NEW PRODUCT DEVELOPMENT
PROCESS
Roll no : 8
INDEX
• INTRODUCTION TO NEW PRODUCT DEVELOPMENT……….3
• INTRODUCTION TO APPLE………7
• INVENTION OF iPOD……….. .8
• STAGES OF DEVELOPMENT PROCESS OF iPOD………....9
INTRODUCTION OF NEW PRODUCT DEVELOPMENT
New product development (NPD) is the term used to describe the complete process of bringing a new product or service to market. There are two parallel paths involved in the NPD process: one involves the idea generation, product design and detail engineering; the other involves market research and marketing analysis. Companies typically see new product development as the first stage in generating and commercializing new products within the overall strategic process of product life cycle management used to maintain or grow their market share.
A product can be considered new under the following
situations:-• New-to-the-world products • New product lines
• Additions to existing product lines
• Improvements and revisions of existing products • Repositioning
• Cost reduction
Why Develop New product:
• To replace declining products.
• To take advantages of new products. • To maintain/increase market share. • To defeat rivals.
• To keep up with rivals.
• To maintain competitive advantage. • To fill a gap in the market.
New Product Development Process:
Stages in New product development process 1.IDEA GENERATION:
Idea Generation is often called the "fuzzy front end" of the NPD process
• Ideas for new products can be obtained from basic research using a
SWOT analysis (Strengths, Weaknesses, Opportunities & Threats), Market and consumer trends, company's R&D department, competitors, focus groups, employees, salespeople, corporate spies, trade shows, or Ethnographic discovery methods (searching for user patterns and habits) may also be used to get an insight into new product lines or product features.
• Lots of ideas are being generated about the new product. Out of these
ideas many ideas are being implemented. The ideas use to generate in many forms and their generating places are also various. Many reasons are responsible for generation of an idea.
• Idea Generation or Brainstorming of new product, service, or store
concepts - idea generation techniques can begin when you have done your OPPORTUNITY ANALYSIS to support your ideas in the Idea Screening Phase (shown in the next development step)
2. IDEA SCREENING :
The object is to eliminate unsound concepts prior to devoting resources to them. screeners should ask several questions:
• Will the customer in the target market benefit from the product? • What is the size and growth forecasts of the market segment/target
market?
• What is the current or expected competitive pressure for the product
idea?
• What are the industry sales and market trends the product idea is
• Is it technically feasible to manufacture the product?
• Will the product be profitable when manufactured and delivered to
the customer at target price?
3. CONCEPT DEVELOPMENT TESTING:
• Develop the marketing and engineering details
• Investigating intellectual property issues and search patent data bases • Who is the target market and who is the decision maker in the
purchasing process?
• What product features must the product incorporate? • What benefits will the product provide?
• How will consumers react to the product?
• How will the product be produced most cost effectively?
• Prove feasibility through virtual computer aided rendering, and rapid
prototyping
• What will it cost to produce it?
4. MARKETING STRATEGY DEVELOPMENT:
Following a successful concept test, the new product manager will develop a preliminary strategy plan for introducing new product in the market. The plan consists of three parts.
• The first part describes the target market size, structure and behavior
for the first few years.
• The second part outlines the planned price distribution strategy and
marketing budget for the 1st year.
• The third part of marketing strategy plan describes the long run sales
and profit goals and the marketing mix strategy over time.
5 .BUSINESS ANALYSIS : Business Analysis involves
o Estimating likely selling price based upon competition and customer feedback
Estimating sales volume based upon size of market and such tools as the Fourt-Woodlock equation
Estimate profitability and break-even point
6. PRODUCT DEVELOPMENT:
In this stage, detailed technical analysis is conducted to know whether the product produced at costs is low enough to make the final price attractive to the customer. Here a working model or a prototype is developed to disclose all tangible and intangible attributes of the product. A product protocol is prepared which is a detailed downiest containing the important attributes that are expected in the product. Once the protocol has been developed, it is handed over to the research the development department to develop the prototype of the product.
7. MARKET ANALYSIS: Market analysis involves
• Producing a physical prototype or mock-up
• Testing the product (and its packaging) in typical usage situations • Conducting focus group customer interviews or introduce at trade
show
• Making adjustments where necessary
• Producing an initial run of the product and sell it in a test market area
to determine customer acceptance
8. COMMERCIALISATION (often considered post-NPD) involves: Launching the product
Producing and placing advertisements and other promotions Filling the distribution pipeline with product
Challenges in NPD:
To Develop innovative products. To Bring new ideas to market ahead.
To Integrate regulatory compliance into product lifecycle processes to reduce business risk and sell products in global markets.
To Effectively manage the global manufacturing supply chain to ensure on-time, on-cost and quality product delivery.
Introduction
Apple
Apple Inc. is an American multinational corporation that designs and
markets consumer electronics, computer software, and personal computers. The company's best-known hardware products include the Macintosh line of computers, the iPod, the iPhone and the iPad. Apple software includes the Mac OS X operating
system; the iTunes media browser; the iLife suite of multimedia and creativity software; the iWork suite of productivity software; Aperture, a professional photography package; Final Cut Studio, a suite of professional audio and
film-industry software products;Logic Studio, a suite of music production tools; the Safari internet browser; and iOS, a mobile operating system.
Invention of iPod
Apple’s iPod has taken the world by storm. Nearly omnipresent, it has changed not only the way people listen to music, but it has transformed its parent company Apple into an entertainment giant. In order to understand how this change came about, we’ll take a look at Apple’s ongoing efforts to make iPod synonymous with hip.
When you mention MP3 Player, the first thing that comes to most people’s minds is iPod. The words MP3 Player and iPod are almost synonymous in today’s society. The iPod has revolutionized the MP3 Player market since its initial release and has continued to do so in following releases.
Few people know - and few market analysts too - that the iPod + iTunes business idea was not conceived inside Apple, but was proposed to Apple by an outside source, a music lover and Engineer named TonyFadell, who was later hired by Apple. Fadell had approached other companies before Apple, including Microsoft, and Microsoft had turned away Fadell and discarded the project as “Uninteresting”. Microsoft executives turned down Fadell and the iPod + iTunes business idea saying: " This will not make any money ”. The iPod was developed by Tony Fadell and his team in just 12 months. The name iPod was proposed by Vinnie Chieco, a copywriter who was called by Apple to figure out howto introduce the new player to the public. After Chieco saw a prototype, he thought of the movie "2001:A Space Odyssey" and the phrase "Open the pod bay door, Hal!"
October 23rd 2001 – a day that revolutionized the digital music world, Apple Computer now known as Apple Inc. released their first MP3 Player, the iPod.
iPod is a line of portable media players designed and marketed by Apple and launched onOctober 23, 2001. The product line-up currently consists of the hard drive-based iPod Classic, the touchscreen iPod Touch, the compact iPod Nano, and the ultra-compact iPod Shuffle. Storage capacity varies by model, ranging from 2 GB for the iPod Shuffle to 160 GB for the iPod Classic
“While everyone else was making an MP3 player that was
better/cheaper/faster, Apple was making electronic jewelry that also played MP3’s. Never focusing on price, they brought to market more value, more style, and new ways of interacting with digital media.” says David Taber a marketing consultant who then goes on to explain that strategy really does matter. Apple knew what they were doing when they designed the iPod; they made it work better on the Mac than on a PC for obvious reasons – to get people to buy more Apple computers, both iPod and Mac sales benefited from this strategy.
Stages of Development in iPOD
IDEA GENERATION
Tony Fadell In 2000, digital music players were either big and clunky or small and useless with equally terrible user interfaces.
Tony Fadell, former employee of General Magic and Phillips, envisioned a brand new MP3 player. Unlike the bulky flash
memory-based MP3 players from Rio and other companies, Fadell wanted to deliver a small hard drive-based player that was linked with a content delivery system where users could legally obtain and download music.
The need for the first iPod resulted from Apple’s recognition that that the development of digital products were moving at a fast pace for many new digital devices such as organizers, digital camera models and so on, but use of digital music remained tied to older technology based devices
The iPod originated with a business idea dreamed up by Tony Fadell, an independent inventor. Fadell's idea was to take an MP3 player, build a
Napster music sale service to complement it, and build a company around it. Apple hired Fadell in early 2001 and assigned him a team of about 30
people, including designers, programmers and hardware engineers.
October 23rd 2001 – a day that revolutionized the digital music world, Apple Computer now known as Apple Inc. released their first MP3 Player, the iPod Steve Jobs announced that “listening to music will never be the same again,” and for once the hype wasn’t far short of the mark. Apple may not have invented the digital music player but it did turn the MP3 player into a fashion icon and build a legitimate digital music industry around it. It also set
standards for product design and ushered in an era of glossy, strokable technology.
IDEA SCREENING :
The need of making downloaded music easily portable was created, and what eventually has made the product category of mp3-players (of descent
memory capacity) viable is that data storage discs have become small enough for this use.
The target market for the iPod to be from middle school ages to adults. That would mean everyone who has access to and knows how to use a computer. The iPod is for those persons who like to listen to music, take pictures, and have easy access to what they enjoy most. Downloading music is rapidly growing and those that like to have the latest music want it easy and fast.
• Does the iPOD add value for the customer? Does it satisfy a market
need?
• Can the product be made within a stated time period to get it to market
when needed?
• How many units of it will sell and at what price compared to the other
MP3 players?
• Can Apple manufacture and sell the product within budget and still
make money?
• Does Apple need to provide the customer with after-sales service? If
so, do we have the resources to do that?
• Does the product fit Apples and corporate strategy?
CONCEPT DEVELOPMENT AND TESTING
The iPod line came from Apple's "digital hub" category, when the company began creating software for the growing market of personal digital devices. Digital cameras, camcorders and organizers had well-established mainstream markets, but the company found existing digital music players "big and clunky or small and useless" with user interfaces that were "unbelievably awful, so Apple decided to develop its own. As ordered by CEO Steve Jobs, Apple's hardware engineering chief Jon Rubinstein assembled a team of engineers to design the iPod line, including hardware engineers Tony Fadell and Michael Dhuey,and design engineer Jonathan Ive.The product was developed in less than one year .
Some of the features that were implemented to make the ipod stand out among the other music players were :
o Quicker transfer time. o Small Fashionable design. o Easy-to-use interface.
o Small hard drive-based player instead of bulky flash memory-based MP3 players.
o Bluetooth headphone system o Large playlist
o Music equalizers o Byzantine interfaces o Easy navigation o Good Battery life .
Apple did not stop there, they continued to be that much better, they used better hardware, software, packaging, and marketing techniques than anyone else. The iPod was also more durable than its competing products due to Apple’s use of better parts which, in return made it more reliable.
BUSINESS ANALYSIS
Before entering a market, Apple skimed its market. Because of how it first started its business in the High-Tech industry, it has needed to restrict its market. Indeed Apple tried to compete with its biggest rival Microsoft by selling High-Tech products costlier because of their better design.
In a very calculated fashion, Apple has leveraged its traditional designer and educational segments against the world market at large in the hopes that the emulation of their cool design factor could be successfully packaged and sold; and though without no regards to its limitation as being a high price tag. Apple was not looking for the wealthier customers but for the most valuable ones.
The iPod was touted to be a symbol of change, it is not only a MP3 player but a change in people way of listening to music and way of attitude towards to the Music World industry.
Apple does not care about local market conditions. Its reputation and
popularity give it the capacity to enter any kind of market with its own price. Moreover, the iPod wanted to be merely seen as a luxury product as
everyone cannot afford one.
Apple wanted consumers to buy iPOD as a must have fashion accessory defined by uniqueness. Apple knows who are its customers: the early
adopters who are eager to get the new Apple gadget. Apple made research to know who would be the next interested in the new iPod. Thus few may pay a premium for good design but when they do so, they valid Apple’s selling strategy: paying the price of coolness and stylishness. The iPod was launched to attract new MP3 users, at a more affordable price. Still it costs a certain price comparing to a casual MP3.
The iPOD was not to be a casual MP3 ,It was to be known for Apple product design and quality.
COMMERCIALISATION
To launch the iPOD as a surprise product, it was not pre-announced. This strategy was used by Apple for launching all the generations of iPod. Extensive advertising and marketing was undertaken for the iPod.
A series of innovative advertising campaigns via television commercials, print ads, posters in public places, wrap advertising etc were used. The case also describes how Apple created an iconic image for iPod that attracted the young and the old alike. It was positioned as a 'cool' product for the present generation.
Apple advertised extensively for iPod. Just when iPod was launched, an introductory campaign which would explain an unfamiliar product was needed. For this, Jobs thought a traditional campaign was preferable. Hence,
the first iPod's commercial showed a man listening to the songs on his iPod and dancing.
The commercial illustrated iPod's portability and ability to easily play songs downloaded from one's computer. All media channels including television, print, hoardings, posters and wrap advertising were used to advertise iPod. The advertisements and commercials of iPod focused on the 'coolness' aspect as it made theviewers believe that having one would make them accepted among their peers. Analystscommented that the hype surrounding iPod was created due to its unique advertising, word of mouth publicity by the users and the look and design of the product.
NEW PRODUCT PRICING
Apples pricing strategy is Aggressive pricing and overwhelming features. IN 2001 pricing for all iPods has become significantly more expensive , and had a very high premium that the company has typically commanded for its
products.
The initial price of the iPhone was set at: Model Price
4gb model $499 8gb model $599
Introduced in June 2001 at a top price of $599 in the United States, the iPhone was one of the most anticipated electronic devices of the decade. Despite its high price, consumers across the country stood in long lines to buy the iPhone on the first day of sales. Just two months later, Apple discontinued the less-expensive $499 model and cut the price of the premium version from $599 to $399.
http://www.besttechie.net/2008/03/01/the-ipod-success-thank-the-marketing-department/ http://www.oppapers.com/subjects/ipod-and-itunes-price-strategy-page1.html http://christophe.benavent.free.fr/IMG/pdf/AINI_2008_Apple_s_Pricing_Strategy. pdf http://news.worldofapple.com/archives/2006/10/18/apple-targets-myspace-in-ipod-marketing-campaign/
