Product or Service Development Process

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JAWWAD HASSAN JASKANIROLL NO 12

STUDENT MBA THE ISLAMIA UNIVERSITY OF BAHAWALPUR

Product and Service Development

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Topic

Product Product development process

What is a Product?

A product is anything that can be offered to a market for

attention, acquisition, use or consumption that might satisfy a

want or need

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What is new product?

A product that is entirely new in market

A product that adapts up or replace an existing product

Old product in new marketOld product packaged in different

way Old product marketed in new way

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New product development

Is a process which is design to develop, test and

consider the viability of product which are new to the market in order to ensure the growth and survival of the

organization

Development of original products, product improvements, product modifications, and

new brands through the firm’s own R & D efforts.

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Why we develop new product?

To add to product portfolioTo create star and cash cow for futureTo replace the declining productTo take advantage of new technologyTo maintain /increase market shareTo defeat rivalsTo keep up with rivalsTo make competitive advantage

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Product Development ProcessA Product Development

process is the entire set of activities required to bring a new concept to a state of market readiness.

A design process is the set of technical activities within a product development process. It does not include business, financial, or marketing activities. 9

An Organized New Product Development Process is Critical

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Step 1: Idea Generation

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Step 2: Screening

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Step 3: Idea Evaluation

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Step 4: Development

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Step 5: Commercialization

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Topic

Difference between product and Services

Activities, Reasoning and objectives of product design

Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall.

New Service or Product Development

Design

Analysis

Development

Full Launch

Service or product not profitable

Need to rethink the new offering or production process

Post-launch review

Major factors in strategy◦Cost◦Quality◦Time-to-market◦Customer satisfaction◦Competitive advantage

Product and Service Design

Tangible – intangibleServices created and delivered at the

same timeServices cannot be inventoriedServices highly visible to customersServices have low barrier to entryLocation important to service

Differences Between Product and Service Design

Product or Service Design Activities

Translate customer wants and needs into product and service requirements

Refine existing products and servicesDevelop new products and servicesFormulate quality goalsFormulate cost targetsConstruct and test prototypesDocument specifications

Reasons for Product or Service Design

Be competitive

Increase business growth & profits

Avoid downsizing with development of new products

Improve product quality

Achieve cost reductions in labor or materials

Objectives of Product and Service Design

Development time and costProduct or service costResulting product or service qualityCapability to produce or deliver a given

product or service

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Topic

New product development process

Life Cycles of Products or Services

Time

Incubation

Growth

Maturity

Saturation

Decline

Dem

an

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Product Life-Cycle Strategies

Product development

IntroductionGrowthMaturityDecline

Begins when the company develops a new-product idea

Sales are zeroInvestment costs

are highProfits are

negative

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PLC Stages

Product Life-Cycle Strategies

Product development

IntroductionGrowthMaturityDecline

Low salesHigh cost per

customer acquired

Negative profitsInnovators are

targetedLittle

competition 26

PLC Stages

Marketing Strategies: Introduction Stage

Product – Offer a basic productPrice – Use cost-plus basis to setDistribution – Build selective

distributionAdvertising – Build awareness among

early adopters and dealers/resellersSales Promotion – Heavy expenditures

to create trial27

Product Life-Cycle Strategies

Product development

IntroductionGrowthMaturityDecline

Rapidly rising sales

Average cost per customer

Rising profitsEarly adopters

are targetedGrowing

competition28

PLC Stages

Marketing Strategies: Growth Stage

Product – Offer product extensions, service, warranty

Price – Penetration pricingDistribution – Build intensive distributionAdvertising – Build awareness and

interest in the mass marketSales Promotion – Reduce expenditures

to take advantage of consumer demand

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Product Life-Cycle Strategies

Product development

IntroductionGrowthMaturityDecline

Sales peakLow cost per

customerHigh profitsMiddle majority

are targetedCompetition

begins to decline30

PLC Stages

Marketing Strategies: Maturity Stage

Product – Diversify brand and modelsPrice – Set to match or beat

competitionDistribution – Build more intensive

distributionAdvertising – Stress brand differences

and benefitsSales Promotion – Increase to

encourage brand switching31

Product Life-Cycle Strategies

Product development

IntroductionGrowthMaturityDecline

Declining salesLow cost per

customerDeclining profitsLaggards are

targetedDeclining

competition32

PLC Stages

Marketing Strategies: Decline Stage

Product – Phase out weak itemsPrice – Cut priceDistribution – Use selective

distribution: phase out unprofitable outlets

Advertising – Reduce to level needed to retain hard-core loyalists

Sales Promotion – Reduce to minimal level

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TopicProject team

Investment and Development cost

CREATING A PROJECT TEAM

Every potential new product or service requires a dedicated development team.

creating your team you need to include people with a variety of skills.

All team members should understand your business' objectives and be committed to them.

There are many forms of effective team working and the right one for you will depend on your business' needs. For example, team members might:

work as a unit dedicated to one project, reporting to a project manager

work exclusively on one project but remain in separate departments reporting to department heads who are under the project manager

work on several projects at once with both a department head and project manager to monitor progress

Teams need someone in a project management role to lead, co-ordinate and motivate the team.

INVESTMENT &DEVELOPMENT

New products and services is an naturally risky process. You must plan any investment carefully and strictly control your costs.

Factors considering in future investment. plan exactly where this investment will be directed. justify the expenditure on every project. Manage your cost. Before making investment decisions, consider how

much your business stands to gain from a completed product or service. Weigh this against the risks you face.

Phasing new product development. One way to minimize your risks is to phase investments

in projects. By reviewing a project at the end of each phase or stage of development.

A range of government grants and tax breaks is available for research and new product development.

It's essential to keep a close eye on costs when you develop new products and services to control cost. You should:

estimate development costs in advance. monitor expenditure throughout the development process introduce phased investment. There are two main ways to estimate costs: a top-down approach where you consider previous

comparable projects and use them as a benchmark a bottom-up approach where all team members agree on

the costs they expect to incur with one project manager, who will then estimate the total cost

Remember that your costs could include staffing, materials, technology, product design and market research.

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Topic

Standardization

StandardizationA uniform identification that is

agreed on is called a standardTwo types exist:

◦Industrial standardization --- the process of establishing agreement on uniform identifications for definite characteristics of quality, design, performance, quantity, service, and so on

◦Managerial standardization --- deals with such things as operating practices, procedures, and systems

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• 100% standardization is rare

• Usually starts with a core product as the foundation

• Various features are added, these may differ according to the country market

• Can also involve modular design, where various features are packaged as modules,

different assembly combinations in different markets

What to Standardize?

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Advantages of Standardization (Cont’d)

Fewer parts to deal with in inventory & manufacturing

Reduced training costs and time

More routine purchasing, handling, and inspection procedures

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Advantages of Standardization

Orders fill able from inventory

Opportunities for long production runs and automation

Need for fewer parts justifies increased expenditures on perfecting designs and improving quality control procedures.

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Disadvantages of Standardization

Designs may be frozen with too many imperfections remaining.

High cost of design changes increases resistance to improvements.

Decreased variety results in less consumer appeal.

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Topic Analysis

ANALYSIS

7 questions you must ask before launching a new product

Is my business already on a solid foundation

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What is the size of the market

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How should I price it

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How much revenue can I expect to generate within a specified time period (usually one year)

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What will it take to realize this additional revenue and profit

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Where is the break even point and what is the potential profit

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Is this new direction in line with my overall Business Vision and Long Term Goals

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CONCLUSIONThe conclusion of this overall

topic is to develop a product requires◦Its designing◦Analysis of market as well as its cost

and required investment ◦A very fine development process◦And finally its publicity and its

approach to the target population