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New Product New Product Development Development
StrategyStrategy
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Visit www.studyMarketing.org for more presentations on Marketing, Strategy,
Innovation, and Branding
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Key Steps in Key Steps in New Product New Product DevelopmentDevelopment
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Key Steps in Key Steps in New Product DevelopmentNew Product Development
Idea Generation
Product Screening
Concept Testing
Business & Financial Analysis
Product Development
Test Marketing
Commercialization
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Idea GenerationIdea Generation
Idea generation is a continuous, systematic search for new product opportunities. It involves delineating sources of new ideas and methods for generating them.
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Methods for Generating Ideas Methods for Generating Ideas
Dimensional AnalysisDimensional Analysis lists all of the physical
characteristics of a product type. Having obtained
such a list, creativity can be triggered by asking
questions such as: "Why is the product this
way?“, "How could the product be changed?""How could the product be changed?"
or "'What would happen if one or more of the
characteristics were removed?"
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Problem AnalysisProblem Analysis is a need-assessment
technique designed to develop an
inventory of consumer problemsconsumer problems in a
particular product or service category and
to serve as a basis for new product or
service ideas.
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Benefit Structure AnalysisBenefit Structure Analysis determines
what specific benefits and characteristics
are desired by consumers within a
particular product or service category and
identifies perceived deficiencies in what identifies perceived deficiencies in what
is currently provided. is currently provided.
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Scenario Scenario
AnalysisAnalysis identifies opportunities by capitalizing on projected future environments and associated consumer needs.
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Product ScreeningProduct Screening
After the firm identifies potential
products, it must screen them. In
product screening, poor, unsuitable, or
otherwise unattractive ideas are
weeded out from further actions.
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• Today, many companies use a new-product
screening checklist for preliminary evaluation.
• In it, firms list the new-product attributes
considered most important and compare each
idea with those attributes.
• The checklist is standardized and allows ideas
to be compared.
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Concept testing presents the
consumer with a proposed
product and measures
attitudes and intentions at this
early stage of development.
Concept TestingConcept Testing
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Concept testing is a quick and
inexpensive way of measuring
consumer enthusiasm. It asks potential
consumers to react to a picture, written
statement, or oral description of a
product. This enables a firm to
determine initial attitudes prior to
expensive, time-consuming prototype
development.
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Business and financial analysis for the
remaining product concepts is much more
detailed than product screening.
Business & Financial AnalysisBusiness & Financial Analysis
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•Factors considered Factors considered
in business analysis in business analysis
stage : stage :
• Demand projections • Cost projections • Competition • Required investment • Profitability
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Product development converts a
product idea into a physical form and
identifies a basic marketing strategy.
Product DevelopmentProduct Development
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It involves product construction,
packaging, branding, product
positioning, and usage testing.
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Test marketing involves placing a product for sale in one or more selected areas and observing its actual performance under the proposed marketing plan.
Test MarketingTest Marketing
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The purpose is to evaluate the
product and pretest marketing
efforts in a real setting prior to a full-
scale introduction.
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Rather than inquire about
intentions, test marketing
allows actual consumer
behavior to be observed.
The firm can also learn
about competitive reactions
and the response of channel
members.
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After testing is completed, the firm is ready to
introduce the product to its full target market. This This
is commercializationis commercialization and corresponds to the
introductory stage of the product life cycle.
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Commercialization
involves
implementing a
total marketing
plan and full
production.
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Key Success Factors Key Success Factors in New Product in New Product
DevelopmentDevelopment
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An investigation of new product practices in 700 firms by Booz-Allen & Hamilton identified the existence the existence
of common characteristicsof common characteristics in companies that were successful at product innovation
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Successful companies are more committed to growth through new products developed internally.
1. Operating Philosophy
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They are more likely to have had a formal
new product process in place for a longer
period of time than unsuccessful companies.
They are more likely to have a strategic plan
that includes a certain portion of company
growth from new products.
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Successful companies are more likely to house the new product
organization in R&D or engineering and are more likely to allow the marketing and R&D functions to
have greater influence on the new product process.
2. Organizational Structure
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Experience in
introducing new
products enables
companies to
improve new
product
performance.
3. The Experience Effect
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New product development costs conform to the
experience curve: The more you do something, the more
efficient you become at doing it. This experience
advantage stems from the acquisition of a knowledge
of the market and of the steps required to develop a
new product.
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Successful companies appear not
only to select a management
style appropriate to immediate
new product development needs
but also to revise and tailor that
approach to changing new
product opportunities
4. Management Style4. Management Style
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An empirical research by Robert CooperRobert Cooper found three key factors that distinguish
winning projects from the losers
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Factor 1: A High-Quality New Product Process
Factor 2: A Clear and Well-Communicated New Product Strategy for the Business
Factor 3: Adequate Resources for New Products
three key factorsthree key factors for effective product development:
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Factor 1: A High-Quality New Product Process
Some of these success factorssuccess factors that top performers build into their new product processes include:
emphasizing the up-front predevelopment homework;
building in the voice of the customer throughout
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Factor 1: A High-Quality New Product Process
demanding sharp, early product definition
having tough Go/Kill decision points where projects really do get killed
and highlighting quality of execution throughout
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there are clear goals or objectives for the business's total new product effort; for example, what percentage of sales or profits new products will contribute to the business
Factor 2: A Clear and Well-Communicated New Product Strategy for the Business
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there are clearly defined arenas—
specified areas of strategic focus, such
as products, markets, or technologies
—to give direction to the business's
total new product effort
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the role of new products in achieving
the business's goals and the new
product strategy for the business are
clearly communicated to all who
need to know
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• In top-performing businesses,
senior management has devoted
the necessary resources—people
and money, marketing and
technical—to achieve the
business's new product objectives
Factor 3: Adequate Resources for New Products
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• R&D budgets
are adequate—
judged to be
sufficient in
light of the
business's new
product
objectives
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• the necessary people are in place and
have their time freed up for new
products.
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Source of Reference:
Robert Cooper, Winning at New Products: Accelerating
the Process from Idea to Launch, Perseus Books Group.