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Case Study New Item Development Marketing Essay


Case Study New Merchandise Development Marketing Essay

New product development (NPD) or Innovation may be the term used to describe the complete process of bringing a fresh product or to discover whether the new concept could be implemented in sensible or not from technological and commercial viewpoint.

“A new product is something that opens up an totally new market, replaces an existing product, or significantly broadens the marketplace of a preexisting product”.

- Arch Paton

“Who should ultimately design the product? The customer, of course.”


“Innovation is the ability to create and capture economical value from invention.”

Business Week, August 2005

“Innovation is fresh convinced that creates value.”

Goldman Sachs

There are two operations which get excited about the development of a fresh product. The 1st one is idea era, product developing and detailed engineering. The second one is general market trends and analysis. Companies/companies consider this the initial step to commercialize any new products in the overall strategic procedure for product life cycle, this enables them to improve or maintain marketplace shares.

A product is not used to the world, the market, the producer, seller, or some combinations of the.


The Phases of New Merchandise Development(NDP)


Idea Generation



Idea Screening





Concept Development and Testing

Business Analysis



Beta Testing and Market Testing





Technical Implementation



New Product Pricing

Idea Generation

Ideas for services can be acquired from researches such as for example SWOT examination (Strengths, Weaknesses, Chances & Threats), consumer craze and company’s R & D (Research & Development fun argumentative essay topics) department, concentrate groups, employees/employees, salespersons, trade shows, corporate spies, rivals, or ethnographic discovery strategies (gathering information for buyer patterns and habits) and market could also be used to get an insight of item features or new product lines.

Idea Screening

Prior to deploying resources, there are few queries which must be asked:

Will the client in the targeted marketplace segment benefit from the new product?

What may be the size and development forecasts of the targeted segment?

What is the predicted or competitive pressure for the new product idea?

What trends may be the product idea predicated on?

Is it technically feasible to manufacture the product?

Will the merchandise be profitable at the target price?

Concept Development and Testing

Concept development: – This is a process driven by focus on product specifications and client needs, which are then converted into potential technological solutions and conceptual designs. Thus giving an approximate description of the product form, its working ideas, and features. These are typically accompanied by experimental prototype and style models which help in the final selections.

Concept testing: – At this time the prototype or product concept is presented to appropriate target consumers to obtain reactions or feedback.

Business Analysis

Estimating the likely selling price based upon comments from customers and competition, sales volume based on the size of the marketplace or tools such as the Fourt-Woodlock equation, the profitability and breakeven points supplies the necessary analysis about the a business.

In this task efforts are made to establish if the new item will be suitable or not?

Future revenue estimation: – For business research, first the future sales of the product is estimated.

Future cost estimation: – Diverse elements of costs involved happen to be analyzed, which can only help calculating the profitability of the merchandise.

Future revenue estimation: – An estimate to determine whether the forecasted profits will provide desired rate of go back on capital invested or not really. On these bases a concept is considered or dropped.

Beta Testing and Industry Testing

A mock-up or physical prototype of the new product is produced to check the typical usage and its packaging. A concentration group based on trade shows or consumer interviews provides details to make necessary changes or advancements to the product. A market test run of the merchandise is set up to determine client acceptance of the product.

Technical Implementation

The various steps mixed up in technical implementation are listed below.

Initiation of new programs

Finalizing quality management system

Estimation of resources

Publication of requirement

Publishing technical communications, such as for example data sheets

Engineering operations planning

Scheduling of departments

Collaboration of suppliers

Logistics plan

Resource plan publication

Reviewing and monitoring of the program

Contingencies – what-if planning

New Product Pricing

A new product must be priced, predicated on value analysis (both interior & exterior), potential competition and choice competitive technologies, differing worth segments (such as price, needs and values) and item costs (both fixed & variable). Pricing also depends upon the impact it is wearing the entire merchandise portfolio and forecast of product volumes, profit and revenue.

Concept Generation and Industry Structure Identification

Concept Screening

Market Structure Analysis


Quantification of Product Concepts

Sales Potential

Idea Generation

Preliminary Product Feasibility and Development

Fact Book

Advertising Development

Creative Testing and selection

Creative Development

Strategy Development & Evaluation

Advertising Development

Final Product Usage, Formulation and Testing

Detailed Product Profiling


National Start/Regional Roll out

Purchase Lab

Test Market

Strategies adopted by different organizations


One of Jack Welch’s trademark messages to managers: “Discover where in fact the best strategies are, and apply them”. Creating, nourishing and building is part of learning customs at GE. Welch says, any idea, if it’s a good one, is worth pursuing and adopting – no matter where it comes from sometimes within GE, or outside GE, wherever. He telephone calls it “legitimate plagiarism.”

It is Welch’s ability to get others excited about those good ideas, which clarifies his phenomenal results. Of all his administration secrets, his extraordinary capability to communicate, to engender employee enthusiasm, is the foremost. He is an outstanding communicator. He knows that it is insufficient to simply raise an idea with employees. It needs to be placed repeating until it finally sinks with every worker.

With Work-Out within its DNA, GEs become just about the most profitable, impressive, and admired companies on earth. At its key, Work-Out is an extremely simple concept based on the premise that those closest to the task know it best. When the ideas of these people, irrespective of their functions or work titles, will be solicited and turned right away into actions, an unstoppable wave of creativeness, energy, and productivity is unleashed throughout the group. At GE, Work-Out “Town Meetings” gave the organization usage of an unlimited source of imagination and strength of its talented staff members.


Harley-Davidson styles, manufactures, and marketplaces heavy-weight motorcycles, electric motor parts, components, collectibles and riding apparels. Harley-Davidson’s management has been recognized global for its successful make use of progressive cutting-edge management approaches. One specific area where Harley-Davidson’s operations has received acclaim can be its make use of cross-functional team to design a new product. Somewhat, cross-functional advice is definitely considered within the new product design process at Harley-Davidson. Representatives from manufacturing, engineering, purchasing and advertising divisions have usually has influenced the near future direction of services.

Management of Harley features underscored its determination to cross-functional teams for designing services by opening a new Product Development Centre (PDC) near its plant in Wauwatosa, Wisconsin. For a long time the motorcycle maker has been constantly moving toward emphasizing extra on using cross-functional clubs for new product advancement. The PDC accelerated this maneuver by locating purchasers, design engineers, manufacturing staff, and other crucial players in a single building. These associates work daily jointly on a full-time basis and are totally dedicated towards the brand new product development process.

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Leaders of 3M proven a successful approach to a dilemma of new product production by favouring independent R&D applications. When William McKnight CEO of 3M declared a company’s rationale 50 years back said, “As our organization grows, it becomes progressively essential to delegate responsibility also to encourage women and men to exercise their initiative. Mistakes will be produced, but if a person is essentially right, the errors he / she makes aren’t as serious in the end as the mistakes supervision will make if it’s dictatorial and undertakes to inform those under its authority specifically how they need to do their jobs.”

The success of advancement at 3M relied on long-term, individually directed research projects. The management at 3M is normally governed by two maxims for such jobs: “Hands off!” and, “Don’t ask, don’t notify!” When the shareholders’ considerations changed, 3M was pressured to develop its toolkit of innovations. This involved even more systematic approaches towards innovation and the methods which included more immediate links with the control.

One of the methods of 3M referred to as the Lead User System has reaped profitable new products, services and strategies.

Eric von Hippel from MIT was the first to develop the System. This technique balances the supervision and the shareholders wants, against “fuzzy front-end” development developers.

Lead User Groups is formed by four to six individuals with varied skills. It is necessary to have team members from functions like advertising and technical. With regards to the teams focus, members would be added from unique areas like developing, procurement or other necessary functional place to the crew. All team members are educated with the techniques to come out with successful solutions to the customer needs.

Lead User Teams will be instructed to welcome uncertainty and ambiguity. They give attention to areas where there exists a great possibility of discovery. It’s important for the team to understand to recognize gaps to recognize prime places for the era of new concepts and products.

The clubs are equipped to get value and capture ideas that are not area of the “business as common,” be it brand-new technology, or applications, or strategic human relationships, partnership, or assistance offered.

Because opportunities are remote from every-day experiences, team members would have to commence by getting acquainted to “what’s as yet not known.” The users of the team has to work towards improving their know-how at an accelerated tempo, primarily with the “Lead Users Crew.”

The cross-functional teams has to channel through a couple of phases, you start with retrieving information from a particular sources and then collaborating this by create new products, new strategies and products helium physical properties and services.

This team then simply looks out for info that targets what the customer would need in future.

The greatest challenge of all is to find the right Lead Users Team. Enlisting involvement is usually a non-issue, as the individuals are rarely involve with Business lead User clubs in a imaginative collaboration. These Users happen to be professionals who use leading cutting edge applications that help them study customer problem. They then create a prototype solution for all those problems.

Lead User Experts has knowledge of advanced applications and its important attributes. Lead Consumer teams look for authorities who work in the prospective industry and the analog industries. These analog sectors contain marketplaces which share their understanding of an essential problem or solutions, for the future market. The Experts and Users from the analog sectors do not have an insight on the complete problem or entire choice, but they have an insight of hard-to-find solutions of particular issue under study.

Lead User Team members are often led away from their existing systems and towards an unidentified and unexpected persons and organizations. These team members then conduct interviews in


Each new contact offers new possibilities to redefine important features of the future market demand or ground breaking problem solving approaches.

At every stage or stage during their interview, the team looks for professionals who are before any general adoption/diffusion routine. These users normally tend to work in more compact segments or pockets of activity and are sometimes hard to find. The bonding between the Lead Users and Lead Use Experts calls for them to become co-creators and recognize that innovations can emerge from their interactions.

Lead User Clubs obtains facts by watching, listening browsing, questioning, and through shadowing various other Lead User’s. The clubs then concludes their do the job by gathering the Business lead Users and Lead Customer Experts alongside the development professionnals of 3M for a workshop dedicated to work collectively on option designs. Content these workshops, the groups reunite and finalize their prioritized intend to move from notion to the development level.

Innovation is More Than “Just” a New Product.

The experience of 3M have proven that the Lead End user System success isn’t just from the product-orientation perspective, but because of their higher plane to create a comprehensive business design. Many Lead User Groups at 3M were subjected to these strategy-level developments where they uncover enormous and rewarding future markets, for services and new technologies.

But for 3M to profitably travel and enter those market segments a completely new approach was required. These clubs had to face concern like, “What perform we carry out if these profitable new future markets do not fit within our existing business market strategies?”

With the 3M operations support, the Lead Consumer Teams developed home based business models and approaches that provided the right fit. This workforce would then develop offerings, product families, novel procedure towards channel partnerships and product/service toolkits for customer.

The team brought about changes in 3M’s organization culture, and happens to be the greatest cause of enjoyment among 3M managers because they assist and encourage higher degrees of innovation within the business. Innovation is now viewed as a collaboration of cross-functional product focused on market, dependent on relationships and activities beyond the boundaries of businesses.

The Lead User System is now the most productive and cost-efficient technology methods adopted by the company today. The products system made a watchword for 3M “change the basis of competition,” which is definitely novel.

Case Study

Based on the margins Intel will make from existing items, Intel uses invention portfolio method of control the rate at which they introduce brand-new microprocessors. “Their portfolio supplies visibility across products and product generations, enabling them to maximize the gains they reap from each other.”

Successful new products

Case 1 Logan was a low cost car developed by French auto enterprise Renault SA, that was intended to end up being its ‘world car’. The car was developed at the company’s Romanian subsidiary, Dacia. Although car was originally targeted to be distributed in the marketplaces of the developing elements of the world, the Logan found sudden EUROPEAN markets, which resulted in Renault creating a new version of the Logan for Western European countries.

Case 2


iRobot Corp. (iRobot) put in work which helped them develop and markets their innovative product – the iRobot Roomba, a floor-cleaning robot. Initiatives were undertaken by the founders of the company to develop robots, that could be useful in military, researches and commercial environments. The focus in the future shifted to industrial robots that have been eventually led to the creativity of the Roomba. The business marketed the merchandise, and later released many release of the Roomba as an open up hardware platform for further more robotic development.

Case 3 Volkswagen

In August 2006, Europe’s largest automaker Volkswagen, unveiled the Iroc principle at a special function in Berlin, Germany. The Iroc was a prototype of the third generation style of the Scirocco, a activities coupé introduced in the 1970s.. The Iroc, which was expected to hit the market in 2008, was an attempt to load the gap in its products and targeted a distinct segment market of Scirocco enthusiasts. Analysts opined that the Iroc would support boost the image of Volkswagen. They also felt that Volkswagen had few mental brands targeted in america customers, and the brand new Scirocco would help load that void. Iroc started to be a cult car in the US and Europe

Case 4

When Suzuki Motor Company thought on an automobile like Swift, they sent a team of around 40 – 50 engineers and designers into Europe, which is a booming market of European countries for tiny car segment. The Swift was first showcased in 2002 Paris Motor Show as an idea car and in 2004 at Vehicle Expo in India.

The Swift was not packed with all that Maruti was known for. But instead it offered an elegant design, classy interiors and compelling overall performance. It stirred up passions in the car market and kicked up an unprecedented degree of hype in favour of Maruti. The Swift looks radical using its overall design theme is a brilliant fusion of opposites that appeals at a first look. The rounded, jellybean-like lower one half and the almost ‘Boxy’ top-fifty percent contain drawn comparisons to the BMW Mini. Just like the Mini, the Swift’s “A” pillar hands and midline are also blacked out to provide the car a floating roof glimpse.

It is a combination of Italian flair and French quirkiness. Though at first Swift was created for the European marketplaces, Maruti Udyog realised the modified variation with the Indian circumstances within their mind. Necessary adjustments were made, without touching the fundamental aesthetics (the elevated bonnet line that matches the new European pedestrian protection norms). Keeping in mind harsher Indian conditions, the suspensions were strengthened, an improved Esteem engine and gearbox was earned, tyres with an increase of traction were utilized and the grade of the paint was as well changed.

The Swift’s biggest plus point is its value. The Swift was launched at Rs. 3.87 lakh for the base model, which was Rs. 50,000 significantly less than when compared to their competitor. Also the top-end version of swift was Rs. 70,000 cheaper than its key competitor the Hyundai Getz GLS.

The element behind the Swift’s achievements was its combo of carefully thoughts: the product design, online marketing strategy and the mentality of Indian potential buyers with respect to price.

Maruti Swift has been a tremendous victory in Indian industry and car of the year 2006, Swift got its absolute commercial success.

Challenges in New-Product Development

There are various issues which can lead to the failure of a new item. Some the observations are listed below;

When a high level executive forces a popular idea through, even though the research finding is negative.

When size of the targeted market is over estimated, in spite of an excellent idea.

When the product is not designed well.

When the product is positioned incorrectly available in the market, or not advertised successfully or when overpriced.

When a product does not gain satisfactory distribution coverage or support

When the cost involved in the development of the product exceeds the estimation

When competitors fight harder than expected.

Factors which hinder the creation of new item when:

There is definitely a shortage of concepts in certain important areas

The market is fragmented

There is a social or Government constraints

Shortage of capital.

Shorter life routine of the product

Time constraints

If the product manager continues with a terrible idea and subsequently launches goods predicated on the bad idea, then he’s likely to become a failure or make a ‘go error’. On the other hand dropping an excellent idea can result in loss of an opportunity; the product manager is likely to make ‘drop error’. The emphasis group discussion will result in the development of market research where the product concepts can be quantified and preliminary merchandise feasibility and development of the product can be tested. This stage is vital for the product supervisor as she/he can take a concept from the stage of ‘abstraction’ to a very important product proposition.

Case 1

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In April 2004, Coca-Cola India introduced its new item the Vanilla Coke, The Company’s first flavour extension in India. Vanilla Coke was likely to boost Coca-Cola’s product sales in India, which got taken a plunge following the pesticide contamination controversy in the entire year 2003.

Blind tests done prior to the launch of the merchandise revealed that consumer liked the taste. The idea of ice-cream floats in cola was quite prevalent in urban eating places in India. The business targeted Vanilla Coke of the urban teens, the young adults from the huge and middle class groups.

The brand-new coke carried the tag collection “Ice Creamy Thanda”. The India advertising campaign got a cue from the “hip-hop” commercial found in Hong Kong, where it had been a successfully launch earlier. The jingle in the industry stressed: “Forget about conventions” and began with the word “Wakaw” meaning cool and various. The 60 second advertisement was enjoyed on youth-centric stations like MTV, Channel [V], HBO and AXN and actually regional channels like Sunshine Tv set. With a retro-Bollywood theme, the advertisement attracted the young consumers to “try something different and various”.

A relatively new celebrity, Vivek Oberoi was chosen for the advertisement. For the advertising of the merchandise, Coke activated major accounts, started promotional actions in shopping malls, colleges and launched a retrospective music album.

Retailers reported slow off take of Vanilla Coke. Relating to retailers in south Mumbai, the product’s sales were swiftly dropping. ‘Irrelevant’ advertising and marketing was among the reasons for failure. The other concerns pointed out by the respondents included “wrong positioning”, “no proper research” and that there is a “mismatch of targeted group and communication”. Therefore Vanilla Coke didn’t excite the Indian palate.

The television commercial and outdoor advertising was successful in creating hype and knowing of the product. But, Vanilla Coke’s marketplace, the young customers felt that the professional itself was out of context and got no connection with the brand.


Most of the industry leaders look at innovation as a proactive procedure where resources happen to be deployed by observing improvements on the market and seize new opportunities even before they arise (this as opposed to a reactive approach where no action is taken until problems arise or before competitor introduces a new product).

Many leaders of the sector view innovation as a continuing process (i.e. constant development) where the whole organization is always on alert and on hunt of opportunities.

The procedure for new product advancement plays an essential role in deciding the continuing future of the organization. Whatever may be the size and characteristics of operation of a firm, product planning and expansion is necessary for its survival and growth over time.

Therefore, efforts should be made to create a unique superior item marketed at a reasonable price in an effective manner.