1. NEW PRODUCT DEVELOPMENT

2. New product development A company may find itself in a situation where it may be advisable to develop a new product. A company may find itself in a situation where it may be advisable to develop a new product. When sales of its current range of products have been declining over the past few years or when it receives complaints about its products from customers, distributors, retailers, it may have to find the possible reasons for the same. When sales of its current range of products have been declining over the past few years or when it receives complaints about its products from customers, distributors, retailers, it may have to find the possible reasons for the same. The concept of product lifecycle suggests that a product passes through different stages. When a company finds that some of its products have entered the declining stage, it may have to take concrete measures to replace them. The concept of product lifecycle suggests that a product passes through different stages. When a company finds that some of its products have entered the declining stage, it may have to take concrete measures to replace them. This can be achieved in 2 ways: Acquisition and Innovation This can be achieved in 2 ways: Acquisition and Innovation

3. New product development New product development can be carried out in one of the following ways: New product development can be carried out in one of the following ways: 1. New product features can be developed by adapting, modifying, magnifying, minimizing, substituting, rearranging or combining the existing features of a product. 2. Different quality versions of the existing product can be developed so that the needs of the different markets can be met. 3. Additional models and sizes of the existing product can be brought out.

4. Internal Innovation & Contract Innovation If the company pursues the policy of internal innovation, it implies that it has its own research and development department which is engaged in the development of new products including modifications and improvements in the existing ones. If the company pursues the policy of internal innovation, it implies that it has its own research and development department which is engaged in the development of new products including modifications and improvements in the existing ones. If, on the other hand, the company pursues contract innovation, it implies that it has engaged the services of outside researchers or new product development agencies for introducing new products for the company. If, on the other hand, the company pursues contract innovation, it implies that it has engaged the services of outside researchers or new product development agencies for introducing new products for the company.

5. New product development There is a dilemma faced by the management with respect to new product development. On the one hand, the company finds that it is necessary to develop new products. There is a dilemma faced by the management with respect to new product development. On the one hand, the company finds that it is necessary to develop new products. On the other hand, the stake involved in the new product development is very high on account of research and development activity being highly capital intensive. On the other hand, the stake involved in the new product development is very high on account of research and development activity being highly capital intensive. If the new product fails in the market, the company has to sustain a heavy loss. If the new product fails in the market, the company has to sustain a heavy loss. It is therefore necessary that new product development be carried out with extreme caution. It is therefore necessary that new product development be carried out with extreme caution. New product development is an extremely difficult process. New product development is an extremely difficult process. One has to be fully informed about the market and product opportunities before entering into a new product development project. One has to be fully informed about the market and product opportunities before entering into a new product development project.

6. New product development process This involves the following stages: This involves the following stages: 1. Idea generation 2. Concept development and testing 3. Product evaluation and development 4. Business analysis and 5. Commercialization.

7. I. Idea Generation The objective of this stage is to obtain The objective of this stage is to obtain 1. New ideas for products 2. New attributes for the existing products and 3. New uses of the existing products There are several sources of new product ideas such as customers, company salesman, dealers, scientists, competitors, top management, industrial consultants, advertising agencies, marketing research firms, industrial publications, universities and commercial laboratories.

8. 1. Attribute Listing Major attributes of an existing product are listed. Major attributes of an existing product are listed. Then, one is asked to imagine how each of these attributes can be modified so that the product will improve. Then, one is asked to imagine how each of these attributes can be modified so that the product will improve. New ideas can be generated with reference to a particular product: New ideas can be generated with reference to a particular product: Can it be put to other uses? Can it be put to other uses? Can we Adapt? Modify? Magnify? Minify? Substitute? Rearrange? Reverse? Combine? Can we Adapt? Modify? Magnify? Minify? Substitute? Rearrange? Reverse? Combine?

9. 2.Forced relationships This technique involves listing of several objects and then trying to find how each object can be combined with the other objects. This technique involves listing of several objects and then trying to find how each object can be combined with the other objects. For example, a bed and a sofa set, two separate products are combined into one – bed – cum- sofa set – fulfilling a felt need of using furniture in a limited space. For example, a bed and a sofa set, two separate products are combined into one – bed – cum- sofa set – fulfilling a felt need of using furniture in a limited space.

10. 3. Morphological analysis Morphological analysis will enable identification of the components of current successful products and find new combinations of attractive features. Morphological analysis will enable identification of the components of current successful products and find new combinations of attractive features. Such an analysis has been extremely useful in the development of new technologies. Such an analysis has been extremely useful in the development of new technologies. Morphological analysis is time consuming. Morphological analysis is time consuming. A thorough search of all the possible combinations would not be possible without morphological analysis. A thorough search of all the possible combinations would not be possible without morphological analysis.

11. 4. Problem analysis Here, the consumers are approached to find out if they have experienced any problem while using a particular product or product category. Here, the consumers are approached to find out if they have experienced any problem while using a particular product or product category. One can then select one or two major problems from such a list on the basis of their importance, the frequency of their occurrence, and the cost of effecting improvement in the product. One can then select one or two major problems from such a list on the basis of their importance, the frequency of their occurrence, and the cost of effecting improvement in the product.

12. 5. Brain storming This technique involves the use of a small number (usually between six and ten) of consumers who are asked to participate in a brain storming session. This technique involves the use of a small number (usually between six and ten) of consumers who are asked to participate in a brain storming session. The purpose of such a session is to generate a new product ideas. The purpose of such a session is to generate a new product ideas. In order to ensure that a brain storming session is effective: In order to ensure that a brain storming session is effective: 1. No criticism of any new idea should be made 2. Freewheeling is welcomed, indicating that the wilder the idea, the better it is. 3. A good number of ideas must be generated 4. Participants should suggest how two or more ideas can be combined into still another idea.

13. 6. Synectics Some authors feel that a major limitation of brain storming session is that it produces solutions too quickly before developing some perspectives. Some authors feel that a major limitation of brain storming session is that it produces solutions too quickly before developing some perspectives. Instead of defining the problem specifically as in brain storming sessions, the synectic approach defines the problem so broadly for the participants in the group who have no idea of the specific problem. Instead of defining the problem specifically as in brain storming sessions, the synectic approach defines the problem so broadly for the participants in the group who have no idea of the specific problem. In such exercises, the participants give their view points and as more and more facts are gradually interjected, their discussion tends to move towards specificity. In such exercises, the participants give their view points and as more and more facts are gradually interjected, their discussion tends to move towards specificity.

14. II. Concept Development & Testing It should be obvious that all the new product ideas generated, cannot be pursued. It should be obvious that all the new product ideas generated, cannot be pursued. This may be on account of several reasons: This may be on account of several reasons: 1. The company may find that a particular new product idea is incompatible with its major objectives. 2. Another reason for not pursuing a new product is that it may not be technologically feasible. 3. Thus, a preliminary screening will eliminate a number of new product ideas.

15. Concept testing The new product ideas which survive in screening are then pursued further through concept testing. The major objectives of concept testing are: The new product ideas which survive in screening are then pursued further through concept testing. The major objectives of concept testing are: 1. To get the reaction of consumers’ views of yhe new product idea. 2. To give direction regarding the development of the project. 3. To choose the most promising concepts for development. 4. To ascertain whether the product in question has adequate potential for its commercialization.

16. Concept testing The concept test can take three different forms: The concept test can take three different forms: 1. It can be entirely verbal – A statement about what it does. 2. It can be visual – in form of a photograph or drawing. 3. A mockup of the product may be used – this is merely a dummy product to get across the idea.

17. 1. Focus group interviews Focus group interviews are conducted with 8 to 12 participants where the moderator gives the group discussion a more specific direction. Focus group interviews are conducted with 8 to 12 participants where the moderator gives the group discussion a more specific direction. The main objective is to have a deeper insight so that the concepts can be further refined. The main objective is to have a deeper insight so that the concepts can be further refined.

18. 2. Monadic tests In monadic testing, a respondent evaluates a single item in isolation from the other alternatives. In monadic testing, a respondent evaluates a single item in isolation from the other alternatives. The respondents are divided into groups and the number of groups depends on the number of new product concepts. The respondents are divided into groups and the number of groups depends on the number of new product concepts. Each respondent evaluates only one concept on uniform dimensions as are used with respect to other concepts. Each respondent evaluates only one concept on uniform dimensions as are used with respect to other concepts. When each respondent has given his rating on the specified dimensions, an average score for each product is calculated. When each respondent has given his rating on the specified dimensions, an average score for each product is calculated. The new product concept that obtains the highest score is chosen for further evaluation. The new product concept that obtains the highest score is chosen for further evaluation.

19. 3. Paired comparison tests Instead of examining only one product concept as in the preceding method, the respondent examines two product concepts at a time indicating which of the two is preferable. Instead of examining only one product concept as in the preceding method, the respondent examines two product concepts at a time indicating which of the two is preferable.

20. 4. Conjoint analysis This method attempts to ascertain the joint effects of two or more nominal independent variables on the ordering of a dependent variable. This method attempts to ascertain the joint effects of two or more nominal independent variables on the ordering of a dependent variable. Here, the respondents give their ratings on two or more attributes at a time. Here, the respondents give their ratings on two or more attributes at a time. The use of conjoint analysis will not only indicate the relative importance of product attributes but also the manner in which they are related to each other. The use of conjoint analysis will not only indicate the relative importance of product attributes but also the manner in which they are related to each other. This will enable the researcher to identify the best combination of product attributes. This will enable the researcher to identify the best combination of product attributes.

21. III. Product evaluation & Development The objective of product testing is to ascertain the market response to the proposed product so that the management can decide whether or not the product should be carried forward. The objective of product testing is to ascertain the market response to the proposed product so that the management can decide whether or not the product should be carried forward. This would involve a more realistic plan for the product exposure. This would involve a more realistic plan for the product exposure. Another major difference between the product testing stage and the concept development and testing stage is that the former involves the trial use of the product by a group of respondents, while the later attempts to measure only the initial interest in the proposed product. Another major difference between the product testing stage and the concept development and testing stage is that the former involves the trial use of the product by a group of respondents, while the later attempts to measure only the initial interest in the proposed product. Here, some kind of usage test is undertaken to find out whether the respondents would be interested in it and whether they would subsequently buy it if it were available in the market. Here, some kind of usage test is undertaken to find out whether the respondents would be interested in it and whether they would subsequently buy it if it were available in the market.

22. 1. Usage tests There are 2 types of usage tests: There are 2 types of usage tests: 1. Laboratory usage tests 2. Consumer usage tests In the laboratory usage tests, R & D people may test a new product with respect to one or more attributes. For example, a car manufacturing unit will have its R & D department whose task is to effect improvements in the car, say, economy in fuel consumption. R & D personnel may evaluate the proposed vehicle by undertaking test drives under varying conditions.

23. Consumer usage tests The consumer usage tests and the laboratory tests may give different evaluations of the same product. The consumer usage tests and the laboratory tests may give different evaluations of the same product. This is because consumers’ perception may be different and accordingly they may attach importance to those attributes which were not considered by the R & D department. This is because consumers’ perception may be different and accordingly they may attach importance to those attributes which were not considered by the R & D department. In a consumer usage test, a small number of consumers are given a sample of the new product. In a consumer usage test, a small number of consumers are given a sample of the new product. They are asked to use it in a normal fashion and later indicate their reaction to it as also the defects tgat they have noticed. They are asked to use it in a normal fashion and later indicate their reaction to it as also the defects tgat they have noticed.

24. IV. Business analysis & Commercialization New product ideas that survive the product evaluation and development stage are then taken up for an in- depth analysis to ascertain their business attractiveness. New product ideas that survive the product evaluation and development stage are then taken up for an in- depth analysis to ascertain their business attractiveness. For this purpose, it is necessary to project the future sales, costs and profit, and if such estimates are reasonably good, the product in question is commercialized. For this purpose, it is necessary to project the future sales, costs and profit, and if such estimates are reasonably good, the product in question is commercialized. However, as new information becomes available, the estimates of sales, costs and profit may have to be revised. However, as new information becomes available, the estimates of sales, costs and profit may have to be revised. In order to carry out business analysis and commercialization of the new product, two important techniques – test marketing and simulated test marketing are used. In order to carry out business analysis and commercialization of the new product, two important techniques – test marketing and simulated test marketing are used.

25. Test marketing After the concept testing and development of a new product, it is necessary to find out whether it is going to be accepted or not in the market. This is achieved through test marketing. After the concept testing and development of a new product, it is necessary to find out whether it is going to be accepted or not in the market. This is achieved through test marketing. The main objective of test marketing a new product is to reduce the commercial risk when it is brought in the market. The main objective of test marketing a new product is to reduce the commercial risk when it is brought in the market.

26. Test marketing Test marketing is a controlled experiment, done in a limited but carefully selected part of the market place, whose aim is to predict the sales or profit consequences, either in absolute or in relative terms, of one or more proposed marketing actions. Test marketing is a controlled experiment, done in a limited but carefully selected part of the market place, whose aim is to predict the sales or profit consequences, either in absolute or in relative terms, of one or more proposed marketing actions. It is essentially the use of the market place as a laboratory and of a direct sales measurement which differentiates this test from other types of market research. It is essentially the use of the market place as a laboratory and of a direct sales measurement which differentiates this test from other types of market research. Uses: Uses: 1. It may be used as a tool for managerial control. 2. It may also be used as a predictive research tool.