NEW PRODUCT DEVELOPMENT

1) NEW PRODUCT DEVELOPMENT

New product development (NPD) is the process of bringing a new product to the marketplace. Your business may need to engage in this process due to changes in consumer preferences, increasing competition and advances in technology or to capitalise on a new opportunity. Innovative businesses thrive by understanding what their market wants, making smart product improvements, and developing new products that meet and exceed their customers' expectations. New products' can be products that your business has never made or sold before but have been taken to market by others, product innovations created and brought to the market for the first time. They may be completely original products, or existing products that you have modified and improved. NPD is not limited to existing businesses. New businesses, sole traders or even freelancers can forge a place in the market by researching, developing and introducing new or even one-off products. Similarly, you don't need to be an inventor to master NPD. You can also consider purchasing new products through licensing or copyright acquisition.

For example, if you are developing a new food product, having a technician who can create the right look and taste is essential. Other issues include sourcing ingredients, the mass production process, quality control and pricing. You may need to include several people from outside your business in your team.

2) NEW PRODUCT PLANNING 

The new product planning is the function of the top management personnel and specialists drawn from sales and marketing, research and development, manufacturing and finance. The new product planning process reduces time to market and drives new revenue streams. If you are developing new products, a new product progresses through a sequence of stages from introduction to growth, maturity, and decline is required. This sequence is known as the product life cycle and is associated with changes in the marketing situation, thus impacting the marketing strategy and the marketing mix. The process of product planning development should be defined with all the elements of the product planning process. The new product market offers the organization an opportunity to expand its revenue streams. But before you jump, you need to be sure that you have done your research, market research.

New product launch planning will require you to manage a lot of moving parts. Your go-to-market strategy will make your product launch a success or bust. It’s a lot of work. New product planning is essential for most companies because of their contribution to the growth and prosperity of the company. Planning for new products demands strategic activity.

3) Alternative product development

Market Penetration

 Example:

 1.HM Sampoerna conducts intensive and large-scale marketing and promotion activities for A-Mild cigarette products,

 2. Coca Cola applies a market penetration strategy to increase market share by making greater marketing efforts.  To support this strategy Cocacola seeks to create a trend and create unique and creative advertisements.  As an example, coca cola launches the ad "Coca-Cola brrrrrrr ..." seen from this ad, coca cola wants to create an image that by drinking coca cola can make consumers more excited.

Market Developement

 Example:

 1. PT.Carrefour Indonesia opens a variety of new retail outlets in various major cities in Indonesia.  Carrefour currently has 30 stores in Indonesia.  

 2. PT.  Garuda Indonesia opens a variety of new domestic and foreign flight routes, including the Jakarta-Tanjung Karang, Jakarta-Malang routes, etc.

Product Developement

 Example:

 1. PT Unilever Indonesia develops pepsodent products with several variants,

 2. PT. TELKOM has developed services, from PSTN services to narrow ISDN and Intelligent Networks services.

Concentric Product Diversification

 Example:

 1. Car companies like Suzuki and Honda also produce motorbikes,

 2. The gramedia compass business group entered the publishing business (elexmedia komputindo), book stores (gramedia) and pentiaran (Sonora radio and TV7)

Horizontal Product Diversification

 Example:

 1. PT Bank Lippo, Tbk as the forerunner of the Lippo group decided to move in the property sector such as Lippo Karawaci, Lippo Cikarang.

 2. PT.Maspion Intonesia has PT Bank Maspion Indonesia, Maspion securities, and Maspion money changers.

Conglomerate Product Diversification

 Example:

 1. PT Bank Lippo, Tbk as the forerunner of the Lippo group decided to move in the property sector such as Lippo Karawaci, Lippo Cikarang.

 2. PT.Maspion Intonesia has PT Bank Maspion Indonesia, Maspion securities, and Maspion money changers.

Product Development

4) The Consumer Adoption Process

In the adoption process, consumers go through a series of stages from first learning about the new product to trying it and deciding whether to purchase it regularly or reject it. These stages in the consumer adoption process can be classified as follows:

Awareness

Consumer is first exposed to the product innovation.

David sees an ad for a new digital camera in the newspaper.

Interest

Consumer is interested in the product and searches for additional information.

David reads about the camera on the manufacturer’s Web site, ad then goes to a camera store near his office and has a salesman show him the camera.

Evaluation

Consumer decides whether or not to believe that this product or service will satisfy the need--a kind of “mental trial.”

After talking with a knowledgeable friend, David decides that his camera should be able to provide him with the photos he needs to use in PowerPoint presentations. He also likes the fact that it uses “standard” floppy disks for storage.

Trial

Consumer uses the product on a limited basis

Since camera cannot be “tried” like a small bottle of a new shampoo, David buys the camera from a dealer offering a 14-day full refund policy.

Adoption (Rejection)

If trial is favorable, consumer decides to use the product on a full, rather than a limited basis--if unfavorable, the consumer decides o reject it.

David finds that the camera is easy to use and the results are excellent; consequently, he keeps the digital camera.

5) Organizing For New-Product Development

NEW-PRODUCT COMMITTEES

The most common organizational arrangement for activities in developing a new product is to center these functions in a new-product committee.

NEW-PRODUCT DEPARTMENTS

Many companies establish separate, formally organized departments to generate and refine new product ideas.

PRODUCT MANAGERS

product manager Marketer responsible for an individual product or product line; also called a brand manager.

There are 3 types of forms of product managers

-Operational PM 

-Feature PM 

-B2B PM

VENTURE TEAMS

venture team Associates from different areas of an organization who work together in developing new products.

example : Mastercard introduces Mastercard Track ™ to facilitate business people in managing business collaboration with Microsoft.

6) The New-Product Development Process

The New-Product Development Process

7) New Products As Key To Success

Key success factors are elements that must be in place for a small business to grow and be profitable. These elements vary by industry and by the company’s stage of development. For a new product launch to be a success, the first key success factor is that the product must offer superior benefits to the target customers when compared to competitive products that are already available in the marketplace. Identifying other key success factors requires the small-business owner to determine what has to happen for her new product to gain acceptance by large numbers of customers.

Creating a Distribution System

For the product to be a success, the small-business owner must set up a distribution system that allows the product to be available to its target markets. Ideally, the distribution system will have several channels so the prospective customers have multiple opportunities to buy it. The business owner must identify which channels work best for his particular product. Some consumer products work well being sold through direct-response channels such as infomercials, while others require a network of distributors or sales reps that can market the product to retailers.

Building Awareness

One of the most important key success factors -- and from a small-business perspective the most difficult to successfully implement -- is building customer awareness about the new product. The small-business owner may develop an advertising and promotion strategy to build awareness. Using social media is another alternative, as is obtaining press coverage about the product. The small-business owner must identify which methods of building awareness have the greatest chance of success -- those that alert the highest number of potential customers for the least marketing cost.

Differentiation and Positioning

The small-business owner wants to move customer prospects who are now aware of the product closer and closer to making a purchase, until they actually buy the product. To do this, the business owner must have a clear, concise marketing message that shows why the product is a different and better solution to the customer’s need than what the customer is currently using. This key success factor is twofold: impressing the customer with the benefits of using the product and positioning the product so the customer can compare its superior benefits to the benefits of competitive products. The small-business owner must identify what features are most important to the customer when making the purchase decision and position her product as clearly having these desirable features.

Appropriate Pricing

Identifying the right introductory price for the product is a key success factor, because price is one of the elements that most customers take into consideration when choosing what or whether to buy. The key to success with pricing is determining the price that will allow the business owner to earn a profit on each sale but is regarded by customers as a good value based on the benefits of using the product. Having the lowest price compared to major competitors could cause the company to lose money on the product and may not result in the large number of unit sales the business owner expects. Conversely, if her marketing message key success factor was effective, the customer will see the added value of the product and may accept a higher price.

8) Critical Success Factor

5 critical success factors in NPD

1. Product development is a team game

2. Process is key

3. Speed is of the essence

4. Knowledge management

5. Management Support

9) Product Innovation

Product innovation is the creation and subsequent introduction of a good or service that is either new, or an improved version of previous goods or services. This is broader than the normally accepted definition of innovation that includes the invention of new products which, in this context, are still considered innovative.

Factors of driving innovation

- Technology advances

Angkot use Jaklangko as their payment in Jakarta

- The shortening of the life cycle or the life span of a product

The time interval from when a product is sold to when it is discarded.

- Changing consumer needs

Ojek use Online Ojek

-The higher the level of competition of a product

10) Types of Innovation Strategy

Types of Innovation Strategy

11) Market and Pricing Strategy

First to Market Strategy

 - Being the first product to enter the market

 - The usual strategy is executed focusing on competitive strategies based on time 

Fast Follower

- Following other products with an additional value-added

- As a positive reaction from the market that has been formed

Growth Rates Will Plummet

- Example for the firts to market/first mover here is Netflix. It started out as a mail order CD renting company, but the leadership figured out early that with better internet, customers preferred streaming online. They quickly moved to a subscription-based streaming service model as a first mover.

- Example for first follower, When Google was launched in 1998, it wasn’t the first search engine to enter the market, rather it was the 15th ( Source: SearchEngineWatch)!! WebCrawler (1994), Ask, Altavista (1995), Yahoo (1996) were around much earlier and yet faded into oblivion.

12) QUESTIONS

Kamal – When the new product development needs?

The product life cycle is defined by four stages: introduction, growth, maturity, and decline. Begin with the introduction phase, when the company launch their product to the market, and the next is Growth phase, when the product trying to growth to gain the target sales and profit. The next is Maturity phase, when the company already get the revenue and the margin from the product sales and the product will reach a peak point and then the product will go to the next phase that is decline phase, this phase is the right time to do the product development process to make the product increase their sales again.

Dhio – What is the criteria of the product innovation?

Criteria of product innovation:

1. Relevant customer benefit

An example of the choice of the wrong target group is the whirlpool, which was developed by the Jacuzzi brothers in the 1950s. They initially marketed the innovative pool unsuccessfully to arthritis sufferers. The business only blossomed when they changed the target group and began to sell the whirlpool as a luxury good to the wealthy.

2. Relevant differentiation from the competition

An innovation must differentiate itself from the competition and be distinguished by at least one unique feature. This differentiating feature should be highly relevant for the user and should be able to be maintained in the long term. 

3. Acceptance and explainability of the product innovation

Sometimes a product innovation puts conventional customer ideas into question to such an extent that they do not recognize their benefits. 

4. Easy to test

The Segway, for example, was originally designed for the masses and sold by the makers as the "future" of one-man passenger transport. But due to its complicated operation and need for explanation, the vehicle is neither easy to test nor suitable for the masses.

5. Easy to change

To stick to the example of the Segway: Until today there is no suitable infrastructure. There is no suitable power supply and the Segway is not in good hands both on sidewalks and on roads. In addition, there are target groups, such as pensioners, for whom the Segway is unsuitable because driving the Segway is too risky. Segway ultimately flopped because the company hadn't thought about an appropriate distribution strategy or infrastructure.

6. Legal framework

7. Earnings prospects of product innovation

New technologies should also be taken into account when assessing revenue prospects to prevent a newly introduced product from being displaced by a new technology.

8. Integration into existing product portfolio

This criteria is an answer of a question: “Can the product be launched without directly competing with your existing product portfolio?”

9. Brand fit

This criteria is an answer of a question: “Does the product innovation fit your brand positioning and values?”

10. Practicability

This criteria is an answer of a question: “Do you have the necessary resources to technically implement and market the product innovation?”

Tima – How the test marketing implemented?

Starting with family and friends

Theoretically, the people in your life are going to be the most positive about your new endeavor, so if the answers to these questions aren’t generally “yes,” then you may have a problem right out of the gate.

Small scale testing

Once you decide you want to move forward with your idea, you’ll want to start market testing on a small scale. If you’re creating a physical product, have prototypes made so that people can test it out and give you feedback on its design and functionality. Alternatively, if you’re creating a service, online business or mobile app, make a simple, streamlined version and have people start doing beta testing, providing thoughts on the interface, ease of use and overall satisfaction.

Testing market online

The Internet is a virtually limitless resource for testing the viability of your idea, and this research can be done in a number of different ways. One of the best places to start is with online forums that deal with topics that are related to your product or service.

For example Suzuki test in Indonesia Market. Suzuki Jimny tested market in GIIAS to test how many Indonesian that interested to Suzuki Jimny. The result is Suzuki Jimny very likely to Indonesian market that Suzuki haven't officially launched but many people that start to paid first for the car.

Bagas – What is the advantages of product innovation?

Advantages of product development are product development helps in producing the goods and services of best quality, provides maximum possible satisfaction to the consumers, helps in expanding the market for the products, helps in achieving stability in the demand of the products, minimizes the possibilities of obsolescence of products, helps in facing competition successfully and effectively, increases the goodwill of the organization, increases profit earning possibilities of the organization.

(From UP-LEFT to UP-RIGHT: Diva Windiarti, Shellyana Kholifatul, Deva Hadinegara, Riza Amartha;

Middle: Berliana Destie)

Keywords:

#NewProductDevelopment #NDP #ProductLifeCycle #ProductDevelopment #NewProduct #InnovationStrategy