Case study new product development marketing essay

New product creation (NPD) or Innovation is the term used to spell it out the complete procedure for bringing a new product or to learn whether the new concept can be implemented in sensible or not from technical and commercial perspective.

"A new product is a product that opens up an entirely new market, replaces a preexisting product, or substantially broadens the marketplace of an existing product".

– Arch Paton

"Who should ultimately design the product? The client, of course."


"Advancement 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 processes which are involved in the development of a new product. The 1st one is idea era, product developing and detailed engineering. The next one is market research and analysis. Companies/agencies consider this the initial step to commercialize any services in the overall strategic procedure for product life cycle, this enables them to increase or maintain marketplace shares.

A product is new to the world, the marketplace, the producer, seller, or some combinations of these.


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 new products can be acquired from researches such as SWOT analysis (Strengths, Weaknesses, Chances & Threats), consumer style and company’s R & D (Research & Development) department, emphasis groups, employees/staff, salespersons, industry events, corporate spies, rivals, or ethnographic discovery methods (gathering information for client patterns and behaviors) and market could also be used to get an insight of item features or new product lines.

Idea Screening

Prior to deploying assets, there are few concerns which must be asked:

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

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

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

What trends may be the product idea based on?

Is it technically feasible to manufacture the product?

Will the product be profitable at the prospective price?

Concept Development and Testing

Concept development: – It is a process driven by concentrate on product specifications and consumer needs, which are in that case changed into potential technological solutions and conceptual designs. This gives an approximate information of the merchandise form, its working concepts, and features. These are frequently accompanied by experimental prototype and design models which help in the final selections.

Concept testing: – At this stage the prototype or merchandise principle is presented to suitable target consumers to obtain reactions or feedback.

Business Analysis

Estimating the likely value based upon comments from customers and competition, sales quantity predicated on the size of the market or tools like the Fourt-Woodlock equation, the profitability and breakeven points provides the necessary analysis about the a business.

In this step efforts are made to establish whether the new product will be appropriate or not?

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

Future cost estimation: – Numerous components of costs involved will be analyzed, which can only help measuring the profitability of the product.

Future profit estimation: – An estimate to find out whether the forecasted profits will provide desired rate of return on capital invested or certainly not. On these bases an idea is known as or dropped.

Beta Testing and Marketplace Testing

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

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, based on value analysis (both inner & external), potential competition and alternative competitive technologies, differing worth segments (such as price, demands and values) and product costs (both fixed & variable). Pricing also depends on the impact it is wearing the entire merchandise portfolio and forecast of device volumes, profit and earnings.

Concept Generation and Industry Structure Identification

Concept Screening

Market Structure Analysis


Quantification of Product Concepts

Sales Potential

Idea Generation

Preliminary Merchandise Feasibility and Development

Fact Book

Advertising Development

Creative Testing and selection

Creative Development

Strategy Development & Evaluation

Advertising Development

Final Product Utilization, Formulation and Testing

Detailed Product Profiling


National Release/Regional Roll out

Purchase Lab

Test Market

Strategies adopted by numerous organizations

Case Study

One of Jack Welch’s trademark communications to managers: "Discover where the best ideas are, and implement them". Creating, nourishing and setting up is component of learning customs at GE. Welch says, any idea, if it’s a good one, is worth pursuing and adopting – irrespective of where it comes from either within GE, or outside GE, wherever. He telephone calls it "legitimate plagiarism."

It is Welch’s capability to get others worked up about those guidelines, which explains his phenomenal results. Of most his control secrets, his extraordinary ability to communicate, to engender employee enthusiasm, is the foremost. He is a great communicator. He knows that it is insufficient to simply raise an idea with employees. It must be maintained repeating until it finally sinks with every worker.

With Work-Out as part of its DNA, GEs become just about the most profitable, innovative, and admired companies on earth. At its primary, Work-Out is a very simple concept predicated on the premise that those closest to the task know it very best. When the ideas of those people, regardless of their functions or work titles, are solicited and turned quickly into action, an unstoppable wave of creativeness, energy, and efficiency is unleashed through the entire organization. At GE, Work-Out "Town Meetings" gave the organization usage of an unlimited learning resource of imagination and strength of its talented workers.


Harley-Davidson designs, manufactures, and markets heavy-weight motorcycles, electric motor parts, gadgets, collectibles and riding apparels. Harley-Davidson’s control has been recognized all over the world for its successful usage of progressive cutting-edge management techniques. One specific area in which Harley-Davidson’s operations has received acclaim is usually its make use of cross-functional team to create a new product. To some extent, cross-functional advice is definitely considered within the new product design method at Harley-Davidson. Representatives from developing, engineering, purchasing and advertising divisions have often has influenced the near future direction of services.

Management of Harley possesses underscored its determination to cross-functional groups for designing new products by opening a fresh Product Development Centre (PDC) near its plant in Wauwatosa, Wisconsin. For a long time the motorbike maker has been consistently moving toward emphasizing more on using cross-functional clubs for new product development. The PDC accelerated this approach by locating purchasers, design engineers, manufacturing staff, and other important players in one building. These associates work daily together on a full-period basis and are totally dedicated towards the new product development process.

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Leaders of 3M set up a successful approach to a dilemma of new product development by favouring independent R&D courses. When William McKnight CEO of 3M declared a company’s rationale 50 years ago said, "As our organization grows, it becomes progressively necessary to delegate responsibility also to encourage people to working out their initiative. Mistakes will be produced, but if a person is essentially right, the mistakes he / she makes aren’t as serious over time as the mistakes operations will make if it’s dictatorial and undertakes to tell those under its authority exactly how they must do their jobs."

The success of development at 3M relied on long-term, individually directed research projects. The management at 3M is usually governed by two maxims for such assignments: "Hands off!" and, "Don testmyprep‚t ask, don’t tell!" When the shareholders‘ issues changed, 3M was pressured to expand its toolkit of improvements. This involved even more systematic approaches towards innovation and the methods including more immediate links with the management.

One of the methods of 3M known 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 administration and the shareholders requirements, against "fuzzy front-end" technology developers.

Lead User Groups is formed by four to six individuals with diverse skills. It is necessary to have associates from functions like advertising and technical. With respect to the teams focus, members would be added from unique areas like developing, procurement or other required functional location to the staff. All team members will be educated with the ways to come out with successful solutions to the customer needs.

Lead User Teams happen to be instructed to welcome uncertainty and ambiguity. They focus on areas where there is a great possibility of discovery. It’s important for the team to learn to recognize gaps to recognize prime spots for the era of new concepts and products.

The clubs are equipped to seek value and capture strategies that are not part of the "business as typical," be it innovative technology, or applications, or strategic interactions, partnership, or assistance offered.

Because opportunities are distant from every-day experiences, team members would have to start by receiving acquainted to "what’s not known." The customers of the team has to work towards increasing their understanding at an accelerated rate, generally with the "Lead Users Staff."

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 and services.

This team then looks out for facts that focuses on what the customer would need in future.

The greatest challenge of all is to get the right Lead Users Workforce. Enlisting involvement is often a non-issue, as the folks are rarely involve with Lead User clubs in a creative collaboration. These Users happen to be professionals who use leading cutting edge applications that support them study consumer problem. They then develop a prototype solution for those problems.

Lead User Gurus has knowledge of advanced applications and its important attributes. Lead User teams look for professionals who work in the prospective marketplace and the analog sectors. These analog sectors contain markets which share their understanding of a crucial problem or solutions, for the future market. The Experts and Users from the analog industries do not have an insight on the entire problem or entire choice, but they possess an insight of hard-to-find alternatives of particular difficulty under study.

Lead User Associates are often led from their existing systems and towards an unidentified and unexpected persons and organizations. These associates then conduct interviews in


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

At every stage or stage throughout their interview, the team searches for professionals who are ahead of any general adoption/diffusion routine. These users normally tend to work in more compact segments or pockets of activity and so are sometimes difficult to find. The bonding between your Lead Users and Business lead Use Experts demands them to be co-creators and recognize that innovations can emerge from their interactions.

Lead User Teams obtains information by watching, listening reading, questioning, and through shadowing other Lead User’s. The teams then concludes their work by gathering the Business lead Users and Lead Individual Experts together with the development experts of 3M for a workshop dedicated to work collectively on remedy designs. Post these workshops, the teams reunite and finalize their prioritized intend to move from idea to the development stage.

Innovation is A LOT MORE THAN "Just" a New Product.

The encounters of 3M have displayed that the Lead User System success is not only from the product-orientation point of view, but due to their higher plane to create a comprehensive business design. Many Lead User Groups at 3M were subjected to these strategy-level developments where they how to write an essay introduction uncover big and lucrative future markets, for services and new technologies.

But for 3M to profitably travel and enter those marketplaces a completely new technique was required. These teams had to face question like, "What do we carry out if these lucrative new future markets usually do not fit within our existing business market tactics?"

With the 3M administration support, the Lead Individual Teams developed new business models and tactics that provided the proper fit. This workforce would then develop offerings, product families, novel strategy towards channel partnerships and merchandise/service toolkits for customer.

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

The Lead User System is now just about the most productive and cost-efficient innovation methods adopted by the business today. The products system designed a watchword for 3M "change the foundation of competition," which is usually novel.


Based on the margins Intel creates from existing items, Intel uses innovation portfolio approach to control the rate at which they introduce new microprocessors. "Their portfolio delivers visibility across products and item generations, enabling them to increase the profits they reap from each other."

Successful new products

Case 1 Logan was an inexpensive car developed by French auto firm Renault SA, which was intended to become its ‚world car‘. The automobile was developed at the company’s Romanian subsidiary, Dacia. Though the car was originally geared to be offered in the marketplaces of the developing parts of the globe, the Logan found unexpected EUROPEAN markets, which resulted in Renault creating a new variation of the Logan for Western European countries.

Case 2 good0S0zu7xGBlMcg4A4DfGHAx./SIG=12qfsg7on/EXP=1276799601/**http%3a/**http%3a/**http%3a/

iRobot Corp. (iRobot) devote initiatives which helped them develop and promote their innovative item – the iRobot Roomba, a floor-cleaning robot. Attempts were undertaken by the founders of the business to develop robots, which could be of use in military, researches and commercial conditions. The focus soon after shifted to industrial robots which were eventually resulted in the development of the Roomba. The business marketed the merchandise, and later released many release of the Roomba as an wide open hardware platform for further more robotic development.

Case 3 Volkswagen

In August 2006, Europe’s most significant automaker Volkswagen, unveiled the Iroc concept at a special function in Berlin, Germany. The Iroc was a prototype of the third generation model of the Scirocco, a sports coupé introduced in the 1970s.. The Iroc, which was expected to hit the market in 2008, was an attempt to complete the gap in its product line and targeted a distinct segment market of Scirocco lovers. Analysts opined that the Iroc would help boost the image of Volkswagen. In addition they felt that Volkswagen acquired few emotional brands targeted in america customers, and the new Scirocco would help load that void. Iroc became a cult car in america and Europe

Case 4

When Suzuki Motor Corporation thought on an automobile like Swift, they delivered a team of around 40 – 50 engineers and designers into Europe, which is a booming market of Europe for little car segment. The Swift was initially showcased in 2002 Paris Motor Show as a thought car and in 2004 at Auto Expo in India.

The Swift had not been loaded with all that Maruti was known for. But rather it offered an elegant design, classy interiors and compelling overall performance. It stirred up passions in the automobile market and kicked up an unprecedented degree of hype towards Maruti. The Swift appears radical using its overall design motif is an excellent fusion of opposites that appeals at a first look. The curved, jellybean-like lower 50 % and the practically ‚Boxy‘ top-1 / 2 have got drawn comparisons to the BMW Mini. Just like the Mini, the Swift’s "A" pillar hands and midline have also been blacked out to give the automobile a floating roof look.

It is a blend of Italian flair and French quirkiness. Though at first Swift was created for the European market segments, Maruti Udyog realised the modified type with the Indian conditions in their mind. Necessary adjustments were produced, without touching the essential aesthetics (the brought up bonnet line that matches the brand new European pedestrian safeness norms). Remember harsher Indian conditions, the suspensions were strengthened, an improved Esteem engine and gearbox was earned, tyres with more traction were utilized and the quality of the paint was also changed.

The Swift’s biggest advantage is its price. The Swift was unveiled at Rs. 3.87 lakh for the base model, which was Rs. 50,000 significantly less than in comparison with their competitor. Also the top-end version of swift was Rs. 70,000 cheaper than its key competitor the Hyundai Getz GLS.

The point behind the Swift’s success was its mixture of carefully thoughts: the merchandise design, marketing strategy and the mentality of Indian clients regarding price.

Maruti Swift has been a tremendous achievements in Indian marketplace and car of the year 2006, Swift acquired its absolute commercial success.

Challenges in New-Product Development

There are various challenges which can cause the failure of a fresh product. Some the observations are listed below;

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

When size of the targeted market is over estimated, in spite of a good idea.

When the product is not designed well.

When the product is put incorrectly available in the market, or not advertised efficiently or when overpriced.

When a product does not gain adequate distribution coverage or support

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

When competitors fight harder than expected.

Factors which hinder the expansion of new item when:

There is a shortage of tips in certain important areas

The market is fragmented

There is a public or Government constraints

Shortage of capital.

Shorter life cycle of the product

Time constraints

If the product supervisor continues with a negative thought and subsequently launches products based on the bad idea, in that case 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 could make ‚drop error‘. The focus group discussion will result in the development of market research where in fact the product concepts could be quantified and preliminary product feasibility and development of the product can be tested. This stage is vital for the product supervisor as she/he may take an idea from the level of ‚abstraction‘ to a very important product proposition.

Case 1

Vanilla coke

In April 2004, Coca-Cola India introduced its new merchandise the Vanilla Coke, THE BUSINESS’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 year 2003.

Blind tests done prior to the launch of the product revealed that consumer liked the taste. The concept of ice-cream floats in cola was quite common in urban restaurants in India. The company targeted Vanilla Coke of the urban teenagers, the adults from the large and middle class groups.

The different coke carried the tag series "Ice Creamy Thanda". The India plan took a cue from the "hip-hop" commercial used in Hong Kong, where it had been a successfully launch earlier. The jingle in the commercial stressed: "Forget about conventions" and started with the word "Wakaw" meaning cool and different. The 60 second ad was played on youth-centric channels like MTV, Channel [V], HBO and AXN and even regional channels like Sun Television. With a retro-Bollywood motif, the ad attracted the young customers to "try something new and different".

A relatively new celebrity, Vivek Oberoi was picked for the advertisement. For the promotion of the merchandise, Coke activated crucial accounts, started promotional activities in shopping malls, colleges and launched a retrospective music album.

Retailers reported slow off take of Vanilla Coke. According to retailers in southern Mumbai, the product’s product sales were speedily dropping. ‚Irrelevant‘ advertising was one of the known reasons for failure. The other problems pointed out by the respondents included "wrong positioning", "no correct research" and that there is a "mismatch of targeted group and communication". Hence Vanilla Coke didn’t excite the Indian palate.

The television set commercial and outdoor promotion was successful in generating hype and knowing of the merchandise. But, Vanilla Coke’s marketplace, the young customers felt that the commercial itself was out of context and experienced no connection with the brand.


Most of the sector leaders look at technology as a proactive process where resources are deployed by observing changes in the market and seize new opportunities even before they happen (this as opposed to a reactive strategy where no actions is taken until problems arise or until the competitor introduces a new product).

Many leaders of the market view innovation as an ongoing process (i.e. continuous development) where the entire organization is always on alert and on hunt of prospects.

The process of new product advancement plays an essential role in deciding the continuing future of the organization. Whatever could be the size and dynamics of operation of a firm, product planning and expansion is necessary for its survival and growth in the end.

Therefore, efforts should be made to develop a unique superior product marketed at an acceptable price in an effective manner.