lOMoARcPSD|10851789
Section 1.9 Unit Review
This unit provided an overview of NPD. There are a number of factors that
affect a company’s ability to develop new products. These include:
• Nature of their market environment
• Level of competition in the market
• Company size
• Length of the product lifecycle
There is a high risk of failure associated with NPD. Some of the factors that
can contribute to failure are:
• Insufficient market research
• Poor marketing effort
• Technical issues
• Bad timing of the development
Timing is identified as an important factor in NPD. Speed to market can
lead to a better competitive position and result in higher profits and less
risk.
The types of new products a company may develop are:
• New to the company (new product lines)
• New to the world
• Additions to existing product lines
• Improvements and revisions to existing products
• Product repositioning
• Reduced cost products
Each of these different types of new products can require a different
approach to development. The shape of the generic product lifecycle
shows how sales of a product change over time. The five stages of the
generic lifecycle are:
1 Development
2 Introduction
3 Growth
4 Maturity
5 Decline
The next unit will explore the use of a formal process to guide companies in
their NPD efforts. The goals of an NPD process are discussed as well as
lOMoARcPSD|10851789
several popular NPD process models including the much-used decision
stage model— Stage-Gate®.
Section 1.10 Self-Assessment Questions
Question 1
Discuss some of the reasons for undertaking NPD.
Question 2
Why can speed to market be crucial for product success? Use
examples to explain your answer. The examples can be real or
fictitious.
Question 3
Discuss some reasons for NPD failure. Use examples to develop your
answer. Again, the examples can be real or fictitious.
Question 4
What are the different types of products a company can develop?
Question 5
Briefly describe the product lifecycle in terms of revenue.
Section 1.11 Answers to Self-Assessment Questions
Answer 1
There are various reasons for undertaking NPD.
The nature of the market in which a company operates affects the
development of products in the company. If the company operates
in a changing environment where the needs of its customers change
rapidly, then it has to develop new products to respond to these
needs. Furthermore, if a company’s competitors are constantly
developing new products, then the company has to innovate and
develop new products to keep up with the rate of development of
the industry. Otherwise, they will fall behind competitively and
ultimately be forced out of the market.
Technologies can become obsolete overnight, forcing companies to
develop new products or cease operating. For example, in recent
years, MP3 players replaced portable CD players which, only a few
years earlier, had replaced portable cassette players.
Products often have lifecycles of varying durations. If a company
develops many products with short lifecycles, unless they continue
to develop new products, they will go out of business in a short
period of time.
lOMoARcPSD|10851789
The size of a company impacts its NPD capabilities. Small companies
may not have the resources to develop as many new products as
large companies. Furthermore, small companies may not be able to
survive product failure if they have invested a large amount of
resources in developing the product.
Answer 2
The ability to accelerate product development and get products to
the market ahead of the competition and within the window of
opportunity is central to product success.
There are major benefits for a company that gets its product to the
market ahead of its competition. Being first to the market can result
in competitive advantage. In addition, it can result in the securing of
a large share of the market or your company becoming associated
with the new product. For example, if the same product is being
developed by two companies, the company that releases the
product first will have a greater market share.
Releasing a product earlier can also mean fewer surprises. For
example, by reducing development time frames, you reduce the risk
of changes in market conditions, market requirements, or the
competitive situation during development.
Answer 3
Insufficient or faulty market research can result in a company
developing a product that does not satisfy customer needs
correctly, thus leading to product failure. For example, suppose a
company conducts a small amount of research using 10 customers
and identifies a particular need for which they develop a new
product. When they release the product, they find it does not sell as
well as they hoped because the group of customers they used for
the market research was too small and not representative of the
general population.
Companies can experience difficulties in turning customer needs
into pilot-scale products and full-scale production. The product
satisfies customer needs but the company does not have the
technical knowhow to manufacture the product in high volumes and
at a price the customer is willing to pay without compromising
product quality.
Finally, a product can fail if a company fails to market and launch
the product correctly. Too little advertising or using the wrong
advertising channels can mean that the target market does not
know about the product’s release. For example, the iPhone was a
very well marketed product. Consumers knew of its release in
advance and this resulted in waiting lists to purchase it. Had the
lOMoARcPSD|10851789
marketing not been as effective, sales may well have been lower,
demand for smartphones may have remained high, and there would
have been room for more competitors to enter the market.
Answer 4
There are a number of types of new products that a company can
develop. These include:
• New to the world products
• New to a company products (new product lines)
• Additions to existing product lines
• Improvements and revisions to existing products
• Product repositioning
• Reduced cost products
Answer 5
A product’s lifecycle can be divided into several stages. These stages
are described by the revenue generated by product sales. If a curve
is drawn showing product revenue over time, it can take one of
many shapes. The generic shape is shown in Figure 1.3.
Development
Introduction
Growth MaturityDecline
SalesVolume
Time
Figure 1.3: Typical Product Lifecycle
The first stage is the Development stage. At this stage, revenue is zero
because the product has yet to be released.
The second stage is the Introduction stage. When the product is introduced
to the market, sales will be relatively low until customers become aware
the product is available.
The third stage is the Growth stage. Revenue grows rapidly in this stage as
more customers become aware of the product and additional market
segments are targeted.
lOMoARcPSD|10851789
The fourth stage is the Maturity stage. The maturity stage is the most
profitable stage of the lifecycle. While sales continue to increase into this
stage, they do so at a slower pace than the previous stages.
The fifth and final stage is the Decline stage. Sales and revenue begin to
decline as the market becomes saturated with the product, the product
becomes technologically obsolete, or customer tastes change.
Section 1.12 Recommended Reading
Ulrich and Eppinger (2008) Product Design and Development, Chapter 1,
pp.1–10.
Cooper (2001) Winning at New Products: Accelerating the Process from
Idea to Launch, Chapter 1, pp.1–21.
Section 1.13 References
Cooper R.G. (2001) Winning at New Products, 3rd ed., Cambridge,
Massachusetts: Perseus Publishing.
Griffin, A. (1997) ‘PDMA Research on New Product Development Practices:
Updating Trends and Benchmarking Best Practices’, Journal of Product
Innovation Management, 14, 429–458.
