new product development chapter eight. copyright ©2011 pearson education, inc., publishing as...

New Product DevelopmentNew Product Development

Chapter EightChapter Eight

Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall 8-2

Key Learning PointsKey Learning Points

Why new products are importantWhy new products are importantFactors affecting new product Factors affecting new product successsuccessThree major approaches to new Three major approaches to new product developmentproduct developmentSteps in bringing a new product to Steps in bringing a new product to marketmarketImpact of the Internet on new Impact of the Internet on new product developmentproduct developmentSpecial topics in new product Special topics in new product developmentdevelopment


Figure 8.1Figure 8.1Percentage of Current Sales by New Percentage of Current Sales by New

Products Developed in Last 5 Years by Products Developed in Last 5 Years by the Company’s Industry Rankthe Company’s Industry Rank


Table 8.1Table 8.1Top 10 Global Companies in R&D Top 10 Global Companies in R&D

Spending (2007)Spending (2007)


Table 8.2Table 8.2Top 10 R&D Spending Countries Top 10 R&D Spending Countries

(as a % of GDP)(as a % of GDP)


OverviewOverview

Innovation is life in high-tech Innovation is life in high-tech industries.industries.30,000+ new supermarket 30,000+ new supermarket products are introduced annually.products are introduced annually.Firms are constantly pressured to Firms are constantly pressured to find the next big thing.find the next big thing.New products offer many benefits.New products offer many benefits.Most new products fail.Most new products fail.


OverviewOverview

New products can be classified New products can be classified into three categories.into three categories.

Minor product changes can also Minor product changes can also result in new products.result in new products.


Figure 8.2Figure 8.2New Product Idea Mortality Curve for New Product Idea Mortality Curve for PDMA Member Firms, 1990 and 1995PDMA Member Firms, 1990 and 1995


Table 8.3Table 8.3New Product Success FactorsNew Product Success Factors


Figure 8.3Figure 8.3New Product and New Product and

Service Development ProcessService Development Process



The Rugby Approach:The Rugby Approach:New products result from New products result from constant interaction among constant interaction among interdisciplinary team members. interdisciplinary team members.

Firms using this method have six Firms using this method have six characteristics.characteristics.


Figure 8.4Figure 8.4The Target Costing ProcessThe Target Costing Process


Figure 8.5Figure 8.5Sources of Ready-Made New-Sources of Ready-Made New-

Product ConceptsProduct Concepts



Elements of BrainstormingElements of Brainstorming

Openness and Openness and participationparticipationProblem Problem orientationorientation

Leaders guide Leaders guide the discussionthe discussion

Building on Building on each other’s each other’s ideasideasEncouraging Encouraging many diverse many diverse ideasideas



Screening new product Screening new product conceptsconcepts

Concept testing gets customer Concept testing gets customer reactions to the product concept.reactions to the product concept.

Data collection Data collection Purpose may varyPurpose may vary

Conjoint analysis can also be Conjoint analysis can also be used to test concepts.used to test concepts.


Table 8.4Table 8.4Conjoint Analysis IllustrationConjoint Analysis Illustration


Table 8.5Table 8.5Conjoint Analysis Illustration Conjoint Analysis Illustration

ResultsResults


ActivityActivity

Visit the following website to Visit the following website to experience conjoint analysis in experience conjoint analysis in action as you concept test action as you concept test ideas for a movie theatre: ideas for a movie theatre: http://elabresearch.ucr.edu/conjoint/conjoint_movie/conjoint_movie.htm


Discussion QuestionDiscussion Question

1.1. Identify the key attributes that you Identify the key attributes that you would evaluate.would evaluate.

2.2. For each attribute, identify the For each attribute, identify the alternatives or levels being alternatives or levels being evaluated.evaluated.

Suppose you were responsible for Suppose you were responsible for planning a concept test for a planning a concept test for a {product of {product of your choice}your choice} using conjoint analysis. using conjoint analysis.


Table 8.6Table 8.6Hierarchy of NeedsHierarchy of Needs


Figure 8.6Figure 8.6Consumers’ Importance Weights of Consumers’ Importance Weights of

Competitive ProductsCompetitive Products


Table 8.7Table 8.7List of Engineering Characteristics List of Engineering Characteristics

for a Car Doorfor a Car Door


Figure 8.7Figure 8.7The House of QualityThe House of Quality



Business analysis: forecasting Business analysis: forecasting demanddemand

Product use tests involve getting Product use tests involve getting potential customers to try potential customers to try prototypes.prototypes.

Diagnostic small sample testsDiagnostic small sample tests

Limited time horizon consumer Limited time horizon consumer testtest

Market testsMarket tests



Market Test Design DecisionsMarket Test Design Decisions

Action Action standardsstandards

Where to testWhere to test

What to doWhat to do

How longHow long

How muchHow much

Information Information gatheringgathering



Sales forecasting for new Sales forecasting for new productsproducts

Forecasting often relies on Forecasting often relies on purchase intention data or other purchase intention data or other qualitative data.qualitative data.

Many approaches have been Many approaches have been developed for frequently developed for frequently purchased items.purchased items.


Figure 8.8Figure 8.8Typical Penetration for a New Typical Penetration for a New

Brand Over TimeBrand Over Time


Figure 8.9Figure 8.9Typical Repeat Rate for a New Typical Repeat Rate for a New

Brand Over TimeBrand Over Time


Figure 8.10Figure 8.10Repeat Rates and Product Repeat Rates and Product

PerformancePerformance



Simple Market Share Forecasting Simple Market Share Forecasting Using the Parfitt-Collins ModelUsing the Parfitt-Collins Model

(P) = An estimate of eventual penetration rate

(R) = An estimate of the ultimate repeat rate

(U) = An estimate of the relative product category

usage rate by buyers of the new brandEventual Market Share = P x R x U



Sales forecasting for new Sales forecasting for new productsproducts

Pretest market data from Pretest market data from laboratory experiments can be laboratory experiments can be used to forecast sales.used to forecast sales.

ASSESSORASSESSOR

Forecasting the success of radical Forecasting the success of radical innovations is more difficult.innovations is more difficult.

Information accelerationInformation acceleration


Figure 8.11Figure 8.11BASES Estimate of Contadina BASES Estimate of Contadina

Year-1 Sales VolumeYear-1 Sales Volume



Launching the new productLaunching the new productLaunching requires that Launching requires that objectives be set, the strategy objectives be set, the strategy be developed, and that the be developed, and that the implementation be planned and implementation be planned and executed.executed.

Implementation is often a key Implementation is often a key factor in product failure.factor in product failure.


- Russell S. Winer

““Because of shorter product Because of shorter product life cycles and faster life cycles and faster technological obsolescence, technological obsolescence, companies are finding that companies are finding that quicker time-to-market with quicker time-to-market with new products has become a new products has become a competitive advantage.”competitive advantage.”


Table 8.9Table 8.9Reported New-Product Reported New-Product

Introduction Time ReductionsIntroduction Time Reductions


Topics in New Product Topics in New Product DevelopmentDevelopment

Importance of shorter product Importance of shorter product development cyclesdevelopment cycles

Several factors influence time to Several factors influence time to market.market.

Importance of product designImportance of product designIDEO is the best-known firm.is the best-known firm.



IDEOIDEO’’s Design Processs Design Process

ObservationObservationBrainstormingBrainstorming

Rapid prototypingRapid prototyping

RefiningRefiningImplementatioImplementationn



New product development over New product development over the product life cyclethe product life cycle

PLC can serve as a guide to the PLC can serve as a guide to the types of innovation sought by the types of innovation sought by the firm.firm.

Improving the integration of Improving the integration of marketing and R&Dmarketing and R&D


Executive SummaryExecutive Summary

New products are necessary for a firm’s New products are necessary for a firm’s long-term survival.long-term survival.Several factors correlate with successful Several factors correlate with successful new products.new products.Several new product development Several new product development approaches exist.approaches exist.New product concepts are either ready-New product concepts are either ready-made or result from a creative process.made or result from a creative process.Product definition must use consumer Product definition must use consumer input.input.Many methods exist to forecast demand.Many methods exist to forecast demand.

new product development chapter eight. copyright ©2011 pearson education, inc., publishing as...

Documents

pearson education

prentice hall

new product development

new product development

overview new products

new product success

new supermarket products

gdp slide