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Advances in the field of science and technology and the resulting changes in the lifestyle of people have led to the need for more and more new products in the market. To be successful in the highly competitive business environment, firms have to regularly introduce new products. Various types of new products are developed through product modification, diversification, differentiation, market creation, market expansion, and market extension. Various factors that necessitate the development of new products include decrease in the life cycle of products introduced in the market, increase in the chance to earn more profit, need to reduce the dependence of the firm on one product alone, and so on. New product development is associated with various risk factors like fast paced technological changes which necessitate a reduction in the span of the product life cycle, high customer expectations, the strong grip that competitors have in the market, wrong estimation of the market size, faulty product pricing, etc.
In spite of all the necessary efforts taken to ensure the success of new products introduced in the market, many new products fail. Some of the major reasons that can be attributed for this are bad timing of product introduction, dependence on test marketing results alone, unsuitable and unappealing product packaging, and dependence on a single supplier source.
Product planning is an important aspect of new product development and it is to be done taking into consideration the various market segments, existing competition in the market, changing tastes and preferences of customers, etc. The basic mission and objectives of the organization should provide the necessary guidelines in the planning of new products. New product strategies are required for the designing of new products to satisfy well-defined strategic roles agreed upon by the management.
These strategies try to accomplish a company's financial and strategic objectives. The analysis of the external environment of the company to find ways to meet customer needs and the capability of the firm to meet those needs of the customer are the two important aspects in the development of new product strategies. Various stages in the development of a new product include idea generation, idea screening, concept development and testing, market analysis, product development, test marketing, and commercialization. Some of the major issues associated with new product development in an organization include the formation of an organizational structure conducive to new product development, deciding upon the technology transfer issues, studying the rate of innovation adoption by customers in order to suit the promotional activities of the new product, etc. Various attributes like relative advantage, compatibility, complexity, trialability, and observability influence the speed at which a new product is adopted by customers.
New Product Development
Types of New Products
Approaches to New Product Development
Prerequisites for Effective New Product Development
Need For New Product Development
Reduction in the Span of Product Life Cycle
Opportunity to Increase Profit
Gain Competitive Advantage
Risks In New Product Development
Reasons For Success of New Products
Unique and Better-Quality Product
Adequate Knowledge about the Market
Capability of the Firm
Reasons for Failure of New Products
Determine the Market Readiness of the Product
Rely Less on Test Marketing Results
Ensure Right Packaging
Access to Number of Suppliers
Product Planning as a Customer Satisfaction Process
New Product Strategies
Developing a New Product Strategy
The New Product Development Process
Concept Development and Testing
Other Issues in New Product Development
Organizational Structure for New Product Development
New Product Adoption