Question

What is the importance of new product development? Put your answer in the perspective of the product life cycle.

Answer 1

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To understand the importance of new product development in perspective of the product life cycle, lets understand bothe concept individually.

New product development - New product development is the process of bringing new product/service to the marketplace. This can be the upgradation of previous product, technology enhancement of the older version, value added in the previous verison. Company indulge in this process because of increasing competetion, new technology available, change in customer preference and many more.

NPD involeves the processes like idea generation, idea screening, concept testing, business analysis, product development, test marketing, launch and review. So this is very important activity which companies now a days do to be in the market and capture the available market share. It gives the feature side of the product

Product life cycle - The product life cycle is the process a product goes through from its itroduction to the market to its remval from the market. Here, it gives the business side of the product where in which phase it makes more sales and profit compare to othet phases.

Following graph shows the product life cycle phases and sales and profit associated with it

Here, this graph shows that there are 6 phases.

Product development, introduction are the phases where the sales are low and company does not make any profit on the product. While growth and maturity are the phases where company gains the most sales and profit and during the decline phase again it starts to dip.

Now lets understand NPD in the context of product life cycle. So company will have multiple products in the market which will be having their individual product life cycle. So products stays longer in the market having long life cycle and some products like (quickly changing technology like mobile) stays for a shorter period. Now company needs to stay in the market share gain race. If they do not do New Product development then their current product will reach the decline phase and their sales will be gone. Plus their competitors will do the NPD and their product will be launch earlier in the market which will take the advantage of being first in the market. They will earn most of the profit in the growth and maturity stage which is very important. So to be in the market competetion and stay relevent it is very important to have NPD which can be enhancement of the older version or compeltely new technology.

So by this we can understand the importance of NPD inperspective of product life cycle