Session_2_03-03-2015

Instructor: Christine Chou Date: March 3, 2015Department of International BusinessNational Dong Hwa UniversityNew Products ManagementThe New Products Process*

Your Presentation on New Products or Service*

Why Study New Products?New products are big business!$100 billion spent annually just on technical phase.Uncounted new products are marketed every year.A single Web site may market hundreds or thousands of products.For many leading firms, a third or more of sales comes from products that are less than five years old.

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What Is a New Product?New-to-the-world (really-new) products (10% of new products) New-to-the-firm products (20%)Additions to existing product lines (26%)Improvements and revisions to existing products (26%)Repositionings (7%)Cost reductions (11%)

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The Basic New Product ProcessPhase 1: Opportunity Identification/SelectionPhase 2: Concept GenerationPhase 3: Concept/Project EvaluationPhase 4: DevelopmentPhase 5: Launch*

The Evaluation Tasks in the New Products Process*

Phase 1: Opportunity Identification/SelectionOngoing marketing planning (e.g., need to meet new aggressive competitor)Ongoing corporate planning (e.g., senior management shifts technical resources from basic research to applied product development)Special opportunity analysis (e.g., a firm has been overlooking a skill in manufacturing process engineering)

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Sources of Identified OpportunitiesAn underutilized resource (a manufacturing process, an operation, a strong franchise)A new resource (discovery of a new material with many potential uses)An external mandate (stagnant market combined with competitive threat)An internal mandate (new products used to close long-term sales gap, senior management desires)

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Phase 2: Concept Generation Select a high potential/urgency opportunity, and begin customer involvement. Collect available new product concepts that fit the opportunity and generate new ones as well.

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Phase 3: Concept/Project EvaluationEvaluate new product concepts (as they begin to come in) on technical, marketing, and financial criteria. Rank them and select the best two or three. Request project proposal authorization when firms have product definition, team, budget, skeleton of development plan, and final PIC.

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Stages of Concept/Project EvaluationScreening (pretechnical evaluation)Concept testingFull screenProject evaluation (begin preparing product protocol)

The first stages of the new products process are sometimes called the fuzzy front end because the product concept isstill fuzzy. By the end of the project, most of the fuzz shouldbe removed.*

Phase 4: Development (Technical Tasks)Specify the full development process, and its deliverables. Undertake to design prototypes, test and validate prototypes against protocol, design and validate production process for the best prototype, slowly scale up production as necessary for product and market testing.

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Phase 4: Development (Marketing Tasks)Prepare strategy, tactics, and launch details for marketing plan, prepare proposed business plan and get approval for it, stipulate product augmentation (service, packaging, branding, etc.) and prepare for it.

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Phase 5: LaunchCommercialize the plans and prototypes from development phase, begin distribution and sale of the new product (maybe on a limited basis) and manage the launch program to achieve the goals and objectives set in the PIC (as modified in the final business plan).

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The Life Cycle of a ConceptFigure 2.3Corresponding New Products Process Phases:Opp. Identification Concept Generation Project Evaluation Development Launch*

Techniques for Attaining Speed in a New Product ProjectOrganization PhaseUse projectization: project matrix and venture teams.Use small groups to thwart bureaucracy.Empower, motivate, and protect the team.Destroy turf and territory.Make sure supporting departments are ready.Clear the tracks in shared departments.

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Techniques for Attaining Speed (continued)Intensify Resource CommitmentsIntegrate channel members and customers, use parallel or concurrent engineeringDesign for SpeedComputer-aided design, rapid prototyping, design-aided manufacturing, common componentsPrepare for Rapid ManufacturingSimplified documentation and process planning, just-in-time delivery (flexible manufacturing)Prepare for Rapid MarketingUse rollouts, invest in immediate market awareness, facilitate trial purchasing

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What About New Services?The tools all fit.Iterations may be more frequent since they are less expensive.Unique, superior service, providing value and benefit as perceived by the customer, must be delivered, to achieve success.Speed to market with services is important

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What About New-to-the-World Products?The challenges are different, but the first phase remains the same: opportunity identification and development of a strategic statement.Clear connection with the firms strategic vision.To establish a transition managementBegin Voice of the Customer (VOC) early.Lead users

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Spiral Development and the Role of Prototype: Probe-and-Learn processFocused (limited-performance) prototypesExample: Iomega Zip Drive: over 50 prototypes were built to test out ideas with customers.Lickety-Stick iterative process: non-linear, more flexible process in which dozens of prototypes may be tried (lickety) before settling on one that customers like (stick).

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Wrap-upWhy we should learn this fieldWhat a new product isThe process of new product developmentTechniques for Attaining Speed in a New Product Project

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Case: Tastykake Sensables

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See you next time!

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