3. The Basic New Product Process The Basic New Product Process Phase 1: Opportunity Identification/Selection Phase 1: Opportunity Identification/Selection Phase 2: Concept Generation Phase 2: Concept Generation Phase 3: Concept/Project Evaluation Phase 3: Concept/Project Evaluation Phase 4: Development Phase 4: Development Phase 5:Launch Phase 5: Launch
4.
5. NPI Process Stages… The simultaneous engineering and concurrence of activities in the development of a new product: In the development of a product, several activities happen simultaneously in numerous functions, departments and locations across the organization. These activities usually have some kind of a relationship or dependency with another activity happening elsewhere. This means that the outcome of activity in one function could have a bearing on one or more activities happening concurrently at another location or function or on an activity at a different point of time. The simultaneous engineering and concurrence of activities in the development of a new product:
6.
7. Making sure every new product contributes towards the overall business goals of the company: Making sure every new product contributes towards the overall business goals of the company:
10. Stage-Gate System Stage-Gate System Detailed Investigation (Business Case) Preparation Full Production & Market Launch Preliminary Assessment Testing & Validation Development Gate Gate Gate Gate Gate Stage Stage Stage Stage Stage Initial Screen Second Screen Decision on Business Case Post- Develop- ment Review Pre-Comm- cialization Business Analysis
12. Product Life Cycles Product Life Cycles PRODUCT DEVELOPMENT: Product Development: Stages New ideas/possible inventions Market analysis – is it wanted? Can it be produced at a profit? Who is it likely to be aimed at? Product Development and refinement Test Marketing – possibly local/regional Analysis of test marketing results and amendment of product/production process Preparations for launch – publicity, marketing campaign
13. Product Life Cycles Product Life Cycles INTRODUCTION/LAUNCH: Introduction/Launch: Advertising and promotion campaigns Target campaign at specific audience? Monitor initial sales Maximise publicity High cost/low sales Length of time – type of product
14. Product Life Cycles Product Life Cycles Growth: Increased consumer awareness Sales rise Revenues increase Costs - fixed costs/variable costs, profits may be made Monitor market – competitors reaction? GROWTH:
15. Product Life Cycles Product Life Cycles MATURITY: Maturity: Sales reach peak Cost of supporting the product declines Ratio of revenue to cost high Sales growth likely to be low Market share may be high Competition likely to be greater Price elasticity of demand? Monitor market – changes/amendments/new strategies?
16. Product Life Cycles Product Life Cycles Saturation: New entrants likely to mean market is ‘flooded’ Necessity to develop new strategies becomes more pressing: Searching out new markets: Linking to changing fashions Seeking new or exploiting market segments Linking to joint ventures – media/music, etc. Developing new uses Focus on adapting the product Re-packaging or format Improving the standard or quality Developing the product range SATURATION:
17. Product Life Cycles Product Life Cycles DECLINE AND WITHDRAWL: Decline and Withdrawal: Product outlives/outgrows its usefulness/value Fashions change Technology changes Sales decline Cost of supporting starts to rise too far Decision to withdraw may be dependent on availability of new products and whether fashions/trends will come around again?
18. Product Life Cycles: Product Life Cycles Development Growth Maturity Decline Introduction Saturation Sales Time
19. What Is a New Product? What Is a New Product? New-to-the-World Products Polaroid camera, in-line skates, Kevlar, word-processing software New Category Entries Hewlett-Packard PCs, Hallmark gift items, Discover Card Additions to Product Lines line extensions Product Improvements frozen yogurt, Miller Lite, Windows 98, plain-paper fax Re-positionings Arm & Hammer baking soda
20. Types of NPD Projects: Types of NPD Projects: 20% New product lines (e.g. AT&T Universal Card) 10% High New-to-the-world (e.g. laser printer) 26% 26% Additions to existing product line (e.g. Bud light) Newness to the company Revisions/improvement to existing products (e.g. MS Excel ‘00) 11% 7% Cost reductions (e.g. Low-end PC) Repositionings (e.g. A&H Deodorizer) Low Newness to the market Low High Source: New Products Management for the 1980’s (New York: Booz, Allen &Hamilton, 1982
21. What Is a Successful New Product? Although you may hear much higher percentages, careful studies supported by research evidence suggest that about 40% of new products fail -- somewhat higher for consumer products, somewhat lower for business-to-business products.
22. Classic Brand Names>> Budweiser Ivory Coca-Cola Maxwell House Kodak General Electric Steinway Wrigley Kleenex Waterford L.L. Bean Ford John Deere Maytag JCPenney Sears Colgate Hershey Gillette Ticonderoga
23. Quality Value Time Cost 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.
30. Uncertainty over product form competition (competition between product classes vs. between different brands of the same product)
31. NPD Myths First to market wins! Company reputation, a strong brand name and a good selling effort will make almost any new product a success. Having a low price is critical to winning.
