Planning for New Products

Planning for new products

Types of new productsTransformational innovationSubstantial innovationIncremental innovation

New product planning as customer driven process

FINDING CUSTOMER VALUE OPPORTUNITIES

Customer value analysisObjective is to identify needs

for:

1. New products

2. Improvements to existing products

3. Improvements in production processes

4. Improvements in supporting services

CustomerExpectations

CustomerSatisfaction Gap

ActualProductPerformance

OPPORTUNITIES

(1) New Products(2) Improvements(3) New and Improved Processes

Finding new product opportunities

Characteristics of Successful Innovators

STRATEGIC INITIATIVES

Creating an Innovative Culture

Leveraging

Capabilities

Selecting the Right

Innovation Strategy

Developing and Implementing Effective New

Product Processes

Making Resource Commitments

Creating an Innovation Culture

Innovation Workshop for top executives to develop an innovation plan. Innovation Statement highlighting objectives and senior management’s role and responsibilities. Training programs for employees and managers. Communicate the priority of innovation. Speakers to expose employees to innovation authorities.

The Innovation Strategy Spells Out Management’s Priorities for New Product Opportunities

1. Set specific New Product Objectives.2. Communicate the role of New Products

throughout the organization.3. Define the areas of strategic focus:

Product ScopeMarketsTechnologies

4. Include longer term discontinuous projects in the portfolio along with incremental projects.

CustomerNeeds

Analysis

BusinessAnalysis

Screeningand

EvaluationIdea

Generation

MarketingStrategy

Development

ProductDevelopment

Testing

Commercialization

NEW PRODUCT PLANNING PROCESS

Ranges from incremental improvement to breakthrough products

Sources-R&D, Employees, Customers, Competitors, Outside inventors,

Acquisition and Value chain members

Methods of Idea GenerationSearch- companies that seek to sell ideas that they do not wish

to commercialize, news sources, trade publicationsMarketing research- survey of product users, FGD, advisory

panel where experienced users provide ideasInternal and external development- internal R&D, external

government and private laboratories, small high technology firms

Other Idea Generation Methods – incentives to employees, acquiring firms

IDEA GENERATION

IDEA GENERATION

SCREENING(fit/feasibility)

CONCEPT EVALUATION

BUSINESS ANALYSIS

SCREENING, EVALUATING, AND BUSINESS ANALYSIS

Screening- to fit with company mission and objectivesCommercial feasibility

Concept EvaluationTo obtain a reaction to proposed productCueCat scanner failure

Business AnalysisEstimates the commercial performance of proposed productRevenue forecastPreliminary Marketing PlanCost EstimationProfit ProjectionsOther Considerations – risk associated with the venture,

cannibalization of existing products etc

SCREENING, EVALUATING, AND BUSINESS ANALYSIS

After business analysis, company decides to abort or implement the proposed product and makes a prototype.

Product Development Process:Product Specifications- describe what the product

will doIndustrial Design- ease-of-use and style of productsPrototype- initial physical product built for testingUse Tests- to obtain feedback from usersProcess Development- process to develop product on

a commercial scaleCollaborative Development- done to increase the

distinctive capability and reduce the time required to develop and market new products

Product and process development

Marketing Strategy Decisions Market Targeting Positioning Strategy- packaging, distribution strategy, price strategy

Market Testing Options Simulated Test Marketing – recruit buyers while they are shopping Scanner – Based Test Marketing- recruited panel members

purchases are monitored through cameras Conventional Test Marketing- city based testing which is later

projected to entire region Testing Industrial Products- testing for industrial products in 1 or 2

cities Selecting Test Sites- population size, per capita income, purchasing

habits etc Length of the Test- longer the test, more accurate the results External Influences- competitor influence

MARKETING STRATEGY AND MARKET TESTING

The Marketing Plan

Complete marketing strategy

Coordinated with people and business functions

Timing and geographical scope of launch

Monitoring and Control

Real – time tracking through store audits

Role of the Internet- online communities

Include product performance metrics with performance targets

COMMERCIALIZATION

Technology Push Processes

Ink jet technology by HP

Platform Products

Leverage platform to develop other products

Process – Intensive Products

Produce products that utilize the organizations process capabilities

Customized Products

Structured and detailed development process to meet the customers need

Proactive cannibalization

Threat to market share of organizations existing products

Proactive cannibalization is essential- britannica encyclopedia vs CD

VARIATIONS IN THE GENERIC NEW PRODUCT PLANNING

To Innovate or Imitate? Entry Strategy and the Role of Market Research

First, from a technology development standpoint, it would seem reasonable that imitation is “easier” than innovation.

Second, An incumbent facing the threat of rival entry would likely consider innovating.

Third, duopoly profit and consumer reaction

Decision to innovate or imitate

Line of action and Payoffs:

Result 1: As duopoly profits π0 increase, under an entrant imitation strategy, both firms increase their R&D level, but under an entrant innovation strategy, the incumbent increases its R&D level and the entrant decreases its R&D level.

Result 2: As monopoly profits π1 increase, under an entrant imitation strategy, the incumbent increases its R&D level, whereas the entrant decreases its R&D level, and under an entrant innovation strategy, both firms increase their R&D levels.

Imitation- R&D of incumbent increases, entrant decreasesInnovation- R&D of both increase

Results: