Master Mind Training Session

- How to search and evaluate business ideas.

- Analysis of the strengths, weaknesses of the ideas.- How to build marketing strategies.

By: MA. Nguyen Thi Huong Giang

What is New Product/Business Idea & what leads to Success?

New product

1. New-to-the-world

6. Cost reductio

n

5. Re-positionin

gs

2. New-to-the-

firm

4. Improvements & revision

to existing products

3. Addition

to existing product

lines

New product concept sorting (1):

New-to-the-World product, or “Really-new product”: products are inventions that create a whole new market and was never seen/marketed before. (10% of new product)

New-to-the-firm products: products that take a firm into a category new to it. (20%)

Additions to existing product lines: or line extensions to the firm’s current products. (26%)

New product concept sorting (2):

Improvements and revisions to existing products: current products are made better. (26%)

Re-positionings: products that are retargeted for a new use or application. (7%)

http://www.youtube.com/watch?v=JUNuznXtyaM Cost reductions: new products simply replace

existing products in the line, providing customer similar performance at a lower cost. (11%)

The Basic New Product Development Process

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Opportunity identification and selection

Concept generation

Concept/project

evaluation

Development

Launch

Phase 1: Opportunity Identification & Selection

3 main streams of activity feeding strategic planning for new product: Ongoing marketing planning Ongoing corporate planning Special opportunity analysis

Sorting of opportunities An underutilized resource A new resource An external mandate (stagnant market/

competition) An internal mandate (management/employees

desire to change)Opportunity identification: the process of

creatively recognizing opportunities. Why?No firm wants to exploit all opportunitiesProduct Innovation Charter

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Phase 2: Concept Generation

Creating new product ideas Identifying problems that people or

business have and suggesting solutions to them

Unsolicited ideas pouring from customers, potential ones, employees, etc.

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Problems/new

opportunity

motivatesConcept generati

on

Phase 3: Concept/ Project Evaluation

Screening or pre-technical evaluation Concept test all views come Full screen Project evaluation Quality Function Deployment, or: Product description/ product definition/

Product Protocol--- List of customer needs. Product protocol: agreement between

various groups before technical work get started. The protocol should be in term of benefits, not the features only.

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Phase 4: Development Resource Preparation The Major Body of Effort: 3 in 1: the

item/service itself + the marketing plan + a business (financial) plan

Prototype Comprehensive Business Analysis ---

Important “Go/No Go” decision Concept evaluation continues along the way.

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Phase 5: Launch/ Commercialization

Final “Go/No Go” decision

Critical and timely step

Market test Activity of planning for

Launch Management

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The Product Innovation Charter

The Product Innovation Charter

Corporate mission, platform planning, strategic fit, non-corporate strategic come together in NPD process Product Innovation Charter

A PIC provide guidance to the business units on the roles of innovation. It is a mission statement, at a more micro level and adapted to new product activities.

PIC allows delegation, financing and assignments.

Background section of the PIC

The background of a PIC includes key points from a PEST analysis (Political, Economic, Social, Technology) or situation analysis.

Questions addressed in this section of a PIC may include:› What is the business about? › Why has this strategy been developed?

Focus section of the PICCore competenciesFocus is achieved by 4 strengths:

Core Technology (Kimberley-Clark)Product experience ( Tan Hiep Phat

for soft-drink, Vissan for processed and canned foods)

Customer franchise (Honda scooter/ Kleenex tissues)

End-use experience (Saigon beer in HCM market, Halida beer in Hanoi market)

Relying solely on technology/customer’s stated want is risky dual-drive strategy

Technology DriversMarket Drivers

Focus of the PICTechnology drivers:

Firm with superior technical skills turning technical specifications into product features that satisfy market needs

Market drivers:Customer group & end-useDistributors & retailers

Questions addressed at this stage of a PIC may include:What are your company’s core competencies? What is your company’s competitive advantage and the

value that your company can bring to the target market? What are your advantages in relation to your target

market’s needs, wants, and consumption trends? What are your company’s marketing capabilities?

Goals & Objectives of the PIC

Any complete PIC need both goals and objectives.

Goals & Objectives can be in 3 types:› Profit› Growth› Market status

Special guidelines of the PIC

Degree of Innovativeness: First to market: pioneering Adaptive product: taking one’s own or a competitive product

and improving it. Imitation or emulation

Timing: First Quick second Slower Late

Miscellaneous guidelines: special guidelines of product’s cost, quality, brand and so forth.

Example of MacBook Pro stated concept

MacBook Pros is Apple product which comes with high performance and high speed when you use for work. This Apple product is really suitable for you who need the best ingredient and have hardware that supports their performance. This Apple Thunderbolt MacBook Pros come with Core i5 and i7 CPU that adding in this notebook. This Macbook will give graphic result that suitable with you want.

Two approaches of generating new product concepts

Gathering Ready-made source Using Managed process by the

NPD team

Best Sources of Ready-Made New Product Concepts

New Products Employees› Technical: R&D, engineering, design› Marketing and manufacturing

End Users Resellers, Suppliers, Vendors Competitors The Invention Industry (investors, etc.

http://www.abc.net.au/tv/newinventors/ )

Idea exploration firms and consulting engineers

Miscellaneous (continued)

Best Sources of Ready-Made New Product Concepts (continued)

Miscellaneous Categories› Consultants› Advertising agencies› Marketing research firms› Retired product specialists› Industrial designers› Other manufacturers› Universities› Research laboratories› Governments› Printed sources› International› Internet

Sources of Ready-Made New Product Ideas

Lead users: customers associated with a significant current trend, have the best understanding of the problems and expect to gain significantly from solutions. How to identify lead users? http://www.youtube.com/watch?v=FnU0phMaVm0

› Is it good to ask customers what they want?› Being a customer, of your competitor’s

products and your own!› Some companies provide toolkits for user

innovation, such as mobile phone games, Lego toys, sport equipment. (Reading on the Website)

Sources of Ready-Made New Product Ideas

Open innovation: a new method to find out creative ideas and concept, by outsourcing or seeking partners, externally.› Select the best partner(s), in terms of

technological, strategic and relational features.

› High level of trust› P&G is one of the successful users of open

innovation, by adopting new technology from outside. Unilever, HP, Toyota, LG, MyStarbucksIdea, etc.

› http://www.innovationexcellence.com/blog/2012/08/13/40-examples-of-open-innovation-crowdsourcing/

› http://www.customerthink.com/blog/10_examples_of_open_innovation_in_high_tech_and_b2b_companies

› http://mystarbucksidea.force.com/

EVA

LUATIO

N O

F IDEA

S HOW TO EVALUATE DIFFERENT BUSINESS OR PRODUCT IDEAS???

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Reasons new product/service fail:

There is no basic need for the new product

The new product did not meet customer needs

The new product idea is not properly communicated

http://www.dailyfinance.com/photos/top-25-biggest-product-flops-of-all-time/#photo-3

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Concept testing and development

› What is a new product concept? A statement about anticipated product features (form or technology) that will yield selected benefits.

› The purposes of Concept Testing: Concept Testing is part of the prescreening process First purpose of a concept test is to identify the

very poor concept so it can be eliminated If the concept passes the first reaction, a second

purpose is to estimate the sales or trial rate that the product would enjoy – a sense of market share or general range of revenue dollars.

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Concept testing and development

› The purposes of Concept Testing: The buying intention question appears in almost every

concept test. The most common format for purchase intention is the classic five-point question: “How likely would you buy a product like this, if we made it?”

1. Definitely would not buy2. Probably would not buy3. Might or might not buy4. Probably would buy5. Definitely would buy The number of people who definitely buy or probably

would buy are usually combined and used as an indicator of group reaction, this is called top-two-boxes score.

The third purpose is to help develop the idea, not just test it!

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Considerations in Concept Testing Research

Prepare the Concept Statement: a concept statement states a difference and how that difference benefits the customer or end-users. For example “This new refrigerator is built with modular parts; consequently, the consumer can arrange the parts to best fit a given kitchen location and then rearrange them to fit another location”.

Format Commercialized Concept Statement Define the Respondent Group Select the Response Situation Prepare the Interviewing Sequence

“Trà Xanh Không Độ cho người tiểu đường có nguồn gốc thiên nhiên, với tác dụng giải nhiệt cao, độ ngọt vừa phải và sử dụng loại đường dành riêng cho người tiểu đường. Trà xanh không độ cho người tiểu đường sẽ là thức uống thích hợp với khách hàng ăn kiêng và quan tâm đến lượng đường trong cơ thể”

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The Scoring model Take an example of a simple situation: You are

deciding what to do on this coming break holiday

Values

Factors 4 points

3 points 2 points

1 points

Degree of fun Much Some Little None

Number of people Over 5 4 to 5 2 to 3 Under 2

Affordability Easily Probably Maybe No

Student’s capability Very good

Good Some Little

Student’s scorings Skiing Boating Hiking Fishing

Fun 4 3 4 4

People 4 4 2 3

Affordability 2 3 4 4

Capability 1 4 3 4

Total 11 14 13 15

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Sales Forecasting for New Products

The first (and most common) method of forecasting new product depletions is historical review. › If a company has introduced similar new

products into similar markets in the past, these histories can often be good predictors of future outcomes.

› If a company has no such history, then histories of similar new products introduced by competitors or other companies can serve as historical guidelines.

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Sales Forecasting for New Products

A second method of forecasting new product success is the test market. › The new product is developed and introduced

into one or more test markets. Actual store sales and market shares are tracked via Nielsen or IRI, or data from retailers in some instances.

› Often this sales tracking is supplemented by survey-based tracking of consumer awareness, trial, usage, and repeat purchase patterns.

› In some instances, consumer diary panels or purchase panels are used to track consumer trial, repeat purchases, and share.

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Sales Forecasting for New Products

A third method of forecasting is before-after retail simulation. A sample of target audience consumers is presented with simulations showing the in-store retail environment and a realistic display of all the major brands in the category. The consumer is asked to choose or “purchase” brands as they normally would, or as they might on their next 10 purchases. › The new product is missing from the simulation during

this “before” measurement. › Then the consumer is exposed to the new product

concept and/or advertising that conveys the new product concept.

› Later, the consumer sees the exact same simulated display (except now it contains the new product) and is asked to make the same choices or purchase decisions as before. So, we have market shares for all brands in the category before the new product is introduced, and the same data after the new brand is introduced.

Marketing Strategy

Market Segmentation Market Targeting Differentiation and Positioning Strategy Marketing Mix (4Ps)