New Product Development is the process that opens up entirely new market in order to ensure the growth of organization that significantly broadens the market for existing product which in turn leeds to beneficial of both the customer and sponsoring company.
Why new product development?
The day today market, technology, and competition have brought changes to almost every market sector and have made new product development one of the most vital business activities. The significant monumental changes that constantly impact commerce have forced companies to grow up with increasing production, quality, reliability and efficiency. In turn, this has made new product development one of the most complex phenomena for business functions. In order to maintain the firms reputation as a leading edge company and to improve the relations with the distributors , firm’s must innovate. The power of innovation had revealed a significant mark in various studies, which further show that companies leading their rivals industries contributes about half of their revenues to products developed in the most recent five years. In comparison, most of the companies fetch approximately one-tenth of the sales from their new products.
Importance :-
To cope up with the advancement of new technology
To meet the desired needs of customers
To attract new customers
To replace the existing product
To maintain a prestigious possession in the market
To give high level of competition to the rivals
To enhance the product portfolio
To repositioned the new products(existing products targeted at new market)
Cost reductions(new products provide similar performance at low cost)
To diversify into new markets
To make cash cows for the future
As per our assignment given According to me Nintendo Wii has to follow the following strategies which should be kept in mind while making New Product Development:-
Original Products – To continue their leadership in the world market Nintendo should pressurize on building the products that would create a user friendly environment. An interactive way to communicate with the user and with others too. The “Wii” is basically a home video game offered by Nintendo as a seventh-generation console, which primarily gives a strong competition to Xbox 360 of Microsoft and Sony’s PlayStation 3.
Acquisition – It is somewhat acquiring control over the entire corporation known as target by stock purchase either hostile or friendly sometimes called as takeover.In selecting a target , Nintendo should consider weather the acquisition would let them extract the values in three ways:
The takeover cost should make it possible to lower the cost through economic scale and better cost management.
The acquisition should be able to increase the company market value by spreading its unique brand name worldwide.
The takeover should help the acquiring company change the competitive game.
Product Improvements -As Nintendo upgrades to their new products in a very short span of time which helps them to move with the flow of advancement of technology. A product that exists in the marketplace can be improved by adding up many features or by changing its style , looks , colour , shape , portability etc. Many of the products that are sold in retail outlets were created through a shift of changes and by improving/upgrading over the existing original models. The improvement could make the product more attractive, pleasing and versatile. As a result, the product could attract a large segment of market towards it.
Improvements and up gradation can uplift a product to a different level. This is also with the case of telephone, which has evolved from a stationary, big black box with a rotary dial embedded on its top, to a wireless, pocket-sized, multi-functional communication device.
Product Modifications – Product modification means by change of one or more of the product’s features that may involve repackaging to enhance more customer towards it. Modifications in the products can give a competitive advantage in the business era.
For acquiring the above steps the important thing which One has to go though is the Models of New Product Development:–
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Opportunity identification – Innovation plays a very significant role in the new product development. As we all know that Nintendo is very habitual of innovation and the quest goes on and it won’t get stopped until it fails because with the failure itself he will gain more and more opportunities and experience which will once again help him to recognize the opportunities in his future life.
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Internal Sources – Internal sources comprises of company employees at all level. Internal development means the firm develops the new product by itself only. This task comprises of many risks than external development sources because the company bears all of the costs associated with new product development and implementation. It has to done with various collaboration which includes strategic partnerships, strategic alliances, joint ventures, and licensing agreements, can be seen when two or more firms work together on developing new products.
External Sources – External sourcing means the company acquires the authoritarian service, or obtains the rights to market the product or service, from another organization. It mainly comprises of :
Customers
Distributor
Competitor
Suppliers
Ideation – Ideation is the unique process of imagining, developing, and visualizing new ideas, where an idea is well understood as one of the vital element of thought that can be either visual or abstract. Ideation is all stages of a thought cycle, from innovation, to development, to actualization. As such, it is an essential part of the design process, both in education and practice.
Cross functional team – The most significant feature of this model is whatever the problems arise inside the company in any departments that will be solved through communication inside the company itself. This rally is team effort work and will be able to solve to query.
Generate ideas – Developing new products is an important way to get control over your future. And new products are very exciting. The most interesting part of the new product development process is having an eye on your new product when they take off in the market world. The second most exciting is creating more and more ideas.
Brainstorming – This technique is basically used to create more and more innovative ideas thereby attracting the mass towards it. As Nintendo constitutes of many peoples and different peoples have different perspective thereby considering the best amongst all.
Suspend judgment – Suspending judgment is a unique way to ‘play it safe’, if it’s more important to you to avoid being wrong than to actually get things right
Encouragement for creativity – Encouragement is contagious. Nintendo should lay more stress for motivating their employs for innovation. They should be more creative so they identifies the benefits and the features of a product to fulfill the consumer requirement.
Opportunity analysis – Nintendo’s nature of innovation is as old as human civilization. As it frequently introduces new and new ideas for meeting the needs of the new generation. They should identify the problem and sort it out efficiently to maintain their repo. The first prioritization should aim at the young earns i.e. the most vulnerable section of our society to gain more and more.
Concept Development and Screening – This can be done by marketing via any advertising agency conducting focus groups , surveys etc.in this different peoples from different streams gathered up and give their ideas and opinions in different aspects. Nintendo must focus upon groups and masses and should perform surveys to meet the local needs. Their objective must judge weather the concept fits the opportunity area , and constraints i.e. weather its been able to meet according to the needs and requirements of the peoples or not. They must refine or describe the product concept. And more importantly what benefits it will deliver to the user.
Product Development – Nintendo should look at the initial stage with broad design and parameters such as :
Produce early prototypes
Show and obtain feedback from end users
Refining the design
Carry out test among end users
Experimental designs offer most powerful learning
Optimize final design and packaging
Position Development – Nintendo should first set out what is their prime target , what is the frame of reference , from where they would get support for their product.
Marketing Plan Development – They should target at the young earns who are the prime assets of our society. They can seek the help of communication media for overseas advertisement and to gain more popularity. Either they can introduce consumer promotions like in the form of discount coupons etc. And the most important they should plan for their financial plan of how to make maximum by spending minimum. The cost of the respective product may vary time to time as according to the needs.
Marketing Test – This can be achieved by two stages :
Stimulated market test(SMT) – It is as similar to concept market but with products by providing samples to consumers for interested ones. Measure the level of response and trial potential.
Live market test(LMT) – It is done to measure actual sales volume namely by two ways controlled i.e. behavior scan and by conventional i.e. normal channels. They must track the sales rate ,trial etc and compare them with the goals to identify the gaps.
Commercialisation – It involves significant market capital which includes hardware parts and equipment . It also involves slotting fees which is characterized by sales incentives. The most vital thing to do is to build product into a “platform” that would help them to maintain growth and sustain competitive advantage.
Question 2:-
In this highly competitive game console environment, illustrate how Nintendo Wii better manage innovation within the organization to stay ahead of its competitor in the gaming industry?
Solution:-
Innovation is generating the new ideas and then implementing those ideas and then commercialisation of those ideas. It is a driving force of welfare that contributes to the upcoming needs and standard.
The online gaming sector in India had aroused by the increasing number of Internet users, which further increases in the monthly incomes, and felt them to spend among the youths. The growth of Internet cafes such as cyber café’s and Reliance WebWorld, who have installed online games to attract more consumers, has also contributed to the rise in online gaming in India.
The gaming industry consists primarily of school and college students. The Personal computer sales in India have increased due to its decrease in prices of hardware components therefore increases the competition.
To be competitive in the market Nintendo must use BCG matrix to know about where his product stands and then accordingly prepare a plan to perform some actions:
What is BCG?
The BCG Matrix method is one of the most well-known portfolio management tool. It is based on plc(product life cycle) theory. The BCG Matrix can be used to determine upto what levels the priorities should be given to a product in the portfolio’s as per business perspective. And moreover to ensure long-term stand in the market, a company should have a portfolio of products that consist of both high-growth products in need of cash inputs and low-growth products that generate a lot of money. The prime goal behind is that if the product has bigger market share or the product market increases at a faster rate ultimately it would leed to the betterment of the company.
The four sections of the BCG Matrix are discussed below:
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BCG Stars (==high growth, high market share)
Stars are using large amounts of capital. Stars are the ultimate head in the business. Therefore they should also generate large amounts of cash.
This is the best category in all of these. It will generate a huge amount of cash because it has a strong market share but it consumes a huge amount of cash. Therefore , if Nintendo can invest more to generate more cash then it will be the best category to invest.
BCG Cash Cows (low growth, high market share)
In this market share is high and low growth rate. The level of Profit and cash generation is high. Because of the low growth, investments which are needed should be low.
Cash Cows are probably the stars of yesterday and they are the foundation of a company.
BCG Dogs (low growth, low market share)
As growth rate and market share is low and therefore unable to generate much cash from the investment.
Beware and minimize the number of Dogs in a company.
Think out for alternates such as ‘rescue plans’.
So when the market is in this situation Nintendo should not invest.
BCG Question Marks (high growth, low market share)
Question Marks have the worst capital characteristics as compared to all, because the demands for cash is high generation of returns is low , because of low market share.
If the market share remains unchanged, Question Marks will swallow huge amount of cash.
So if Nintendo has some special ideas he can invest in them otherwise it is better to avoid this situation also because it may or may not generate profits.
Some other efforts Nintendo needs to do to defend their rivals in the gaming era are as stated below:-
The BCG Matrix model model is the base for management to decide and prepare for future actions.
Nintendo should manufacture the products as per the desired whims of their customers so as to increase the customers value.
The products cost must be as low so to take a leed over Microsoft’s Xbox 360 or Sony’s playstation PSP3 and by not letting to compete it at any level and thereby increasing the profits.
They should primarily avoid the traditional thinking and lethargy.
After every a short span of time they should introduce new product so to keep up with the technology as well as the needs.
The products must be well conceived with properly executed launch.
For all the new products launch there should be a top management backing.
The new products must be in accordance to new architecture/design thereby causing an appeal and attracting more customers towards it.
The level of comfort must be monitored before introducing it into the market.
From time to time they should also introduce customer loyality programmes to give utmost importance to the customers , making a material point in comparison to others.
They should introduce some more 3D kind of games enabling the user to feel the true reality and gaining importance over others.
The other three ways to introduce a new product over the existing products are :-
Line Extension – Using the existing brand products in the same category.
Brand Extension – Use of existing brands into new product categories, but in the same broad definition of the market.
Brand Stretching – using the existing names in different markets.
Nintendo should not fix the price of the products, as they previously did, it was a big failure. In my opinion , the following two strategies must be taken care of namely market penetration pricing and market-skimming pricing. Market penetration means to penetrate or to divert the masses towards them. This is one of the most significant aspect that Nintendo should taken care of. By introducing new products with low cost surely benefit them in all respect and increasing their market share. In parallel market skimming price means of getting an overview of the market and the customers willing to buy expensive products not in bulk but increasing the overall capital.
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MARKET PENETRATION PRICING
Pricing has counsel Nintendo Console Wii market penetration of the last. The Wii is made from the price of $ 249.99 in the beginning, and much cheaper than Sony’s PSP3 and Microsoft’s Xbox360. The pricing strategy and the innovation plan was the most significant and brings about remarkable success. In today’s world Ninetndo holds the highest share as compared to its most potential alias named Microsoft Xbox 360 and sony’s playstation PSP3. Nintendo showed a cut off price and launched the price of 2009 so far in addition to the Wii for $ 209.
MARKET SKIMMING PRICE
In 2006 as full payment, the Sony Play Station 3 (PS3). Price, the 60 GB model and astronomical Rs.30756 Rs.21956 20 GB model. Many buyers in hopes that off by high prices in many places and opportunities to console gaming (Xbox 360 and Nintendo Wii), much worse. Then they return Nintendo to the lack of good after the publication of this work fell into the crowd with the introduction of two copies of the price and the 40GB 80GB and phasing out the 20GB and 60GB. Sony PSP3 currently has at least a portion of the competition. Although this is the height of many factors and can be applied to many first train of hope, which is worth less than buyers an alternative to Microsoft bought Nintendo Wii and Xbox 360
Nintendo should keep this in mind and he should set price very carefully for his product because a buyer wants full value of his expending. He should not set a higher price for existing product which have their alternatives and are cheaper also. He can probably set a higher price if he introduces a product with some new features that are not copied by others because as the demands are changing and customer wants more they will surely invest in his product.
CONCLUSION
As discussed above it has became very much clear that Nintendo should follow the Processes which has been mentioned above to form a New Product so that the Product will uplift the market and will sustain in future as well.
Strategies will help in maintaining Nintendo’s prestigious position in the market and will be helpful for him to earn more profit in this competitive era. As we know that Nintendo was first to launch the gaming products so his good fame should be there for long time and for that reason only He should follow the above mentioned Process and Strategies.
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