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One of the most astonishing frameworks we come across while learning about business management is Product Life Cycle, it is the stages and time a product undergoes from being introduced into the market until it's taken off the shelves.
(In case this is your first sales article, then it is advisable to check 18 most important sales concept overview here)
Here is the simple diagram of PLC. As you can see on the X axis, we have Time and on Y axis we have Revenue. Every organization wants their product to remain in Growth phase perpetually, however the sad truth is that they all mature eventually and start declining.
Example of Product Life Cycle:
Parle-G biscuits, for years, consumers loved Parle-G, it was a default choice of snacks for most houses along with Tea.
Parle as a company wanted it to remain like that, but here enters the Gen Zs with increasing disposable income.
They desire for more, a biscuit with better taste, creamier feel, which made Parle to introduce biscuits such as Bourbon, Hide & Seek and now Milano (after seeing the meteoric rise of ITC’s Dark Fantasy biscuits).
With time, as customer preferences change, you as a company needs to innovate. Even if your product is in the mature stage, it is always a wise strategy to start exploring new product for growth.
Example of successful NPD culture:
Nike is a very successful company when it comes to NPDs. Nike has enhanced its overall brand reputation, well beyond the realm of athletic footwear, as a result of its successful introduction of golf equipment and supplies, swimwear, soccer equipment and apparel, as well as numerous successful products that appeal to tennis, basketball, and baseball enthusiasts.
Example of unsuccessful NPDs in International Market:
Smokeless Cigarettes by RJ Reynold Tobacco company failed as customers hated its taste
Henry Ford led the way in developing the automobile market. The Ford Motor Company in the 1950s introduced the Edsel and lost more than $100 million.
General Mills lost millions of dollars after the introduction of a line of snacks called Bugles, Daisies, and Butterflies.
Gillette lost millions on a facial cleansing cream called Happy Face.
Xerox invented the personal computer in 1973 (three years before Jobs and Wozniak got started) but failed to commercialize the “Alto” despite it being a brilliant technical success.
Example of unsuccessful NPDs in India:
Tata’s most ambitious automobile project: Tata Nano.
Cadbury Perk mint flavor as it fails to garner customer acceptance.
Bisleri’s soft drink Pop & energy drink Urzaa.
Monaco Smart chips, a healthy alternative for chips. It is like a Too-Yum of 2009.
Ponds toothpaste is a classic case of product failure by extension.
Why organizations love NPDs?
New products may be able to use many of the same raw material inputs as the firm’s existing products, and may be able to be sold by the firm’s existing sales force – resulting in substantially lower unit costs (and in turn higher margins) for the firm.
Furthermore, Company can easily employee their existing distribution channel to promote new products.
What are the steps to a successful New Product Development?
Here are the stages of NPD:
1. Idea Generation:
It is the most important step in any NPD. It is where brainstorming takes place and getting the concept wrong results in time & financial waste. Following best practices, businesses form a small team to explore the idea generation and initial definition of the product concept, business analysis, perform market research, and explores its technical and market risk.
Below are points to take care before proceeding to next stage (Sugarcoated):
Idea should be in sync with organization’s vision.
Active competition analysis in the space to be done.
Risk analysis regarding the product to be done.
SWOT analysis of the product concept.