the new product development process copyright © 2002 by rabikar chatterjee (1) the new product...

The New Product Development ProcessCopyright © 2002 by Rabikar Chatterjee

(1)

Opportunity IdentificationMarket definitionIdea generation

DesignCustomer needs Sales forecasting

Product positioning EngineeringSegmentation Marketing mix

TestingAdvertising and product testing

Pretest and prelaunch forecastingTest marketing

IntroductionLaunch planning

Tracking the launch

Life Cycle ManagementMarket response analysis

Competitive monitoring and defenseInnovation at maturity

Harvest

Reposition

Go

Go

Go

Go No

No

No

No

The New Product Development Process


(2)

Northern Telecom: The Norstar Launch

Exemplary Product Development Process• Parallel cross-functional development team

from the outset

• Voice of the customer – end-user and reseller

• Clear business model

• Zero-based design

• Structured “gating” procedure to convert business proposition into marketing program


(3)

The Stage-Gate System

Robert G. Cooper, “Stage-Gate Systems: A New Tool for ManagingNew Product,” Business Horizons (May/June 1990)

Idea GATE 1

InitialScreen

GATE 5

Pre-Comm-ercializationBusinessAnalysis

GATE 4

Post-Development

Review

GATE 3

Decisionon

BusinessCase

GATE 2

SecondScreen

STAGE 1

PreliminaryAssessment

STAGE 3

Development

STAGE 4

Testing andValidation

STAGE 5

FullProductionand MarketLaunch

Post-Implementation

Review

$

STAGE 2

DetailedInvestigation(BusinessCase)

Preparation

STAGE 1

PreliminaryAssessment


(4)

Benefits of the Stage-Gate Process

• Quality focus

• Market orientation

• Up-front homework

• Parallel processing– Speed– Multifunctional, multidisciplinary inputs

• Better project evaluations

• Road map for project leader and team


(5)

Critical Variables in Choice of New Product Development Process

• Complexity longer time to complete project• Novelty (dynamic, unpredictable markets and

environment shorter response time

Sequential process does not work if response time must be short relative to time to complete project!


(6)

Complexity vs. Novelty: Implications for NPD Process

Reactive (organic) FlexibleHigh

NOVELTY

Low ContinuousIncremental

improvement

Sequential (Stage-Gate)

Low High

COMPLEXITY


(7)

Integrating New Technology with Customer Preferences:

The Adaptive Co-Development Process

TECHNICAL POSSIBILITIES

CUSTOMER PREFERENCES

InitialInput

ProductRelease

BETA

1

BETA

3

BETA

2


(8)

Uncertainty Profiles in Traditional Versus Adaptive Co-Development Process

Degree ofUncertaintyin ProductDefinition

ConceptDefinition

Design, Development,and Testing

Market Launch

Time

Adaptive Process

Traditional Process


(9)

NPD Process: Netscape Navigator 3.0Start

Objectives

Spec Complete

Feature Design and Coding

Input from User Feedback

Integration

Stabilize

Full Release

Beta 0Internal Beta 1

Beta 2

Beta 3

Beta 4

Beta 5Beta 6

Jan Feb Mar Apr May Jun Jul


(10)

In Summary….

• The new product development process must be– Methodical and cross-functional– Customer oriented

• What’s the right NPD process for you?– Complexity v. Novelty– Other industry- and company-specific factors

• Analytical tools and methods available– Examples: Lead user research, conjoint analysis


(11)

Lead User Research

• Who are Lead Users?– Lead with respect to cutting edge applications

of important market and technical markets– Experience needs ahead of others

• Types of Lead Users– Lead users in the target application– Lead users in analogous markets– Lead users involved with the more important

attributes relevant to the target application


(12)

Lead User Analysis: “Extremes versus Means”

• Identification of functionally novel products and service concepts should be done at the leading edge of markets and applications

• Evaluation of commercial potential should be done at the “means” of markets and market segments

Good reference on lead user research: Eric von Hippel, Stefan Thomke, and Mary Sonnack, “Creating Breakthroughs at 3M,” Harvard Business Review. September-October 1999


(13)

Conjoint Analysis: Basic Process

• Alternatives defined as combination of attributes, each specified at a particular level

• Identify important attributes and define appropriate levels and range for each (critical step!)

• Carefully selected set of alternatives evaluated by respondents– Preference data collected in various ways (rankings, ratings, pair-

wise comparisons)

• Overall preferences for alternatives “decomposed” into utilities (“part worths”) for each attribute level– Assumption: Overall utility for a product is a combination (usually

additive) of the utilities (“part worths”) of the attribute levels


(14)

Example: Partners for Dates

Salient Attributes Levels

1. Common interests Few, Many

2. Personality Introvert, Extrovert

3. Wealth Poor, Rich

4. Attractiveness Average, Gorgeous

5. Education No, Yes

6. Age Younger, Older (than you)

How many possible combinations?

2 2 2 2 2 2 = 64

Need 8 (carefully selected!) profiles for estimation


(15)

Conjoint Analysis of Dating PreferencesPART WORTH UTILITIES: TOTAL SAMPLE (N = 40)

1.0

0.5

0

Common Interests

Few Many

1.0

0.5

0

Personality

Introvert Extrovert

0.44

1.0

0.5

0

Wealth

Poor Rich

0.31

1.0

0.5

0

Attractiveness

Plain Gorgeous

0.45

1.0

0.5

0

Education

Less More

0.22

1.0

0.5

0

Age

Younger Older

0.18


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Conjoint Analysis of Dating PreferencesPART WORTH UTILITIES: MEN (N = 37) AND WOMEN (N = 3)

1.0

0.5

0

Common Interests

Few Many

1.0

0.5

0

Education

Less More

0.20

0.64

1.0

0.5

0

Age

Younger Older

0.16

0.59

1.0

0.5

0

Attractiveness

Plain Gorgeous

0.42

1.00

1.0

0.5

0

Personality

Introvert Extrovert

0.42

0.64

1.0

0.5

0

Wealth

Poor Rich

0.27

0.95

the new product development process copyright © 2002 by rabikar chatterjee (1) the new product...

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