Product Services Offering and Pricing Part 1CE 2.4: Product/Service Offering and Pricing

Daniela Axinte and Mary Keany2015/2016

Topics for discussion

• New Service / Product Development

• Ideation Process

• Innovation

• Service Selection Criteria

• Business Opportunities

• Design

NEW SERVICE / PRODUCT DEVELOPMENT

New Product / Service Development Process

Ideation

Product Selection Criteria

Business Opportunity

Analysis

Design

EngineeringTransfer to Manufacturing

Testing

Patentability

Production

IDEATION

Three Approaches to Innovation

• Listen to the biggest customers and develop products for them

• Ignore the biggest customers requests and focus on the company’s strengths and the market trends

• Hybrid

Listening to the Biggest Customer

Pros• High probability of continuous business/revenue

• Could be your biggest promoters

• Could pay for development in advance

Cons• Not real innovation• Incremental changes • Changes might not fit any other size/industry customers

• Can intimidate smaller players

• Can alienate more innovative customers

Ignoring the Biggest Customers

Pros• Maintain the “innovative”

spirit

• Forces the company to be more agile in its development, manufacturing, and marketing process

• Could attract new customers

Cons• Alienating the big

customers can impact the bottom line

• Could loose significant business

Hybrid

Pros• Combines industry trends with big customer needs

• Big customer could fund the development

• Fully• Joint Ventures• Co-development

• Allows the company to be innovative

Cons• Big customers could restrict the innovation by focusing on their specific needs

• Could be harder to convince big customers

IDEATION PROCESS“New ideas come from seeing, smelling,

hearing – being there”.

Tom Kelley – IDEO

Ideation

• Step 1: Idea collection

• Collection of material from various groups or your target customer base

• Brainstorming on specific problems

Ideation

• Step 2: Idea screening

• Gate 1: Smell test. Is the opportunity logical, fair, legal, and ethical? Does it address a visible company or market need?

• Gate 2: Financial impact. Will this opportunity help the company achieve its revenue expectations? Will it require an incremental investment over budget or divert committed resources?

• Gate 3: Strategic Impact. Does the opportunity provide brand building, product line enhancement or IP value according to the company’s goals?

SOURCES OF INNOVATION

Sources of Innovation

• Internal ideas• Customers• Focus groups• Industry trends • Patents and licensing opportunities

Sources of Innovation

Issue Internal Customer Focus Groups

Industry Trends

Patents Licensing

Specific needs X

Solving a problem X X X X

Improving productivity/efficiency/effectiveness of processes and/or people

X

Lessons learned from employee training X

Back burner projects X

Industry / regulatory requirements X X X

Implementation of new technology available

Standards upgrades X X X

Inspiration from another industry X

Existing IP X

Cosmetic design improvements X X X

Functional design improvements X X X

New business models X X

SERVICE / PRODUCT SELECTION CRITERIA

Product Selection Criteria

• Rank-based evaluation

• Must have quantifiers and qualifiers

• Quantifiers – examples• Product cycle• Revenue• Profit margin

• Qualifiers – examples• New market opportunity• IP portfolio• Brand awareness

Example of Product Selection Criteria

Quantifiers

Revenue Cycle Profit Margin %

Home Run $20 million 3 or more years 25%

Double $10-20 million 1 to 3 years 20-25%

Single $0-10 million Annual 10-20%

Quantifiers

New Market Opportunity

IP Brand Hierarchy of Needs

Home Run 1st to market 3 or more years #1 #1

Double Strong follower that could displace leader

1 to 3 years #2 #2 or #3

Single Better mouse trap 0 to 1 year #3 #4 or #5

BUSINESS OPPORTUNITY ANALYSIS

High-Level Analysis

• Business opportunity analysis - brief evaluation of the:

• Market opportunity• Partnering options• Commercialization potential

• Technology match analysis – brief evaluation of the technology needed

• Priority assessment – the product is assessed for its potential place in the product line-up:

• Priority 1: Pursue to the next phase• Priority 2: Delay pursuit to the next phase until a previously

established event occurs• Priority 3: Do not pursue

High-Level Analysis Report

PRODUCT NAME

Product Description Short description of what the product concept is supposed to look like and quick (bullet points style) list of the new features/functionality/design as compared to similar existing products

Market Need Is there a market need for this particular product? Why would people buy it vs. existing ones.

Technical Assessment Is this product concept technically doable? How (40,000 ft level explanation)

Commercialization Distribution avenues

Resources Needed Short list of the resources needed (human, financial, equipment/technology, partners, etc.)

DESIGN

Design

Exploration Detailed product requirements Use scenarios Design concepts Concept value test report

Convergence Decision matrix Selection of one of the concepts Product character definition

Refinement Engineering

architecture Engineering

specifications Final ID Patent disclosures

Topics discussed

• New Service / Product Development

• Ideation Process

• Innovation

• Service Selection Criteria

• Business Opportunities

• Design

About PACE-IT Program

This workforce solution was 100 percent funded by a $3 million grant awarded by the U.S. Department of Labor's Employment and Training Administration. The solution was created by the grantee and does not necessarily reflect the official position of the U.S. Department of Labor. The Department of Labor makes no guarantees, warranties, or assurances of any kind, express or implied, with respect to such information, including any information on linked sites and including, but not limited to, accuracy of the information or its completeness, timeliness, usefulness, adequacy, continued availability or ownership. Funded by the Department of Labor, Employment and Training Administration, Grant #TC-23745-12-60-A-53.PACE-IT is an equal opportunity employer/program and auxiliary aids and services are available upon request to individuals with disabilities. For those that are hearing impaired, a video phone is available at the Services for Students with Disabilities (SSD) office in Mountlake Terrace Hall 159. Check www.edcc.edu/ssd for office hours. Call 425.354.3113 on a video phone for more information about PACE-IT Program. For any additional special accommodation needed, call SSD office at 425.640.1814. Edmonds Community College does not discriminate on the basis of race; color; religion; national origin; sex; disability; sexual orientation; age; citizenship; marital or veteran status; or genetic information in its programs and activities.