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New Product In Toy Industry Mattel

3015 words (12 pages) Essay in Marketing

21/04/17 Marketing Reference this

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Nowadays, along with the NPI concept associated with market, customer satisfaction, distribution, etc, the NPI process become one of the most complicated procedures within the company. However, new product introduction is one of the most important procedures in the business organization. Apart from marketing strategy as price and promotion, new product introduction also indicates the company’s ability to response to the market. The marketing competition, growing customer needs and updated technology drive company to improve the product design and development process. There is a product war in the market in every industry. In this essay, new product introduction process in different industry will be discussed to determine the factors may influence the publication time. In general, there are several factors can affect the time to market. The new product development time is one of the factors, and it’s varying from sector to sector due to the difference of the processes. The NPI process also needs to be aligning with marketing strategy. Capacity utilization is another factor attribute to the length of NPI process. In this essay, we will focus on the factors embed in the new product introduction process in different industry. Pharmaceutical industry, toy industry, fast moving consuming goods industry and functional food industry will be discussed in terms of new product development process analysis, trends in future.

1.2 New product introduction in toy industry – Mattel

Mattel is the biggest toy manufacturer in the world according to the market share. The Mattel’s headquarter locates in California. It is found in 1945 and is famous for their products – Barbie doll series. The products have been sold in all over the world. The product lines include the Barbie doll, hot wheels, cars, and board game, etc.

1.2.1 New product development model

In the general toy industry, the main toy markets are in US, Europe and Japan. The needs of customers include the traditional toys as dolls and also high technical toys. The majority end users of toys are children. However, the consumers are usually adults. The generic production development flow can be demonstrated as Fig2.

Fig1. An operational model for NPD in toy companies (Sun & Wing, 2005)

According to the Fig1, the whole process has been divided to four phases. The first phase requires identification on target segmentation. There are several aspects should be well arranged during this phase: skilful R&D team; innovation on product and design; customer focus; awareness of capability in company, etc. While it is considered quality standard, project goal and risk management in the second phase. Once the design is finalized, the project needs to be well implemented and monitored during the phase3. Thus internal communication within the project team is very important. And due to the toy manufacturer in Hong Kong need to export the toys to abroad market, the external test is essential in this stage. The phase 4 requires on-time delivery of the product to customer with competitive price. (Sun & Wing, 2005)

1.2.2 The factors affect the toy development process

Generally speaking, Mattel dominates the market by the variety of products. In the toy industry, the number of new product introduction decides whether the company can be successful in the market. Mattel introduced about 300 new toys every year. In another word, satisfaction to customer’s needs drive the company to shorten the time to market.

Product life cycle is another issue affect the publish time. For the product lines apart from Barbie, Mattel always use the movie or cartoon characters as model. Those products’ life cycle is always shorter than one year. Thus company has to introduce more products to obtain the market.

Another key issue affected the time to market in toy industry is the market needs. It is important in toy industry to launch the new product in the right time. The product based on cartoon characters should be launched as soon as possible after the movie on show; while toys also are expected to be launched before holiday as Charismas holiday. The new product introduction should always align with marketing strategy. The peak sale is the one of the most important direction in marketing strategy. Thus the new product introduction should be scheduled according to it.

1.2.3 NPI trends in toy industry

To extend the product life cycle in the market, innovative designs has been considered more and more important as the direction of new product introduction. It is very essential to have significant changes in product or process according to related technology or innovative design.

New methodology and tools are used to shorten the new product introduction time. The stimulation and 3D modelling software as 3DCAD are developed rapidly. If the stimulation technology can be used during the design phase, it would provide the designer more opportunity to speed on detail design. Furthermore, it enables to identify the problem in a visible way. The prototyping technology enables the design and development plan can be evaluated in the early stage. [2]

E-commence will be another new trend in toy industry. It would enable customer to interact with toy manufacturer through internet. For example, customer may able to add opinions during the design and development. Thus the design and development can be done in internet in a customer oriented way.

1.3 New product introduce in pharmaceutical industry

Along with the development of advanced technology in biotechnology and chemistry, the pharmaceutical industry has been developed rapidly since the last century. The new product introduction process also has been improved according to the high demanding of customers. The main market drivers can be recognized as affordable cost, time to market, highly efficacious, etc. (Meibohm & Derendorf, 2002) However, to ensure company can response to the market quickly and successfully, the company need the capability to combine the knowledge elements to the new product which is able to meet the market’s needs. (Nerkar & Roberts, 2004)

1.3.1 NPI model in pharmaceutical industry

Fig2.1 Production introduction for pharmaceuticals (WMG, 2010)

Fig2.2 Production introduction for pharmaceuticals (WMG, 2010)

Generally speaking, the production introduction for pharmaceutical industry is conducted through a set of sequential phases as Fig2. The most important phases in this process are the clinical development phases and testing, which also last for long time. The preclinical and clinical development phases are focusing on what compound should be used and how much the dose should be used. In the clinical development phase 1, the information will be collected based on proper dosages taken by volunteers. The trials in phase 2 will focus on the efficacy of the drug to the patients with specific disease. The trials in phase 3 are conducted widely to test the side-effects that may happen. (Dimasi, Hansen & Grabowski, 2003)

Actually, there are many organizations are working on preclinical research every year in the market. However, only 5-10% of them can go through the development procedures. And 20% can go for the clinic trials. The process from the research on the compound selection to the regulatory approval is about 12 to 15 years according to the research of FDA. (Dimasi, Hansen & Grabowski, 2003)

1.3.2 The factors affect the NPI process in pharmaceutical industry

In terms of the publish date of pharmaceutical industry, it takes long time from the discovery of compound to ready for market. As above discussion, the trials will last for long time test the long term effects. The factors affect the time to market has been analyzed as below.

Technology and capacity of organization are the key elements in the pharmaceutical industry. Due to the customer in this industry is specialized as patient. The ability of market competitive is identified according to the publish time and efficacy of the drugs. Thus whether the organization can associate the knowledge elements into the new drugs in a short time will decide whether the organization can gain profit in the market. Technology in the biotechnology and chemistry is the limitation in the pharmaceutical industry, which affect the product life cycle as well. The product paten can be kept for 20 years. Therefore all the companies would like to speed the product introduction process. Otherwise, they have to face many competitors on the maturity and saturation phase of product life cycle.

High failure rate during the development phase is another key factors which affect the publish date. The low predicts on toxicity and efficacy of the new drugs is the limitation in clinical trials. (Gomes, Abrunhosa, Ramos & Pauwels, 2010) Even there are enough preparation on predicting how new drug will effect. There are still many sub-effects due to the variety of human body. The massive number of testing occur high cost and long time. Once the product introduction process sustains for a long time, the financial pressure on the organization is huge.

In the pharmaceutical industry, the product only can be published when it has been approved by related medicine management Committee. In UK, the drug licensing can be obtained through the Medicines and Healthcare products Regulatory Agency (MHRA) or the European Medicines Evaluation Agency (EMEA). The committee will assess the medicine for human use, then comment with agree or object. After the drug has been ‘licensed’ with marketing authority, there is still period for the drug to be launched on the market to be prescribed by doctors.

1.3.3 NPI trends in pharmaceutical industry

Recent years, the investment on the pharmaceutical Research and Development is rising every year. However the success output from the R&D is decreased. Thus companies apart from big organization as Johnson & Johnson are looking for merger to enable to exploit wider scope in R&D.

Shorten the new product introduction period will help company save cost and time. It will also enable company to gain more profit to be earlier in the market. Along with the development of computer technology, it becomes feasible to use stimulation technology on drug research and experiments or trials, which may save lots of time and cost.

Clinical trials take long time during the new production introduction, which also generated a massive group of data from patients. Nowadays, more and more drugs are being tested by company. Thus more and more data has been generated to be analyzed for regulation review. Information technology is a direction that companies would go to speed this process.

1.4 New product induction in fast moving consumer goods (FMCG) industry

Fast moving consumer goods industry provides different consumable commodities with the high turnover ratio. FMCG has been considered as one of the most growing rapidly market among all sectors in the market. Alternatively, the competition in this industry is extremely fierce. Thus launching new product line and products would be high risky and easy to fail. In FMCG industry, the significant difference with other industry is that product has been development to align with the brand or product line. Companies would choose to launch products as the extension of existing product line instead of launching brand-new product. It is also a cost effective method. Therefore, the FMCG companies are focusing on brand building a lot during the new product introduction process.

The sequence of the above phases is not necessary the same. There is also overlapping phases during the new product development process. There would be different drivers for the purpose of project. For example, project is designed according to the market gap or technology push; project is designed to compete with other company in the market; Best practice transfer is also the initials in some cases. Companies use the product line and brand name as two criteria to categorize the product: New brand; Flanker; Brand extension; Line extension. (Amber & Styles, 1997)

1.4.1 Stage-Gate model

However in this rapid turnover market, the most and more company realized product and technology innovation in the product introduction is the strategic bullet. P&G who used Stage-Gate® system is one of the innovative leaders in FMCG industry. ‘Stage-Gate product innovation process is a conceptual and operational roadmap for moving a new-product project from idea to launch.’ (Stage-Gate)

Fig3. Stage-Gate product Innovation process (Stage-Gate)

The product innovation process has been divided into several phases. A set of criteria have been set between each phase to evaluate the whether the previous phase is accomplished. A cross-functional team is the base of the project. The gate 1 is the idea screen. The criteria has been set here includes feasibility, business strategy alignment, market opportunities, etc. When the idea can meet the criteria, the project can go to the stage 1. At stage1, a group of activities will be taken to evaluate the feasibility in market and technology. The project will be revaluated in gate2. At stage2, a group of analysis as market needs analysis, operational analysis, and financial analysis will be conducted to input to Gate3. The development and testing of product are conducted in stage3. At gate4, there is a post-development review. The product, production process and market acceptance will be test through a set of activities. The gate5 is the final point can deny the whole project. The project will be launched in the stage5. (Cooper, 1990)

The Stage-Gate process is able to offer visible requirements in every stage of the process. The gates are easy for company to assess the whole project to reduce the risk. In order to meet the timeline of project, parallel processing will be conducted.

1.4.2 NPI trends in FMCG industry

There are also several trends in terms of customer’s needs. Firstly, Natural and healthy will be the most important concept in the Fast moving consumer goods industry. In this case, the ingredients will be tested during the research phase even carefully. Secondly, convenience is the most important innovation driver in this industry. The demand for easy transportation, easy use would be met during the design phase. The success of the private brand brings threats to the big companies. Thus many companies are trying to launch new product line or new brand. For example, Coca cola developed Menos es Mas in Spain.

E-commerce may also bring change to the NPI process in FMCG. Product can be displayed and tested on-line to be identified whether it will be successful. This may help companies to manage the risk of NPI.

The Fig3 demonstrate the generic product development process in food industry. The phase 1 and phase 2 requires company to set the business strategy with understanding in customer and technology advances. Product and process design will be done in the phase 3. The testing and production are conducted during the phase 4. In phase 5, the product will be launched and related marketing plan will be conducted. (Earle, 1997)

1.5.1 NPI model of dairy food case

New product development process is structured vary and different approaches have used in each phase. Correspondingly, the process will be proceeding in different pace. Gefilus, Evolus and the lactose-free milk are three type of dairy food product developed by Valio Ltd. (Biström & Nordström, 2002) The three new product introduction process will be analyzed to demonstrate factors affect the publish date.

Fig5. Timescale for the three dairy product development processes (Biström & Nordström, 2002)

According to the above case analysis, the structure of project is one of the factors to decide the length of the new product introduction process. the Evolus uses the shortest time for product development process. It is visible that Evolus plan has been planned by cross-functional activities. The marketing and testing phases start at the early age of the project, which enable to shorten the time to market. The Genfilus also have overlapping phases in the progress. However, the implementation of those phases is not effective as Elvolus. LFM, which takes longest time in development press, take each phase as single phase to implement. (Biström & Nordström, 2002)

The technology is another key factor affects the product development process. In the Fig5, Genfilus spent a long time in basic research. Thus even it has overlapping phases structure, the time to market is still longer compare to Evolus. This is because Genfilus was developed from the new and innovative technology. In another word, Genfilus was a pioneer in the market of Finland, which focused on blood lower function. Evolus also focused on the same function but based on raw material selection, which required the shorter research time. LFM which was developed on the healthy and flavor purpose is also based on a new technology. Thus the LFM also takes long time on research. (Biström & Nordström, 2002)

Market strategy is also a key factor affects the publish date. In this case, when Genfilus was launched in 1990 in Finland, it was the first dairy product with the healthy concept. Genfilus was a pioneer brought people the concept of functional food. When Evolus was developed, both Genfilus and LFM were already accepted by customers on the market. In another word, Evolus already had the base of market acceptance. This enables Evolus to speed the new product introduction and had a early publish date.

1.5.2 NPI trends in food industry

Innovation on the product and technology will be the most important part in the new product development in future. Fearing the failure of new innovative products, companies preferred to develop product based on similar technology and concept. However, innovative products have been approved to be more successful than copied products. (Knox & Mitchell, 2003) Because more and more competitors enter this market, customer will not buy in copy concept in this market environment. (Knox & Mitchell, 2003)

Customer oriented will be the principle of new product development. Nowadays, food producers more rely on supermarket to gain market information. The risk of failure in new product introduction will be bear by food producers. Thus it’s very important for food producers to take customer oriented in the product development process to decrease the risk of failure. (Knox & Mitchell, 2003)

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