Product Development

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Product Development

• MKTG 4320
• Instructor Dr. Irina Pentina
• Text New Products Management
• by M. Crawford and A. Di Benedetto, 7th edition,
  2003

2
Introduction

• Class Structure and Schedule
• Overview of the Subject Area (Chapters 1 and 2)
• NPD role and complexity
• Marketing function and NPD
• Careers in NPD
• What is a New Product
• New Product Development Process
• Meet Other Students

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Role of NPD

• Unique superior product is a 1 reason for a
  companys success
• NPs provide differentiation-based competitive
  advantage
• Command premium pricing, increase sales and
  profit margins
• Help avoid pricing wars

4
NP Development is a complex process

• high level of uncertainty
• lack of info, time and resources
• intense pressure
• short lead time
• higher technological turbulence
• multifunctional teams
• resistance to change
• high NP failure rates (40-80)

• Ways to deal with challenges
• Use heuristics (tried and proven rules of thumb)
• Use intuition
• Select people to rely on
• Compromise between time, cost, quality, and value

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The Conflicting Masters of New Products Management

• Three inputs to the new products process the
  right quality product, at the right time, and at
  the right cost.
• These conflict with each other but may have
  synergies too.
• Issue how to optimize these relationships in a
  new product situation.

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Role of Marketing in NPD

• Help the entire NP team succeed (think like a
  general manager)
• Strong creative contribution (how to best develop
  and market NPs)
• Generating market and competitor intelligence
• Screening new ideas and concepts
• Developing Marketing Mix components
• Positioning new product categories
• Naming
• Promotion planning
• Etc.

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Careers in NPD

• Expanding field
• Not many entry positions
• Specific jobs
• Functional Representative
• Project Manager or Team Leader
• New Product Process Manager
• Characteristics important for NPD job
• Be multifunctional
• Be risk-taker
• Think like a general manager (have a bigger
  picture in mind)
• Combine optimism and realism, aggressiveness and
  cooperation
• Develop creative skills
• Be comfortable in chaos and confusion
• For examples of job descriptions visit
  http//www.pdma.org

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Product Innovation vs. Process Innovation

• Product innovation applies to the total
  organization by which a NP is created and
  marketed, and includes innovation in all of the
  functional processes
• Process innovation applies to functions,
  especially manufacturing, or distribution, and
  every new product benefits from this type of
  innovation

Electronic Order Processing
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What Is a New Product?

• We define a NP from the developers view
  anything that requires a NP process is a NP,
  even if it is an imitation. According to this
  definitions, the following categories can be
  differentiated

• New-to-the-World Products
• Polaroid camera, in-line skates, word-processing
  software
• New Category Entries
• Hewlett-Packard PCs, Hallmark gift items,
  Discover Card
• Additions to Product Lines
• line extensions or flankers
• Product Improvements
• frozen yogurt, Miller Lite, Windows 98,
  plain-paper fax
• Repositionings
• Arm Hammer baking soda

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Comprehensiveness of NP

• Includes
• New Service
• New B2B offering
• New not-for-profit offering
• New international offering

All use similar development process
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NPD Process
Phase 1 Opportunity Identification/Selection
Phase 2 Concept Generation
Phase 3 Concept/Project Evaluation
Phase 4 Development
Phase 5 Launch
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Phase 1 Opportunity Identification/Selection

• Active and passive generation of new product
  opportunities as spinouts of the ongoing business
  operation. New product suggestions, changes in
  marketing plan, resource changes, and new
  needs/wants in the marketplace. Research,
  evaluate, validate, and rank them (as
  opportunities, not specific product concepts).
  Give major ones a preliminary strategic statement
  to guide further work on it.

Activities that Feed Strategic Planning for New
Products

• Ongoing 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 Opportunities

• An 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 Evaluation

• Evaluate 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 have product definition, team, budget,
  skeleton of development plan, and final PIC.

Stages of Concept/Project Evaluation

• Screening (pretechnical evaluation)
• Concept testing
• Full screen
• Project evaluation (begin preparing product
  protocol)

The first 3 stages of the new products process
are sometimes called the fuzzy front end because
the product concept is still fuzzy. By the end
of the project, most of the fuzz should be
removed.
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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.

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 Launch

• Commercialize 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 Impact of Simultaneous Operations on the
Product Development Process The Stage-Gate
Process
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The Life Cycle of a Concept
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Rate of Use of NPD Steps among PDMA Members

• Concept searching 90
• Concept screening 76
• Concept testing 80
• Business analysis 89
• Product development (technical) 99
• Use testing/market testing 87