Strategic Managemt and Industry Analysis

INTRODUCTION

The product innovation can be divided into three stages, beginning with the product-oriented or technology-pushed stage. In the post-World War II era Americans were coming off wartime shortages and were in the mood to buy the many goods that manufacturers produced. Engineers, who were more product-oriented than consumer oriented, designed new products that might or might not find places in consumers' hearts and minds. This was a product-oriented process in which the market was considered the receptacle for products that emerged from the firm's research and development efforts.

However, competition escalated and consumers became more skeptical and selective about the types of products they purchased. Marketers found it increasingly difficult to rely on persuasive sales techniques to move products. Retailers grew restless when these products did not move off shelves as quickly as planned. Companies had to know more about their target markets.

The second stage was marked by the emergence of the market as the driver of innovation. Instead of being technology-driven, new product development evolved into a market-led process in which new products emerged from well-researched customer needs. The new product development process was placed in the hands of marketers who knew consumers' wants and needs. Customer demand "pulled" the product through the development process.

Modern new product development is a blending of these two orientations into a "dual-drive" approach to innovation. Companies recognize that innovation is a complex process that requires sound investment in research and development, as well as significant marketing expertise that focuses on satisfying consumers' wants and needs.

Global competition means there are more competitors capable of world-class performance. This has made competition more intense, rigorous, and aggressive than ever before. Fragmenting and more sophisticated markets mean that consumers demand more from products in terms of quality, differentiation, and "meaningfulness."

New technologies have had two important outcomes in regards to innovation. First, new technologies are responsible for this new market sophistication in which consumers have more choices and are thus more demanding. Secondly, new technology has increased manufacturers' capabilities for rapid response to shifting market needs.

Finally, product life cycles have become more compressed as the skills required for developing new products increase in complexity. For example, consider the development of a new type of computer software. The expertise needed to develop the software from conception to commercialization might take years. The product's life cycle in such a competitive and turbulent environment might last only a few months. Therefore, companies have embraced the view that new products are transient, whereas the skills and expertise needed to develop these products are a much more persistent requirement for success.

NPD PROCESS

NPD is a process which is designed to develop, test and consider the viability of products which are new to the market in order to ensure the growth or survival of the organization.

NPD is an eight step process. Different companies and different industries may alter this eight-step process for different products, or the steps themselves may become blurred as companies become engaged in several stages at the same time.

STEP 1-IDEA GENERATION

Idea generation is the systematic search for new product ideas obtained internally and from Customers, Competitors, Distributors, Suppliers.

STEP 2- IDEA SCREENING

After generation of