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What is a New Product Development ?

Updated: Jun 27, 2021

Important Disclaimer: All the definitions given below are collection of knowledge from sites mentioned in the sources at the end of the website. These are not personal views of any one individual or group of individuals.

Name of any company or product used are for example purpose and not for any harm to the brand equity. Please drop a mail on connect@marketingweekly.in or ping on 8804900400 for any objection/removal of name. We have used name in good-faith.


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.


Product Life Cycle
Product Life Cycle | Develop new before current product reach Decline stage

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):


  1. Idea should be in sync with organization’s vision.

  2. Active competition analysis in the space to be done.

  3. Risk analysis regarding the product to be done.

  4. SWOT analysis of the product concept.

  5. Customer analysis of the product.


Below are points to take care before proceeding to next stage (In Reality):


  1. Don’t select product which doesn’t ring a bell in customers’ mind. E.g. Colgate launching processed food or Britannia launching smartwatch.

  2. Don’t select product with too much barrier to entry unless you have competency in that space. If the competition is too strong, you will end up bleeding your own capital. E.g. L’Oréal launching Soft Drinks.

  3. Analyze various risks such as price of raw material, stock risk, legal risks, etc. List down all the stakeholders and analyze risks in this way.

  4. SWOT analysis in comparison to all the players in market.

  5. Talk with customers/end-users of your product and see how they respond. Check the level of acceptance of your product in the eye of customers. E.g. Pidilite launching Leather Bags.


2. Idea Screening (and Concept test):

  • This process involves concept development & refining. A small team can be assembled who creates the first detailed assessment of the technical, market and business aspects of the new product concept and determines its core functionality.

  • Sometimes Paper Models are used to obtain early feedback on product market fit. These models can be primitive, for example, paper prototypes are commonly used to get early feedback from test marketing.

  • The goal of this phase is to discover whether the product is good enough.


Two steps can be followed to ensure comprehensive screening:


A. Marketing Strategy Development:

  • Product’s POD (Point of differentiations) are being listed here. Marketing team must decide how they want to position the product in the eye of consumers. If done wrong, product may get misunderstood in the market.

  • E.g. If Parle is launching a new healthy biscuit, do they want to position it as Health supplement or play around low calorie or target kids who need nutrients.

  • Marketing Team also estimates annual recurring revenue (ARR) and cost of acquisition (COA) which helps them to plan budget.


B. Business Analysis:

  • Here the team should benchmark competition in the market, find out at what price they are selling, what promotions they are running, what is their distribution strategy and acquisition strategy.

  • Company should have an estimate of ROI along with three-year revenue model. (In reality it is just a complex multiplication in excel files which may or may not turn out to be true but need to be done for senior management to give their nod)

  • In many instances’ companies do create a real-product prototype on small scale and test it in a small market to collect feedback. It is usually tested across few high potential geographies.

Process of Minimum Viable Product (MVP)
Process of Minimum Viable Product (MVP)

3. Product Development:

  • In this step, the focus is on product design and refinement of the prototype of the product.

  • In most cases they alpha test (alpha test maybe difficult for the uninitiated) the product prototype by working with customers in an iterative fashion: getting their feedback and incorporating it into the prototype.

  • Finalization of manufacturing facility and its optimization is being done before mass manufacturing the product.

  • Companies should be extremely efficient in their manufacturing if they want smooth result in market. Any sloppiness results into product rejection, loss of margin and stock issues.

  • Along with these, product launch and activation are being planned (timelines are being created, product training being done) via sales and distribution team. It is usually done in phase-wise hence central product team can focus on post-launch market response and provide necessary service support if need be.


4. Commercialization:

Once manufacturing excellence of new product is in place, sales and distribution team starts product placement in targeted geographies. Many ideologies are being followed for successful commercialization. Most of them involve below steps:

  1. Free beta product demo at selected retail shops (Free product can also be given as per budget)

  2. Placement of a product (If retailers/channel convinced with the demo, they will buy it. Many companies provide first-purchase discounts to encourage fast placement)

  3. Order farming (It is important to have repeat purchase of your product for a successful product activation in the market)

To achieve above steps, companies use their trade marketing budget to support sales team. Many activities including consumer sampling, kiosk activity, influencer connect, etc. being done to push the product till it sustains natural sales.


Do share your experience with New Product Development.


Sources:




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