The process NPD

1. Idea Generation is often called the "fuzzy front end" of the NPD process
 Ideas for new products can be obtained from basic research using a SWOT
analysis (Strengths, Weaknesses, Opportunities & Threats), Market and consumer
trends, company's R&D department, competitors, focus groups, employees,
salespeople, corporate spies, trade shows, or Ethnographic discovery methods
(searching for user patterns and habits) may also be used to get an insight into new
product lines or product features.
 Lots of ideas are being generated about the new product. Out of these ideas
many ideas are being implemented. The ideas use to generate in many forms and
their generating places are also various. Many reasons are responsible for
generation of an idea.
 Idea Generation or Brainstorming of new product, service, or store concepts -
idea generation techniques can begin when you have done your OPPORTUNITY
ANALYSIS to support your ideas in the Idea Screening Phase (shown in the next
development step).
2. Idea Screening
 The object is to eliminate unsound concepts prior to devoting resources to them.
 The screeners should ask several questions:
 Will the customer in the target market benefit from the product?
 What is the size and growth forecasts of the market segment/target
market?
 What is the current or expected competitive pressure for the product
idea?
 What are the industry sales and market trends the product idea is based
on?
 Is it technically feasible to manufacture the product?
 Will the product be profitable when manufactured and delivered to the
customer at the target price?
3. Concept Development and Testing
 Develop the marketing and engineering details
 Investigate intellectual property issues and search patent data bases
  Who is the target market and who is the decision maker in the purchasing
process?
 What product features must the product incorporate?
 What benefits will the product provide?
 How will consumers react to the product?
 How will the product be produced most cost effectively?
 Prove feasibility through virtual computer aided rendering, and rapid
prototyping
 What will it cost to produce it?
 Testing the Concept by asking a sample of prospective customers what they
think of the idea. Usually viaChoice Modelling.
4. Business Analysis
 Estimate likely selling price based upon competition and customer feedback
 Estimate sales volume based upon size of market and such tools as the Fourt-
Woodlock equation
 Estimate profitability and break-even point
5. Beta Testing and Market Testing
 Produce a physical prototype or mock-up
 Test the product (and its packaging) in typical usage situations
 Conduct focus group customer interviews or introduce at trade show
 Make adjustments where necessary
 Produce an initial run of the product and sell it in a test market area to determine
customer acceptance
6. Technical Implementation
 New program initiation
 Finalize Quality management system
 Resource estimation
 Requirement publication
 Publish technical communications such as data sheets
 Engineering operations planning
 Department scheduling
 Supplier collaboration
 Logistics plan
 Resource plan publication
  Program review and monitoring
 Contingencies - what-if planning
7. Commercialization (often considered post-NPD)
 Launch the product
 Produce and place advertisements and other promotions
 Fill the distribution pipeline with product
 Critical path analysis is most useful at this stage
8. New Product Pricing
 Impact of new product on the entire product portfolio
 Value Analysis (internal & external)
 Competition and alternative competitive technologies
 Differing value segments (price, value, and need)
 Product Costs (fixed & variable)
 Forecast of unit volumes, revenue, and profit

Positioning strategies

Positioning is what the customer believes about your product's value, features, and
benefits; it is a comparison to the other available alternatives offered by the
competition. These beliefs tend to based on customer experiences and evidence,
rather than awareness created by advertising or promotion.

Marketers manage product positioning by focusing their marketing activities on a

positioning strategy. Pricing, promotion, channels of distribution, and advertising all
are geared to maximize the chosen positioning strategy.

Generally, there are six basic strategies for product positioning:

1. By attribute or benefit- This is the most frequently used positioning strategy. For
a light beer, it might be that it tastes great or that it is less filling. For toothpaste, it
might be the mint taste or tartar control.
2. By use or application- The users of Apple computers can design and use graphics
more easily than with Windows or UNIX. Apple positions its computers based on
how the computer will be used.

3. By user- Facebook is a social networking site used exclusively by college

students. Facebook is too cool for MySpace and serves a smaller, more
sophisticated cohort. Only college students may participate with their campus e-
mail IDs.

4. By product or service class- Margarine competes as an alternative to butter.

Margarine is positioned as a lower cost and healthier alternative to butter, while
butter provides better taste and wholesome ingredients.

5. By competitor- BMW and Mercedes often compare themselves to each other

segmenting the market to just the crème de la crème of the automobile market.
Ford and Chevy need not apply.

6. By price or quality- Tiffany and Costco both sell diamonds. Tiffany wants us to
believe that their diamonds are of the highest quality, while Costco tells us that
diamonds are diamonds and that only a chump will pay Tiffany prices.

Positioning is what the customer believes and not what the provider wants them to
believe. Positioning can change due the counter measures taken at the competition.
Managing your product positioning requires that you know your customer and that
you understand your competition; generally, this is the job of market research not
just what the enterpreneur thinks is true.

Product differentiation
From Wikipedia, the free encyclopedia
A concept in Economics and Marketing proposed by Edward Chamberlin in his 1933
Theory of Monopolistic Competition.

In marketing, product differentiation (also known simply as "differentiation") is the

process of distinguishing a productor offering from others, to make it more attractive to a
particular target market. This involves differentiating it fromcompetitors' products as well
as a firm's own product offerings.

Differentiation can be a source of competitive advantage. Although research in a niche

market may result in changing a product in order to improve differentiation, the changes
themselves are not differentiation. Marketing or product differentiation is the process of
describing the differences between products or services, or the resulting list of
differences. This is done in order to demonstrate the unique aspects of a firm's product
and create a sense of value. Marketing textbooks are firm on the point that any
differentiation must be valued by buyers (e.g.[1]). The term unique selling
proposition refers to advertising to communicate a product's differentiation.[2]

In economics, successful product differentiation leads to monopolistic competition and is

inconsistent with the conditions for perfect competition, which include the requirement
that the products of competing firms should be perfect substitutes. There are three
types of product differentiation: 1. Simple: based on a variety of characteristics 2.
Horizontal : based on a single characteristic but consumers are not clear on quality 3.
Vertical : based on a single characteristic and consumers are clear on its quality [3]

The brand differences are usually minor; they can be merely a difference
in packaging or an advertising theme. The physical product need not change, but it
could. Differentiation is due to buyers perceiving a difference, hence causes of
differentiation may be functional aspects of the product or service, how it is distributed
and marketed, or who buys it. The major sources of product differentiation are as
follows.

 Differences in quality which are usually accompanied by differences in price

 Differences in functional features or design
 Ignorance of buyers regarding the essential characteristics and qualities of goods
they are purchasing
 Sales promotion activities of sellers and, in particular, advertising
 Differences in availability (e.g. timing and location).
The objective of differentiation is to develop a position that potential customers see as
unique. The term is used frequently when dealing with freemium business models, in
which businesses market a free and paid version of a given product. Given they target a
same group of customers, it is imperative that free and paid versions be effectively
differentiated.
Differentiation primarily impacts performance through reducing directness of
competition: As the product becomes more different, categorization becomes more
difficult and hence draws fewer comparisons with its competition. A successful product
differentiation strategy will move your product from competing based primarily
on price to competing on non-price factors (such as product characteristics, distribution
strategy, or promotional variables).

Most people would say that the implication of differentiation is the possibility of charging
a price premium; however, this is a gross simplification. If customers value the firm's
offer, they will be less sensitive to aspects of competing offers; price may not be one of
these aspects. Differentiation makes customers in a given segment have a lower
sensitivity to other features (non-price) of the product.[4]