New Product Development

Introduction: New Product Development

By its nature marketing requires new ideas. Unlike some organizational functions, where basic processes follow a fairly consistent routine (e.g., accounting), successful marketers constantly make adjustments to their marketing efforts. New ideas are essential in responding to changing demands from target market and pressure exerted by competitors. These changes are manifested in marketing decisions in all areas including the development of new products.

Innovation is the engine for growth in today's market .Organizations are under pressure to unrelentingly innovate to contribute to revenues and market share.

They face the choice of working with existing processes to gain incremental improvements or to restructure their organizations and invest in new products and services.

Without sound innovation, many organizations are doomed to decay.

Strategic Innovation is the creation of growth strategies, new product categories, services or business models that change the game and generate significant new value for customers and the corporation.

New product development refers to the process of bringing a new product or service into the market

Why new product development

a) Potential of greater revenue generation

b) Repositioning the company in the customer's mind

c) Competitive advantage

d) Widespread imitations

e) Shorter product life spans

f) Product expansion strategy i.e. new product lines

g) Optimize production capacity i.e. idle capacity

Possible reasons for new product success

a) Deeper understanding of customer needs

b) Higher performance-to-cost ratio

c) Time of product launch i.e ahead of competition

d) Effective product launch and promotion

e) Top management support

f) Cross-functional teamwork

Why new products fail

a) Overestimated market size

b) A ‘Let-go' error , could be due to influence

c) Poor product design

d) Poor product positioning, pricing or promotion

e) Unexpected competitive response

f) High development costs