MCOM 2nd Year Product Development Study Material Notes Study Material Notes Sample Model Practise Papers Chapter Wise Question With Answer
Every product has a certain life period. The life-cycle of a product reveals after than certain period, every product faces the stage of obsolescence. When product reaches at the stage of obsolescence, it is necessary for the enterprise to stop the production of such product and to divert its resources in producing! new product. The process of starting the production of a new product is called the process of new product development. It includes the exploration of new ideas, screening of new ideas, business analysis for p oduct de elopment, test marketing and commercialisation of the product.
Thus, the process of development of a new product starts when an existing product of a firm reaches at the stage of obsolescence and ends with the Oroduction of new product. At every stage of product development process, deep study is carried out as to whether the product should go to the next stage or not. A product is came into a market after passing through five stage successfully. The six stages of process are as under.
[I] Exploration of New Ideas
The process of development of new product starts with exploration of De ideas. There may be many sources of exploring these new ideas. Some importa sources are as follows:
1. Consumers. Sometimes the business and industrial enterprise inyl consumers of its products and they are requested to express their opinions give their suggestions in respect of the goods and services of the enterprise.
These opinions and suggestions can be helpful in product development product innovation. A decision taken on the basis of such opinions and suggestions can be very close to realty because it is based on the opinions of the customers who really make the consumption.
2. Salesman. Salesraan are the person who are in closest touch with consumers. The enterprise, from time to time tries to diagnose the reasons for a decline in the sales of the products of the enterprise. Opinions of salesman are also collected to know what improvements can be made in the products to increase their demand.
3. Competitive Products. Competitors introduce new products into the market from time to time. They also make important amendments in their product specifications. These products changes may be treated as guideline for the enterprise to make relevant improvements in its products.
4. Scientific Development. Industrial enterprise of large scale appoint their own scientific laboratories. These scientists keep themselves regularly busy on investigating the needs and wants of the consumers and give results of their investigations to the industrialists. These suggestions may prove to be of great importance to the enterprise,
5. Employees of the Enterprise. This is a very important source of exploring new ideas about the products. Under this technique, the employees of the enterprise are motivated to give their suggestions and opinions for the development of products of the enterprise. For this various incentives like prize, promotion, increments may be offered.
6. Management, Managers and executives of the enterprise also have their opinions and suggestions. Many decisions of product development and innovations are taken on the basis of opinions and suggestions of these executives. Generally, these opinions relate to the competition of a product line or production of supplement product or production of a by-product.
[IT] Screening of New Ideas
Screening of idea is the second stage which comes after exploring of ideas. Every idea is evaluated analytically, so that the idea may be converted into action. Analysis of an idea includes the following contents :
Idea generation – Idea screening Business analysis → Product development – Test marketing – Commercial production.
If idea qualities with these standard the idea is selected and if the idea does not qualify these standards it is dropped. If the ideas selected at this stage are very large in number, an order is determined on the basis of its importance.
[III] Business Analysis
When an idea is selected and the decision is taken to produce a new product analysis is made of the product under consideration. Efforts are raade to establish whether the new product will be suitable or not. Following are the three types of estimates which are necessary to be made in of a product:
Estimating Future Sales. Efforts are made to forecast the sales of the product under consideration. Though it is very difficult to forecast the sales of a product which has not yet been developed but the efforts are made to have an idea of these sales.
Estimating Future Costs. Estimated costs of the product to be develon provide a real base for measuring the profitability of a product. Differe elements of the costs are analysed.
Estimating Future Profit. After estimating the sales and costs of product, it is very easy to estimate future profits resulting from the sales of th. product. It is also considered whether these profite will provide desire rate return on capital invested or not. If no, the idea is dropped and if yes, it is finally selected.
[IV] Product Development
When the idea of developing a new product comes out to successfully from all three stages discussed above the steps are taken for the real implementation of the decision. The process of development of a product includes four stages ag under:
Developing Models. The idea of new product is given to the research and development department of the enterprise. Research and development department develops different models for the product. The management of the enterprise has to select single model for the product out of these models.
Consumer Preference Testing. The selection of a product’s model is very important decision. For this some selected consumer should invite and the efforts are made to select a particular model. For this, various techniques may be adopted such as pair comparison, ranking procedure etc.
Brands. After selecting a particular model of the product, the decisions are taken regarding the name of the brand and the registration of patent, copyright and trademark etc.
Packaging. Packaging of the new product is also an important decision because it must be of the nature that it may attract maximum consumers.
[V] Test Marketing
This is a critical stage of the process of a new product development. At this stage the new product is marked on a trial basis. The product is not introduced in the whole market at first instance. Some particular segments of the market are selected and the product is introduced in these segments only for a particular period. The object of test marketing is to know the opinions and suggestions of consumers regarding product and also to know the defects of the product. It provides an opportunity to remove the defects of the product before it is widely marketed.
[VI] Commercialisation of the Product
Commercialisation of the product is the last step in the process of development of new product. It includes all the activities performed by an enterprise in bringing the product in full scale production, advertising and selling the product in the wide market and providing after sale services to the customers.