New Product Development Process Essay

For every successful new product, many new product ideas are conceived and discarded. Therefore, companies usually generate a large number of ideas from which successful new products emerge. I work as a strategic manager in Solarland Co., Ltd. This company does business of electronic appliances. As a Strategic Manager, I have been directed by my BOD to introduce a new product in Bangladesh. I want to introduce a Solar Based LED TV which will be run with solar system, which is without electricity people will be able to watch TV. So I have gone through my knowledge which I gained from my Strategic Management course and then make a draft of my proposal for them. The draft of my proposal for introducing a new solar based LED TV is discussed below. 1. Idea Generation The new product development process begins with idea generation. Strategic management is all about selling an idea. So as a Strategic manager I have created the new product idea of Solar Based LED TV. I have created this idea as I want to capture a new market where people do not have enough electricity or else they will also be able to safe electricity cost. This new product can define the overall character and mission of our company. 2. Idea Screening Idea screening, the second step, considers the new product idea of developing a Solar Based LED TV. At this stage I consider not only the firm’s manufacturing, technology, and marketing capabilities, but also how the new idea fits with the company’s vision and strategic objectives. During screening the idea I consider some facets which are very important like: What are the purposes of the organization? What image should the organization project? What are the ideals and philosophies that the organization desires its members to posses? What is the organizations business? How can the organization best fulfill its corporate objectives? 3. Concept Development and Testing The third stage, concept development and testing, requires formal evaluations of the product concept by consumers, usually through some form of marketing research. As a strategic manager, to build up a self-concept is very important. Self-Concept refers to the distinctive competence or major competitive advantages of the company. In case of concept testing, the existing strategic plan should be compared with the best plan which can be developed at any given point in time. So the best conceivable plan becomes the standard. The degree to which the existing plan varies from the standard and the cost of that variation compared to the cost of revising the plan will determine whether corrective action should be taken. Figure 1: New Product Development Process and Strategic Factors 4. Business Analysis The business analysis stage is next. At this point the new product idea is analyzed for its marketability and costs. After passing the first three stages an idea may be discarded once marketing and manufacturing costs are analyzed, due to limited potential for profitability or commercial success. I can do it through Porter Five Forces analysis. Figure 2: Factors of Industry Analysis Threat of new entrants Profitable markets that yield high returns will attract new firms. This results in many new entrants, which eventually will decrease profitability for all firms in the industry. Unless the entry of new firms can be blocked by incumbents the abnormal profit rate will trend towards zero (perfect competition). So I will analyze the threat factor of new entrants. For my new product I found that potential threat of new entrants are very low. Threat of substitute products or services The existence of products outside of the realm of the common product boundaries increases the propensity of customers to switch to alternatives. So I need to assess whether there is any existing or potential substitute of our new product. As this new product will work without electricity, so threat of substitute product is very low. Bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs: the ability of customers to put the firm under pressure, which also affects the customer’s sensitivity to price changes. The buyer power is high if the buyer has many alternatives. We can take measures to reduce buyer power, such as implementing a loyalty program. Bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs. Suppliers of raw materials, components, labor, and services to the firm can be a source of power over the firm when there are few substitutes. Suppliers may refuse to work with our firm or charge excessively high prices for unique resources. So we need to be careful about that. 5. Prototype Development The fifth stage, prototype development, at this stage the concept is converted into an actual product. A customer value perspective during this phase means the product is designed to satisfy the needs expressed by consumers. We may use quality function deployment (QFD) as we develop the prototype. QFD links specific consumer requirements such as versatility, durability, and low maintenance with specific product characteristics (for example, adjustable shelves, a door-mounted ice and water dispenser, and touch controls for a refrigerator). The customer value perspective requires the new product to satisfy customer needs and meet desired quality levels at specified production costs. 6. Test Marketing In Test marketing we will test the prototype and marketing strategy in simulated or actual market situations. Because of the expense and risks associated with actual test markets, we need to use them with caution. If the product tests poorly, it will be pulled back and re-conceptualized or discarded. 7. Commercialization Commercialization, the final stage, is when the product is introduced full  scale. The level of investment and risk are highest at this stage. At this stage we will consider consumer adoption rates, timing decisions for introduction, and coordinating efforts with production, distribution, and marketing. STRATEGIC FACTORS INFLUENCING NEW PRODUCT DEVELOPMENT Organizational Structure and Culture Organizational structure, leadership, and team building influence the speed and efficiency with which new products are introduced. Structure influences efficiency, autonomy, and coordination. New product innovation requires structure that optimizes direction and guidance. Structure that facilitates internal information exchange, decision making, and materials flow is essential. A â€Å"fast-cycle† structure allows more time for planning and implementing activities to gain competitive advantage. This type of structure also cuts costs because production materials and information collect less overhead and do not accumulate as work-in-process inventory. Autonomy refers to the amount of decision making allowed at lower levels of management. The coordination of the engineering, product designs, manufacturing, and marketing functions in the new product development process is vital. Leadership Leadership influences strategy, culture, and the firm’s overall ability to undertake new product development. Top management can demonstrate involvement in the development process by providing career advancement for entrepreneurial skills and encouraging broad employee participation. Clarity and vision are crucial to ensuring that new product ideas are good strategic fits for the company. The degree to which leadership allows trial and error and promotes individual initiative positively influences the development of new products. This acceptance of risk and support for an entrepreneurial spirit within the organization are crucial in order for innovation to flourish. New products emerge in a variety of ways and their development does not always proceed in rational and consistent manners. It is necessary for leadership to view the process as iterative and dynamic, and to foster adaptation and flexibility. Management flexibility and responsiveness to  change also are needed. This type of leadership is particularly important to the project manager who must coordinate and integrate the various parts of the new product development process so that a coherent system emerges that produces a product with compelling value. Initiative encourages creativity and problem-solving skills. Team Building Teams provide mechanisms for breaking down functional biases created by a strict adherence to structure. The amount of interdepartmental conflict in the organization, the social cohesion among team members, and the frequency and directionality of interdepartmental communication influence team building. Through shared understanding of the objectives and purposes of the project, as well as the tasks required in the development process, teams can shape the project and influence how work gets done in the organization. Now a day technology continues to change and create new opportunities and threats. Customer requirements and expectations continue to shift and create new demands. Old channels of distribution are becoming obsolete and new channels are opening new opportunities. Some competitors are falling by the wayside while others are surging to the forefront by making new and unexpected moves to gain advantage. The very structure of industry is changing. A key to success in this tumultuous environment will continue to be the ability to sustain a competitive advantage through innovation. However, speed, efficiency, and quality in product development will be paramount. Building capabilities in all aspects of product creation and implementation, overcoming uncertainty and facilitating decision-making, ensuring these innovations are strategically linked to the firm’s vision, and doing this on a continuous basis is the challenge of new product development in the next century.