UNIT-II Product Management & New Product Development

Meaning of a New Product

A new product refers to a product that is new to the company or the market. It could be a
completely innovative product, an improvement over an existing product, or an adaptation for a new
market. It's about bringing innovation to the market, whether it's a revolutionary breakthrough or a
simple enhancement

Importance of a New Product

 Meeting Changing Customer Needs: Consumer preferences and needs constantly evolve, requiring
companies to develop new products to stay relevant.
 Growth and Survival: New products are essential for a company's long-term growth and survival in a
competitive market.
 Increased Profitability: Successful new products can generate significant revenue and profits.
 Competitive Advantage: Innovation through new product development can provide a competitive
edge.
 Brand Enhancement: New products can enhance a company's brand image and reputation.
 Market Expansion: New products can help a company enter new markets or expand its existing
market share.
 Customer Satisfaction: Fulfill emerging or unmet customer needs.

Example:

 Apple introducing the iPhone was a completely new product that revolutionized mobile
communication.
 Coca-Cola launching Coke Zero targeted a new health-conscious demographic.
 A company that only sells traditional gasoline powered cars, must develop electric vehicles to stay
relevant in the changing market.

Types of New Products

 New-to-the-World Products (Radical Innovations):

Completely new products that create entirely new markets.
Example: The first personal computer, the first smartphone, or CRISPR gene-editing technology.

 New Product Lines:

Products that are new to the company but not to the market.
Example: A beverage company entering the snack food market.

 Additions to Existing Product Lines:

New products that supplement a company's established product lines.
Example: New flavors of a popular soft drink, or a new model of a smartphone with enhanced
features.

 Improvements to Existing Products:

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 Revised or improved versions of existing products.
Example: A software company releasing a new version of its operating system with bug fixes and
performance enhancements.

 Repositioning:
Existing products that are targeted to new markets or segments.
Example: Baking soda being marketed not only for baking but also for cleaning and deodorizing.

 Cost Reductions:
New products that provide similar performance at a lower cost.
Example: a new generation of microchips that are cheaper to produce.

Types of Product Innovation

1. Incremental Innovation:
Small improvements to existing products.
Example: Adding a fingerprint sensor to a smartphone.
2. Radical Innovation:
Ground-breaking changes or inventions.
Example: Electric cars by Tesla.
3. Disruptive Innovation:
Creates new market and value networks, disrupting existing markets.
Example: Airbnb disrupting the hotel industry.
4. Architectural Innovation:
Reconfiguring existing product technologies.
Example: Digital cameras replacing film-based cameras.

Stages of New Product Development (NPD)

1. Idea Generation:
Systematic search for new product ideas from various sources (customers, employees, competitors,
R&D). Internal (R&D, employees) and external sources (customers, competitors).
Example: Brainstorming sessions, customer surveys, and competitive analysis.
Example: Customer feedback leads to a new coffee flavor.

2. Idea Screening:
Filtering ideas to eliminate those that are not feasible or compatible with the company's objectives.
Evaluating ideas to filter feasible ones.
Example: Using a scoring system to evaluate ideas based on market potential, technical feasibility,
and financial viability.
Example: Dropping an idea that is too costly or not aligned with brand image.

3. Concept Development and Testing:

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 Creating detailed concepts and testing with target consumers. Developing detailed product concepts
and testing them with target customers.
Example: Creating prototypes and conducting focus groups to gather feedback.
Example: Conducting focus groups for a new snack flavor.

4. Marketing Strategy Development:

Designing an initial marketing strategy, including target market, value proposition, sales goals, and
marketing mix.
Example: Developing a marketing plan that outlines how the product will be launched and promoted.

5. Business Analysis:
Estimating sales, costs, and profits. Evaluating the financial attractiveness of the product, including
sales forecasts, cost estimates, and profitability analysis.
Example: Conducting a break-even analysis and calculating the return on investment.
Example: Financial projections for launching a new tech gadget.

6. Product Development:
Creating a prototype or limited production model. Developing a physical prototype and ensuring that
it meets technical and functional requirements.
Example: Building and testing a working model of the product.
Example: Beta version of a new app.

7. Test Marketing:
Product is launched in a limited area to study reactions. Testing the product and marketing strategy
in a limited market to assess customer acceptance and refine the marketing mix.
Example: Launching the product in a few select cities before a national rollout.
Example: Testing a new cereal in select cities.

8. Commercialization:
Full-scale launch with marketing campaigns. Launching the product into the full market.
Example: Full scale production, national advertising campaign, and distribution
Example: National ad campaigns, full product rollout.

Reasons for the Failure of a New Product

 Poor Market Research:

Misunderstanding customer needs.
Example: Launching a high-calorie drink in a health-conscious market.

 Pricing Issues:
Too expensive or undervalued.
Example: Google Glass was too expensive for mainstream users.

 Poor Promotion:
Lack of awareness or unclear messaging.
Example: Pepsi Clear failed due to confusion over product taste.

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 Technical Failures:
Product does not work as promised.
Example: Samsung Galaxy Note 7 battery issues.

 Strong Competition:
Competitor launches a better product at the same time.
Example: Microsoft Zune vs. Apple iPod.

 Inadequate Product Design: Flawed product design or poor quality.

 Overestimation of Market Size: Unrealistic sales forecasts.
 Incorrect Positioning: Failure to target the right market segment.
 High Development Costs: Unexpectedly high costs that erode profitability.
 Lack of Organizational Support: Insufficient internal resources or commitment
 Example:

New tech products that are launched before the market is ready for them often fail. Also, products
that are released with significant bugs, and then receive negative reviews, also have a high rate of
failure.

Meaning of Packaging

Packaging refers to the process of designing and producing containers or wrappers for a product. It
serves both functional and promotional purposes. It is often the first thing a consumer notices about
a product. It is a process of designing and producing the container or wrapper for a product.

Objectives of Packaging

 Protection: Safeguards product from damage, contamination, spoilage.

 Convenience: Easy to store, handle, and use.
 Promotion: Communicates brand and influences purchase decisions.
 Differentiation: Distinguishes product from competitors.
 Information: Displays usage, ingredients, manufacturing and expiry date.

Meaning of Labelling

Labelling involves the use of printed information on the product package that informs the customer
about the product. It is a subset of packaging. Providing information about the product through the
label. Majorly labels are categorised as Brand Label - Only the brand name, Descriptive, Grade Label -
Indicates product quality, Label - Includes features, usage, etc.

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 Product labelling refers to any written, electronic, or graphic communication on the product package
that provides information to the consumer. Labels serve a critical role in informing, persuading, and
protecting consumers.

Example: A shampoo bottle with a flip cap (convenience), colorful design (promotion), and a label
showing ingredients (information).

Types of Labels

Label Type Description Example

Brand Label Indicates only the brand name. “Nike” on a shoebox
“Paracetamol 500mg, for fever
Descriptive Label Provides detailed product information.
and pain”
Indicates the quality, size, or grade of a “Grade A eggs”, “Extra Virgin
Grade Label
product. Olive Oil”
“How to use a washing
Informational Label Instructions, usage details, ingredients, etc.
powder”
Legal/Mandatory Required by law (e.g., expiry date, MRP, All food, medicine, and
Label barcode, FSSAI number in India). cosmetics must comply

Packaging Levels

1. Primary Packaging: Directly holds the product.

Example: Toothpaste tube.
2. Secondary Packaging: Provides additional protection and branding.
Example: Cardboard box holding the toothpaste tube.
3. Tertiary Packaging: Used for bulk handling, storage, and transportation.
Example: Cartons carrying multiple toothpaste boxes.

🧠Factors Influencing Packaging Decisions

 Target market preferences

 Cost of packaging materials
 Product type (fragile, perishable, liquid, etc.)
 Environmental regulations
 Retail display space
 Brand image and design aesthetics

📌 Examples of Great Packaging & Labelling

 Apple: Minimalist white box design symbolizes premium quality.

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 Cadbury Dairy Milk: Purple color is iconic and conveys brand identity.
 Dettol: Clean, medical-style label design aligns with hygiene branding.
 Tetra Pak for juices: Innovative, lightweight, and long shelf life.

📦 Packaging Strategies

Packaging strategies are decisions related to how the product is packaged to appeal to customers
and support marketing goals.

🔄 1. Family Packaging
All products of a company have a similar design or color scheme.
 Example: Amul uses white and blue designs across butter, milk, and paneer packaging.
 Advantage: Builds brand recognition and trust.

♻️ 2. Reusable Packaging
Designed so that customers can reuse the packaging.
 Example: Horlicks jars or Nutella glass containers that can be reused.
 Advantage: Eco-friendly appeal, customer loyalty.

📦 3. Multiple Packaging (Multipacks)

Bundling several units together.
 Example: Coca-Cola 6-pack cans.
 Advantage: Encourages bulk buying, perceived value increase.

🎨 4. Innovative Packaging
Unique shapes, materials, or opening mechanisms.
 Example: Heinz upside-down ketchup bottle.
 Advantage: Enhances usability and attracts attention.

🧊 5. Transparent Packaging
Allows consumers to see the product.
 Example: Salad boxes, bakery products.
 Advantage: Builds trust, ensures product quality is visible.

🌿 6. Eco-Friendly or Sustainable Packaging

Uses biodegradable, recyclable, or reusable materials.
 Example: Paper straws, cardboard packaging.
 Advantage: Appeals to environmentally conscious consumers.

⚖️ Ethical Aspects of Packaging

Packaging is not just about aesthetics and protection; it also carries ethical responsibilities toward
consumers, the environment, and society. Unethical packaging can mislead buyers, cause
environmental harm, or promote overconsumption.

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 ⚖️ Legal Requirements:

 Must comply with FSSAI, BIS, or other national standards.

 Must include:
o Ingredients
o Net weight
o Mfg/Expiry date
o MRP
o Address of manufacturer
o Nutritional facts (for food items)

🌱 Key Ethical Considerations in Packaging

1. Truthful Representation
Do not exaggerate or mislead with imagery, size, or quantity.
Example: A large chips bag that's only half-filled is considered deceptive.

2. Avoid Misleading Claims

Packaging must not include false or unverified health or quality claims.
Example: Writing “100% organic” when not certified is unethical and illegal.

3. Minimal and Responsible Use of Materials

Avoid excessive packaging that leads to waste and environmental damage.
Use recyclable or biodegradable materials where possible.
Example: Single-use plastic wrapping on already-boxed items is wasteful.

4. Safety of Packaging Materials

Should not leach harmful chemicals (especially in food or medicine).
Must be tamper-proof and child-safe where required.
Example: Use of BPA-free plastics in baby bottles is an ethical practice.

5. Respect for Cultural and Social Sensitivities

Packaging should avoid offensive language, graphics, or stereotypes.
Example: Avoid using religious symbols inappropriately on consumable items.

6. Clear Disposal Instructions

Ethical packaging includes guidance on how to dispose or recycle the product packaging.

Summary: Ethical Packaging Do's and Don'ts

Ethical Practice Unethical Practice
Honest product representation Misleading visuals/claims
Eco-friendly materials Over-packaging
Safe for consumers Toxic materials
Respect cultural norms Insensitive symbols or images

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 🏷️ Product Labelling

📌 Meaning of Product Labelling

Product labelling refers to any written, electronic, or graphic communication on the product package
that provides information to the consumer. Labels serve a critical role in informing, persuading, and
protecting consumers.

🔍 Types of Labels

Label Type Description Example

Brand Label Indicates only the brand name. “Nike” on a shoebox
“Paracetamol 500mg, for fever
Descriptive Label Provides detailed product information.
and pain”
Indicates the quality, size, or grade of a “Grade A eggs”, “Extra Virgin
Grade Label
product. Olive Oil”
“How to use a washing
Informational Label Instructions, usage details, ingredients, etc.
powder”
Legal/Mandatory Required by law (e.g., expiry date, MRP, All food, medicine, and
Label barcode, FSSAI number in India). cosmetics must comply

⭐ Importance of Labelling

1. Legal Compliance
Protects company from legal action by following statutory requirements (FSSAI, BIS, etc.).
2. Consumer Awareness
Helps consumers make informed decisions (ingredients, allergies, expiry).
3. Brand Identification
Reinforces brand image and differentiates products.
4. Promotional Tool
Labels with attractive designs, QR codes, or offers drive engagement.
5. Handling Instructions
Important for fragile, perishable, or hazardous goods.

🎓 Examples of Good Labelling Practices

 Nutritional labels on packaged foods: calories, sugar content, etc.

 QR codes on labels for digital engagement (e.g., scanning for recipes or tutorials).
 Red/green/yellow labels for food safety grading (used in India for vegetarian/non-vegetarian items).

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🔍 Labelling vs. Packaging – Quick Comparison

Feature Packaging Labelling

Focus Physical container Information on the container
Function Protection, display Communication, compliance
Material Plastic, glass, cardboard Paper, ink, print, stickers
Role Branding + physical utility Legal + informational utility

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 Case Study: Apple Watch – Stages of New Product Development (NPD)

🏢 Company: Apple Inc.

📦 Product: Apple Watch

🎯 Objective: To diversify Apple's product line and enter the wearable tech and health monitoring
market.

🔁 1. Idea Generation

 Sources of Ideas:
o Market trends in health & fitness.
o Rise of wearable technology.
o Consumer demand for more integration with iPhones.
 Example: Apple observed that people were interested in fitness trackers like Fitbit, but there was
room for a device that combined fitness, communication, and design.

✅ 2. Idea Screening

 Apple screened multiple wearable concepts:

o Glasses (eventually Google tried that with Google Glass).
o Jewelry-like health accessories.
o Smartwatches integrating health, notifications, and style.
 The smartwatch idea passed as the most feasible and aligned with Apple’s ecosystem.

🧠 3. Concept Development and Testing

 Apple developed concepts combining:

o Health tracking (heart rate, activity rings).

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o Notifications from iPhone.
o Customizable watch faces.
 Concepts were internally tested with small focus groups and select Apple employees.
 Key insight: Users wanted style + function. This led to offering multiple bands and sizes.

📊 4. Business Analysis

 Apple projected high profitability by targeting:

o Existing iPhone users.
o Fitness-conscious individuals.
o Luxury watch market.
 Pricing strategy: Tiered pricing with multiple models (Sport, Classic, and Edition).

🛠️ 5. Product Development

 Engineers and designers built prototypes.

 Integrated:
o New Taptic Engine.
o Digital Crown for navigation.
o Sensors for health monitoring.
 Developed a custom operating system: watchOS.

🧊 6. Test Marketing

 Unlike other companies, Apple does limited public testing, but they did:
o Use internal testing and invited select users.
o Partner with influencers and celebrities before launch (e.g., Beyoncé was spotted wearing an Apple
Watch pre-launch).
o Collect feedback via developer kits sent to third-party app creators.

🚀 7. Commercialization

 Launch Date: April 2015.

 Apple launched it with a full-blown global campaign:
o TV ads, in-store displays, social media buzz.
o Focus on health, connectivity, and personalization.
 Retail Strategy: Sold in Apple Stores and selected luxury retailers.

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 🔍 Outcome:

 Despite initial slow adoption, the Apple Watch became the #1 selling smartwatch globally.
 It revolutionized health wearables, introducing:
o ECG monitoring.
o Fall detection.
o Blood oxygen sensors.
 Apple continues to release updated models every year.

📈 Key Learnings:

 Apple's success followed every stage of the NPD process with precision.
 Internal testing and ecosystem integration ensured product alignment with user expectations.
 Emphasis on design, functionality, and marketing made Apple Watch a success.

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