New-product development

Given  the  rapid  changes  in  consumer  tastes,  competition, and technology, companies have to develop a steady stream of new services and products. A firm can get new products in two ways. One is through acquisition-by buying entire company, a patent, or a license to manufacture someone else's product. The other is by new-product development and in the development department and company's own research. By new products we mean original products, product modifications, product improvements and new brands which the firm develops by its own development and research attempt. We concentrate on new-product development. New products are continually unsuccessful at a disturbing rate. One source estimates that new consumer packaged goods (consisting most of line extensions) fail at a rate of 80 %. Moreover, failure rates for new industrial products can be as high as 30%. Why do  so  many  new  products  fail?

There   are many reasons. Although an idea can be good, market size may have been overestimated. Possibly the actual product was not designed plus it should have been. Or perhaps it was incorrectly positioned in the market,     cost too high, or advertised   poorly high-level executive may push a favourite idea despite weak marketing research findings.  Sometimes the prices of product development are greater than expected, and sometimes competitors fight back very harder than expected.

Because so various new products fail, companies are concerned to learn how to improve their odds of new-product success. One way is to recognize successful new products and discover what they have commonly. Another is to study new-product failures to see what lessons may be learned. Many studies recommend that new-product success depends on developing an exclusive superior product, one having higher quality, new features, and higher value in use. Another key of success factor is a definite  product  concept  prior  to  development,  in  which  the  company  concern fully  defines  and assesses the target market, the product needs, and the benefits before proceeding. Other success factors have also been suggested-relentless innovation, senior management commitment, and effortlessly functioning new-product development procedure. In all, to produce successful new products, a company has to understand its markets, consumers and competitors and develop products that deliver greater value to customers.

So companies face a problem-they have to develop new products, but the odds weigh greatly against success. The solution lies in strong new-product planning and in setting up a systematic new-product development procedure for discovering and growing new products. Given figure shows the eight major steps in this procedure.