Transcript Lecture 8
New Product Development
Chapter Eight
Key Learning Points
Why new products are important Factors affecting new product success Three major approaches to new product development Steps in bringing a new product to market Impact of the Internet on new product development Special topics in new product development
8-2
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
Figure 8.1
Percentage of Current Sales by New Products Developed in Last 5 Years by the Company’s Industry Rank
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-3
Table 8.1
Top 10 Global Companies in R&D Spending (2007)
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-4
Table 8.2
Top 10 R&D Spending Countries (as a % of GDP)
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-5
Overview
Innovation is life in high-tech industries.
30,000+ new supermarket products are introduced annually.
Firms are constantly pressured to find the next big thing.
New products offer many benefits.
Most new products fail.
8-6
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
Overview
New products can be classified into three categories.
Minor product changes can also result in new products.
8-7
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
Figure 8.2
New Product Idea Mortality Curve for PDMA Member Firms, 1990 and 1995
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-8
Table 8.3
New Product Success Factors
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-9
Figure 8.3
New Product and Service Development Process
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-10
New Product Development
The Rugby Approach: New products result from constant interaction among interdisciplinary team members. Firms using this method have six characteristics.
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-11
Figure 8.4
The Target Costing Process
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-12
Figure 8.5
Sources of Ready-Made New-Product Concepts
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-13
New Product Development
Elements of Brainstorming
Openness and participation Problem orientation Leaders guide the discussion Building on each other’s ideas Encouraging many diverse ideas Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-14
New Product Development
Screening new product concepts Concept testing gets customer reactions to the product concept.
Data collection Purpose may vary
Conjoint analysis can also be used to test concepts.
8-15
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
Table 8.4
Conjoint Analysis Illustration
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-16
Table 8.5
Conjoint Analysis Illustration Results
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-17
Activity
Visit the following website to experience conjoint analysis in action as you concept test ideas for a movie theatre: http://elabresearch.ucr.edu/conjoint /conjoint_movie/conjoint_movie.htm
8-18
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
Discussion Question
Suppose you were responsible for planning a concept test for a {product of your choice} using conjoint analysis.
1. Identify the key attributes that you would evaluate.
2. For each attribute, identify the alternatives or levels being evaluated.
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-19
Table 8.6
Hierarchy of Needs
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-20
Figure 8.6
Consumers’ Importance Weights of Competitive Products
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-21
Table 8.7
List of Engineering Characteristics for a Car Door
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-22
Figure 8.7
The House of Quality
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-23
New Product Development
Business analysis: forecasting demand Product use tests involve getting potential customers to try prototypes.
Diagnostic small sample tests Limited time horizon consumer test
Market tests
8-24
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
New Product Development
Market Test Design Decisions
Action standards Where to test What to do Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall How long How much Information gathering
8-25
New Product Development
Sales forecasting for new products Forecasting often relies on purchase intention data or other qualitative data.
Many approaches have been developed for frequently purchased items.
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-26
Figure 8.8
Typical Penetration for a New Brand Over Time
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-27
Figure 8.9
Typical Repeat Rate for a New Brand Over Time
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-28
Figure 8.10
Repeat Rates and Product Performance
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-29
New Product Development
Simple Market Share Forecasting Using 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 brand
Eventual Market Share = P x R x U
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-30
New Product Development
Sales forecasting for new products Pretest market data from laboratory experiments can be used to forecast sales.
ASSESSOR
Forecasting the success of radical innovations is more difficult.
Information acceleration
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-31
Figure 8.11
BASES Estimate of Contadina Year-1 Sales Volume
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-32
New Product Development
Launching the new product Launching requires that objectives be set, the strategy be developed, and that the implementation be planned and executed.
Implementation is often a key factor in product failure.
8-33
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
“Because of shorter product life cycles and faster technological obsolescence, companies are finding that quicker time-to-market with new products has become a competitive advantage.
”
- Russell S. Winer
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-34
Table 8.9
Reported New-Product Introduction Time Reductions
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-35
Topics in New Product Development
Importance of shorter product development cycles Several factors influence time to market.
Importance of product design IDEO is the best-known firm.
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
8-36
Topics in New Product Development
IDEO ’ s Design Process
Observation Brainstorming Rapid prototyping Refining Implementation
8-37
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
Topics in New Product Development
New product development over the product life cycle PLC can serve as a guide to the types of innovation sought by the firm.
Improving the integration of marketing and R&D
8-38
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall
Executive Summary
New products are necessary for a firm’s long term survival.
Several factors correlate with successful new products.
Several new product development approaches exist.
New product concepts are either ready-made or result from a creative process.
Product definition must use consumer input.
Many methods exist to forecast demand.
8-39
Copyright ©2011 Pearson Education, Inc., Publishing as Prentice Hall