assessment 4 MKT 520 – IKEA

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assessment 4 MKT 520 – IKEA

REPORT

  • Introduction
  • Background to the report
  • As technology is developing at such an exponential rate, new opportunities are constantly arising. New opportunities and developments inevitably result in new customer needs and wants. New product development is a theoretical process which is instigated to create new products which attempt to effectively satisfy evolving customer needs and requirements. The overall process of new product development is heavily based around the concept of identifying a market opportunity and transforming this opportunity into a desirable and attractive product.

    The new product development process is incredibly vital for an organisation’s success because of the constant changes in customer trends and needs, resulting in products becoming undesirable and stagnant in the market. With new product development, an organisation is able to develop new products which are designed to satisfy the ever-changing needs of the consumers and also develop new competitive advantages against other competitors.

    One of the major issues with new product development is the risk that new products fail to satisfy the customer needs, or attract new customers. It is next to impossible for an organisation to consistently develop new products that successful. Statistics show that over 60% of all products fail to even make it into the market, therefore only 40% successful pass viability tests. Of these 40% of products, around 60% fail to generate profits for the company and therefore the production ends up being terminated. New product development can be used to increase the likelihood for the product to become successful and profitable.

    In the case of IKEA, NPD is the lifeblood of the organisation, as new products are being designed and developed constantly. IKEA has become the biggest furniture retailer in the world, mainly due to its immense range of innovative product designs and quality. With over 12,000 different products available in the store at the moment, and countless number of products that are no longer being produced, IKEA’s new product development process plays an incredibly significant role in the organisation’s success, .

  • Aims
  • This report will explore the theories and concepts of new product development in relation to IKEA. The report will highlight and explain the key factors and influences which affect new product development, and how organisations such as IKEA are able to consistently develop products that are successful.

  • Definition of NPD
  • According to , New Product Development or NPD is the process of designing, planning and developing a new product that attempts to attract certain markets. The process can vary greatly, depending on the type of product, significance, customer needs, competitors, etc. and the process will differ for all organisations.

  • Frameworks for NPD
  • 3.1) Existing frameworks

    In reference to , there are 8 general stages to the new product development process;

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    assessment 4 MKT 520 – IKEA
    Last updated: Feb 2024

    Page 1

    In reference to , there are 8 general stages to the new product development process;

  • Idea generation
  • Every new product comes from an idea. Ideas can come from creativity, or identified through analysis of the organisation such as a SWOT analysis (Strengths, weaknesses, opportunity and threats. Through these analysis opportunities can be identified and ideas can be created to take advantage of these opportunities.

  • Screening the Idea
  • Once an idea is developed, the idea will then be screened or considered for viability and feasibility. Simple questions can be asked to eliminate poor ideas, filter through the ideas and identify the best ideas.

  • Testing the concept
  • An idea may not always be possible, and this is why Ideas must then be tested. Many great ideas are just not physically possible with the current technology, or not financially viable after additional factors are considered. This stage will review the idea or concept more deeply to determine whether the product will be possible or not.

  • Business Analytics
  • Since all products are developed for the primary purpose of generating profit for the company, the company must determine the price at which the product will sell for as well as the sales volume and other factors that will influence the market performance.

  • Creating a Beta for testing
  • Prototypes and beta versions are created for testing purposes. Shapes, designs and functions are all tested to make sure that the product is attractive to the customers and viable in the market. Adjustments can be made to these prototypes to ensure that the products fulfill their purpose and will meet the customer needs. Generally the prototypes will be tested and reviewed through focus groups and experts.

  • Technicalities and product development
  • Any technicalities or areas that can be developed will be fixed and improved so that the final product is the best product that can be developed. Any adjustments and modifications must be made before the product is commercialized as the organisation will be unable to change the product once released.

  • Commercializing the product
  • Once a product is finalized and ready for consumers, it will be commercialized to the public. Advertisements will be made to inform customers of this new product and build a strong first impression to the customers. Commercializing the product is not just about giving the customers information, but selling the product before the customers have even purchased it.

  • Launch product
  • The final stage of the framework is launching or releasing the product into the market. There should be no flaws in the product as consumers will be unsatisfied if they purchased a product that is not completed or working to its full potential.

    These 8 stages of the new product development are the basics to creating a new product, however for large companies such as IKEA, there are many other procedures and stages within their modified New Product Development process.

    3.2) Impact of NPD frameworks on companies in general

    New…

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    assessment 4 MKT 520 – IKEA
    Last updated: Feb 2024

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