New Product Development
New products are a vital part of a firm’s competitive growth strategy. Leaders of successful firms know that it is not enough to develop new products on sporadic basis. What counts is a climate of a products development that leads to one triumph after another. It is commonplace fro major companies to have 50percent or more of their current sales in products introduced within the last 10 years. Some Additional facts about new products are: • • • • • Many new products are failures. Estimates of new product failures range from 33%90%, depending on industry. New product sales grow far more rapidly than sales of current products, potentially providing a surprisingly large boost to a company’s growth rate; Companies vary widely in the effectiveness of their new products programs; A major obstacle to effectively predicting new product demand is limited vision; Common elements appear in the management practices that generally distinguish the relative degree of efficiency and success between companies.
In one recent year, almost 22 000 products were introduced in supermarkets, drugstores, mass merchandisers and health food stores. Idea Generation Every product starts as an idea. But all new product aides do not equal merit or potential for economic or commercial success. Some estimates indicate that as many as 60-70 ideas are necessary to yield one successful product. To develop a new product the following step must be realized: 1. 2. 3. 4. 5. 6. Idea generation; Idea screening; Project planning; Product development; Test marketing; Commercialization.
Idea screening The primary function of the idea screening process is two fold: first, to eliminate ideas for new products that could not be profitably marketed by the firm, and second, to expand viable ideas into full product concepts. New product ideas may be eliminated either because they are outside the fields of the firm’s interest or because the firm does not have the necessary