Market research and analysis:

New Product Development:
New Product Development is a journey, but where does it begin and where does it end? In today’s highly competitive marketplace, it is very important for organizations to carefully assess their current situation, identify their goals for new product development and formulate a workable plan for achieving those goals.

New Product Development and Marketing Strategy is a multi-stage process. Many different models with a varying number of stages have been proposed in the literature. We briefly review these models and propose a new model that is better suited to decision making regarding product performance and specification. For better understanding New product development we have to discuss product  new product and product life cycle etc.

Definition of  Product:
A product consists of all the tangible and intangible (goods, service or idea) characteristics provided in an exchange between a seller and a buyer. People buy product for the benefits and satisfaction it gives.

According to Philip Kotler, “ Anything that can be offered  to a market for attention, acquisition, use or consumption that might satisfy a want or need . It includes physical objects, services, person places, organizations and ideas.”

Consumers buy products for different reasons and can be broadly divided into three categories:
Households: These comprise individuals (or families) buying products, such as food items, cosmetics, clothes, televisions, kitchen appliances, household furniture, and so on.

Industrial and commercial organizations: These comprise businesses buying a range of products (e.g., furniture, computers, telephones) for use in the office; products to deliver services (e.g., X-ray machines in hospitals, trucks to move goods from factory to markets, trains to move people)

and products (e.g., lathes, assembly robots, components) to produce other products for sale.Governments: These not only buy the products consumed by households and industrial and commercial organizations to administer and provide services, but also products (e.g., tanks, ships) to defend the country.

Definition of New Product:
New product  is  a good, service or idea that perceived by some potential customers as a new. A new product is one  that  is new in any way for the  company concerned.

Product Classification:
Products can be classified in many different ways, as indicated below.

Classification 1:
This is the most common classification. Consumer non-durable and durable: These products are bought by households.The non-durable differ from the durable in the sense that the life of a non durable product (e.g., cosmetic, food) is relatively short, and the product is less complex than a durable product (e.g., cellular phone, television).

Industrial and commercial products: These are standard (off-the-shelf) products used by industrial and commercial organizations for their operations. The technical complexity of such products can vary considerably. The products can be either complete units, such as cars, computers, trucks, pumps, and so forth, or product components needed by a manufacturer, such as batteries, drill bits, electronic modules, and toner cassettes for laser printers.

Specialized defense-related or industrial products: Specialized products (e.g., military aircraft, ships, and rockets) are usually complex and expensive and involve state-of-the-art technology with considerable research and development effort required of the manufacturers.  Customers are typically governments or industrial businesses. These products are usually designed and built to the specific requirements of the consumer. Still more complex are large systems (e.g., power stations, chemical plants, computer networks, and communication networks) that are collections of several inter-linked products.

Classification 2:
Standard products: These are manufactured in anticipation of a subsequent demand. As such, the products manure fractured based on market surveys. Standard products include all consumer non-durable and durable and most commercial and industrial products.

Custom-built products: These are manufactured in response to a specific request from a customer and include specialized defense and industrial products.

Classification 3:
Creative designs: Creative design is an abstract decomposition of the design problem into a set of levels that represent choices for the problem. An a prior plan for the problem does not exist.

Innovative designs: The decomposition of the problem is known, but the alternatives for each of its sub-parts do not exist, and must be synthesized. Design might  be an original or unique combination of existing components. A certain amount of creativity comes into play in the innovative design process.

Redesign: An existing design is modified to meet the required changes in the original functional requirements.

Routine designs: An a prior plan of the solution exists. The sub-parts and alternatives are known in advance, perhaps as the result of either a creative or innovative design process. Routine design involves finding the appropriate alternatives for each sub-part that satisfies the given constraints.

Classification 4:
Hubka and Eder (1992) suggest a broader classification that captures complexity, usage, appearance, and methods for designing the product. According to their classification, products range from artistic work to industrial plant as indicated 1. Artistic works 2. Consumer durable  3. Bulk or continuous engineering products  4. Industry products  5. Industrial products  6. Industrial equipment products 7. Special purpose equipment etc.

New Product Development:
We need to differentiate between a new item and a used (or second-hand) item. If the useful life of a product is much greater than the product life cycle (discussed in Section 2.3), customers often replace a working old item (old product) with a new  one (new product). As a result, a market for used or second-hand products is created.

 “Newness” of a New Product:
New products are replacing existing products on a regular basis. The rate at which new products are appearing on the market is growing at an exponential rate. The reasons for this are many and can include one or more of the following:

• Create a differential advantage (product differentiation)
• Support continued growth for the manufacturer
• Capitalize on technological breakthroughs
• Response to changing demographics

There are several different notions of what constitutes a new product. The “newness” of a new product can vary from high to low and depends on whose perspective and what is new.

The different perspectives yield the following:

• New to the world (e.g., the first aircraft, radio, computer, car)
• New to the industry (first application in an industry of a product well established in some other industry)
• New to the manufacturing firm (and familiar to competitors in the industry)
• New to the market
• New to the customer

The degree of newness is an indicator of the difference between the new product and the existing one. The change (depending on the perspective) can vary from minor or incremental to major or radical. For example, a change that reduces the production cost might be viewed as a major change from the manufacturer’s perspective and no change from the customer’s perspective. A radical change is due to a new technology (higher speeds resulting from jet engines that was not possible with the earlier propeller engines) whereas an incremental change is due to advances within an existing technology.

New Product Development: Stages and Methods:
The new product development process has the potential to be haphazard because of the inherent uncertainty in the process, as well as the myriad methods available for product development. Setting up an organizing framework to identify the stages in the process, and the methods applicable to each stage, should help in bringing order to the process.

Our purpose in this article is to lay out a framework and identify key methods that are most likely to be useful in each stage. The focus here is on methods that use quantitative data collected mainly through the web thus bringing more validity and flexibility to the process along with speed to market. We envision the new product development process as an iterative multistage process as shown in Figure 1.

This is a straightforward way of looking at the process that starts with idea generation, moves to development of individual features and then to full product development and finally into product testing. Of course, this is one example of how the process can be viewed and not a rigid framework. There has to be considerable fluidity in the system to accommodate feedback,skipping of stages, use of new methods and perhaps introduction of new stages.

Idea Generation:
Many methods are available for the idea generation stage such as brainstorming, Delphi and focus groups. The basic approach is to harness creativity in some form for the development of new ideas. While there is much to recommend for the more qualitative approaches, one of the drawbacks is the lack of quantitative validity to the ideas at this stage. That is, the ideas have not been shown to have popularity in the constituency that matters – the customers. We have found that the Smart Incentives approach can provide both creativity and validation in the same step. Respondents to a survey compete with each other to produce ideas thus introducing creativity into the process. The generated ideas are then evaluated by a peer group to provide the required market validation. This approach can be useful for generating ideas on both whole products and individual features.

 Feature Development:
Feature development is the process of identifying features that would be of interest to customers. Traditional methods such as Importance Scales can be used, but may not provide sufficient discrimination between features. Pairwise comparisons of features are a straightforward method for identifying feature importance. The task is simple, but can be tedious if a large list of features needs to be culled. More recently developed methods such as Max-Diff scaling can provide a better alternative. Max-Diff is similar to pairwise comparison, except that more than two features are evaluated at a time (3-5) and the most and least preferred alternative is chosen from each set. Some advanced statistical analysis on the back end provides a score for each feature that is generally more discriminatory than a regular importance scale.

Another alternative is the Kano method where the positive and negative aspect of each feature is rated in order to distinguish the “must have“ features from the “nice to have” features. The final method in this stage (that straddles this and the next stage) is the Self-explicated Method (SEM). Respondents rate the desirability of each level of each attribute as well as the importance of each attribute. Combining these two pieces of information gives attractiveness scores (similar to conjoint utilities) for each attribute level. Although all attributes and levels are rated by respondents (as in conjoint analysis), since they are presented individually, this method may be more appropriately seen as useful for feature development.

Product Development:
In this stage, combinations of features are used to build or evaluate the product. The Configuration allows survey respondents to build their ideal product by selecting from a list of available features. Usually prices are provided at the feature level to ensure that respondents make realistic decisions. As respondents build their own ideal products, the most popular features and feature combinations rise to the surface, resulting in the automatic development of preference based market segments. The Optimizer is different in that respondents make choices from among fully formed products. Information from their choices is taken into account in creating successive products that are more preferred till the process finally converges on the respondent’s ideal product. This method is more appropriate when the design and packaging (i.e. the visual element) is more important. As with the Configuration, the market segments itself into preference based segments.

The various flavors of conjoint (such as traditional, discrete choice, adaptive) can also be used in this stage to identify feature importance. But care has to be taken to ensure that the basic assumptions are met and that the right type of conjoint is used.

 Product Testing:
Conjoint analysis can be fruitfully used in this stage also to estimate the interest in various product combinations and especially in running market simulations. The latter ability is very important in cases where a strong competitive market exists and reasonable estimates of take rates and ability to choose the ideal combination for the market are requisites. Concept testing is much more limited than conjoint and is usually used when the product is almost set except for perhaps one or two questions, often relating to price.

In short, the chaos of the product development process can be structured, and appropriate methods applied, to gain maximum benefit at different stages.

New Product Development Process in the Overall Business Context:
Businesses use strategic management to achieve their long-term objectives. This requires formulating strategies for various elements of the business in a coherent manner so that they are consistent and integrated. Once this is done, procedures to implement the plans need to be devised. The resulting actions need to be monitored so that changes can be made and the process controlled in an effective manner.

In the Figure 2.1 shows some of the key strategies with product development strategy being one of them. The success of the new product development depends strongly on formulating and implementing strategies. According to Wheel wright and Clark, companies succeeding in the global and dynamic competition are those that are able to bring new products fast to them market, products that satisfy the expectations of the customer. Those:

• approaching new product development in a structured manner are more successful than those with an ad-hoc approach
• emphasizing early stages, have a higher chance of success than those not doing

4. New Product Development Models:

 A variety of models have been proposed to get better insight into the new product development process and its management. The process starts with an idea to build a product that meets specific requirements (or create new requirements for radically innovative products) defined by customers and/or the manufacturer, and ends when the product is launched on the market. It involves several phases and the number of phases and descriptions of the phases vary from model to model. An illustrative sample is given in Table 2.1

 Product Life Cycle Phases: Basic Concepts and Activities:
In this section we discuss the basic concepts and activities in the five different phases of the product life cycle model shown in Figure 1.1. This is needed for a proper understanding of the new model for decision making regarding product performance and specification in new product development.Opportunity, Idea, and Concept

These three terms are closely related and important in the context of new product development, and may be defined as follows :

Opportunity: An identified business or technology gap that exists between the current situation and a potential future that can be exploited to gain competitive advantage or solve a problem.

Idea: The earliest perception of a new product or service. It may be an early view of a solution for taking advantage of the opportunity.

Concept: Has well-defined form and description, and includes an understanding of the technology needed, the primary features, and customer benefits.

New Product Development Drivers:
The trigger (need or opportunity) for a new product idea can be one or more of the following factors:

Technology: Advances in technology (either in-house or outside) provide an opportunity to improve existing products.

Market: The manufacturer has to improve his existing product in response to (i) competitor actions (e.g., reducing the price or an improvement to their product) and/or (ii) feedback from customers through complaints about product performance.

Management: The motivation for improvement could be (i) internal (e.g., to increase market share, or improve profits by reducing warranty cost) and (ii) external

(e.g., new legislation related to product performance).

Screening of Ideas

The new product drivers above generate a continuous flow of new product ideas.Thus, there is also a continuous screening of ideas to decide which ones to pursue further. Screening is concerned with answering the following questions :

• Does the idea fit within the business market or technology focus area ?
• Are the business opportunities attractive (e.g., potential market size and growth)?
• Is it technically feasible to develop and produce the product?
• Are there any potential hindrances that may stop the project (e.g., legislative and/or environmental issues)?

Once an idea is selected for further investigation the subsequent activities that need to be carried out can be grouped into three groups: (i) product definition, (ii) project plan, and (iii) project definition review. This process is very selective, since up to 90% of the ideas and 80% of the concepts may be dismissed. A review of the literature on front-end indicates a considerable variation in the activities to be carried out in the front-end phase. We include screening of the idea whereas many others view the front-end starting after the ideas have been screened.

Product Definition:
 
The main task in the product definition is to translate feasible ideas into technically and economically feasible and competitive product concepts as shown in Figure 2.2.An important aspect of this process is the capture of business objectives (presented by internal stakeholders) and customer requirements (presented by external stakeholders) such that a concept meeting these may be developed. This process may be called “requirements capture”. The product definition states what characteristics (preferably measurable) that the product should have in order to meet the expectations of both internal and external stakeholders. To establish the product definition is an iterative process involving:

• Market investigations and market research studies
• Competitive analyses
• Business and financial analyses
• Technical and manufacturing appraisals
• Resource and capabilities assessments, all aiming at ensuring the feasibility of the concept

Business Objectives: The business objectives can be defined as “the overall business goals for the new product development process” or “what the product should do for the business.” It can be the required return on investment, desired market share, and so on. The factors that influence the business objectives are as indicated in Figure 2.3.

Product Life Cycle Phases: Basic Concepts and Activities:
 

Customer Requirements:
For consumer durable , customer requirements, wants, and preferences (what the product should do for the customers) are identified through market research. A problem of concern is that customers often state the requirements in a vague manner. This represents a great challenge when conducting market studies and in translating the vague requirements into specific product characteristics.8 For custom-built products, the customer usually defines the requirements, wants, and preferences in detail.

Concept Generation and Screening:The process of generating feasible concept specifications is concerned with-

• Identifying the possible concepts that can be pursued to meet the business objective and the customer requirements
• Evaluating the most likely candidates in terms of performance
• Deciding on preferred concept(s)

The concept generation process starts with determining the overall functions (and sub-functions) of the product. What the product should do, is defined through these functions, prior to exploring product concepts and solutions.

The freedom to choose function structures and solutions depends on the degree of product modularization, as dictated by the product platform strategy set out by the manufacturer.

Product Platforms and Modularisation: Platform strategies and modularization have significant impact on the concept generation process. In the ever tougher global competition manufacturers are facing, many manufacturers attempt to reduce design and production costs by increasing the use of the same parts, or modules, across different products. Product platforms and modularization are common concepts in this context. A broad definition of a platform isa relatively large set of product components that are physically connected as a stable sub-assembly and are common to all different products.”

Product platforms allow manufacturers to reduce the number of product specific

components,  and, in turn reducing the production cost as plants are utilized better, and the logistics are simplified. It also allows manufacturer to better meet individual customer demands.

Project Plan:The project plan deals with planning the remainder of the new product development project in detail and deals with issues such as time and resource allocation, scheduling of tasks, and so on. The project planning encompasses:

• Activity planning
• Definition of roles and responsibilities
• Resource and service planning
• Risk management planning
• Establishing project performance measures

 Design:The design phase is concerned with arriving at product characteristics that may provide the desired product attributes determined in the front-end phase. This phase may consist of several sub-phases and decision points.The initial efforts of the design phase are concerned with arriving at an optimal product architecture.

Design definition activities: These activities involve evolving the product design at an ever increasing level of detail, until all details have been laid down, and the product is ready for production.

Design evaluation activities: These activities encompass analysis, evaluation, and comparison of potential design options, aiming at finding the best solution and potential improvements of the chosen solution.

Design management activities: These activities are concerned with coordinating and managing the design definition and evaluation activities throughout the new product development process.

Design Reviews: Several formal design reviews may be carried out. In the early design phases, one or more reviews (the number depends on the product complexity14) may be required to verify the product architecture. Subsequently, more design reviews may be required to verify critical components. A critical design review is usually conducted to verify the final design, prior to the launch of production or construction.

 Development:The development phase is concerned with both component and product prototype testing. Development is mainly necessary when items involve new technologies, or their application is outside the range used in the past. Tests are conducted using engineering breadboards, bench test models, service test models, rapid prototyping, and the like.

 Production: Having, throughout the design and development phases, found a solution that meets the desired performance, within given constraints, the challenge of the production and assembly/construction phases is to retain the designed-in performance.

Process Control: The process state can be either in-control  or out-of-control. The effect of assignable causes can be eliminated through proper design of the process and is referred to as off-line control. Through regular inspection of the items produced and using control charts, we can detect the change from in-control to out-of-control and this is referred to as on-line control.

Inspections and Testing: In addition to statistical process control, several inspection and testing methods are aimed at ensuring conformance to the built-in performance of produced items.

 Post-production:

For standard products, this phase involves two sub-phases – marketing and product support. For custom-built products, this phase comprises only the latter.

Marketing:This sub-phase deals with issues such as the logistics of getting the product to the markets, sale price, promotion, warranty, channels of distribution, and so on.  The strategies that we formulate for some of these (e.g., price) would need to change over the life cycle and in response to external factors such as competitors’ actions,economy, customer response, and so on.

Price:There are two approaches to pricing. The first is based on the cost of manufacture scaled upwards to ensure the desired profit. The second is based on market demand and supply considerations.For a product new to the market, the sale price is generally high at the start of the life cycle and comes down during the later stages partly due to reduced production costs, but also because new competitors appear in the market.

Promotion: Depending on the product, the manufacturer can use different media e.g.radio, television,  newspapers, magazines, mail brochures, and leaflets to promote the product. The duration or size of a particular advertisement and the frequency of repetition have an impact on consumer awareness and their decision making processes. For expensive products, the kind of product support that the manufacturer provides can also serve as a very effective promotional tool as well as for differentiating from competitor’s products.

Example 2.4 (Cellular Phone): Any advertising slogan or message has a limited life and manufacturers need to come up with new ones. Sohn and Choi (2012) look at the advertising lifetimes for cellular phones sold in South Korea by five different South Korean manufacturers during 1911-1912. The following data (for LG Telecom 019) is extracted from their Table 1.

Title of advertisement	Duration of advertisement	Advertisement lifetime(days)	Subscribers during the advertising period	Number of advertisements switching by competitors
The birth	09/08/11-31/08/11	23	88,136	0
Family	01/09/11-26/11/11	87	2,18,817	6
Cradle song	27/11/11-12/03/12	106	4,06,223	12
The vivid PCS	19/01/12-25/03/12	66	3,61,346	4
My father	13/03/12-04/08/12	145	7,68,433	11
Shining PCS	11/04/12-10/09/12	153	6,85,103	14

Product Support:When making purchases, customers believe that they are buying more than a physical item. These include maintenance, spare parts, training, upgrades, and so forth. They also have expectation about the level of support service subsequent to the sale of the product and this is called product support. Product support service refers to the different types of services needed over the useful life of a product (consumer non-durable, commercial or industrial) to ensure satisfactory operation of the product. Product support service can add value to the tangible product in several ways:

• Extending the product life cycle
• Maintenance can give a product further use and postpone replacement
• Direct value in initial sale of product
• Delivery, installation, base and extended warranties add value to the product from the customer perspective

Product support service can include one or more of the following activities:

• Parts, information, training
• Installation
• Maintenance/service contracts
• Warranties, extended warranties, service contracts
• Design modification/customization

2.2 Marketing Strategy
Marketing strategy is the fundamental goal of increasing sales and achieving a sustainable competitive advantage. Marketing strategy includes all basic, short-term, and long-term activities in the field of marketing that deal with the analysis of the strategic initial situation of a company and the formulation, evaluation and selection of market-oriented strategies and therefore contribute to the goals of the company and its marketing objectives

Developing a marketing strategy
The process generally begins with a scan of the business environment, both internal and external, which includes understanding strategic constraints.[3] It is generally necessary to try to grasp many aspects of the external environment, including technological, economic, cultural, political and legal aspects.[4] Goals are chosen. Then, a marketing strategy or marketing plan is an explanation of what specific actions will be taken over time to achieve the objectives. Plans can be extended to cover many years, with sub-plans for each year, although as the speed of change in the merchandising environment quickens, time horizons are becoming shorter.[4] Ideally, strategies are both dynamic and interactive, partially planned and partially unplanned, to enable a firm to react to unforeseen developments while trying to keep focused on a specific pathway; generally, a longer time frame is preferred. There are simulations such as customer lifetime value models which can help marketers conduct “what-if” analyses to forecast what might happen based on possible actions, and gauge how specific actions might affect such variables as the revenue-per-customer and the churn rate. Strategies often specify how to adjust the marketing mix; firms can use tools such as Marketing Mix Modeling to help them decide how to allocate scarce resources for different media, as well as how to allocate funds across a portfolio of brands. In addition, firms can conduct analyses of performance, customer analysis, competitor analysis, and target market analysis. A key aspect of marketing strategy is often to keep marketing consistent with a company’s overarching mission statement.[5]

Early marketing strategy concepts
In his classic Harvard Business Review ( HBR  ) article of the marketing mix, Borden (1964) credits James Culliton in 1948 with describing the marketing executive as a ‘decider’ and a ‘mixer of ingredients.’ This led Borden, in the early 1950s, to the insight that what this mixer of ingredients was deciding upon was a ‘marketing mix'” (34).

“In product differentiation, according to Smith (1956, p. 5), a firm tries ‘bending the will of demand to the will of supply.’ That is, distinguishing or differentiating some aspect(s) of its marketing mix from those of competitors, in a mass market or large segment, where customer preferences are relatively homogeneous (or heterogeneity is ignored, Hunt, 2011, p. 80), in an attempt to shift its aggregate demand curve to the left (greater quantity sold for a given price) and make it more inelastic (less amenable to substitutes). With segmentation, a firm recognizes that it faces multiple demand curves, because customer preferences are heterogeneous, and focuses on serving one or more specific target segments within the overall market” (35). Dean’s “skimming and penetration strategies”
 Corporate strategy concepts
Andrews’ “SWOT analysis”
Although widely used in marketing strategy, SWOT (also known as TOWS) Analysis originated in corporate strategy. The SWOT concept, if not the acronym, is the work of Kenneth R. Andrews who is credited with writing the text portion of the classic: Business Policy: Text and Cases (Learned etc al , 1965)” (41).

Standoff’s “growth strategies”
The most well-known, and least often attributed, aspect of Igor Standoff’s Growth Strategies in the marketing literature is the term ‘product-market.’ The product-market concept results from Ansoff juxtaposing new and existing products with new and existing markets in a two by two matrix” . [Sahiful Islam]

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