NEW PRODUCT DEVELOPMENT AND MANAGING NEW PRODUCT DEVELOPMENT PROCESS. SELMA SARIOĞLU N.NİHAN ÇELİK N. ECE ÖZ F. SÜMEYYE DURAK. NEW PRODUCT DEVELOPMENT (NPD). INNOVATION MANAGEMENT AND NPD.
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NEW PRODUCT DEVELOPMENT AND MANAGING NEW PRODUCT DEVELOPMENT PROCESS
N. ECE ÖZ
F. SÜMEYYE DURAK
NEW PRODUCT DEVELOPMENT(NPD)
NPD AS A GROWTH STRATEGY
MarketPenetration:Increasingthe market share of a business’sexistingproductsbyexplotingthefullrange of marketing-mixactivities is thecommonapproachadoptedbymanycompanies.
Thismay be includebrandingdecisions.
Market Development:Inthisinstancethecompanymaintainsthesecurity of itsexistingproducts but optstodevelopandenternewmarkets.Market development can be achievedbyopeningupnewsegments.Similarly, companiesmaydecidetoenternewgeographicareasthroughexporting.
NPD AS A GROWTH STRATEGY
Diversification:Theselection of thisoptionwould be significant in thatthebusinesswouldmoveintoproductareasandmarkets in which it currentlydoes not operate.Manycompaniestrytoutiliseeithertheirexistingtechnicalorcommercialknowledgebase. Additionalopportunitiesfordiversifiedgrowthexistthroughforward, backwardandhorizontaldiversification.
A Range of ProductDevelopmentandOpportunities:
A development of Ansoff’sdirectionalpolicymatrixwasJohnson andJone’smatrixforproductdevelopmentstrategies.ThismatrixreplacesAnsoff’sproductvariablewithtechnology.Itbuilds on Ansoff’smatrixbyofferingfurtherclarification of therange of optionsopento a companycontemplatingproductdecisions. Inparticular, theuse of technology as a variablebetterillustratesthedecisions a companyneedstoconsider.
Theserepresent a smallproportion of allnew
productsintroduced.Theyarethefirst of theirkindandcreate a new market.Theyareinventionsthatusuallycontain a significantdevelopment in technology. Forexample; Kodak’sdigitalcamera.
Although not newtothemarketplace, theseproductsarenewtotheparticularcompany.Theyprovide an opportunityforthecompanytoenter an established market forthefirst time.Forexample;Samsungand Sony Ericsonhaveenteredthecellphone market.
Thiscategory is a subset of newproductlines.Thedistinction is thatwhilethecompanyalready has a line of products in this market, theproduct is significantlydifferentfromthepresentproductoffering but not sodifferentthat it is a newline.Forexample; Hewlett-Packard’scolourink-jet printer was an additiontoitsestablishedline of ink-jet printers.
Thesenewproductsarereplacement of existingproducts in a firm’sproductline.Forexample; Hewlett-Packard’sink-jet printer has receivednumerousmodificationsover time and, witheachrevision, performanceandreliabilityhavebeenimproved. Thisclassificationrepresents a significantproportion of allnewproductintroduces.
NEW PRODUCT DEVELOPMENT
New product development is a crucial processfor the survival of firms
Some of thesourcesfornewproductideasincludethebusinesscustomers, competitors, newspapers, journals, employeesandsuppliers.
Inproductscreening, poor, unsuitableorotherwiseunattractiveideasareweededoutfromfurtheractions.
Concepttestingpresentstheconsumerwith a proposedproductandmeasuresattitudesandintentions at thisearlystage of development.
Businessandfinancialanalysisfortheremainingproductconcepts is muchmoredetailedthanproductscreening.
Productdevelopmentconverts a product idea into a physical form andidentifies a basic marketing strategy.
The test market ideally aims to duplicate "everything" - promotion and distribution as well as "product" - on a smaller scale.
Commercializationinvolvesimplementing a total marketing plan andfullproduction.
Departmental-Stage model based around the linear model of innovation, where each department isresponsibleforcertaintasks.
Common problems that occur within theproduct development process centre aroundcommunicationsbetweendifferentdepartments.
The cross-functional teams (CFT) approachremoves many of these limitations by having a dedicated project team representingpeople from a variety offunctions.
Decision-stage models represent the new product developmentprocess as a series ofdecisions that need to be taken in order to progress the project
As the name suggests, conversion-process models view new product development asnumerous inputs into a ‘black box’ where they are converted into an output.
Response models are based on the work of Beckerand Whistler who used abehaviourist approachto analyse change.
MANAGING NEW PRODUCT DEVELOPMENT PROCESS
NEW PRODUCTS AS PROJECT
The previous chapters have outlined some of the conditions that are necessaryfor innovation to occur and have shown variousrepresentations of the new productdevelopment process. However, while these conditions are necessary, they are insufficientin themselves to lead to the development of new products. This is because, aswith any internal organisational process, it has to be managed by people. The concepts ofstrategy, marketing and technology all have to be coordinated and managed effectively.This is where the attention turns from theory
and representation to operationandactivities.
NEW PRODUCTS AS PROJECTS
We have seen that a product idea may arise from a variety of sources. We have alsoseen that, unlike some internal operations, NPD is not the preserve of one single department.And it is because a variety of different functions and departments are involvedthat the process is said to be complicated and difficult to manage. To be successful new product development needs to occurwith the participation of a variety of personnel drawn from across the organisation.
Without the continual accumulation of knowledge, anorganisationwill be hindered in its ability to create new product ideas. Figure showsa wide range of activities that together help to maintain a company’s knowledge base.
You should be aware of the concept, even if the process is not fully clear. This stage in theNPD process is also referred to as opportunity identification (OI). It is the process ofcollecting possible business opportunities that could realistically be developed by thebusiness into successful products. This definition contains several caveats, which helpsto explain the difficulty that faces businesses.
This activity involves transforming a list of ideas into potential product concepts. For a product idea to become a new product concept, three inputs are required: form, technology and need.
Form: This is the physical thing to be created . It may still be vague and not preciselydefined.
Technology: In most cases there is one clear technology that is at the base of theinnovation.
Need: The benefits gained by the customer give the product value.
In this case, the product concept could be an opportunity in theyellow spreads market for a low-fat spread that can be applied like soft margarine(an emulsion of fat droplets in water), which has a buttery taste.
This is the phase during which the item acquires finite form and becomes a tangiblegood. It is at this stage that product designers may develop several similar prototypeswith different styling. Manufacturing issues will also be discussed such as what typeof process to use. During this activity numerous technical developments will occur.
Commercialisation is not necessarily the stage at which large sums of money are spenton advertising campaigns or multi-million-pound production plants, since a companycan withdraw from a project following the results of test marketing.
New product project teams in small to medium-sized organisations are usuallycomprised of staff from several different functions who operate on a ‘part-time’ basis.
Membership of the project team may be just one of the many roles they perform.Inlarger organisations, where several projects are in progress at any one time, there maybe sufficient resources to enable personnel to be whollyconcerned with a project.
Ideally, a project team will have a group of people with the necessary skills, who areable to work together, share ideas and reach compromises.Thismay include externalconsultantsorkeycomponentsuppliers.
Commonapproach used by many large manufacturing companies is toorganisethe company by product type. Each product has its own functional activities.
Some functions, however, are centralised across the whole organisation. This is toimprove efficiency or provide common features.This type of structuresupports the notion of product platforms where a generic group oftechnologies are used in a variety of products. Sony, Philips and Nokia all have centralisedR&D activities where the majority of products are developed allowing for a high degreeof technology transfer between product groups.
The matrix structure is an organizational design that groups employees by both function and product.
Strengths of a matrix structure:
Weaknesses of a Matrix Structure:
Project management is the discipline of planning, organizing, motivating, and controlling resources to achieve specific goals.
The Process Champion is universallyknownthroughout the organization and is respectedand admired by company personnel. He or she
pushes the NPD Process as avehicle forProduct, Service, and Program innovation.
Process Sponsors are typically pulled from theranks of Divisional or Departmental Managers.He or she delivers resources (time, money,
people, and/or equipment) to the NPD Projects
The keeper of the NPD Process is the
Process Manager. He or she is a processexpert with primaryresponsibility to promote andimprove the NPD Processes.
REASONS FOR NEW PRODUCT FAILURE