Lecture 7 - New Product Development

Question 1

What the defines a product replacement?

Answer 1

45% of all new product launches.
Revision and improvements to existing products, repositioning of existing products, cost reductions or redesigned products so they will cost less to produce.

Question 2

What defines additions to existing lines?

Answer 2

25% of new product launches.
New products to add to the companies existing product lines.
Weetabix - Oatabix.

Question 3

What defines new product lines?

Answer 3

Around 20% of all new product launches.
Represent the move into a new market.
(Mars launching ice cream brands)

Question 4

What defines new to the world products?

Answer 4

Around 10% of the new product launches.
They create entirely new markets.
(This could include video games consoles or MP3 players)

Question 5

What are the seven stages to new product development?

Answer 5

Idea generation, screening, concept testing, business analysis, product development, market testing, commercialisation, new product.

Question 6

New project strategy 3 steps?
Drummond et al.
IM-IM-IN

Answer 6

Product improvement/modification - maintain competitive position in existing market and adapt to appeal to other markets.
Product imitation - capitalising in the initiative of others (own brands)
Product innovation - new ideas to replace or provide diversification

Question 7

The innovation continuum

Answer 7

Continuous Innovation - no new consumer behaviour required.
Dynamically Continuous Innovation - some adaptation in consumer behaviour.
Discontinuous Innovation - complete change in consumer behaviour.

Question 8

Features of a proactive approach to new product development..

Answer 8

• Sets out to find new ideas and commercialise them early.
• Strong R&D, consumer research and market awareness.
• Willingness to take risks, enterprise culture.
• Joint ventures.
• Expensive and time consuming.
• No guarantees of success, needs to place in strong product portfolio.

Question 9

Features of a reactive approach to new product development..

Answer 9

• Responding to what others do.
• Happy to let others take the risk.
• Enters the market when other opportunities arise.
• Avoids launch errors and uses experience to extend the tech.
• Emphasis on application and design engineering.
• Create new segment at lower end of market.

Question 10

Internet’s effect on NPD…

Answer 10

• Disintermediation - Buy straight from manufacturer, feedback too.
• Dematerialisation - Digital media affecting companies and consumers. (Radio-DAB-Free iPhone app)
• Visuality vs. Functionality - Visual criteria important, decisions based on looks and branding.

Question 11

Six features of the product adoption process…

Answer 11

Divisibility- tried on limited basis.
Relative Advantage- value added in comparison to comp.
Perceived Risks- cost in money and pride if decision is wrong.
Compatibility- fits with consumer wants/needs/attitudes.
Complexity- user friendly, quicker adoption rate.
Communicability- ease of communicating benefits.