"Happy to release my second book-a reference text book for B-Schools titled' New Product Development-A FMCG Perspective' .Based on my fifteen years of corporate experience, teaching at IIMs/XLRI and PhD at IIT Madras. Foreword by IIM Indore Director Rishikesha Krishnan. The book helps students, academicians and corporate personnel alike in developing and launching new products in the marketplace.

The following aspects are covered:

  • How does one develop new products?
  • What are the methods to measure the success of new products?
  • How is developing new products in an entrepreneurial company different?
  • What are the key factors that contribute to the success of new products in the marketplace?



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Preface

Foreword

Preface

New product development is an important activity in any business. New products contribute to the growth and survival of an organisation and has a key influence on how the organisations are perceived by the investors in terms of its innovation ability. A marketing person, on an average, spends more than 50% of his time in either ideating, developing or launching new products in the market place.

In the last few decades, the number of new products developed and /or introduced has gone up significantly. Correspondingly, managing the new product development (henceforth called NPD) process has become a challenge for firms as it requires extensive financial and human resources and is time sensitive. The stark reality is that the majority of new product ideas never get launched in the market and those that do face a failure rate somewhere in the order of 25 to 45 percent. For every seven new product ideas generated by firms, only about four enter development, one and a half are launched, and only one succeeds. Hence NPD ranks amongst the riskiest and the most complex tasks for organizations. As the amount of resources invested in NPD goes up, the pressure to maximize returns on those investments also goes up. An estimated 46 percent of resources allocated to NPD are spent on products that are either abandoned or have ceased to payback an adequate financial return.

NPD process can be very different across different industries. The Indian FMCG (fast moving consumer goods) industry, with an estimated market size of approximately USD 2 trillion, accounts for the fourth largest sector in India. With a population of over one billion, India is one of the largest economies in the world in terms of purchasing power and increased consumer spending, next to China. In the last decade, the FMCG sector in India has grown at an average of 11% a year. It is characterized by a strong presence of global businesses, an intense competition between organized and unorganized players, a well- established distribution network and a rather low operational cost. Rising per capita incomes are likely to increase discretionary spending, driving the growth in the Indian FMCG sector. Also, the rising number of working women and the reducing popularity of the joint family system has increased the demand for processed and packaged food products. Further, increased media consumption has boosted demand for personal care and healthcare products. People in the rural areas have become more open to consuming modern packaged food products and personal grooming products. Being a consumer-driven economy, India is one of the leading FMCG markets in the world. Given all this, the focus of this book is NPD in the FMCG sector.

The existing literature available on NPD largely pertains to industrial and technology sectors in the developed economies. However FMCG industry differs from industrial and technology sectors from the angles of frequency of purchase, limited role of R and D, significant customer involvement, supply chain complexity etc. According to National Knowledge Commission 2007, one of the key barriers for new product development in India is insufficient academic work in this area. Also developing markets like India are quite different from the developed world in many aspects- sub optimal living conditions that determine a consumer’s purchase decision, current and future size of the market, regional presence of family owned brands that has an impact on consumer preferences and of course the infrastructural challenges that a new organization may face. All these contribute to making the activity of new product development and market introduction being very different in a country like India.

After spending fifteeen years in sales and marketing in leading Indian FMCG corporates, the key motivation for me to write this book was to get answers to the questions that I faced as a marketing professional- How to make consumers try the new product launched in the market place? How to develop new products that will become strong brands over a period of time? How to be perceived as a company that is innovative? . I wished I knew what were the set of critical aspects that I needed to focus in order to improve success rates in new products.

This book is also an outcome of my five years of teaching experience at various Premier Management Institutes in the country. While discussing the topic of NPD with students, I got fresh insights into some areas. I also got to understand what would be the current expectations from the new product development activity, as far as young marketing professionals are concerned.

The final and the most important input that has gone into the book is my five years of focussed research work that was undertaken in this area across Premier Institutes in the country.This has resulted in greater understanding of NPD process as well as success factors. All these are being shared here.

Therefore this book is a combined result of my work experience , teaching and research in the area of New product development in FMCG. I hope that both the industry and the academic community will be benefited by this book. Practitioneers can refer to this while developing and and launching new products in various categories in FMCG while academicians can use this as a text book in their Institutes in ‘New Product development’ in MBA programs .

What to expect from the book?

The main section of the book comprises eight chapters. They are interspersed with examples, case studies and snap shots, in order to make the concepts more interesting. There are also videos, assignment questions, multiple choice questions and power point presentations pertaining to each chapter. Additionally there are also work book formats that will enable the academicians and the industry personnel to kepp a checklist of the important aspects of new product development.

Finally the highlight of the book is a special section on ‘Corporate Speak’ -- where a few leading industry personnel have given their views on important aspects of New product development in the FMCG industry and what can be done better.

The eight chapters are organised as follows. Starting with introduction, they cover aspects of NPD process in various companies within FMCG, how to measure New product success, what are the differences in new product process and success factors across categories within FMCG, how to the perspectives of various functions differ with regard to NPD and finally how to learn from new product failures. Each chapter touches upon the available academic literature on that topic,industry insights as well as any research finding in that area.

With this book, I sincerely hope that there will be better understanding of New product development in FMCG in India. I hope that armed with more knowledge, companies will invest more resources in new product development activities and that success rates will go up. And that finally, the consumer will be delighted more.

Happy reading!

 

Foreword

New product development (NPD) as an activity came into its own in India only after the opening up of the economy and when deregulation made innovation important for corporate success. Companies sought to address so-called “base-of-the-pyramid” markets and discovered that their existing products were over-engineered and over-priced to reach these customers. Companies found that creating products aligned to the needs of these customers often involved starting with a clean slate and developing a product without pre-conceived notions or assumptions. At the same time, the product needs to be very functional and aligned with the expectations of the user.

The Indian market provides opportunities to make better products for already articulated needs as well as for unarticulated needs of customers. Indian companies like Marico, Cavinkare, Paras, Emami, ITC and Godrej as well as established multinationals have demonstrated how NPD can drive their growth engines.

NPD is a subject close to my heart. The first elective I offered (jointly with Prof. Ganesh Prabhu) as a young faculty member in my first academic job was on NPD. So, was the first Management Development Programme I designed (again, with Ganesh Prabhu). The article on NPD challenges in India that Ganesh and I wrote in 1999 (“Creating Successful New Products: The Challenge for India,” Economic & Political Weekly) is one of the papers I really enjoyed writing and I was really happy when it was appreciated by practising managers.

I am delighted that Professor K. Rajeshwari has written this book on NPD with a special emphasis on NPD for India. Raji brings to this book an ideal combination of exhaustive field experience and rigorous academic study. She has worked at the cutting edge of the FMCG industry, researched NPD as a doctoral scholar at IIT Madras, and now continues to do research in the area as a faculty member at XLRI.

Prof. Rajeshwari has been writing on NPD and related topics at frequent intervals in academic journals as well as in the popular press. I have had the good fortune to be in touch with her during her research journey and have always appreciated her enthusiasm for developing her own insights and then articulating and writing them.

I am confident that students of management and NPD practitioners will find this book a useful guide to the NPD process



Dr. Rishikesha T. Krishnan
Director & Professor of Strategy
Indian Institute of Management Indore


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