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 Awareness Consideration Choice Decision
Set Set Set Set
Philips
LG LG LG Sansui
Samsung Samsung Samsung Onida
Sansui Sansui Sansui Videocon
Onida Onida Onida ?
Videocon Videocon Videocon
Sony Sony Aiwa
BPL BPL
Hitachi Akai
Akai Aiwa
National
Aiwa

FISHBEIN MULTI-ATTRIBUTE MODEL FOR BUYING

Differentiation Variable- Product
After-sales
In
st
y

al
nt

Features la
t io
ra
ar

Style n
W

Design

Tr Packaging
ai i t
n in Branding ed
g Cr

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
Idea Screening Caution : Go Error / Drop Error

Concept Development
Concept Testing Category concept / Brand Concept

Marketing Strategy
Business Analysis
Product Development
How many test cities? Which cities?
Market Testing
Length of test?
What information?
What action to take?
Commercialisation When / Where / Whom / How ?
 Product-Idea Rating Device
Relative Product Product
Weight Score 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 6.85

Rating scale: 0 - 3.0 poor 3.1 - 6.0 fair 6.1 - 8.0 good.
Minimum acceptance rate: 6.1
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 Market Build Brand Convert the Reduce
Objective Development Loyalty Competitor’s Inventory
Customer
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/ Maintain Lower Prices Lower Prices
Skimming Prices
Place Selective Extensive Extensive Selective
Distribution Distribution Distribution Distribution

Promotion High Advertising Moderate High Advertising Low

Sales Promotion Advertising Trade Promotion
PR/Publicity
 The Product Life Cycle

Product hierarchy
 Need family
 Product family

 Product class

 Product line

 Product type

 Item