Project Report of Marketing Management

Consumer Involvement in New Product Development

New Product Development

Table Of Content
Aim...................................................................................................................................... Objectives............................................................................................................................ Executive Summary............................................................................................................

Submitted To:

Submitted By: B-

Mrs. Vandana Anil Barolia Introduction........................................................................................................................ Gupta 45 Background of the study....................................................................................................

Review of the Literature....................................................................................................

Aditya Govil B47 New Product Development.................................................................................................. ABS. Integration of Customers with New Product Development..................................................... Amit Agrawal BCustomer Involvement......................................................................................................... Rationale............................................................................................................................... ANALYSIS.......................................................................................................................... Research Methodology......................................................................................................... Why Research Method Is Important?................................................................................... DATA ANALYSIS AND INTERPRETATION.................................................................. Effective Customer Involvement with New Product Development....................................... Recommendations................................................................................................................. Conclusion.............................................................................................................................

Faculty

Aim
Aim of the paper is to bring forward the effectiveness on the product design and de v e l o p m e n t w h e n c u s t o m e r s a r e i n v o l v e d i n t h e p r o c e s s . C u s t o m e r s a r e regarded as the king of the market. It is very important to understand their need and demands so that the right kind of product can be designed. Without need, no product can survive in market. Objectives The objective of the paper is to evaluate the importance of the customers in the designing phase of the new product. The effect of the customer requirement and demands on the new product development process has to be analyzed deeply and this is what this paper will try and contribute to. Different literature works on the field will be put forward for the help of the research and also to bring out some required and relevant data from each source in brief. Through this paper a deep study will be performed on the topic with research methodology to gain maximum information on the effect of customers on the design and development of new product. Recommendations and conclusion is will be drafted in the end of the paper for people who are involved in the process. The quality of the paper involves: Knowing the New Product Development Process Knowing the PM Methods used during NPD and Deriving the time of involvement of PM role i.e., starting and ending Comparing the results with that of the earlier one from the literature reviews

Executive Summary
As a summary of what this paper will entail, there is an introduction section that gives an outline of what new product development means and how customer involvement can help in achieving success with their new products from the best strategies. The background will give the reasons why the researcher thinks this is an important area for research and why there is need to add to the body of knowledge when it comes to effective customer involvement with New product Design and development. The researcher will also try to examine as many of the available literature of the topic of interests and all of these information will be found under the literature review section. These literature sources will be beneficial in further knowledge on the subject of the paper. These sources can be used for future reference on the topic. Research presented on this paper would be based on case study findings which will be analyzed and presented on the findings section.

This is a multiparadigm research and will therefore make use of the multi-paradigm principles. This paper will add to the social environment as an educational source and willa l s o i t w i l l c o n t r i b u t e t o t h e o r g a n i z a t i o n a l e n v i r o n m e n t a l a n d b e h a v i o r a l practices. The paper aims to bring in some changes that are helpful for the organization. The organizations managers, especially product manager will benefit a lot from this paper. Through this paper they will not only understand the importance of customers with various stages of product development but they will also learn how to implement it and how to make their involvement strategies effective. There are various literature resources that will be discussed i n t h e p a p e r t h a t w i l l p u t m o r e l i g h t o n t h e c u s t o m e r i n v o l v e m e n t a n d n e w product development separately and also some of the resources of work on integration of the both will be discussed. All this is for making the managers and the organization understand the benefits of the integration process. Apart from the professionals, this will also act as a useful source of study for the students who are studying management. Better understanding of the m a n a g e m e n t a n d m a n a g e m e n t s k i l l s i n t h e f i e l d o f n e w p r o d u c t d e s i g n , develo pment, management etc. is being put forward through this paper. This paper will contain all that they will need to have a successful system where the new product development involves market analysis and will help in attaining the goals and the objectives through the product. Management can gain a lot from such a study as it presents the benefits of u s i n g m u l t i p a r a d i g m s f o r e f f e c t i v e p r o d u c t m a n a g e m e n t . T h e r e i s a l s o a methodology section which will describe how the researcher intends to carry out this research. The research will be in a systematic manner so that each step is carefully understood for in depth understanding of significance of the integration new product development with customer involvement. The benefits of explo r i n g b o t h p a r a d i g m s b y t h e m a n a g e m e n t c o m e a s t h e l a s t s e c t i o n i n concluding this research. It has been tried best to complete the paper with all perspective so that the aim and the purpose is solved in best possible way.

Introduction
Today mobile phones have moved beyond their primary role of voice communications and have graduated to become an essential entertaining device for mobile users. We are in an era where users buy mobile phones not just to be in touch, todays youth use it to express their thoughts, for social networking, to show their interests, play games, read news, surf on the internet, listen to music, chat instantly with friends & families and even check their bank balances. There are various phone manufacturers providing handsets. However, Nokia is the dominant player on the GSM space, accounting for 63% of the installed base (phones currently in use) while LG rules CDMA with 48% of installed base market share. On looking at urban India GSM/CDMA combined installed base, Nokia is at the top with 54% of installed base market followed by LG (14%). LG is second most used handset manufacturer India primarily due to its dominant position in the CDMA.

Phone manufacturer usage

April 2009 ending quarterly Average - India Urban Mobile Phone Users (N=5,775)

Brands

Installed base* Total GSM CDMA 47.6% 5.4% 24.3% 11.2% (GSM + CDMA) 14.4% 7.2% 53.7% 9.5%

LG Motorola Nokia Samsung SonyEricsson

4.4% 7.8% 62.6% 9.0%

8.9%

6.8%

* Users currently using the phone model On looking at the ability of manufacturers to gain market share via word of mouth, Nokia and Sony-Ericsson fare a lot better compared to the other three big manufacturers, with 2 out of 3 users for each of the two manufacturers mentioning they are likely to recommend their handset to their friends.

Phone manufacturer usage

April 2009 ending quarterly Average India Urban Mobile Phone Users (N=5,775)

Model

Installed base* Likely to Recommend**

LG Motorola Nokia Samsung Sony-Ericsson

57.6% 41.0% 68.6% 55.7% 65.3%

Relationship marketing with the customers has many phases. It helps in building long term relationships with the customers and extends interaction a n d communication beyond sales, promotion and advertising. It helps in nurturing the customers with respect to the organization for purpose of sales, clients and loyalty. With advancement in technology and websites and other internet channels, customer relationship marketing has gone to different level. The interaction and communication because of this channel has not only become easy but also organizations can now have effective management with some useful information and suggestions. During the whole process of new product development, there is involvement of customers and requirement of customers ideas and review at different stages. Adaptationof relationshipmarketingisveryim p o r t a n t h e r e w i t h n e w p r o d u c t d e v e l o p m e n t b e c a u s e a t i t a l l o w s d i r e c t response marketing campaigns that emphasize the retention & satisfaction of customers rather than dominating the focus on the sales figures and strategies.T h e r e h a v e b e e n a r g u m e n t s b y d i f f e r e n t r e s e a r c h e r s w h e r e s o m e s a y t h a t customer involvement will play a fundamental role in generation of ideas for the development of the new product while others say that it will only lead to ideas and will bring across suggestions that are unimaginative, impractical and will result in only imitative products. However, it is clear now that the utility of the customers for
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the purpose of generating ideas depends on the maturity and the characteristics of the targeted customers and also the technology and also the alignment of the product line along the customer base has some great effect. When all these dimensions are really high, what we have in the end is a product that has excellent innovation, high dimensions and good quality. However, if these dimensions are low due to some reasons, the value of the resources is limited with respect to the customers .However, it has been seen that when there have been not high, rather only promising resources, customer involvement has played a passive role and what is achieved in the end is an acceptable product. Customers rarely give in the ideas and suggestions for the new product till the organizations approach them with structured mechanism of inquiry. This helps in rich and frequent contributionf r o m c o n s u m e s i d e . T e c h n o l o g y i s t h e s e c t o r w h e r e t h e c u s t o m e r s havem a x i m u m i n v o l v e m e n t i n t h e n e w p r o d u c t d e v e l o p m e n t . T h e i s s u e s a n d problems faced by the users require solutions and these solutions lea d t o generation of new product ideas. Customers can also play a valuable role of co-creators with the new product. This will involve participation of customers from activities like product designtoproduct development.S c h n e i d e r a n d B o w e n ( 1 9 9 5 ) s t a t e t h a t p r o m i s i n g in centives for the customers can motivate them to come forward and participate in the development of new product that has been targeted for the customers with same mind-set or group. This would further increase control, more opportunities and discretion in order to make choices and will result in even more product customization. There are a lot many things a customer can contribute towards the design of the product. However, it is more practical with industrial products rather than consumer products. Customers are important even during product support and testing. Testing of new products with the customers is nothing that is recent. This has been ever since the new products innovations have been made. This has been used in all kinds of industries or sectors that bring out products for customers. This facilitates in reducing the cost of redesign as customers who are supposed to use it can easily detect faults. The more the number and type of people involved, more would the organization be aware of the kind and level of usage by the customers. This will further deepen the understanding of the product from the side of the firm.

The steps should be systematic for effective results.

The generation of the idea is the first phase. The idea has to be evaluated and analyzed using SWOT analysis and opportunity analysis. Idea is screened to eliminate all those ideas that are not practice or realistic and would waste a lot of resources if one tries to achieve them. The market analysis is done with the rough idea of the project. The market scope, the customer requirement, etc. will define the success of the product and therefore market study for the acceptance of the product is very
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important. Customers and market are the ones that define the growth of any product.(Mills, 1986)

The team of people assigned for the design of new product has to then develop the concept and train the required people for the purpose. Next is to evaluate the business and its perspectives. The competition, price, resources available, etc. have to be analyzed

Mock testing of the product with beta and market testing is done prior the processing of the product to analyze the success rate of the product after launch. The done technical implementation of the product is tested and requiredplanning is

After technical implementation comes the turn of commercialization that is launch, advertisement, etc. Competition, alternative products, etc. are evaluated to fix the price of the product. These are few phases of development of new product. However, most importantp h a s e i s w h i c h i n v o l v e s i n t e r a c t i o n w i t h t h e p o t e n t i a l c u s t o m e r s . V a r i o u s interviews, market research, documentation has to be done in order to see the demand and s c o p e o f t h e n e w p r o d u c t i n m a r k e t . T h e d e v e l o p m e n t i s n o t brought into practice till the design is approved by the customers.

Review of the Literature

For the purpose of understanding all the areas that the study seeks to examine the literature review section will be divided into three parts. For the first part, you can find all that the researcher considers important for this particular study in terms of effective customer involvement with the product design and d e v e l o p m e n t . M o s t o f t h e l i t e r a t u r e o n n e w p r o d u c t d e v e l o p m e n t w i l l b e handle d second as a way of introducing the important aspects of the study andhere, the research will try to examine what is the main area of concern for mostauthors of this topic. The purpose of this section is to establish whether there is any research that has been done on integrating the two and what issues have been covered. Therefore, the last section will be related to the integration of the customer with the new product development.

Customer Involvement
A strategy that doesnt explicitly speak about the customers and competitive environment should be prepared for the failure as the sustained competitive and customer conscious is missing in the organization. All the essence that will make it survive and useful for todays market. It was written during the phase when companies started experimenting with the launch of new products. Each organization then thrived for recognition and leadership. The same thing lies in todays market as well, though leadership is more important now. The book aptly discusses about the role of customers in rise and fall of theo r g a n i z a t i o n . I t h a s b e e n e v e r y w h e r e s a i d t h a t t h e m a r k e t s t a r t s w i t h t h e cu stomers and each topic has been discussed around the same. The value of customer relationship management in the marketplace cannot be u n d e r e s t i m a t e d . The writers say that it makes it important to weigh the market and provide customers with the products and services they demand in best possible way. Third thing is that customization of the product has to be done in order to help the customers with the solutions to the various problems. The author is aware of the importance of the customers and their relation with the organization and the book is compiled in order to put forward the same. Some customers seem to be loyal to the brand just because they are habitual in buying the same one. However this in no way means that they are committed to the product or services. The day a new competitor comes in market offering better products and services at lesser price, the customers will shift the loyalty towards the same. Thus the brand will lose their share in the market. Jannie Hofmeyr and Butch Rice bring about developed and analyzed research through their book Commitment-Med Market the keys for the organization that can bring c o m m i t m e n t f r o m t h e c u s t o m e r s m i n d . T h e f i r s t a n d t h e f o r e m o s t t h i n g discu ssed here is involvement of the customers. The book supports certain analysis with graphs and charts that give a better understanding on the level of involvement of the customer within the organization. It states that customer s a t i s f a c t i o n i s n o t o n l y t h i n g f o r s a i l i n g o f t h e p r o d u c t s i n t h e m a r k e t . T h e involvement with them is equally important.

New Product Development

New product development is undoubtedly one of the most important areas that management has to handle. It is also a risky process which must be handled with care. Most of the NPD failures arise from the fact that project managers might have failed to consider the
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important processes. New products to some extend determine the future of the company as a successful product will ensure company growth. There is useful literature on the NPD processes and although there have been changes over the years when it comes to the terms being used; the processes remain practically the same. Developing new productd e s i g n s t r a t e g i e s i s s o m e t h i n g t h a t c a n n o t b e i g n o r e d w h e n i t c o m e s t o describing the process of NPD. Mario Vellandis New Product Design Strategy identifies five primary design strategies which are the cost advantage, designp r o m i n e n c e , f e a t u r e l e a d e r s h i p , c o n c e n t r a t e d a p p l i c a t i o n a n d d e s i r a b l e alternative.

Lean, Rapid and Profitable New Product Development by Robert Cooper and Scott Edgett teaches seven principles of successful new product development .These principles are divided for various stages of development of the new product. First three principles define the methodsof gaining advantages inc o m p e t i t i v e i n i n i t i a l p r o d u c t i o n s t a g e s . N e x t t w o p r i n c i p l e s a r e f o r t h e development and scope in market. Sixth principle is for maximizing th e productivity of the new product. The seventh and the last principle are dedicated to the flexibility and adaptation of the new product development .For turning the new ideas into profitable services and products, New Product Development for Dummies can be referred to. The book has been written with help of scholars in the field. It starts with the basics and deals with every issue with new product development and has various secret tips for handling the risks in the field. There are ten helpful ideas in the book that can help in testing the success of the new product. The book can be useful for not only students but also big and small organizations.

Ever wondered why some of the products are immensely successful while others cant even make it to the mark? This is the question that has been tried to answer by Marty Cagan in his book I n s p i r e d : H o w t o C r e a t e p r o d u c t Consumers love. Some of the other questions that have been answered in the book that circle around the above question are:

How is the discussion about the product made and which p r o d u c t opportunity to pursue?

How to evaluate that the product that has been innovated and that has been asked to build will be successful in the market?

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How is the identification about minimum possible new product made? How to evaluate and manage demand, rather conflicting demands of market, customers, sales, engineers, stakeholders, etc.? How is the agile method adapted for commercial product environment? There are hundreds of such common and uncommon questions answered by Cagan in his book. He uses lessons he learned, practices, experiments, cases t u d i e s , t e c h n i q u e s e t c . t h a t c a n t a k e t h e p r o d u c t t o w a r d s t h e p a t h o f t h e success. The ways that the best of the companies adopt so that their products are successful

DATA ANALYSIS AND INTERPRETATION (Questionnaire filled by the consumers) Implications

In order to involve the customers to the maximum and thereby understanding their requirements which need to be included into the new product can be studied by doing an in-depth analysis. For the matter of doing the research, we have interviewed 100 customers of different categories and thus have come to the following conclusions. For doing this analysis, we took the following questionnaire:
Gender?

Male Female

What is your age?

Under 14 14-17 18-20 21-34

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35-54 55-64 65+

Please tell us how the described product would rate on the following attributes. Very Unsatisfie d a. High Quality * Unsatisfied Neutral Satisfied Very Satisfied

b. Expensive *

c. A Brand I Can Trust *

d. A Good Value *

e. Desirable *

f. Unique *

What is it that you like about the product? Feel free to check as many responses as you wish.

Convenience Price Camera Quality Design

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Accessories Compatibility Other

What do you not like about the product?

Convenience Price Camera Quality Design Accessories Compatibility Other

How interested would you be in purchasing this product if it were available?

Definitely would buy Probably would buy Might or might not buy Probably would not buy Definitely would not buy

Are you currently using any similar product?

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Yes No

Rate each statement based on its influence in your purchasing decision. Very Unsatisfie d Resources on the internet * Unsatisfied Neutral Satisfied Very Satisfied

Word-of-mouth *

Sales material/circulars *

Publications/Magazines *

Advertising *

Coupons *

In store displays *

Packaging *

According to you, is the product:

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Extremely expensive Somewhat expensive Affordable Cheap Extremely cheap

Will you purchase the product if it is launched in the market?

a) Yes b) Maybe c) No

Findings Effective Customer Involvement with New Product Development

Globalization has made the Markets to have a wide variety of Products in order to sustain the Competition. Hence there is an increasing demand for NPD. There is always a controversy in knowing the role of customer involvement in the success of any NPD Project.

Details
The project is about understanding the needs of involving the customers in the designing and understanding the requirements that a new product needs to be equipped of. A new product is considered to be developed when there arises a need of the customers for getting some special or distinctive features in any product. Therefore, this

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project has been focused on researching and finding out that how important and to what extent it is important to involve the customers into the new product development process.

Aim This was aimed to understand the actual importance of the customers and their say in the development of any new product. Any new product development is always planned as such that it should meet the requirements of the customers. Thus, a research was conducted for studying the impact of customers and their needs from the new product under development. Along with it the aim was to provide some kind of literature resource to the field as there are not many of the same today.

Collection of Information
Information for the research is been collected with the help of, questionnaire filling, online surveys, document reviews and with the help of observing the consumer behavior towards the products.

Findings
After doing the extensive research of the primary as well as the secondary data with the help of the questionnaire and online surveys and also by the literatures available, we have found that the customers are the main reason for the development of the new products and the main a i m o f t h e s e n e w p r o d u c t s u n d e r d e v e l o p m e n t a r e t o s a t i s f y t h e custom ers only. In case any product fails to meet the customers needs, it is discarded or rebranded by understanding the requirements which is best possible to be done by involving the customer himself designing process of the product. As from the research we did by selecting a non-biased sample of 50 individuals, we can derive that the customers are majorly driven by the young female adults and as the technology and advancement happening, there have been developed many new customer touch-points. While considering a mobile phone as a product and based on questionnaire we had te following findings:

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What is it that you like about the product? Feel free to check as many responses as you wish.

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Please tell us how the described product would rate on the following attributes.

What is it that you like about the product? Feel free to check as many responses as you wish.

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Conclusion
The customers are involved for the betterment of the new product under development. The customers feedback will ensure a good quality and efficiency of the product once it is developed andwill beeasilya c c e p t e d b y t h e c u s t o m e r s a s t h e p r o d u c t w i l l b e a s p e r t h e i r o w n requirements. The best example for this is the tailor-made jeans service which was started long time back by Levi-s Jeanswear. The tailor-made service is actually involvement of the customer in the development of a new product but at a very small scale. If we look at the large scenario, we can see that the products will be readily accepted once they are meeting the requirements of the customers which in turn can only be done by involving the customers. Within our analysis , price is not the most important factor than the quality and brand name. People are ready to part with the money at the cost of good quality.

Recommendation
The above analysis and study shows the importance of the integration of the new product development with customer relationship management i.e. involvingcu stomers with new product design. The vendors and their local customers should be targeted for recommendation as mall culture has not much effect on the sales of their products. While designing the product, the price has to be controlled till the quality of the product is superior most in the market. Until and unless there is something extra in the product, they are not ready to divert from their present choice. After the launch of the product, promotional schemes and combo offers attract most number of people. Brand image is most important to the customers and it comes with quality. Today, brand means the best quality. For the purpose of collection of the data from customers, it is important that the organizations use most accessible communication channel and that is television. The importance of customers in various departments has been analyzed and it brings out significance of customers in the development of new product. It is recommended that the mangers responsible for thee same consider theintegra tion of the two terms sincerely and take necessary steps.

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Overall Conclusion
The process of new product development is a critical process. The customers are the new innovators. It the customer for whom, the new product is developed. Therefore, it is must to analyze what are their demands and what sectors or areas they wish to have products and services that can support them or help them. The idea of the new product comes from customers, thus it is must that the idea that took birth in their mind is further and developed with specifications. Thus, it becomes necessary to ask questions and understand the mindset and demands of the customers with details pertaining to the product that has been innovated. Designing the product around those specifications saves a-lot of work, money and time and gives a better hope of success in the market. The paper dealt with various literature resources that can be helpful in the study with some or the other information. The literature review has been done for further reading on the topic and gives substantial support to the report. The research methodology gave out various answers to various questions that are important to understand and choose the customers to target for a specific product.

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