New Product Development Strategy

Introducti on

Product Development strategy Given Given the rapid rapid change changess in consum consumer er tastes tastes techno technolog logy y arid arid compet competiti ition on compan companies ies must must develo develop p a steady steady stream stream of new products products and services services A firm firm can obtain obtain-ne -new w produc products ts m two ways. ways. One is throu through gh acquis acquisiti ition on by  buyin  buying g a whole whole compan company y a patent patent or a licens licensee to produ produce ce someon someonee else else s  product  product The other as through through new-product new-product developmen developmentt m the company s own own rese resear arch ch -and -and-d -dev evel elop opme ment nt depa depart rtme ment nt By new new prod produc ucts ts we mean mean origin original al produ products cts produc productt impro improvem vement entss produc productt modifi modificat cation ionss and new   brands brands that the firm develops through through its own research-a research-and-d nd-develo evelopment pment efforts. When an organization introduces a product into a market they must ask  themselves a number of questions. 1. Who is the the produ product ct aime aimed d at? at? 2. What benefit will they expect? 3. How do they plan to position the product within the market? 4. What differential advantage will the product offer over their  competitors?

 New products continue to fail at a disturbing rate. One source estimates that more more than than 90 percen percentt of all new produ products cts fail in within within 2 years years Anothe Anotherrstudy suggested that of the staggering 25,000 new consumer food, beverage,  beauty, and healthcare products to hit the market each year, only 40 percent will will be arou around nd 5 year yearss late laterr Mo More reov over er fail failur uree rate ratess for for new new indu indust stri rial al products may be as high as 30 percent. Why do so many new products fail? There re several reasons Although an idea may be good the market size may have been overestimated Perhaps the actual product was not designed as well as it should have beer Or maybe it was incorrectly positioned in the market priced too high or advertised poorly A high-leve high-levell executive executive might push a favorite favorite idea despite despite poor marketing marketing

research findings- Sometimes the costs of product development are higher  than expected, and sometimes Competitors fight back harder than Expected. However the reasons behind some new product failures seem pretty obvious Try the following on for size.

Review

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Literature

Product strategies When an organization introduces a product into a market they must ask  themselves a number of questions. • • • •

Who is the product aimed at? What benefit will they expect? How do they plan to position the product within the market? What differential advantage will the product offer over their  competitors?

We must remember that Marketing is fundamentally about providing the correct bundle of benefits to the end user, hence the saying ‘Marketing is not about providing products or services it is essentially about providing changing benefits to the changing needs and demands of the customer’ (P.Tailor 7/00) Philip Kotler in Principles of Marketing devised a very interesting concept of benefit building with a product For a analysis the book book of Principles of of Marketing by P.Kotler. P.Kotler.

Kotler suggested that a product should be viewed in three levels. Level 1: Core Product. What is the core benefit your product offers?. Customers who purchase a camera are buying more then just a camera they are purchasing memories. Level 2Actual Product: All cameras capture memories. The aim is to ensure that your potential customers purchase your one. The strategy at this level involves organizations branding, adding features and benefits to ensure that their product offers a differential advantage from their competitors. Level 3: Augmented product: What additional non-tangible benefits can you offer? Competition at this level is based around after sales service, warranties, delivery and so on. John Lewis a retail departmental store offers free five year guarantee on purchases of their Television sets, this gives their  `customers the additional benefit of peace of mind over the five years should their purchase develop a fault.

Idea generat gene rat ion

 New product development starts with idea generation the systematic search for new product ideas. A company typically has to generate many in order to

find find a few few go good od on once ce.. Acco Accord rdin ing g to on onee well well-k -kno nown wn mana manage geme ment nt consultant, For every 1 000 ideas, only 100 will will have enough commercial commercial t0  promise to merits a small sca1e experiment only 10 of those will Warrant substantial financial commitment and of those a couple will turn out to be unqualified successes. “His conclusion?“ If you want to find a few ideas with the power to enthrall customer, foil competition, and thrill investors’ you yo u must ust’ fir first gen genera erate hun und dred reds and and po pote ten ntial tially ly tho thousa usand ndss of  unconventional strategic ideas. Internal Idea Sources

Usin Using g inte intern rnal al sour source cess the the comp compan any y can can find find new new idea ideass thro throug ugh h form formal al research and development. It can pick the brains of its executives Scientists engine engineers ers manufa manufactu cturin ring g staff staff Sand Sand sales sales people people Some Some compan companies ies havehavedeveloped successful entrepreneurial programs that encourage employees to think up and develop new product ideas. For example 3M s well known 15 percent rule allow employees to spend 15 percent of their tine bootlegging   —work —working ing on projec projects ts of perso personal nal intere interest st whethe whetherr or not those those projec projectt directly benefit the company. Comp Compan anie iess some some time timess look look for for crea creati tive ve inno innova vati tion on app approac roache hess that that overcome barriers to the free flow-of new product ideas For example firms like Eureka’ Ranch—a well known new product hatchery —employ both method and madness in helping companies to jumpstart their new product idea generation process. External Idea Sources

Good new product idea also come from watching and listening to customers The company can analyze analyze customer customer questions questions and complaints complaints to find new   pro produ duct ctss that that bett better er solv solvee cons consum umes es prob proble lems ms Comp Compan any y engi engine neer erss or  salespeople can meet with and work. Alongside customers to get suggestions and ideas The Company can conduct surveys or focus groups to learn about Cons Consum umer er need needss and and want wants. s. Hein Heinzz did did just just that that when when its its rese resear arch cher erss approached children who consume more than half of the ketchup sold find out what would make ketchup more appealing to them The answer change the color So, Heinz developed and launc1iedEZ Squirt green ketchup that comes iii a squeezable bottle targeted at kids Blastin Green ketchup was a smash hit, so Heinz followed up with an entire rainbow of EZ Squirt colors, including Funky Purple Passion Pink, Awesome Orange, Totally Teal, and Stellar Blue. The EZ Squirt bottle s special nozzle also emits a thin ketchup

stream, “so tykes can autograph their burgers (or squirt someone across the table though Heinz neglects to mention that).” In all the new line earned the Company a 5 percent increase in sales ii the first year after hitting the grocery shelf. Consumers often create new products and uses on their own and companies can benefit by putting them on the market. For example for years customers were spreading the word that Skin-so-soft bath oil and moisturizer was also a terrific bug repellent. Whereas some Consumers Were content simply to   bat bathe he an wate waterr scen scente ted d with with the the frag fragra rant nt oil oil othe others rs carr carrie ied d it in thei their  r   backpacks to mosquito-infested campsites or kept a bottle on the deck of  their beach houses Avon tuned the idea into a complete line of Skin-So-Soft Bug Guard PLUS lR335® products including the Insect Repellent Gentle Breeze Moistures Sun block Lotion SPF 30 a combination moisturizer insect repellent and sunscreen. The sear The search ch for for newnew-pr prod oduc uctt idea ideass shou should ld be syst system emat atic ic rath rather er than than haphazard. Otherwise few new ideas will surface and many good ideas will sputter sputter and die Top manageme management nt can avoid these problems problems by installing installing an idea management system that directs the flow of new ideas to a central point where they can be collected reviewed and evaluated hi setting up such a system the company can do any or all of the following. •

Appoint a respected senior person to be the company s idea manager. •

Create a cross-functional idea management committee consisting of    people people from R&D, engineeri engineering ng purchasin purchasing g operation operationss finance finance and sales and marketing to meet regri1rly and evaluate proposed new  product and service ideas. •

Set up a toll-free number or Web site for anyone who wants to send a new idea to the idea manager. •

Encou Enc ourrage age all all com company pany stak stakeh ehol old dersers-em empl plo oyee yees supp suppli lier ers, s, distributors, dealers—to send their ideas to the idea manager.

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Set up formal recognition programs to reward those who contribute the best new ideas.

Idea Screening

The purpose of idea generation is to create a large number of ideas. The  purpose  purpose of the succeeding succeeding stages is to reduce that number. The first first ideaideareducing stage is idea screening, which helps spot good ideas and drop poor  ones as soon as possible. Product development costs rise greatly in later  Stages, so the company wants to go ahead only with the product ideas that will turn into profitable products. o

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The object is to eliminate unsound concepts prior to devoting resources to them. The screeners must ask at least three questions: Will the customer in the target market benefit from the  product? What What is the the size size and and grow growth th fore foreca cast stss of the the mark market et segment/target market? What is the current or expected competitive pressure for  the product idea? What are the industry sales and market trends the product idea is based on? Is it technically feasible to manufacture the product? Will the product be profitable when manufactured and delivered to the customer at the target price? 

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Many companies require their executives to write up new-product ideas on a standard form that can be reviewed by a new-product committee. The writeup describes the product, the target market, and the competition. It makes some rough estimates of market size, product price, development time and costs, manufacturing costs, and rate of return. The committee then evaluates the idea against a set of general criteria. For example, at Kao Company, the

- large Japanese consumer-products company, the committee asks questions such as these: Is the product truly useful to consumer and society? Is it good for our particular company? Does it mesh well with the company’s objectives and strategies? Do we have the people, skills, and resources to make it succeed? Does it deliver more value to customers than do competing products? Is it easy to advertise and distri distribut bute? e? Many Many compan companies ies have have well-d well-desi esigne gned d system systemss for for rating rating and screening new-product ideas. Concept development and testing

An attractive idea must be developed into a product concept. It is important to distinguish between a product idea, a product concept, and a product image. A product idea is an idea for a possible product that the company can see itself offering to the market. A product concept is a detailed version of  the idea stated in meaningful consumer terms. A product image is the way consumers perceive an actual or potential product. o

Develop the marketing and engineering details Who is the target market and who is the decision maker  in the purchasing process? What product features must the product incorporate? What benefits will the product provide? How will consumers react to the product? How will the product be produced most cost effectively? Prov Provee feas feasib ibil ilit ity y thro throug ugh h virt virtua uall comp comput uter er aide aided d rendering, and rapid prototyping What will it cost to produce it? 

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Concept Development

Afte Afterr 10 year yearss of deve develo lopm pmen ent, t, Daim Daimle lerC rChr hrys ysle lerr is gett gettin ing g read ready y to commercial commercialize ize its experimen experimental tal fuel-cell fuel-cell-pow -powered ered electric electric car. This car’s car’s nonpolluti nonpolluting ng fuel-cell fuel-cell system system runs directly on methanol, methanol, which delivers delivers hydrogen to the fuel cell with only water as a by-product. It is highly fuel efficient (75 percent more efficient than gasoline engines) and gives the new car an environmental advantage over standard internal combustion engine cars cars or even even toda today’ y’ss stup stupef efac acie ient nt gaso gasoli line ne-e -ele lect ctri ricc hy hybr brid id cars cars.. Last Last year year,, Daim Daimle lerC rChr hrys ysle lerr pu putt 60 “F-c “F-cel ell” l” cars cars on the the road road in Japa Japan, n,

Germany, and the United states to test their worth in everyday operation. Based on the tiny Mercedes A-Class, the car accelerates quickly, reaches speeds of 90 miles per hour, and has a 280-mile driving range, giving it a huge edge over battery-powered electric cars that travel only about 80 miles  before needing 3 to 12 hours off recharging. Fuel cell systems are also being tested in busses, trucks, and other vehicles.  Now DimlerChrysler’s task is to develop this new product into alternative  product concepts, find out how, attractive each concept is to customers, and choose the best one. It might create the following product concepts for the fuel-cell electric car: Concept 1 A moderately priced subcompact designed as a second family car  to be used around town. The car is ideal for running errands and visiting friends. Concept Concept 2 A medium-cos medium-costt sporty sporty compact compact appealing to young young people. people. Concept 3 A inexpensive subcompact “green” car appealing to environmentally conscious people who want practical transportation and low  pollution. Concept Concept 4 A high-end high-end SUV appealing appealing to those those who love love the space SUVs  provide but lament the poor gas mileage. Concept Testing

Concept testing calls for testing new-product concepts with groups of target consumers. The concepts may be presented to consumers symbolically or  physically. Here; in words, is concept 3: An efficient fun-to drive fuel cell-powered electric subcompact car that seats four. This methanol powered high-tech wonder provides practical and reliable trans potation with virtually o pollution It goes up to 90 miles per hour and unlike battery-powered electric cars, it never needs recharging It s priced, fully equipped at $20000. For some concept tests a word or picture description might be sufficient. However a more concrete and physical presentation of the concept will increase the reliability of the concept test Today some marketers are finding innovative ways to make product concepts more real to consumer subjects For example some are using virtual reality to test product concepts. Virtual reality programs use computers and sensory devices (such as gloves or  goggles) to simulate reality A designer of kitchen cabinets might use a virtual reality program to help a customer ‘ see how his or her kitschier  would look and work if remodeled with the company’s products. After being

exposed to the concept consumers then may be asked to react to at by answering questions such as those. The answers will help the company decide which concept has the strongest appeal For example the last question asks asks abou aboutt the the cons consum umer erss inte intent ntio ion n to bu buy y Supp Suppos osee 10 perc percen entt of the the cons consum umer erss said said they they defi defini nite tely ly woul would d bu buy y and and anot anothe herr 5 perc percen entt said said “obab1y ‘The company could project these figures to the full population in this target group to estimate sales volume Even then the estimate is uncertain  because people do not always carry out their stated intentions.

Marketing Strategy development Suppos Supposee Daimle DaimlerCh rChrys rysler ler finds finds that that concep conceptt 3 for for the fuel fuel cell cell powere powered d electric car tests is best The next step is marketing strategy development designing an initial marketing strategy for introducing this car to the market. The mark The market etin ing g stra strate tegy gy stat statem emen entt cons consis ists ts of thre threee part parts. s. Th Thee firs firstt part part describes describes the tar get market market the planned product positioning positioning;; and the sates, sates, market share, and profit goals for the first few years. Thus: Thee targ Th target et mark market et is yo youn unge gerr well well educ educat ated ed mode modera rate te to high high inco income me indivi individua duals ls couple coupless or small small famili families es seekin seeking g practi practical cal enviro environme nmenta ntally lly responsible transportation The car will be positioned as more economical to oper op erat ate, e, more more fun fun to driv drive, e, and and less less po poll llut utin ing g than than toda today y s inte intern rnal al combustion engine or hybrid cars It is also less restricting than battery  powered electric cars which must be recharged regularly. The company will aim to sell 100 000 cars cars in the first first year year at a loss loss of not more than $15 million In the second year the company wall aim for sales of 120,000 cars and a profit of $25 million. The second part of the marking strategy statement outlines the product s   pla plann nned ed pric pricee dist distri ribu buti tion on and and mark market etin ing g bu budg dget et for for the the firs firstt year year:: The fuel cell powered electric car will be offered an three colors—red white and blue—and will have optional air-conditioning and power drive features It will sell at a retail retail price of $20,000—w $20,000—with ith 15 percent percent off the list price to dealers. Dealers who sell more than 10 cars per month will get an additional discount of5 percent on each car sold that month An advertising budget of$5Q million will be split 50-50 between a national media campaign and local advertising. Advertising will emphasize the car’s fun spirit and low emissions. During the first year, $100,000 will be spent on marketing research to find out who is buying the car and their satisfaction levels.

Business analysis

Once Once mana manage geme ment nt has has deci decide ded d on its its prod produc uctt conc concep eptt and and mark market etin ing g strategy it can evaluate the business- attractiveness of the proposal. Business analysis involves a review of the sales costs, and profit projections for anew  product to find out whether they satisfy the company’s objectives. If they do the-product can move to-the product development stage. To estimate sales, the company might look at the sales history of similar products and conduct surveys of market opinion. It can then estimate minimum and maximum sale saless to asse assess ss the the rang rangee of risk risk.. Afte Afterr prepa repari ring ng the the sale saless fore foreca cast st,, management can estimate the expected costs and profits for the product includ including ing market marketing ing R&D operat operation ionss accoun accountin ting g and financ financee costs. costs. The company then uses the sales and costs figures to analyze the new product’s financial attractiveness.

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Esti Estima mate te like likely ly sell sellin ing g pric pricee base based d up upon on comp compet etit itio ion n and and customer feedback  Estimate sales volume based upon size of market and such tools as the Fourt-Woodlock Fourt-Woodlock equation Estimate profitability and breakeven point

Product development

So far for many new product concepts the product may have existed only as a word a thawing or perhaps a crude mock-up If the product concept passes the business test it moves into product development Here R&D or  engine engineeri ering ng develo develops ps the produ product ct concep conceptt into into a phy physic sical al produ product. ct. The  product development step however now calls for a large jump in investment It will ill show show whet wheth her the prod roduct uct ide idea can can be turn turned ed into nto a work  work  able able prod produc uct. t. Th Thee R&D R&D depa depart rtme ment nt will will deve develo lop p and and test test on onee or more more  physical versions of the product concept R&D hopes to design a prototype that will satisfy and excite consumers and that can be produced quickly aid at bu budg dget eted ed cost costs. s. Deve Develo lopi ping ng a succ succes essf sful ul prot protot otyp ypee can can take take days days,, weeks, months, or even years. Often products under go rigorous tests to make sure that they perform safely and effectively, or that consumers will find value in them. Here are some examples of such  product tests:

Procter & Gamb1e (P&G)spends $150 million on 4,000 to 5 0O studies a year test in everything from the ergonomics of picking up a shampoo bottle to how long women can keep their hands in sudsy water. On any given day subjects meet an focus groups e11 their dirty laundry to researchers put   prototype diapers on their babies bottoms and rub mysterious creams on thei theirr face facess Last Last year year on onee elem elemen enta tary ry scho school ol rais raised ed $1 $170 7000 00 by havi having ng stud studen ents ts and and pare parent ntss take take part part in P&G P&G prod produc uctt test testss Stud Studen ents ts test tested ed toothp toothpast astee and shampo shampoo o and ate browni brownies es while while their their mother motherss watche watched d advertising for Tempo tissue P&G s paper wipes packaged to fit in a car. At Gillette almost everyone gets involved in new product testing. Every working day at Gillette, 200 volunteers from various departments come to work unshaven troop to the second floor of the company’s gritty South Boston plant and enter small booths with a sink and mirror. There they take instructions from technicians on the other side of a small window as to which razor, shaving cream or after shave to use The volunteers evaluate razors for sharpness of blade, smoothness of glide and ease of handling In a near nearby by show shower er room room wome women n perf perfo orm the the same same ritu ritual al on thei theirr legs legs,, underarms and what the company delicately refers to as the bikini area. We bleed so you. 11 get a good shave at home says one Gillette employee. Test marketing

If the product passes functional and consumer tests, the next step is test mark market etin ing g the the stag stagee at whic which h the the prod produc uctt and and mark market etin ing g prog progra ram m are are introduced into more realistic market settings. Test marketing ’gives the marketer experience with marketing the product before going to the great expense of full ‘introduction. It lets the company test the product and its entire entire market marketing ing progr programam-pos positi itioni oning ng strate strategy gy advert advertisi ising ng distri distribut bution ion   prici pricing ng brandi branding ng and packag packaging ing and bud budget get levels levels.. The amount amount of test test marketing needed varies with each new product Test marketing costs can be high, and it takes time that may allow competitors to gain advantages. o o o

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Produce a physical prototype or mock-up Test the product (and its packaging) packaging) in typical usage situations Conduct focus group customer interviews or introduce at trade show Make adjustments where necessary Produce an initial run of the product and sell it in a test market area to determine customer acceptance

When the costs of developing and introducing the product are low or when management as already confident about the new product the company may do little or no test marketing In fact test marketing by consumer packagegoods firms has been been declining in recent recent years Companies Companies often do not test market simple line extensions or copies of successful competitor products For example. P&G introduced its Folgers’s decaffeinated coffee crystals without test marketing and Pillsbury rolled out Chewy granola bars and chocolate covered Granola Dips with no standard test market. However  when when intr introd oduc ucin ing g a new new prod produc uctt requ requir ires es a big big inve invest stme ment nt or when when management is not sure of the product or marketing program a company may do a lot of test marketing. For instance Lever USA spent 2 years testing its highly successful successful Lever 2000 bar soap in Atlanta Atlanta before introducing introducing it internationally. Frito-Lay did 18 months of testing in three markets on at least five formulations before introducing its Baked Lays line of low fat snacks. And Nokia test-marketed its N-Gage cell phone/mobile game player  extensively in London before introducing it worldwide. Standard test Marketing

Usin Using g stan standa dard rd test test mark market ets, s, the the comp compan any y find findss a smal smalll nu numb mber er of  representative test cities conducts a full marketing campaign in these cities and uses store audits consumer and distributor surveys, and other measures to gauge product performance. The results are used to forecast national sales and profits discover potential product problems and fine tune the marketing  program. Standard test markets have some drawbacks. They can be very costly and they they may may take take a long long time time—s —som omee last last as long long as 3 to 5 year yearss Mo More reov over  er  competitors can monitor test market results or even interfere with them by cutting their prices in test cities increasing their pro motion or even buying up the product being tested. Finally test market give competitors a look at the compan company’s y’s new produc productt well well before before it is introd introduce uced d nation nationall ally y Thus Thus competitors may have tune to develop defensive strategies and may even  beat the company s product to the market For example while CLOROX® was still test marketing its new detergent with bleach in selected markets P&G P&G laun launch ched ed Tide Tide with with Blea Bleach ch nati nation onal ally ly Tide Tide with with Blea Bleach ch qu quic ickl kly y  became the segment leader GLOROX® later withdrew its detergent Despite these disadvantages standard test markets are still the most widely used approach for major in-market testing However many companies today are shifting toward quicker and cheaper controlled and simulated test marketing methods.

Control Test Marketing Several research firms keep controlled panels of stores that have agreed to carr carry y new new prod produc ucts ts for for a fee fee Cont Contro roll lled ed test test mark market etin ing g syst system emss like like ACNielsen’s Scan track and Information Resources Inc s (IRI) Behavior  Scan Scan trac track k indi indivi vidu dual al cons consum umer er beha behavi vior or for for new new prod produc ucts ts from from the the television set to the checkout counter. In each Behavior Scan market WI maintains a panel of shoppers who report all of their purchases by showing an identification card at check-out in   participating stores and by using a handheld scanner at home to record  purchases at nonparticipating stores. With in test stores, IRI controls such factors as shelf placement price and ia-store promotions for the product   being tested IRI also measures TV viewing in each panel household and sends sends specia speciall commer commercia cials ls to panel panel member member televi televisio sion n sets sets Direct Direct mail mail  promotions can also be tested. Commercialization

Commercialization is the process or cycle of introducing a new product into the market. The actual launch of a new product is the final stage of new of new  product development, development , and the one where the most money will have to be spent for advertising, sales promotion, and other marketing efforts. In the case of a new consumer packaged good, costs will be at least $ 10 million,  but can reach up to $ 200 million. In general one can say that it will cost about a dollar for each dollar of sales turnover achieved. Commercialization is often confused with sales, marketing or business development. The Commercialization process has three key aspects: 1. The funnel. funnel. It is is essential essential to look look at many ideas ideas to get get one or two two  products or business that can be sustained long-term 2. It is a stage-wis stage-wisee process process and each each stage has has its own key key goals and and milestones 3. It is vital to involve involve key key stakeholder stakeholderss early, includi including ng customers customers Commercialization of a product will only take place, if the following four  questions can be answered: When?

The company has to decide on the introduction timing. When facing the danger of cannibalizing the sales of the company’s other products, if the

 product can be improved further, or if the economy is down, the launch should be delayed. Every single bank in Nigeria today has been commercialized. But its sad enough to know that most of these banks are not straight forward in their  various dealings with their clines/customers. Where?

The company has to decide where to launch its products. It can be in a single location, one or several regions, a national or the international market. This decision will be strongly influenced by the company’s resources, in terms of  capital, managerial confidence and operational capacities. Smaller  companies usually launch in attractive cities or regions, while larger  companies enter a national market at once. Global roll outs are generally only undertaken by multinational conglomerates, since they have the necessary size and make use of  international distribution systems (e.g., Unilever, Procter & Gamble). Other  multinationals use the “lead-country” strategy: introducing the new product in one country/region at a time (e.g. Colgate-Palmolive). To Whom?

The primary target consumer group will have been identified earlier by research and test marketing. These primary consumer groups should consist of innovators, early adopters, heavy users and/or opinion leaders. This will ensure adoption by other buyers in the market place during the product growth period. How?

The company has to decide on an action plan for introducing the product by implementing the above decisions. It has to develop a viable marketing mix and create a respective marketing budget.

Test marketing gives management the information needed to make a final decision about whether to launch the new product. If the company goes

ahea ahead d with with comm commer erci cial aliz izat atio ion— n— intr introd oduc ucin ing g the the new new prod produc uctt into into the the market—it will face high costs The company may have to build or rent a manu manufa fact ctur urin ing g faci facili lity ty.. And And it may may have have to spen spend d in the the case case of a new new con consum sumer pack packaaged ged goo ood d betw etween een $1 $10 0 mil million lion and $2 $200 00 milli illio on for  advertising sales promotion, and other marketing efforts in the first year. The company launching a new product must first decide on introduction timing. If DaimlerChrysler s new fuel cell electric car will eat into the sales of the company s other cars its introduction may be delayed If the car can be improved improved further, further, or if the economy economy is down, down, the company company may wait until the following year to launch it.   Next, Next, the compan company y must must decide decide where where to launch launch the new produc product—i t—in n a single location, a region the national market or the international market. Few companies have the confidence capital and capacity to launch new products into full national or international distribution. They will develop a planned market rollout over time. In particular small companies may enter attractive cities or regions one at a time Larger companies, however may quickly intro1uce new models into several regions or into the full national market. There are the following step of commercialization. o o o o

Launch the product Produce and place advertisements and other  promotions  promotions Fill the distribution pipeline with product Critical path analysis is most useful at this stage

Organizing for new product Development

Many companies organize their new product development process into the orde orderl rly y sequ sequen ence ce of star starti ting ng-w -wit ith h idea idea gene genera rati tion on and and endi ending ng with with commercialization Under this sequential product development approach one company department works individually to complete its stage of the process  before passing the new product along to the development next department and and stag stage. e. Th This is orde orderl rly y step step-b -by y step step proc proces esss can can help help brin bring g cont contro roll to comple complex x and risky projects projects.. But it also also can be danger dangerous ously ly slow. slow. In fast fast changi changing ng highl highly y compet competiti itive ve works works marke markets ts such such slow slow but sure sure produc productt deve develo lopm pmen entt can can resu result lt in pro4 pro4uc uctt fail failur ures es lost lost sale saless arid arid prof profit itss and and crumbl crumbling ing marke markett positi positions ons Speed Speed to market market and reduci reducing ng new produc productt development cycle time have become pressing concerns to companies in all

industries. In order to get their new products to market more quickly many companies are adopting a faster team-oriented approach called simultaneous product development (or team bad or collaborative product-development) Under this appr approa oach ch comp compan any y depa depart rtme ment ntss work work clos closel ely y toge togeth ther er thro throug ugh h cros crosss functional teams overlapping the steps in the product development process to save time and increase effectiveness Instead of passing the new product from department to department the company assembles a team -of people from various departments that Stays with the new product from start to finish finish.. Such Such teams teams usuall usually y includ includee people people from from the market marketing ing financ financee desi design gn,, manu manufa fact ctur urin ing g and and lega legall depa depart rtme ment ntss and and even even supp suppli lier er and and customer companies. top manage managemen mentt gives gives the produc productt develo developme pment nt team team genera generall strate strategic gic direction but no clear cut product idea or work plan It challenges the team with stiff and seemingly contradictory goals— turn out carefully planned and superior superior new produc products ts but do it quickl quickly y —and —and then then givers givers the team team what whatev ever er free freedo dom m and and reso resour urce cess it need needss to meet meet the the chal challe leng ngee In the the sequential process a bottleneck at one phase can seriously slow the entire  prote  protect ct In the simult simultane aneous ous approa approach, ch, if one functi functiona onall area area hits hits snags snags it works to resolve them while the team moves on.

The Data Collection

Primary Data BOOKS

Principal of Marketing (Eleventh Edition) Part III Chapter# 9 Page # 274,276,280,282 Web site

www.learnmarketing.net www.wikipedia.org

www.infotrends.com Secondary Data Organization

P&G Pakistan Private (Ltd)

Web site

www.pg.com

Practical Study

Procter & Gamble Pakistan Pvt Ltd WHO WE ARE Three billion times a day, P&G brands touch the lives of people around the world. We are one of the largest and strongest portfolios of trusted, quality, leadership brands. At P&G, the people who develop and build the brands are the foundation of our success. • • •

Building Diversity in the Organization Developing Skills and Nurturing Talent Providing Quality Assurance, Meeting Safety Standards

OUR COMMITMENT At P&G, we believe in giving back to the communities we live in. Corporate social responsibility is close to P&G’s heart. P&G develops and runs several initiatives and  programs aimed at helping communities and improving people’s lives, especially children.

OUR HISTORY

P&G commenced operations in Pakistan in 1991. Headquartered in Karachi, our goal was to become the finest global consumer goods company operating locally in Pakistan. To fulfill this goal, we are serving Pakistani consumers with 12 brands that strive to make their everyday lives better.

PRODUCT INFORMATION We are committed to providing products of consistently excellent quality and standards  — products that have a positive effect on the lives of the world's consumers. As we continue to succeed in this aim, we can keep growing as a marketing community.

PRODUCTS RANGE

Data Analysis Why are some companies so successful at new product development? And how do some businesses make it seem so easy – one new product winner  after another? Consider Procter & Gamble: Total sales at P&G increased by $8 billion in 2004, with new product winners playing a important role. The IRI cites P&G as the clear winner in its annual New Product Pacesetters report: In the non-food category, five P&G new products were in the top ten  best-sellers, with Prilosec OTC and Crest Whitestrips Premium in the #1 and #2 positions. Exceptional performance in product development in companies such as P&G is no accident. Rather, it’s the result of a disciplined, systematic approach  based on best practices. This article highlights many of the key factors that distinguish best performing businesses, such as P&G, from the rest. To show  proof that these best practices really do have an impact on performance, we present research conclusions from a recent major APQC study.2 Not surprisingly, P&G, an exemplary company in new product development, has implemented many of these practices; thus, we use the company as a superb a case illustration to show many of these best practices in action. Authors’ notes: In this article, we use the term “new products” to mean any change to the product visible to the consumer or customer; these include true new-toworld products as well as new items in an existing product line, significant modifications and improvements, and extensions. The term “customer” means immediate customer, for example a retailer; and the term “consumer” means the end user. The Innovation or Initiatives Diamond to guide new product development

Four major factors or forces drive a business’s new project performance, according to the APQC (American Productivity & Quality Center) best Center) best  practices study. The Innovation Diamond3 in Exhibit 1 illustrates these four   points of performance: Having a product innovation and technology strategy in place for the  business. Having an effective and efficient idea-to-launch process or StageGate® system. Resource commitment and focusing on the right projects – portfolio management. People – having the right climate and culture, effective crossfunctional teams, and senior management commitment to new product development. •

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Procter & Gamble’s management in the 1990s subsequently transformed the triangle into their Initiatives Diamond, shown in figure P&G’s major “aha” was that there is no one key to success in product innovation, and thus management stepped back  from a focus on individual initiatives and looked at the broader picture. For  example, having a great idea-to-launch process is not sufficient – it’s not a standalone driver of positive performance. P&G’s Initiatives Diamond serves as a guide for each business’s product innovation efforts, and helps to focus management’s attention on what is important to success. Here’s what Bob McDonald, P&G’s Vice Chairman of  Global Operations, says: “The Initiative Diamond played a significant role in improving the business results in P&G’s Fabric & Home Care global  business unit. This work brought us a new discipline to manage our  innovation programs, and yielded a major increase in the in-market success of our initiatives. We aligned our organization on how to use Stage-Gate® success criteria and portfolio and resource management to deliver better  innovations for the consumers we serve.

About Marketing

Did you know P&G invented the concept of brand, brand management and even the Soap Opera (originally designed to showcase our soap powders on TV)? Over the years, we¹ve remained consistently on the cutting edge of  marketing always finding new and exciting ways of reaching consumers. So, it’s not surprising that some of the world’s best marketing pros started here. Here, you will lead a brand’s strategic choices and vision, product and commercial innovations, and marketing elements across all media, while collaborating with multi-function teams and agency partners. You will need to make tough calls to a build a brand’s market shares and deliver profit to P&G shareholders. Join us today if you¹re ready to challenge paradigms and  push creative boundaries to propel brand building to a new level. A degree is required. Concept Development

There is following example of concept development Procter & Gamble’s and Kimberly Clerks moist toilet papers tested after launch received an F in

AcuPOLL Both companies spent millions to launch these products but have since withdrawn them from the market Consumers saw Wet toilet paper as unique but didn’t find the benefit to be all that compelling AcuPOLL has found that-just being different doesn’t lead to market success. Product Development

Procter & Gamb1e (P&G) spends $150 million on 4,000 to 5 0O studies a year test in everything from the ergonomics of picking up a shampoo-bottle to how long women can keep their hands in sudsy water On any given day subjects meet an focus groups e11 their dirty laundry to researchers put  prototype diapers on their babies bottoms and rub mysterious creams on their faces. Last year one elementary school raised $17 000 by having students and parents take part in P&G product tests Students tested toothpaste and shampoo and ate brownies while their mothers watched advertising for Tempo tissue P&G s paper wipes packaged to fit in a car.

Conclusion & Recommenda tions Conclusion The strategy behind the developing and implementing of product is not an easy thing most of organization struggling in this part of business. As I ment mentio ion n in my prac practi tica call stud study y Proc Procte terr & gamb gamble le says says this this proc proces esss the the initiative. The whole process is not based on well idea which can took from resear research ch depart departmen mentt intern internal al or extern external al source sourcess of organ organiza izatio tion. n. Idea Idea screening is also very important it is essential to pick the positive values of  idea and refine the negative one. Marketing strategy and business analysis is also significant potion. With out dealing market situation and competitor  movement it is very dangerous to work some new product development. According to P&G initiative management diamond innovation strategy and measure is the top of this diamond. Product development is not an easy stage

its contai contain n diffe differen rentt kind kind of planni planning ng like like resou resource rcess planni planning, ng, strate strategic gic  planning. The resources of any organization play a vital role in product developing big organization normally rely on there internal resources which are much benefited for them. If we conceder all the part of test marketing it is the key of conclusion the organization understand who much they are good in research or they have good idea of market. The organization also know who much they are superior to read the market condition a bad result of test marketing can create a bad effect of organization soil. Commercia Commercializat lization ion is also imperativ imperative. e. High class commercial commercializati ization on can create a huge impact and arrange fine plate foam for the product. P&G are working in Pakistan from a wile there product developing process is totally out of Pakistan but they lunch there product rapidly in this region and for  this they need high quality commercialization. In Pakistan P&G doing well in product commercialization and the proof is there product success. In my opinion P&G is one of the best non food product organization which not only sell there product in Pakistan but they also introduce the new one.

Recommendation As I already admire this P&G doing well in our region they working on new product and introduce in our country. But they research in other  countr countries ies and in the result result of there there resear research ch they they develo develop p new product product acco accord rdin ing g to the the rese resear arch ch whic which h is belo belong ng from from that that regi region on wher wheree the the research held. So P&G also lunch there research in Pakistan and develop the  product. These product represent us and also it is according to our needs.

References

BOOKS

Principal of Marketing (Eleventh Edition) Part III Chapter# 9 Page # 274,276,280,282

Website

http://learnmarketing.net/product.htm http://en.wikipedia.org/wiki/New_p http://en.wikipedia.org/wiki/New_product_developm roduct_development ent http://www.npd-solutions.com/strategy.html http://www.infotrends.com/publi http://www.infotrends.com/public/Content/MRD/Proj c/Content/MRD/Projectdescriptions ectdescriptions /productconcepttesting.html http://www.businessplans.org/Market.html http://www.proddev.com/pdf/Su http://www.proddev.com/pdf/Succeeding_at_New_ cceeding_at_New_Products_the_PG_  Products_the_PG_  Way.pdf  www.pg.com