80 terms

New Product Development

STUDY
PLAY
New Product Development
A framework that includes a process, strategy and portfolio
Product Management
Ensuring over time that a product profitably meets customer needs by monitoring and modifying elements of the marketing mix
Product Manager
A mini-general manager. In charge of cross functional teams (different agendas) Deals with various departments:
-Quality, marketing, engineering, finance, operations, sales, and regulatory
Importance of New Products
-Customer and market needs evolve
-Address these issues via innovation and business growth
-It is a top business challenge
New Products
Goods, services, or knowledge sold to satisfy unmet customer need. Can be tangible, intangible, or a combination of the two. Usually sold to consumers (end-user), intermediaries (Physician), or another business.
New Product Categories
-New to World (10%)
-New to Firm (20%)
-Product Line Additions (26%)
-Product Improvements (26%)
-Re-positioning (7%)
-Cost Reduction (11%)
Globalization
Very important in NPD because:
-Top firms spend > 50% of their R&D internationally
-It is difficult to launch efforts over multiple countries
-Need to have a global innovation culture in order to be aware of business and cultural difference
Accidental Discovery
Not all product innovations are planned, but you know you have something when you come across it. (Popsicles, Super Glue, Teflon, Velcro, Microwaves, Slinky)
New Product Failures
-Overestimate market size
-Design problems
-Incorrect pricing
-High development costs
-Competition
-Customer need/insight was not optimized
New Product Success
The number one drive contributing is that it is an unique and superior product that adds value for the customer
New Product Challenges
-It is a new field that lacks systematic language
-Requires a strong creative contribution (how the product is defined, developed, and marketed)
-Many decisions are made on inadequate facts
-Dealing with people under intense pressure
Professional Certification
-Teams, people and organization (20%)
-New Products Process (20%)
-Tools and Metrics (20%)
-Strategy (15%)
-Market Research (15%)
-Portfolio Management (10%)
3 Categories of Innovation
-Configuration
-Offering
-Experience
Configuration Innovation
The business side of innovation. Includes:
-Profit Model
-Network
-Structure
-Process
Offering Innovation
The product side of innovation. Includes:
-Product Performance
-Product System
Experience Innovation
The customer side of innovation. Includes:
-Service
-Channel
-Brand
-Customer Engagement
Profit Model
Part of configuration innovation. It is how you make money.
Network
Part of configuration innovation. It is how you connect with others to create value.
Structure
Part of configuration innovation. It is how you align your talents and assets.
Process
Part of configuration innovation. It is how you use signature or superior methods to do your work.
Product Performance
Part of offering innovation. It is adding a benefit to improve and develop features and functionality.
Product System
Part of offering innovation. It is creating complementary products and services. How individual products connect together to create a bundle.
Service
Part of experience innovation. It how you support and amplify the value of the product.
Channel
Part of experience innovation. It is how you deliver your offerings to customers and users.
Brand
Part of experience innovation. It is how you represent your offerings and business.
Customer Engagement
Part of experience innovation. It is how you foster compelling customer interactions.
P and G Case
The acquired many businesses (Cover Girl, Max Factor, etc.) and had to manage the product development. They did not have a strategy and were not very successful. Key Takeaways:
-Does not usually begin with a new product idea
-Not all activity is behind closed doors
-Not over at launch (continuous process)
-Top level support is crucial
Development Process Activities
Activities that feed strategic planning for new products including ongoing marketing planning, ongoing corporate planning, and special opportunity analysis.
New Product Development Process
5 stages:
-Opportunity ID and Selection
-Concept Generation
-Concept/Project Evaluation
-Development (Marketing/Technical)
-Launch
Opportunity ID and Selection
Phase 1: Generation of new product opportunities. Research, evaluate, validate and rank opportunities (not specific product concepts). Where should we look?
Concept Generation
Phase 2: Select a high potential or urgent opportunity, begin customer involvement, and develop certain concepts. Is the idea worth screening?
Concept and Project Evaluation
Phase 3: Evaluate new product concepts on specific criteria (technical, marketing and financial). Rank and select the best 2/3 and request authorization to move forward with team, budget, and final PIC. Should we try to develop it?
Development- Technical
Phase 4: Specify full development process and its deliverables, design prototypes, test and validate. Then, scale up production as necessary. Have we technically developed it?
Development- Marketing
Phase 4: Further develop business/marketing plan including strategy and tactics (4 P's), so that it can be approved. Have we confirmed readiness to go to market?
Launch
Phase 5: Begin distribution and sale of new product. Make sure to manage the release program to achieve goals and objectives. How do we successfully execute the rollout?
New Services Development Process
Similar process, but with appropriate adaptations. Different prototypes, more iterations, and more training.
New to the World Development Process
Adaption to the process (many iterations and the order might change). A clear connection is required between innovation and strategic innovation. High risk and high reward, so senior leadership alignment and guidance is critical.
New Products Strategy
-A mission statement for innovation
-Chart new product team's direction
-Set team's goals and objectives
-Tell the team how to innovate (rules and constraints)
Corporate Strategic Priorities
Type of strategy: New products in the firm will have specifics in either technology, markets, or guidelines
Product Platform
Type of strategy: product families that share similarities in design, development, and production process.
Opportunities
Trends, new segments, and markets, new geographies, and new technologies
Product Innovation Charter
It is the new product team's strategy that is designed by senior management to provide guidance to the strategic units for innovation. Benefits include:
-focus and integration
-allow for delegation
-establish size and range of sandbox
-avoid moving targets
Contents of PIC
-Background: key ideas from situation analysis
-Focus: 1 clear technology dimension and 1 clear market dimension
-Goal-Objectives: what the project will accomplish
-Guidelines: rules of the rode (requirements)
Kellogg Case
They were losing ground to General Mills so they increased brand awareness with snack products in order to overtake General Mills using new products, line extensions, and marketing.
Portfolio Analysis
Used to evaluate opportunities to assess attractiveness and priorities. Helps link to strategy and why it is important. Factors include:
-Strategic Goals
-Project Types
-Duration
-Risk ID and Distribution
-Market and Technology Familiarity
-Geography
Portfolio Management
Is a significant discipline that provides elaborate models and software can support and manage ongoing evaluation
Portfolio Evaluation Mode
Shows the probability of technical success (also shows risk)
Ideation
These are factors that help drive this term:
-The right people
-Management
-Creativity driven activities
-Removing roadblocks
Role of Management
Recognize individuality, but also encourage interaction and competitive teams. Be tolerant of mistakes and supportive under stress.
Group Think
Obstacle to Idea Generation: Think we are being creative, when in reality we are only coming up with ideas that our group will find acceptable.
Targeting Error
Obstacle to Idea Generation: We keep going back to the same simple demographic targets
Poor Customer Insight
Obstacle to Idea Generation: Lavish research spending doesn't guarantee that customer research is done well.
Complexity
Obstacle to Idea Generation: Creative types as well as senior management, often think the more complex the idea, the better
Lack of Empathy
Obstacle to Idea Generation: Well-educated, high-income managers accustomed to an upscale lifestyle may not understand the "typical" customer.
Too Many Cooks
Obstacle to Idea Generation: Large companies are prone to internal competition for power.
Key Inputs of Ideation
Technology permits us to develop a form that provides the benefit:
-Form (the physical thing created)
-Technology (source by which form is attained)
-Benefit/Need (benefit to customer because of their need)
Ready Made Concepts
A way to generate new product concepts in addition to using a team. Sources are:
-employees
-end users
-re-sellers or suppliers
-competitors
-consultants
Crowdsourcing
Open idea solicitation from customers
Lead Users
Gathering input from early adopters that are associated with a significant current trend because they have the best understanding of problems faced
Open Innovation
Process by which a firm searches external sources for research, innovation, technologies and products. Increases speed, cuts risks and generated new ideas.
Problem Sources
-Internal: marketing and technical staff and information
-Stakeholders: prioritize key stakeholders (customer research)
-Scenario Analysis: extend the present, paint a picture and study it for problems and needs
Guidelines for Brainstorming
-Leader outlines the main issue
-Use a diverse group
-No criticism
-Do not slow down the session
Product Attributes
3 types:
-Features: what the product consists of
-Functions: what the product does and how it works
-Benefits: how the product satisfies the user (value proposition)

Feature permits a function which provides a benefit.
Gap Analysis
Technique used to determine how various products are perceived by "how" they are positioned on a market map. As items are plotted, they tend to cluster, which leaves open spaces (gaps).
Determinant Gap Map
Time and cost efficient Gap Analysis that is produced from managerial input/judgement on products.
-Determine 2 important attributes (need to be different)
Perceptual (AR) Gap Map
Gap Analysis that is produced from ratings by customers using a likert type scale and statistical techniques.
Buyer Cycle
-Purchasing
-Delivery
-Use
-Supplements
-Maintenance
-Disposal
Trade Off Analysis
Looking at key attributes and combining the best level of each attribute into a favorite product
Evaluation Systems
Enables profitable new products that meet customer unmet needs by evaluating a product at each step in development process and finding the right balance of accepting and declining products.
Rolling Evaluation
The project is assessed in steps rather than a single go/no go decision. Also, the financial analysis needs to be continuously adjusted.
Risk/Payoff Assessment Choices
-Avoidance: eliminate the project
-Mitigation: reduce the risk to acceptable level
-Transfer: move responsibility to another organization
-Acceptance: accept risk and develop a contingency plan
People
Critical to the evaluation process because they can influence the evaluation and can really buy into an idea or project.
Surrogates
Questions you can as that can give clues to the real answer. Lets you read into the action or behavior to understand the real problem.
Financial Forecasting
ATAR
-Aware: has heard about the new product
-Available: they buyer can find/buy it
-Trail: purchase or consumption of the product
-Repeat: they continue buying or recommend to others
Written Product Concept Components
-Name and headline
-Product description
-Benefits
-Reasons to believe (features)
-Price
Concept Testing
Will narrow concepts by eliminating poor ones or highlighting strong ones. Also can help estimate product sales and further develop the product.
Top Two Box
Is on every concept test and measures the buying intention by asking a five point question. Shows those that will definitely or probably would buy
Conjoint Analysis
Measures three product attributes and shows how much each attribute affects likes and dislikes. Helps you learn importance of each attribute and the optimal level of each attribute.
BASES
Starts with a rough sales projection, and then uses various measurables to estimate awareness and availability. Will then use the concept + use equation to gauge repeat purchases.
Six Hats
Good technique for looking at the effects of a decision from a number of different points of view