketing is also time consuming procedure, it has to be carried out for a fairly long duration in order to get a reliable indications. For example: HUL introduced organics, but not succeed.
(9) Commercialization: At this particular stage, the company takes the decision to go in for vast scale manufacturing and marketing of the product. At this stage the company completely commits itself to commercialize the new product with the needed investment in manufacturing and marketing.