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Discuss the new product development approaches.

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1. Reactive approach: involves responding to the competitors’ new product development initiatives by acquisition through licensing or contracting. It consists of the firm attempting to outmaneuver its competitors by waiting them to take the risks of new product development and then entering the market when it is clear that further opportunities exist.
• The main objectives of the approach include avoiding costly launch mistakes and using the experience to extend the technology.
• The major emphasis is on application and design engineering to allow manufacturing of cheaper, lower quality products for new market segments at the bottom end of the market.
• The limitation with this imitation approach is the difficulty of penetrating established markets in which others may have established a lead and quality reputation
2. Proactive approach: deliberately finding new product ideas and seeking to commercialize early before any competitors set in through internal research and development. Requirements for this approach to succeed:
1. It requires commitment to R & D , consumer research and market awareness
2. Needs willingness to take risks
3. It requires entrepreneurial organizational culture
4. Environmental scanning for opportunities and then developing products to fit the perceived gap in the market
5. It may involve joint ventures or licensing where resources do not allow
Limitations include:
1. costliness of new product development
2. It is time consuming
3. The risk of failure as many new products have about 90% failure rate
4. Uncertain cashflows at the initial stages require a short time for cost recovery
5. Unpredictable marketing environmental changes that shorten the life cycles of new product

Lellah answered the question on November 5, 2021 at 10:57

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Discuss the new product development approaches.

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