New Product Development

Topics: Innovation, Management, New product development Pages: 11 (2411 words) Published: February 28, 2015
Business Strategy3
Market Penetration3
Market Development4
Product Development4
From Strategy to Implementation5
Stage-Gate Product Innovation Process7
Stage 0: Idea Generation7
Stage 1: Scoping7
Stage 2: Project Evaluation7
Stage 3: Development8
Stage 4: Testing and Validation8
Stage 5: Launch8

In order to sustain growth and compete in today’s ever-changing business environment, organisations must continue to develop commercially successful products in order to remain ahead of their rivals and retain their market dominance. However, the development of new products from concept to realisation is often challenging, due to organisations being unable to either produce a product that the customer wants or at a price that is profitable. To successfully develop a new product, an organisation should not solely rely on research and development but all departments such as design and engineering, product management, marketing and sales need to operate in tandem to achieve their strategic goal. The common problem presented to organisations are that “new products and services are exploding onto the scene overnight, while current products are becoming obsolete faster than ever” (Wiley, 1999) and as such, in 2013, the world’s largest electronics company Samsung had a reported annual spend of €14billion for new product development, surpassing their nearest competitor Apple’s $4.5billion expenditure. For technology driven organisations, innovation management and new product development is required to not only to stay competitive, but to actually survive.

Business Strategy
For any organisation deciding to create a new product, they must review their existing business strategy and the possible impact a new product may have on their organisation. Morgan (2001) states that “if you confine someone, tie them down and force them to stick to particular thought patterns, you leave little or no room for this freedom of thought” and such, creativity is suppressed and new products will never be achieved. With “only one product concept out of seven becoming a new product winner, and 44% of businesses’ product development projects failing to achieve their profit targets” (Cooper & Edgett, 2005), organisations must consider whether their existing resources and capabilities are sufficient to compete. One of the most valuable strategic tools available to management and marketers in planning for future growth is the Ansoff matrix, which helps organisations determine whether to increase their product range or market scope, or both.

(Empower, 2011)
Market Penetration
One of the more basis growth strategies available is the concept of market penetration, increasing the level of sales of an existing product in an existing market. This is often achieved using a marketing-mix, most notably price promotions or advertising as means to increase sales. The cereal manufacturer Kellogg’s have enjoyed successusing this method by promoting their products as a “snack” to be eaten anytime during the day rather than the conventional breakfast time.

Market Development
A highly successful method of increasing sales is making products available to other markets, typically geographic. In recent years, many organisations have began to strategically enter emerging markets such as Asia in order to generate additional revenue.

Product Development
Most organisations will implement a growth strategy based on improving their existing products to generate sales. This may be in the form of a new release (a 2nd or 3rd edition) with additional features that helps maintain it’s competitiveness against rivals. However, it can also be a product that is new for the organisation, such as McDonald’s salad range – a product that is not usually associated with fast-food outlets.

Conglomerate diversification is considered high-risk,...

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