Posted in Business Management, Marketing, Principles of Management
on Mar 4th, 2014 | 0 comments
What Do You Mean by New Product Development?
In business and engineering, new product development (NPD) is the complete process of bringing a new product to market.
Innovate or Die:
Product management should be viewed form a broader perspective by business firms, in that, it has to include new product development as part of the action plan, apart from appraising the existing product line, positioning them effectively and taking brand decisions wisely. “Innovate or die’, is the modern entrepreneurial slogan. Unless organizations innovate and introduce new products, they cannot survive in the competitive market. Strategies defining the organization’s future are built upon the portfolio of new products.
Need for new product development:
- People always welcome change and new product development is an opportunity for the firms to meet the changes in consumer demands.
- They are a source of competitive advantage. Your new product may infuse a fresh lease of life to your sagging profits.
- New products may turn out to be the star performers of your firm and provide long term financial return on your investment.
- Some firms take the smart strategic choice of using the idle capacity of their plant for manufacture of a new product that may utilize the existing production and operation resources to an optimum level.
- They capitalize on research and development. Products that create a wave are a result of research on market trend and consumer preference. Firms can make it, if their research is customer-centric rather than product-centric.
- They provide opportunities for reinforcing or changing strategic direction. It is wiser to discontinue production of a product that does not find acceptance and divest the funds in a beneficial venture.
- They leverage marketing and brand equity. Big corporate firms while introducing new products make a big publicity, so that it can attract potential investors and consumers.
- They enhance the corporate image. You cannot expect a firm to make it big with a single product line or confined to one area of development. The growth of a company is evident only when it ventures into multifarious disciplines reflecting its capacity for expansion and diversification. Also if a company grows, the growth of the stake holders is rest assured as the company would be in a position to offer decent dividends with bonus. Even if a growing company ploughs back its profits for expansion, it is again a good thing for the investors as further expansion obviously means growing profits.
- They affect human resources-a new product is perceived differently by different people. It is a need satisfying concept with benefit for buyers; a bundle of need satisfying features for marketers; a way to add value for intermediaries; an opportunity to design for R and D and a chance; to assemble and process for the production department.
- They meet environmental threats-Until recent times, products were not subjected to environmental evaluation, but the recent crises regarding global warming and pollution has been an eye opener for all nations which are enforcing much rules and regulations, demanding for production aimed at environmentally safe products.
New product development is a multi-dimensional concept, inherent in most organizations. The process is initiated when the organizations are subject to market pressure and the firms are left with no choice other than to take up the challenge.
A List of Productivity Terms
- Automation – The use of robots or other automatic equipment to do certain tasks
- Business Productivity – The amount of goods or services produced by a business from a set amount of resources
- Capital Goods – Manufactured or constructed items that are used to produce goods and services
- Capital Investment – Funds the business has reinvested in the business
- Delegate – To assign authority or responsibilty to another person
- Disposable Income – The amount of income people have left to spend, or dispose of, after they have paid their taxes
- Division of Labor – Dividing a large job into units, or job tasks, and assigning an individual to do each of the tasks
- Efficiency – Accomplishing a task with a minimum expenditure of time and effort
- Flextime – A scheduling prodcedure in which employees select their own working hours as long as they work the required number of hours
- Franchise – A contractual agreement between a parent company and a franchise to distribute goods or services
- Goal Setting – Establishing an objective to be reached; may apply to individuals or to businesses
- Gross Domestic Product – The final market value output of all goods and services produced within a country’s geographic boundaries during a year’s time
- Gross Domestic Product per Capita – The average productivity of individual workers calculated by dividing the gross domestic product by the worker hours required to produce it
- Inflation – A rapid rise in prices that may occur when demand exceeds supply or when productivity declines and costs of labor go up
- Inputs – All the resources used in producing goods and services
- Job Orientation – Job preparation or induction in which new employees are acquainted with their surroundings, receive general information about the company and its policies, and are given specific information about their jobs
- Labor – The work people do or the workers themselves
- Labor Union – A group of workers who have joined together for a common purpose to improve the terms and conditions under which employees work
- Mass Production – The rapid production of large quantities of product
- Mechanization – The use of machines to perform certain tasks
- Natural Resources – Items that are found in nature and used to produce goods and services
- Outputs – The goods and services produced as the result of combining inputs
- Participative Decision-Making – The involvement of several individuals in making decisions; in business, the participation of employees in decisions to be made by management
- Productivity – The amount and the value of goods and services produced (outputs) from set amounts of resources (inputs)
- Quality of Work Life – The general conditions in which employees work
- Specialization – The process of making the best use of resources in the production of goods and servicse
- Standard of Living – The general condition in which people live; quality of life
- Technology – Scienctific applications to business objectives or the methods used to attain those objectives
- Trend – The general direction in which something is moving
- Worker Productivity – The amount of work a worker can perform in a given period of time, e.g., customers served per hour