Initiating Factors for PD
Prof. V N Achutha Naikan
IIT Kharagpur
Initiating Factors for PD
1. Financial Goals
- Profit/earning per share to increase with NPD - Old Products : Cost increase
Low production rate
Obsolete technology
Earnings stabilized/declined
Opening of market & competition Saturated demand
Example : Land phones
Initiating Factors for PD…
2. Sales Growth
- NP are developed to maintain/increase SG - SG results in reduction of per-unit cost
3. Competitive Position
- Market share changes (even 1%) are critical.
- US auto manufactures had spent b$ on R&D to
compete and regain with Japanese auto
companies
Initiating Factors for PD…
4. Product Life Cycle
• Introduction
• Growth
• Maturity
• Decline
Product Life Cycle
1. Competition
2. Technological changes 3. Market shifts
4. Innovation by competitors
• If new products are not developed, sales & profit decline
• Decline in sales growth may not be permanent
• Repositioning and diversification are possibilities
• Innovation is risky but important
Make products obsolete
Initiating Factors for PD
5. Technology :
- Rapid change of Technology
- High rewards for NPD with high-tech
6. Invention :
- A new invention of scientific principle → NPD
Example : Polaroid instant camera
Initiating Factors for PD….
7. Regulation
Government regulation/deregulation → NPD
Example: Auto (LPG/NG) from Petrol/Diesel to protect Environment 8. Material property, cost and Availability
Change of these → Products must be revised/dropped 9. Demographic & Life style changes
ITC → Tobacco to Foods, Stationary
PEPSI → Soft drinks to diet decaffeinated cola & Pepsi foods
Nuclear family → Small washers/driers, ovens, ready to eat foods, small family products
Health consciousness → Jogging & work out equipment, low cholesterol high fiber foods
Initiating Factors for PD….
10. Customer Requests : - Market survey
- Market/consumer trend
- Competitive product features 11. Supplier Initiatives :
- Supplier can also force innovation
- An industry producing refills can motivate a pen industry for better design
- A packaging industry can motivate a soft
drink/food industry to develop a new product
12. New Situations
• Famine
• War
• Pandemic
• Natural Calamity
• Political Changes
• Migration to other countries/places
• Demographic Changes
Nature of Initiating Forces
Internal forces: Financial goals, sales growth
External : Competition, life cycle, technology, invention, regulation, material costs
Opportunities : Demographic changes, request supplier initiatives, new statutory laws, tax benefits….
A good product manager understands these and responds to them.
• Proactive approach and (not Reactive approach) gives advantage to an industry
• Potential rewards of NPD should be high
• Risks of NPD should be at acceptable level
End
