New Product Development

Do we really need so many new products in the market? This is certainly a tricky question. We are in mad race at the market place. I often get reminded of a tale of African lion and a deer in their race for survival. For survival the lion has to run faster that the slowest deer and the deer has to run faster that the fastest lion. This is the race for survival. We have now reached such a stage in market, where we have to keep running just to stay at a place. The faster you run; you can be ahead of others. One of the reasons for this race is the shortening of maturity phase in PLC of the products. The consumer demands are changing every day. What was sought after yesterday is not needed today. Samsung, Apple and many others are introducing new products at frequent intervals may be at the cost of previous versions of newer products. Thanks to shifts in consumer taste or purchasing behavior, increase in GNI, technological innovations and demographic trends. These all factors are catalysts for creating opportunities for new products.

The age old concept of five stages (some authors recommend eight stages) viz. Idea Generation, Screening, Concept Development, Product Development and Commercialization is valid but there are changes in the approach. There is no doubt that ideas generally guide the process of new product development, but the way ideas are coming forward is different today. Today it is far more important to observe and listen, and the way we do it is different. The social media, internet has great importance in how we “listen and observe”. Thanks to technology. Observing the world around us and discovering customer problems or needs is critical. OLA in India has to an extent succeeded in identifying the customer need. OLA and other aggregators have their own niche and that makes the co-founder of OLA a youngest super rich in India. It was the idea that created this business but just the idea is not enough.

Determining the Market Potential is more important. Thorough research is to be carried out to ascertain how large the market for the product is, how many potential customers are out there and what/how is the competition. In case of tangible product investment are higher due to raw material procurement, manufacturing, inventories and physical distribution therefore before committing the company's human and financial resources for developing a product prototype and bringing it to market, make sure that a thorough research is done.

Apart from conducting research and understanding the statistical jugglery it is imperative to thoroughly test the idea by talking to current customers and prospects, as well as industry participants such as vendors, sales personnel and distributors. Their feedback is also useful in proving that there is a viable market for your product idea. Create a product concept, take customer’s viewpoint.

Idea is to be designed, manufactured and delivered in financial and time framework. Once there is a green signal at this stage then the embarking upon further journey is advisable to follow the steps of product development and commercialization. However time is the essence of all these activities. The process of finding an idea, evaluating it, creating the product and implementing a marketing plan for it can stretch over a longer period. The changing consumer needs and technological changes can stump the efforts and it would be too late to realize that the new product developed was needed a year back and not today. There is a need to think ahead. Need to be proactive to consumer needs, not just reactive. Be proactive and plan ahead. Don’t land up in a situation that the need for the product is eliminated by the time the product is ready. There is also need to plan for funding and HR, many times this is not done and then the resource constrains contribute to product failure.

Be on a traditional path for new product development and subsequent business plan but take a different approach. The factors like shifts in consumer taste or purchasing behavior, technological innovations and demographic trends have changed the canvas and will keep changing. The traditional approach may not work in this scenario, thus the need to think and act differently. I get reminded of blue ocean strategy to make competition irrelevant and offer something unique that offers a competitive advantage. And this advantage has to be sustainable in market.

Another important issue that has emerged in this globalized world is consideration to IPR. With WTO as watchdog and different legal systems in place the new product development has another dimension of concern.

The customers are increasingly becoming solution or service oriented. Six sigma may not be possible for everyone, thus service and information dissemination becomes extremely important. Most of the companies are going for outsourcing this activity which adds another dimension of complexity. The business plan has to have provisions for this. Uncertainty over the maturity phase of the new product exists and this forces one to be proactive for product/brand extensions, adding new features, and for value additions. The core benefit of cell phone is gone. This tiny gadget has more capabilities than the super computer US had years back. The iPhone commercials are out to position the product as a superior video recorder rather than a cell phone. Is it because of change in consumer need/usage or because the Apple PMT is proactive? This can be debated but proves the point. The photographic material company like Kodak considered Fuji as its competitor and both would have never dreamt of competition from cell phone manufacturers for their products. Musicians and music companies like HMV, RCA, got trounced by digital revolution. It is getting difficult to understand who your competitor is and will be. Best selling products can get obsolete and unknown products can rule the market. We kept on worrying for world economy in relation to US recession, Greece problems, but less than a month back China emerged in forefront of the global economic issues. Can China problems help India to grow? Can we develop the products that will replace Chinese innovations or duplications? This is the extent of uncertainty in the market. Developing business plans keeping all these known and unknown issues is more complex.

Once due consideration is given to all aspects discussed so far, and then the major activity of STP has to be carried out. Forecasts and budgets will be in place. This elaborates the financials. The balance sheet, P&L and eventually BE will be understood. The STP will guide to design marketing strategy that needs to be properly implemented for desired results. Good strategy and good implementation will ensure success.

The new product development in the past was never as complex as it is now. Today one need not be a scientist like Edison or James Watt or Graham Bell to offer new products, undoubtedly they were great, but today one certainly has to be a good product manager to get new products developed.