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NPD: New Product Development

NPD: New Product Development. Why New Products?. Sustain growth Increase revenues and profits Replace obsolete items Innovative Firms Apple Google Microsoft IBM Toyota. New technologies lead to NPD. New Products. New to the world ( discontinuous innovations )

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NPD: New Product Development

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  1. NPD: New Product Development

  2. Why New Products? • Sustain growth • Increase revenues and profits • Replace obsolete items • Innovative Firms • Apple • Google • Microsoft • IBM • Toyota

  3. New technologies lead to NPD

  4. New Products • New to the world (discontinuous innovations) • Create an entirely new market • Smallest category • New Product Lines • Additions to existing Product Lines • Modifications • Repositioned products • Lower-Priced

  5. NPD Process • Idea Generation • Idea Screening • Business Analysis • Development • Test Marketing • Commercialization

  6. Idea Generation • Customers • Employees • Distributors • Vendors • Competitors R&D • Consultants

  7. Idea Screening • MOST IMPORTANT STEP • Weed out bad ideas • Another group performs a review • Concept testing • Does not predict success

  8. Business Analysis • Survived Screening process • Estimate • Demand • Cost • Sales • Profitability • CDSTEP

  9. Development • Prototype by engineering • Start marketing strategy • Can take a long time • Crest 10 years • Polaroid in color 15 years • Xenox 15 years • Minute Rice 18 Years • Work out the kinks • All departments work at once - Simultaneous

  10. Test Marketing • Limited introduction • Tests customer reaction • Marketing strategy • Costly • Alternatives • Lab testing • Internet to assess demand

  11. Commercialization • Decision to go full Launch • Manufacturing large scale • Order materials/equipment • Inventories • Shipping • Etc.

  12. Diffusion of Innovations

  13. Diffusion in numbers

  14. In a more serious tone… • Innovators: eager to try new ideas; obsession • Early adopters: group oriented, opinion leaders • Early majority: weighs pros & cons • Late majority: most of their friends have it • Laggards: low SES; adopt when obsolete; luddites

  15. How Product influences adoption • Complexity • Compatibility • Relative Advantage • Observability • Trialability

  16. Product Life Cycle

  17. Product Life Cycle

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