Product Development Whitepaper

Product Development VMG

Contents 1

Introduction .......................................................................................................................................... 3

2

What is Product Development .............................................................................................................. 3

3

Stages of Product Development or Product Development Process ..................................................... 3 3.1

Concept: ........................................................................................................................................ 3

3.2

Investigation: ................................................................................................................................ 4

3.3

Development................................................................................................................................. 4

3.4

Shipping: ....................................................................................................................................... 4

3.5

Support: ........................................................................................................................................ 4

4

Stake Holders of Product ...................................................................................................................... 4

5

Marketing the Strategies ...................................................................................................................... 5 5.1

The Marketing Mix 4 P's Model .................................................................................................... 5

5.2

Product Life Cycle Model .............................................................................................................. 6

5.2.1

Product Development ........................................................................................................... 6

5.2.2

Product Introduction............................................................................................................. 7

5.2.3

Growth Phase ........................................................................................................................ 7

5.2.4

Maturity Phase ...................................................................................................................... 8

5.2.5

Decline Phase ........................................................................................................................ 8

5.3

Strategies of Product life Cycle ..................................................................................................... 9

5.4

Explain the Crossing the Chasm .................................................................................................. 10

6

Product Life Cycle Requirement Management ................................................................................... 12

7

Reference ............................................................................................................................................ 12

1 Introduction All products and services have certain life cycles. The life cycle refers to the period from the product’s first lunch into the market until its final withdrawal and it is up in phases. Increase in the profit is the major goal of a company that introduces a product into a market its position in the market compared to competitors, and the product’s success or failure.

2 What is Product Development Product development is the process of designing, creating, and marketing an idea or product. The product can either be one that is new to the marketplace or one that is new to your particular company, or, an existing product that has been improved. In many instances a product will be labeled new and improved when substantial changes have been made.

3 Stages of Product Development or Product Development Process Product development process is import steps. Many people what they do for developing a product they simply build the product then go to customer for demo which is not fruitful and waste of time also because if your idea is not good no customer is going to accept it. Until your concept is not approved by customer, you should not think of development of new product. We cannot make a product simply by an idea. One of the main things which all of us should take in to account is Business from the product which we make. How our product will get business, how market is react to our product, what is the value added to customer who can tempt to buy our product. These are some question which we need to answer before going to product development phase. Product development Stages:

Concept or Idea

Investigation

Development

Shipment

Support

3.1 Concept: Brainstorming and developing a concept is the first step in product development. Once an idea is generated, it is important to determine whether there is a market for the product, what the target market is, and whether the idea will be profitable, as well as whether it is feasible from an engineering and financial standpoint. Once the product is determined to be feasible, the

idea or concept is tested on a small sample of customers within the target market to see what their reactions are. This is called prototyping. After prototyping marketing guys visit the customer, present our product as demo version and get the feedback. The customers who are all show interest on this product is called “Potential Customers”. One thing we have to take care is that until unless demo is not accepted by any of customer product should not go into other phases. It means customer not interested in the Concept of our product itself.

3.2 Investigation: Once the Concept is approved investigation start how to do the product, how to make robust, what are the tools we need to use. How much resource required, what is estimation Etc.,

3.3 Development Once your developed concept [Prototype] is accepted by customer, it is worth in investing the product. Development involves the Engineering process Designing, architecting, and testing the product etc., Ex: Software Development Process

3.4 Shipping: Once product is developed, it is ready for shipment.

3.5 Support: In this stage product goes into the maintenance mode. Another important thing is Time to Market, a very important thing which product maker should aware. If product which you are going to develop is well ahead of the time that means the feature, the support which you providing cannot be understood many people which beyond some point then nobody accept. Example: Now a day’s MPEG is very much used. If guy start making a product which runs the MPEG standard where MPEG itself not known by many people or not established in the market then that product is going to scrap.

4 Stake Holders of Product Most functional areas of the company get involved at some time or another, including Researchers Marketing Product Manager Engineering Supply management Manufacturing Finance, and so on. As the people in these functions use enterprise systems to help them do their jobs, all of these systems are involved in Product Development example

Customer relationship management (CRM), Enterprise resource planning (ERP), Product life-cycle management (PLM), supply chain management (SCM), supplier relationship management (SRM)

5 Marketing the Strategies 5.1 The Marketing Mix 4 P's Model This model is used every phase of the Product Life Cycle product to be alive.

\ Product -- Is the product what consumers want? Consider brand name appeal, packaging, quality, styling, and warrantees. Price -- Is the pricing strategy working? Consider competitive products, suggested retail price, wholesale pricing, cash discounts for volume sales, and other factors that impact on per-unit profit. Place -- Where is the product being bought by consumers? Consider "Brick and mortar" and Internet retailers. Promotion -- How well is marketing working? Consider advertising, public relations, sales force, and sales promotions.

5.2 Product Life Cycle Model This describes the natural process by which a new product is introduced, is gradually accepted, sells well for a while and is then gradually superseded before, potentially, being phased out.

Product Life’s cycle – period usually consists of five major steps or Phases Product Development Introduction Growth Maturity Decline 5.2.1 Product Development This phase starts when company finds and develops a new product idea. This involves translating various pieces of information and incorporating them into a new product. During this phase sales are zero and revenues are zero. It is the time to spending money which has absolutely no returns.

5.2.2 Product Introduction In this phase sales will be low until customers become aware of product its benefits. Introduction phase of a product includes the product launch with its requirements to getting it launch in such a way that it has maximum impact on Sales. This period can be described as a “Money Sinkhole” compared to the maturity phase of a product. Promotion and Advertizing: Promotion is aimed to Brand Awareness. Large expenditure on promotion and advertizing is common, and quick but costly service requirements are introduced. A company must be prepared to spend a lot of money and get only a small proportion of that back. Distribution: In this phase distribution arrangements are introduced. Having the product in every counter is very important and is regarded as an impossible challenge. Some companies avoid this stress by hiring external contractors or outsourcing the entire distribution arrangement. This has the benefit of testing and important marketing tool such as outsourcing. Price: Pricing is very important in this phase. For a new product always customer is ready to pay little high price. So it minimizes the money sinkhole. Generally high, assuming a skim pricing strategy for a profit margin as early adopters [Please refer below] buy the product and the firm recoup development costly quickly. During this phase company takes lot of actions. Marketing Strategy Customer requirements on design, pricing and packaging 5.2.3 Growth Phase The growth phase offers the satisfaction of seeing the product take off in the market place. This is the appropriate timing to focus on increasing the market share. If the product has been introduced first into the market, then it is in a position to gain market share relatively easily. This period is the time to develop efficiencies and improve product availability and services. Cost efficiency and time to market and pricing and discount policy are major factors in gaining customer confidence. Managing the growth stage is essential. A company must not make any mistake by over committing. This will result into losing customers not finding the product ‘on the self’. Product: New product features and packaging options, improvement of product quality Price: Maintained at a high level if demand is high, or reduced to capture the additional customers Distribution: Distribution becomes more intensive. Trade discounts are minimal if reseller shows a strong interest in the product. Promotion: Increase the advertisement to make brand reference.

5.2.4 Maturity Phase When the market becomes saturated with variations of basic product, and all competitors are represented in terms of an alternative product, maturity phase arrives. In this phase growth is market share growth is at the expense of someone else’s business, rather than growth of market itself. This period is the period of the highest returns from the product. A company that has achieved its market share goal enjoys the most profitable period, while a company that falls behind its market share goal, must reconsider its marketing positioning into the marketplace. Promotion and advertising relocates from the scope of getting new customers, to the scope of product differentiation in terms of quality and reliability Product: Modifications are made features and features are added in order to differentiate the product from competing products that may have been introduced Price: Possible price reductions in response to competition while avoiding a price war Distribution: New distribution channels and incentives to resellers in order to avoid losing shelf space. Promotion: Emphasis on differentiation and building of brand loyalty. Incentives to get competitors customers to switch. 5.2.5 Decline Phase The decision of withdrawing the product from the market is important and complex decision. Usually company makes the price of the product high so that increases the profit margin and gradually discourage few loyal remaining customers from buying it. Sometimes it is difficult for a company to conceptualize the decline signals of a product. Usually a product decline is accompanied with a decline of market sales. Its recognition is sometimes hard to be realized, since marketing departments are usually too optimistic due to big product success coming from the maturity phase. This is the time to start withdrawing variations of the product from the market that are weak in their market position. This must be done carefully since it is not often apparent which product variation brings in the revenues. The prices must be kept competitive and promotion should be pulled back at a level that will make the product presence visible and at the same time retain the “loyal” customer. Product: The number of products in the product line may be reduced. Rejuvenate surviving products to make them look again new. Price: Prices are lowered to liquidate inventory of discontinued product. Distribution: Distribution becomes more selective. Channels that no longer are profitable are phased out. Promotion: Expenditures are lower and aimed at reinforcing brand image for continued products.

5.3 Strategies of Product life Cycle

5.4 Explain the Crossing the Chasm This is the book written by Geoffrey Moore. It is a bible for marketing guys. Every business is based on the tradition technology Adoption Life Cycle., a smooth bell curve of high tech customers, progressing from Innovators, Early Adopters, Early Majority, Late Majority, and finally Laggards. In turn, this model becomes the foundation for a high-tech marketing model which says the way to develop a market is to work the curve from left to right, progressively winning each group of users, using each "captured" group as a reference for the next.

Early Adopter: Rare breed of visionaries These members are having insight to match an emerging technology to strategic Opportunity. The core goal is business goal not technology goal Visionaries drive the high tech industry because they see the potential for an ‘order of magnitude’ return on investment and willingly take high risk to pursue this goal. Visionaries are very easy to sell but very hard to convince because they are buying a dream. They want to start out with a pilot project, which makes sense because they are 'going where no man has gone before' and you are going with them.

Early Majority: They are pragmatics.

they care about the company they are buying from, the quality of the product they are buying, the infrastructure of supporting products and system interfaces, and the reliability of the service they are going to get It is very difficult to break into a new industry selling to pragmatists. References and relationships are very important…Pragmatists won't buy from you until you are established, yet you can't get established until they buy from you Once a startup has earned its spurs with the pragmatist buyers within a given vertical market, they tend to be very loyal to it, and even go out of their way to help it succeed. "Pragmatists are not anxious to reference visionaries in their buying decisions. Hence the chasm. Four fundamental characteristics of visionaries that alienate pragmatists: o Lack of respect for colleagues' experiences. o Taking greater interest in technology than in their industry. o Failing to recognize the importance of existing product infrastructure. o Overall disruptiveness.

The chasm is because it difficult convince between the Early Adopter to Early Majority. It is a big chasm. Because early majority people never ever convinced with simple question and answers.

Late Majority: Skeptical People, will use new ideas or products only when the majority is using it. Laggards: Traditional people, caring for the old days, are critical towards new ideas and will only accept if the new idea has become main stream or even tradition.

6 Product Life Cycle Requirement Management

7 Reference Crossing the Chasm by Geoffrey Moore