Challenges in new product development stage
Companies that fail to develop new products are putting themselves at great risk. Their existing products are vulnerable to changing customer needs and tastes, new technologies, shortened product life cycles and also increased domestic and foreign competition. Let’s see various challenges in new product development stage & how to overcome it.
Reason for Failures in New Product Development Stage
Why do new products fail ?
- A high-level executive pushes a favorite idea through in spite of negative market research findings.
- The idea is good, but the market size is overestimated
- The product is not well designed.
- The product is incorrectly positioned in the market, not advertised effectively, or overpriced.
- Development costs are higher than expected.
- Competitors fight back harder than expected
Factors that hinder New Product Development Stage:
Shortage of important ideas in certain areas :
There may be few ways left to improve some basic products (such as steel, detergents).
Fragmented markets :
Keen competition is leading to market fragmentation. Companies have to aim their new products at smaller market segments, and this can mean lower sales and also profits for each product.
Social and government constraints :
Costliness of the development process:
A company typically has to generate many ideas to find just one worthy of development. Furthermore, the company often faces high R & D, manufacturing, and marketing costs.
Some companies with good ideas cannot raise the funds needed to research and launch them.
Faster required development time:
Companies that cannot develop new products quickly will be at a disadvantage. Companies must learn how to compress development time by using computer-aided design and manufacturing techniques strategic partners, early concept tests, and advanced marketing planning. Alert companies use concurrent new-product development, in which cross-functional teams collaborate to push new products through development and also to market.
Shorter product life cycles :
When a new product is successful, rivals are quick to copy it. Sony used to enjoy a three-year lead on its new products. Now Matsushita will copy the product within six months, leaving hardly enough time for Sony to recoup its investment.
Overcoming Challenges in New Product Development Stage
Given these challenges, what can a company do to develop successful new products ?
- Number-one success factor is a unique, superior product. Products with a high product advantage succeed 98 per cent of the time, compared to products with a moderate advantage (58 per cent success) or minimal advantage (18 per cent success).
- Another key success factor is a well-defined product concept prior to development. The company carefully defines and assesses the target market, product requirements, and benefits before proceeding.
- Other success factors are technological and marketing synergy, quality of execution in all stages, and also market attractiveness.
- New-product development is most effective when there is teamwork among R & D, engineering, manufacturing, purchasing, marketing, and finance.
- The product idea must be researched from a marketing point of view, and a specific cross-functional team must guide the project throughout its development. Studies of Japanese companies show that their new-product successes are due in large part to cross-functional teamwork.
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