Marketing Management

Clasically Chapter 8
New Product Development

1. What all comes under the term new product development? OR when can we classify a
development in a product as new?
Answer - New products are commonly divided into three categories:-
a) Classically innovative products These products can also be said as new to the world
products, and are a result of out of the box thinking by the managers. These
products are revolutionary.
b) New category entries These are the products whose category already exists in the
market and a firm enters the same category. The product introduced is new to the
firm.
c) Additions to product line or line extensions These are the new versions of the
product which are already marketed by the firm. Eg- A new colour or a new flavour.
Some otInher minor changes to the existing product can also be called as a new product.
These minor changes might be
a) Repositioning.
b) Product improvements.
c) Cost reductions.

2. Describe the following approaches to new product development:
a. Classic Linear Approach
b. Rugby Approach
c. Target Costing Approach

Answer -
a) Classic linear approach This approach is called as linear approach because the firm
using this approach goes through a series of activities performed one after another
for the development of the new product. The stages which are involved in this
approach are given below :-
Opportunity identification - In the first stage of new product development
process, the company determines which market it wants to enter. Once the
market entry decision has been made, the company searches for new product
ideas.
Design This phase of the new product development process includes a step to
screen the concepts developed in the first stage.
Testing Once the prototype is developed, it is tested with customers from the
target segment.
Introduction Following product testing, the product is ready to be rolled out
nationally or internationally. For all the products the roll out period is critical.
Life cycle management Pressure from customers and competitors forces firms
to consider whether the price is appropriate, the advertising is working as it
should and so on.
b) The Rugby Approach - The product development process results from the constant
interaction of a multidisciplinary team whose members work together from the
beginning of the project to the products introduction. The characteristics of this
approach are :
Built in stability
Self organizing project teams
Overlapping development phases
Multilearning
Subtle Control
Transfer of learning.
c) The Target Costing Approach This approach starts with the estimated price that
the targeted customers are willing to pay. Before a firm launches a product, the
ideal selling price must be determined and the costs must be controlled in a way
that the product can be sold at the target price.



3. How can one carry out screening of concepts?
Answer - The main purpose of a concept test is to choose the most the most promising
from a set of alternatives, get an initial notion of the commercial prospects of a concept. The
subjects used in these tests should be taken from the target customers . The data collection
procedures fall into the following three major categories :
a) Surveys Useful for getting large samples for projection purposes.
b) Focus groups - Can be used to get detailed descriptions.
c) Demonstrations Products can be demonstrated to a large mob gathering and
collect their reactions.

4. What are the sources of creative idea generation for a company?
Answer - The sources can broadly be classified into two :-
Internal Sources - These sources are present within the organization. Like
employees, Technical department, R&D department, Marketing and manufacturing
department etc.
External Sources - These sources are not present within the organization. Like End
users, lead users, stakeholders, general public, secondary sources etc.
5. Why has shorter product development cycle gained importance in todays time?
Answer Because of shorter life cycles and faster technological obsolescence, companies
are finding that quicker time-to-market with the new products has become a competitive
advantage. The impact of new technologies , internet and new software developments are
helping in reducing the life cycle of the products.
6. What actions should be taken by companies when thinking of New Product Development
over the Product Life Cycle?
Answer - The stages of the product life cycle can be a guide to kinds of innovations a
company should seek.
a) Introductory- This would include new technologies such as laser printing, satellite
TV etc.
b) Growth In this stage, the focus should be on product innovation and
differentiating from existing competitors.
c) Maturity It is important at this stage to invest in marketing differentiation as the
products are similar.
d) Decline At this stage, focus should be on product enhancements and line
extensions that focus on the segments still purchasing the product.

7. What are the pros and cons of the three approaches followed in new product development?