Operations and Innovation: New Product Development
Declaration
I declare that this assignment is my own work, presented in my own words, ALL sources of information have been cited and any direct quotations are contained within quotation marks.
Introduction
In the field of engineering and business, new product development, abbreviated as NPD, is the complete process that involves introduction of an entirely new product line, or an expansion of an existing line to include more products (Ahmad, Mallick & Schroeder, 2013). In this case, a product is considered as a set of benefits which are offered for exchange with other valuable commodities like money, and can either be tangible or intangible. Two distinct parallel paths exist in the adventure of a new product development: generation of ideas, design of product, and engineering detailing; while the other segment involves carrying out of market research, as well as analysis.
New product development is basically one of the initial stages which are utilized by companies to commercialize and generate income to their ventures. Apart from this reason, organizations decide to introduce a new product due to a myriad of reasons, including being part of a strategic form of product life cycle management (Kuwashima, 2012). This paper champions the thesis that whichever reason is behind a new product development, organizations must take great care in handling this all-important process, being enamored less in the new product ideas, and instead focusing on market research, and design of implementation.
Reasons for Introducing a New Product
This paper uses the case of a grocery company, which deals in milk products, and analyses the process, need, and design of new product development within this company, which has been chosen to be frozen yoghurt. Virtually all businesses need to bring in new innovations regarding new products so as to be able to stay further ahead, or maintain pace with its competitors (Lakemond, Magnusson, Johansson & Säfsten, 2013). Continuation with a single or similar product for a long time in the market would have serious ramifications to the business, including marked reduction in sales and profits. There are numerous reasons why the grocery company, just like any other company, may want to introduce a new line of product, that is, frozen yoghurt. First, consumers have rapidly and ever changing needs and preferences. In order for firms to keep track and maintain satisfaction of their customers, which would serve to win their loyalty, they have to be on toes with these ever changing needs and preferences. One sure way to respond to this change is through new products and services, which are tailored towards specific needs of customers. Without this necessary change and response, customers will always find satisfaction and solace in the next substitute, or product competitor, and in the process reducing the demand and sale of the old product (Sethi, Iqbal & Sethi, 2012). For instance, as consumers become more health conscious, the Coca-Cola Company has been quick to invent a new product which does not contain sugars with calorie values, though the taste is as sweet as the old product (Jae Young, Jungwoo & Jongsu, 2013). This has served to maintain its customers, who might otherwise have switched to other health products.
In addition, some natural forces in the life cycle of the common yoghurt might necessitate the introduction of a new product of superior nature. All products, irrespective of the market demand and quality, undergo a formal process of the product life cycle, which ultimately takes them to maturity (Creusen, Hultink & Eling, 2013). At this stage, products register low sales, less demands, and are generally unpopular among the consumers, since other sleek products might have entered the market. The maturity stage stimulates the need to create product modifications, or introduce an entirely new product, so as to rejuvenate sales and demand. Moreover, competitors are also key players in the move to introduce a new product. Typically, these are agents that force change to occur in an organization’s products. In a market that welcomes new innovations, especially those driven by technology, it becomes a necessary move for all players in the market to introduce new products, so as to keep pace with the competition (Slotegraaf & Atuahene-Gima, 2011). Usually, some companies are afraid to venture into new product development, but when a competitor is successful, there is usually a massive proliferation of such invention, as the grocery industry is largely homogenous.
Market share is a very important aspect of competition, especially in the grocery industry, where there is massive proliferation of homogenous goods and services. Usually, the company with the largest market share enjoys various fringe benefits such as brand name, economies of scale, and massive sales. In order for an organization to maintain his market share, it must be able to produce most of the needed products by consumers. The move to introduce frozen yoghurt as a complementary product line in the grocery company might also be crucial in expanding the market share, as well as shelf-space in major stores and retail outlets (Fu, Jones & Bolander, 2008). It is also important in placing a company as the market leader, who enjoys various benefits including setting of prices, enjoying the largest market following, and generation of huge profits. Generally, with numerous products, a company would always position itself strategically in the minds of consumers, thus creative a lucrative band image.
Product Design and Development
Product design has been defined as the entire process of creating new products, aimed at satisfying the diverse needs of customers. Product designers play an important role of conceptualizing and evaluating new ideas, which are then transformed into tangible products and inventions. It involves the combination of science, art, and technology to come up with innovative products which keep up with the competition in the grocery market (Gielens, 2012). Product design and development is a knowledge-intensive, cross-functional work that is gaining substantial importance in the current fast-paced economy and market environment. It is a critical factor, particularly in the success of an organization as it is the pillar that sets features, characteristics, and performance of goods and services according to the demand of consumers. The overall objective of product design and development process is to create an excellent product with unique functionality that can be appealing to customers. A new product being designed should be of low-cost materials, superior quality, and not involve an intensive method to develop (McNally, Akdeniz & Calantone, 2011). As a result, it must be highly competitive, and offer more satisfaction to its substitutes, in terms of appearance, quality, service life, performance, and price.
The product design and development process, in varying cases may utilize prototypes, of computer-aided designs. Prototyping is common in most engineering operations, where small samples of products are developed and used to carry out market tests. Computer-aided design has also been widely employed in the design process, which uses graphic display to present physical shapes of a proposed product (Ernst, Hoyer & Rübsaamen, 2010). Though these may not be very common in the grocery industry, they are important considerations to be made while developing a new product. In a product design process, a team approach as well as early involvement can be used to significantly reduce the amount of time taken in this process. Participants in the design process include marketers, researchers, developers, suppliers, and those in charge of engineering operations. Reducing the product design and development time increases the innovativeness and productivity of design teams (Mundra, Gulati & Gupta, 2013). This strategy is a labor intensive process, which usually calls for the involvement of a highly competitive team of specialists. These serve to reduce wait time between episodes of decision making, enhance better communication, and bring on board great and innovative ideas. Concurrent activities and early involvement in product design and development are beneficial since future problems are detected early enough and resolved to avoid causing mishaps in later stages. In addition, a team of specialists when working concurrently are able to learn from one another, and work synergistically to produce prime results. Lastly, this strategy avoids making of multiple changes once the design process is concluded, which speeds up the development process, and reduces overhead costs (Florén & Frishammar, 2012). Thus, this process requires decision-making skills and expertise of all pertinent segments of the organization.
The Design and Development Process of Frozen Yoghurt
In order to design the frozen yoghurt as part of the product line in the grocery company, the following stages would be crucial. The strategy includes analysis of current situation, where the designers accept and commit to finding a solution to the current problems associated with the common yoghurt. (Ahmed, Kazim & Arif, 2012). They bring resources together, in readiness to tackle the situation efficiently. It is at this stage that analysis of the decision to develop the frozen yoghurt is key. Conducting market research is a crucial bit of the design and development process, and most businesses have registered failure due to lack of market research. It enables the designers to understand and comprehend the current market trends, changes in needs and preferences of customers, and the available competition. With this knowledge, the product design team would be in a better position to develop a superior product, which would steer clearly ahead of every other existing similar product, and get the approval of customers. After market research, the new product idea is conceptualized, defined, and illustrated (Raassens, Wuyts & Geyskens, 2012). The key issue of reduced sales and need to attract more market share is clearly brought on board, and the conditions of the problem are coined into objectives of a new process. The concept to develop the frozen yoghurt is then synthesized, where the designers generate various ideas and solutions to the problem of design; select the most appropriate ideas that seem to be plausible and of guaranteed success; implement the selected ideas, by building prototypes which are tested with a sample of the market consumers; and evaluate the product through a series of organoleptic tests, making necessary improvements (Chi-Shiun, Chun-Shou & Chin-Fang, 2012). Once the sample frozen yoghurt is produced, and the final quality parameters agreed upon, the company launches a massive production to compete in the market, employing the necessary marketing mix to facility efficient market entry.
Contribution of the Frozen Yoghurt to Increase in Sales and Market Capturing
For this particular organization, just like many other firms, introduction of frozen yoghurt beside the existing common milk products is an engine of growth. Several existing frameworks such as growth-share matrix and product life-cycle, all postulate the necessity of introducing new products in the aspect of generation of future profitability, as well as prevention of a firm’s product line obsolescence (Thomadsen, 2012). In fact, researchers conclude by stating that innovative companies always achieve the highest profitability and stakeholder returns by investing in development of new products. However, developers must not forget that a new product may experience failures, which research showing that about 33-66% of all new products being launched in the market fail to materialized and realize profitability (Van Oorschot, Akkermans, Sengupta & van Wassenhove, 2013). Apart from sales, the frozen yoghurt will have three distinguishable benefits to the organization: it will increase long-term performance of financial value of the organization, which is not a benefit associated with adopting the strategy of sales promotions; investor reactions to the introduction of the product change and grow with time, thus indicating that valuable information can unfold in an event of a frozen yoghurt launch, which might be useful in enhancing overall growth and market share of the organization; and new product entry has been confirmed to yield the highest bottom-line, top-line, and market benefits. These reasons largely justify the need to introduce new products in the grocery organization, which is faced with stiff competition.
The grocery industry, as mentioned above, offers a challenging environment full of homogenous products and highly competitive market. The introduction of frozen yoghurt in the organization would promote sales and improve market share in a number of ways. First, the formal and comprehensive process of design and development, including extensive market research, generation of plausible ideas, analysis of most relevant and lucrative ideas, and synthesis of the selected ideas would generate a superior product which possesses overarching qualities (Roberts & Palmer, 2012). Such unique qualities of a keenly developed product would attract customers, who would generally shift from their current tastes of common milk products to embrace the new one. This way, the frozen yoghurt would register increased sales, as it gains popularity and market domination. In addition, since the product will be developed to bolster an existing product line, would ensure retention of existing customers, and especially with inclusion of new features, such modified product is likely to attract new customers, which most obviously would lead to increased market cover and sales (Marion, Friar & Cullinane, 2012). Extension of a product line, by introducing new products is a common strategy of new product development that is adopted by many firms. If a line had only two products, and then it is developed to include two more commodities, the number of customers would definitely increases, and the brand image of the organization will come out as superior, and commanding more attraction from consumers (Van Oorschot, Akkermans, Sengupta & van Wassenhove, 2013). Therefore, the market share commanded by the organization would increase, which represents an exponential increase in sales and profits as well.
Conclusion
New product development is a strategy, whose application is on the rise in the current business trends, cutting across sectors of electronics, manufactured goods, and clothing among others. With the rapid change in customer needs and preferences, competition, and market trends, there is increasing need for organizations to develop products that can keep pace with current developments. The process of developing a new product is an extensive one, requiring active participation of highly specialized team. Introduction of the frozen yoghurt would be beneficial to the grocery industry in no uncertain ways, including increased sales and market capture.
List of References
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