New Product Development

12 Key excerpts on "New Product Development"

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  Navigating Strategic Decisions

  The Power of Sound Analysis and Forecasting

  • John E. Triantis(Author)
  • 2013(Publication Date)
  • Productivity Press

    (Publisher)

  133 © 2010 Taylor & Francis Group, LLC 9 New Product Development New Product Development (NPD) is the set of functions and processes involved in bringing a product or service from the idea stage to the market. On average, new products account for more than 30 % of sales and profits, and this explains the 2.5–3.0 % R&D share of GDP spent in developed countries. Companies are constantly fighting to enhance or maintain their market share position, and new products are viewed as competitive weapons and tools to achieve differentiation and gain competitive advantage. And, since NPD and product innovation are recognized as crucial elements of growth and business strategy, senior management places emphasis on them and they are given a high priority. The NPD process is a long series of commonly taken steps, which includes all the activities that take place from the initial idea or invention to the time a product, service, or technology are launched. It combines different disciplines in order to meet the goal of commercializing an idea, and the functions involved in NPD include strategic planning, R&D, design and engineering, portfolio management, forecasting, finance, manufacturing, marketing and sales, and supply chain management. It is a discipline used by multifunctional teams in large companies; but in small business environments, NPD is many other things, the process is less structured but more creative, and all functions are performed by a small project team. New product or service development involves similar processes and they are treated in the same manner, but when there are no upfront or significant future capital requirements, they are consid-ered extensions or simple innovations. The overall process of developing new technology is similar to the NPD process, but forecasting for it has its own peculiar needs and challenges discussed in Section 9.3.2 and further examined in Chapter 12.

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  Product Development Strategy

  Innovation Capacity and Entrepreneurial Firm Performance in High-Tech SMEs

  • Mina Tajvidi, Azhdar Karami(Authors)
  • 2016(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  79 4 Product Development Strategy 4.1 Introduction This chapter discusses the New Product Development (NPD) strategy in the firms studied. It begins with a theoretical discussion of New Product Development strategy and covers a wide range of theories and concep- tual frameworks in developing new product concepts. The associated theoretical models such as product life cycle and new product process are discussed in detail. The chapter covers the findings of the empirical research on product development strategy and firm performance in the firms studied. 4.2 Product development and business strategy Business strategy is defined as a long-term plan for a company which helps it achieve its goals (Zahra and Covin, 1993). The goal of business is to achieve their long-term objectives by using strategic management. To do this, it is necessary to formulate strategies for the business’s various elements in a coherent way so that they are consistent and integrated (Murthy et al., 2008). After this stage, procedures to implement the plans need to be followed and all resulting actions should be monitored in an effective manners. The success of new product depends strongly on formulation and implementation strategies (Murthy et al., 2008). According to Fairlie- Clarke and Muller (2003), New Product Development needs some key strategies and consists of three stages: set objectives and plan product development; execute product development; and control product devel- opment. New Product Development is part of the business process (see Figure 4.1).

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  Performance Measurement of New Product Development Teams

  A Case of the High-Tech Sector

  • Kenneth A. Loparo, Erin Yu-Ching Lin(Authors)
  • 2008(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  The importance of effective NPD is recognised in both the market- ing (Shocker and Srinivasan, 1979; Wind and Mahajan, 1997), and the innovation literature (Rothwell, 1972; Veryzer, 1998). Krishnan and Ulrich (2001:1) define ‘NPD as the transformation of a market oppor- tunity and a set of assumptions about product technology into a product available for sale.’ Successful NPD needs an organisation-wide information accumulation and communicate process designed to dim- inish possibilities of uncertainty in meeting customers needs (Moenaert and Souder, 1990). Explicitly, executives who aim to improve NPD per- formance should involve and promote effective participation of all departments and professional employees with potential influence on the outcome of the NPD project team. Many studies have been carried out to examine the NPD process (Cooper and Kleinschmidt, 1987a; Griffin and Hauser, 1996; Hughes and Chafin, 1996; Wind and Mahajan, 1997), to identify what steps a 24 Performance Measurement of New Product Development Teams Table 2.1 Summary of Selected Studies in NPD Literature – continued Author(s) Sample Context González and Palacios 365 firms were 195 firms in electric and (2002) contacted electronic equipment, and 195 firms – transport equipment sample companies manufacturing industry – Spain Godener and Three electronic The high-technology sector Söderquist (2004) companies in French company ought to conduct (Cooper, 1988a, 1990; Crawford and Di Benedetto, 2003), to document what impact each step has on the outputs – new products (Cooper, 1990; Cooper and Kleinschmidt, 1986), and \to assess the role of models in supporting and improving the NPD pro-cess (Mahajan and Wind, 1986). Cooper (1988b, 1996) explains that the NPD process is a goal directed, stepwise process, involving a series of information acquisition activities and evaluation points.

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  Marketing Theory

  A Student Text

  • Michael J Baker, Michael Saren, Michael J Baker, Michael Saren(Authors)
  • 2016(Publication Date)
  • SAGE Publications Ltd

    (Publisher)

  As noted above, the topic of NPD is multidisciplinary, mirroring the multifunctional tasks required to identify and develop a new product that is fit for purpose in the market. The single-strand linear representation ignores these multifunctional inputs, which include marketing, technical (design) and production tasks or decisions that occur as the process unwinds. Each of these strands of development creates both problems and opportunities within the other two. For example, if, at the product development stage, production has difficulties which push costs up, this could affect market potential through increased pricing rendering the product less attractive to potential buyers. In this case, the new information requires reworking of the market and technical assumptions. New courses of action might include a new design, alternative distribution, acceptance of longer payback horizons, none of which are represented by the single-strand view of NPD. Whatever the nature of the final solution, it has to be based on the interplay of technical, marketing and manufacturing development issues, meaning that product development activity is iterative, not only between stages, but also within stages.

  It is also worth noting that the NPD process is idiosyncratic to each individual firm and to the new product project in question. Its shape and sequence depend on the type of new product being developed and its relationship with the firm’s current activities (Cooper, 1988; Hart et al., 2008; Markham and Lee, 2013). In addition to the need to adapt the process to individual instances, it should be stated that in real situations there is no clear beginning, middle and end to the NPD process.

  For example, from one idea, several product concept variants may be developed, each of which might be pursued. Also, as an idea crystallizes, the developers may assess the nature of the market need more easily and the technical and production costs become more readily identified and evaluated.

  The iterative nature of the NPD process results from the fact that each stage or phase of development can produce numerous outputs which implicate both previous development work and future development progress. Using the model provided by Booz Allen and Hamilton, if a new product concept fails the concept test, then there is no guidance as to what might happen next. In reality, a number of outcomes may result from a failed concept test, and these are described below and depicted in Figure 15.2

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  The Development of new food products

  • Reema(Author)
  • 2023(Publication Date)
  • Delve Publishing

    (Publisher)

  New Product Development and advancement is widely recognized as a key generator of competitive advantage. Considering the significance of NPD for a company’s current and future success, a large proportion of new products seriously struggle when they are introduced to the market (Costa & Jongen, 2006). Most novel idea constructs perform poorly into becoming commercially successful without the help of a structured process, according to research. As a result, formal NPD procedures have had a constructive impact on the management and control of some companies’ new product programs. As a result, new products, if handled correctly, can provide a significant boost in growth that is typically unavailable from current models. 4.2 RISK OF FAILURE Rates of return vary depending on the potential consequences of failure intrinsic in each new product situation. A main determinant in determining whether or not to move ahead with a new product is the combination of investments, risk, and returns. Because new product prediction models can be costly in terms of both time and finances, careful consideration must be given before implementing them. The impact of successes or failures on new products over a 5 years has been numerically demonstrated. It’s clear that half of the companies polled were successful, with at least two of major new products launched in the last five years. Even so, just under two- thirds of those half mentioned such success with their innovative products. As a consequence, the average values for new product accomplishments for producers selling to both industrial and consumer markets were the same. As a result, each company’s success rate indicates the ratio of all significant new products launched in the market during the preceding years. Manufacturers serving consumer markets are more likely to achieve complete success or failure than those serving industrial markets.

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  Strategic New Product Development for the Global Economy

  • T. Kono, L. Lynn(Authors)
  • 2007(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  In all these cases, innovation is driven by companies finding new applications for technologies they have on hand or have learned about. With needs oriented development the potential demand for a new product is forecast, a product concept is created, and the NPD is begun. This is the general model for success. Even in the case of seeds oriented development, it is necessary to study consumer needs. Generally speaking, when the producer knows more about the product than consumers, a seeds type of development can succeed. When the consumers know more, as in the case of fashionable women’s apparel and home appliances, needs oriented development is more likely to succeed. Yet even in this case, research suggests, it is necessary to give special attention to “expert consumers” – those who have visions of future trends. After information is collected about the seeds or needs, a “product concept” is constructed. The goal of development is to satisfy the primary function of the product concept. Next, the architecture of the total structure is designed, showing the relationships between the parts. The architecture is divided into parts. In the case of a copier, for example, the architecture would be broken down into com- sponents and materials. In the case of an automobile, the process goes from design to components. In the case of cosmetics, it may go from design to the development of creams and perfumes. Finally, the parts are integrated into a whole, and the new product is tested. If this process is not followed, the new product is likely to fail, as we saw in Chapter 2 happened in the case of the $2 billion Seagire resort project. IT plays an increasingly important role in each type of NPD process. The use of computers and the internet, have greatly improved the speed and quality of development. We look at this more closely in Chapter 11, but a few examples can be given here.

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  Corporate Innovation (RLE Marketing)

  Marketing and Strategy

  • Gordon Foxall(Author)
  • 2014(Publication Date)
  • Routledge

    (Publisher)

  Although effective innovation depends upon the ‘coincidence’ of external (market) opportunities and internal (resource) capacities, it is far from being an unplanned phenomenon which occurs by chance. Successful New Product Development is usually the result of a deliberate sequential process involving

  1. the generation and evaluation of product ideas;
  2. business analysis and preliminary market assessment; and
  3. development, market testing and launch.

  Another recurring theme in the following chapters is the need for corporate strategy to be clearly defined before serious new product planning occurs. If the constraints laid by explicit strategy upon the corporate innovative process are known, then the problems encountered in the planning and development of marketing-oriented innovative strategy – can be the more easily solved. In other words, the development of those new product concepts which are adopted, and the scope and methods of market exploration which produce them, must be fitted to the strategic framework consciously constructed by the highest levels of management. Indeed, even at the point at which new ideas are generated, some evaluation or screening is often inevitable. The pressing managerial task is to ensure that potentially useful ideas are not arbitrarily discarded at this stage nor unsuitable ideas passed for expensive development at the next more formal phase of screening. And so on throughout the New Product Development sequence: explicit strategy and the accommodation of product development to the demands of a known strategic framework are prerequisites of effective innovation.

  Undertaken within the appropriate strategic framework and properly accommodated to its requirements, the New Product Development process is capable of reducing the uncertainty which surrounds and permeates corporate innovation. Yet, while there exists the possibility of informing more adequately the development process, it cannot be supposed that corporate innovation can ever become an entirely rational, orderly and systematised procedure. Abstract accounts may assume some of these qualities in order to clarify and generalise the process they describe, but actual managerial problems are always much ‘squishier’ than this in the sense that they lack ‘well-defined formulation’.7

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  Managing Innovation

  Integrating Technological, Market and Organizational Change

  • Joe Tidd, John R. Bessant(Authors)
  • 2020(Publication Date)
  • Wiley

    (Publisher)

  and K.B. Clark, Revolutionizing product development: Quantum leaps in speed, efficiency and quality . 1992, New York: Free Press; Wheelwright, S.C. and K.B. Clark, Creating project plans to focus product development. Harvard Business Review , 1997. September–October 10.1 Processes for New Product Development 353 3. Product development – translating the selected concepts into a physical product (we’ll dis-cuss services later). 4. Product commercialization – testing, launching and marketing the new product. CONCEPT GENERATION Much of the marketing and product development literatures concentrate on monitoring market trends and customer needs to identify new product concepts. However, there is a well-established debate in the literature about the relative merits of ‘market-pull’ versus ‘technology-push’ strat-egies for New Product Development. A review of the relevant research suggests that the best strategy to adopt is dependent on the relative novelty of the new product. For incremental adap-tations or product line extensions, ‘market pull’ is likely to be the preferred route, as customers are familiar with the product type and will be able to express preferences easily. However, there are many ‘needs’ that the customer may be unaware of, or unable to articulate; and in these cases, the balance shifts to a ‘technology-push’ strategy. Nevertheless, in most cases, customers do not buy a technology, they buy products for the benefits that they can receive from them; the ‘tech-nology push’ must provide a solution for their needs. Thus, some customer or market analysis is also important for more novel technology. This stage is sometimes referred to as the ‘fuzzy front end’ because it often lacks structure and order, as discussed in Chapter 9, but a number of tools are available to help systematically identify new product concepts, and these are described below. The research note on concept change for radical products illustrates this.

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  Strategic Marketing Management in Asia

  Case Studies and Lessons across Industries

  • Syed Saad Andaleeb, Khalid Hasan(Authors)
  • 2016(Publication Date)
  • Emerald Group Publishing Limited

    (Publisher)

  It can then estimate minimum and maximum sales to assess the range of risk. After preparing the sales forecast, management can estimate the expected costs and profits for the product, including marketing, R&D, operations, accounting, and finance costs. The company then uses the sales and costs figures to analyze the new product ’ s financial attractiveness. Product Development It refers to developing the product concept into a physical product to ensure that the product idea can be turned into a workable mar-ket offering. For many new-product concepts, a product may exist only as a word description, a drawing, or perhaps a crude mock-up. If the product concept passes the business test, it moves into product development. Here, R&D or engineering develops the product concept into a physical product. The product develop-ment step, however, now calls for a huge jump in investment. It will show whether the product idea can be turned into a workable product. The R&D department will develop and test one or more physical versions of the product concept. R&D hopes to design a prototype that will satisfy and excite consumers and that can be produced quickly and at budgeted costs. Developing a successful prototype can take days, weeks, months, or even years depending on the product and prototype methods. Often, products undergo rigorous tests to make sure that they perform safely and effec-tively, or that consumers will find value in them. Companies can do their own product testing or outsource testing to other firms that specialize in testing. Marketers often involve actual customers in product testing. Test Marketing Test marketing is the stage of new-product development in which the product and its proposed marketing program are tested in rea-listic market settings. New Product Development 233

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  Principles of Sustainable Project Management

  • Mohamed Salama(Author)
  • 2018(Publication Date)
  • Goodfellow Publishers

    (Publisher)

  8 New Product Development: Implementing Agility through innovation and technology Wallace Whistance-Smith and Mohamed Salama Learning outcomes By completing this chapter, the reader will be able to: „ Understand the relationship between operations management and New Product Development (NPD). „ Discuss the difference between goods and services amid growing service sectors. „ Understand the challenges to achieve sustainable competitive advantage through NPD. „ Explain how the concept of ‘Agility’ facilitates New Product Development success. „ Explain the benefits of integrating Agile framework with virtual and augmented technologies. Introduction New Product Development is an integral part of the project management practice. However, product design and process design have been, historically, two of the main components of the operations management theory. Operations management is the task of creating value in the form of goods and services by transforming inputs into outputs. More specifically, the techniques to create value are universal in scope and can be applied to any form of enterprise whether service-oriented or manufacturing-based. It is this operations transformation model that creates the possibility for enterprise success. The efficient production of goods and services requires an effective application of the transformative process, and it is in this transformation that value is created. Value supports the possibility for enterprise viability, and without such, there is little opportunity for sustained financial feasibility – this is particularly so in the ever-increasing competitive landscape Principles of Sustainable Project Management 206 of today’s worldwide economic system. This chapter discusses the fundamentals of product and service development, in the context of sustainable competitive advantage, in the era of digital transformation.

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  Innovating for Sustainability

  Green Entrepreneurship in Personal Mobility

  • Luca Berchicci(Author)
  • 2008(Publication Date)
  • Routledge

    (Publisher)

  adopts them (Damanpour & Gopalakrish-nan, 1998). Then the generating process results in an outcome such as a technology or a product for the generating organization, while the adopting process delineates how the outcome is assimilated in the adopting organization (Daman-pour et al., 1998). For the purpose of this research study, the focus is mainly on the generation of innovation within one organization. The same organization then adopts and implements the innovation.

  2.3 New Product Development (NPD)

  After defining what innovation is, the objective of this section is to identify factors influencing both the process and the outcome of the innovation. More specifically, it draws on a specific innovation literature that has mainly studied the generation of innovations and their performance in the market, such as the New Product Development literature (e.g. Cooper & Kleinschmidt, 1987; Roth-well et al., 1974) excluding the literature on adoption and diffusion of innovation widely studied in the last 30 years (e.g. Damanpour, 1992; Downs et al., 1976; Kimberly, 1979; Rogers, 1995). The rationale behind drawing on NPD literature regarding the generation of innovation exclusively is threefold. First, the focus of this research study is to examine and explain how environmental ambition influences product development. Therefore, the main concern is how organizations with environmental ambition develop products and services and what the implications are for product performance. Second, the product performance in the market is considered to be heavily influenced by how the process of innovation unfolds and how well activities are carried out (e.g. Cooper et al., 1995a; Montoya-Weiss et al., 1994). Third, the innovation adoption and diffusion literature has little direct relevance for the process of generating innovation (Damanpour, 1992).

  Although technical and market changes can never be controlled, proactive New Product Development is considered critical for firms as a potential source of competitive advantage (Brown et al., 1995). The search for the factors influencing the effectiveness and efficiency of the product innovation has been the rationale of many studies. In the next subsection the most relevant ones are reviewed.

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  Innovation and New Product Marketing (RLE Marketing)

  • David F. Midgley(Author)
  • 2014(Publication Date)
  • Taylor & Francis

    (Publisher)

  Figure 6.10 , where all the stages of the process from market definition to product launch are shown. The vertical lines represent product review sessions – the outcomes of which are decisions to continue or abandon the development of particular concepts. For the sake of clarity only a few concepts are detailed, an actual development programme would be likely to involve a greater number of ideas.

  Chapter 8 is devoted to a discussion of the various techniques for generating and screening new product concepts, and for refining and developing these concepts into actual products. Chapter 9 returns to the theme of this section and seeks to examine the means by which product performance may be predicted and hence decisions made.

  It must be stressed that to perform the development process at all efficiently it is necessary to establish a formal, though flexible, system for carrying out the various tasks. Once established this system must itself be modified and developed as more is learnt about both the markets concerned and the development process. Subsequently recommendations will be made as to the various components of this system, here it is first necessary to discuss how the New Product Development function may be incorporated into the organisational structure, which is the main purpose of Chapter 7 .

  6.4

  Summary

  In this chapter we have begun to build a framework for New Product Development around the general theory of innovative behaviour. It has been noted that the main element of this framework is the prediction of an uncertain future, uncertain because the new product must be developed before consumer response can be assessed. New product management is therefore concerned with reducing the risk to the company, and it is argued that the only satisfactory course of action whereby this may be achieved is to understand the phenomena involved.

  The extent of the risk involved has been stressed yet again. Most new products fail in some way or other, and most expenditure on New Product Development is wasted. Yet companies need new products and cannot afford to opt out of this activity. They need new products to grow, that is to develop market areas which are new to them, but the concept of the product life cycle indicates that they also need new products merely to maintain their existing markets – in fact to survive.

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