NPD & PLC

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New Product Development (NPD) Improving and updating product lines is crucial

for the success for any organisation. Failure for an organisation to change could result in a
decline in sales and with competitors racing ahead. The process of NPD is crucial within an
organisation. Products go through the stages of their lifecycle and will eventually have to be
replaced There are eight stages of new product development. These stages will be discussed
briefly below:

Stage 1: Idea generation New product ideas have to come from somewhere.
But where do organisations get their ideas for NPD? Some sources include: • Within the
company i.e. employees • Competitors.
• Customers • Distributors, Supplies and others.

Stage 2: Idea Screening This process involves shifting through the ideas
generated above and selecting ones which are feasible and workable to develop. Pursing non
feasible ideas can clearly be costly for the company.

Stage 3: Concept Development and Testing The organisation may


have come across what they believe to be a feasible idea, however, the idea needs to be taken to
the target audience. What do they think about the idea? Will it be practical and feasible? Will it
offer the benefit that the organisation hopes it will? or have they overlooked certain issues? Note
the idea and concept is taken to the target audience not a working prototype at this stage.

Stage 4: Marketing Strategy and Development How will the


product/service idea be launched within the market? A proposed marketing strategy will be
written laying out the marketing mix strategy of the product, the segmentation, targeting and
positioning strategy sales and profits that are expected.

Stage 5: Business Analysis The company has a great idea, the


marketing strategy seems feasible, but will the product be financially worth while in the long
run? The business analysis stage looks more deeply into the cashflow the product could generate,
what the cost will be, how much market shares the product may achieve and the expected life of
the product.

Stage 6: Product Development Finally it is at this stage that a prototype is


finally produced. The prototype will clearly run through all the desired tests, and be presented to
the target audience to see if changes need to be made.

Stage 7: Test Marketing Test marketing means testing the product within
a specific area. The product will be launched within a particular region so the marketing mix
strategy can be monitored and if needed, be modified before national launch.

Stage 8: Commercialization If the test marketing stage has been successful


then the product will go for national launch. There are certain factors that need to be taken into
consideration before a product is launched nationally. These are timing, how the product will be
launched, where the product will be launched, will there be a national roll out or will it be region
by region?
Product Life Cycle
The product life cycle concept suggests that a product passes through four stages of evolution.
Introduction, growth, maturity and decline. As a product evolves and passes through theses four stages
profit is affected, and different strategies have to be employed to ensure that the product is a success
within its market.

Product Life Cycle stages

Introduction
As a new product much time will be spent by the organisation to create awareness of it presence amongst
its target market. Profits are negative or low because of this reason.

Growth
If consumer clearly feel that this product will benefit them in some ways and they accept it, the
organisation will see a period of rapid sales growth.

Maturity
Rapid sales growth cannot last forever. Sales slow down as the product sales reach peak as it has been
accepted by most buyers.

Decline
Sales and profits start to decline, the organisation may try to change their pricing strategy to stimulate
growth, however the product will either have to be re-modified, or replaced within the market.

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