Planning for new products

New product planning as customer driven process

Types of new products

Transformational innovation
Substantial innovation
Incremental innovation

FINDING CUSTOMER VALUE OPPORTUNITIES

Customer value analysis
Objective is to identify needs
for:
1. New products
2. Improvements to existing
products
3. Improvements in
production processes
4. Improvements in
supporting services

Finding new product opportunities

Customer
Expectations
Customer
Satisfaction Gap
Actual
Product
Performance

OPPORTUNITIES
(1) New Products
(2) Improvements
(3) New and Improved
Processes

Characteristics of Successful Innovators

Creating an
Innovative Culture

Leveragin
g
Capabiliti
es
Making Resource
Commitments

STRATEGIC
INITIATIVES

Selecting
the Right
Innovation
Strategy

Developing and
Implementing
Effective New
Product Processes

Creating an Innovation Culture

Innovation Workshop for top executives to
develop an innovation plan.
Innovation Statement highlighting
objectives and senior managements role and
responsibilities.
Training programs for employees and
managers.
Communicate the priority of innovation.
Speakers to expose employees to
innovation
authorities.

The Innovation Strategy Spells Out Managements

Priorities for New Product Opportunities

1. Set specific New Product Objectives.

2. Communicate the role of New Products
throughout the organization.
3. Define the areas of strategic focus:
Product Scope
Markets
Technologies
4. Include longer term discontinuous projects
in the portfolio along with incremental
projects.

NEW PRODUCT PLANNING PROCESS

Customer
Needs
Analysis
Idea
Generation

Screening
and
Evaluation

Business
Analysis

Marketing
Strategy
Development

Product
Development

Testing
Commercialization

IDEA GENERATION
Ranges from incremental improvement to breakthrough

products
SourcesR&D, Employees, Customers, Competitors, Outside inventors,

Acquisition and Value chain members

Methods of Idea Generation

Search- companies that seek to sell ideas that they do not wish
to commercialize, news sources, trade publications
Marketing research- survey of product users, FGD, advisory panel
where experienced users provide ideas
Internal and external development- internal R&D, external
government and private laboratories, small high technology firms
Other Idea Generation Methods incentives to employees,
acquiring firms

SCREENING, EVALUATING, AND

BUSINESS ANALYSIS
IDEA GENERATION
SCREENING
(fit/feasibility)
CONCEPT EVALUATION
BUSINESS ANALYSIS

SCREENING, EVALUATING, AND

BUSINESS ANALYSIS
Screening to fit with company mission and objectives
Commercial feasibility

Concept Evaluation
To obtain a reaction to proposed product
CueCat scanner failure

Business Analysis
Estimates the commercial performance of proposed product
Revenue forecast
Preliminary Marketing Plan
Cost Estimation
Profit Projections
Other Considerations risk associated with the venture,

cannibalization of existing products etc

Product and process development

After business analysis, company decides to abort or

implement the proposed product and makes a

prototype.
Product Development Process:
Product Specifications- describe what the product will
do
Industrial Design- ease-of-use and style of products
Prototype- initial physical product built for testing
Use Tests- to obtain feedback from users
Process Development- process to develop product on
a commercial scale
Collaborative Development- done to increase the
distinctive capability and reduce the time required to
develop and market new products

MARKETING STRATEGY AND MARKET TESTING

Marketing Strategy Decisions
Market Targeting
Positioning Strategy- packaging, distribution strategy, price strategy

Market Testing Options

Simulated Test Marketing recruit buyers while they are shopping
Scanner Based Test Marketing- recruited panel members purchases

are monitored through cameras

Conventional Test Marketing- city based testing which is later projected

to entire region
Testing Industrial Products- testing for industrial products in 1 or 2

cities
Selecting Test Sites- population size, per capita income, purchasing

habits etc
Length of the Test- longer the test, more accurate the results
External Influences- competitor influence

COMMERCIALIZATION
The Marketing Plan
Complete marketing strategy
Coordinated with people and business functions
Timing and geographical scope of launch

Monitoring and Control

Real time tracking through store audits
Role of the Internet- online communities
Include product performance metrics with

performance targets

VARIATIONS IN THE GENERIC NEW

PRODUCT PLANNING

Technology Push Processes

Platform Products

Produce products that utilize the organizations

process capabilities

Customized Products

Leverage platform to develop other products

Process Intensive Products

Ink jet technology by HP

Structured and detailed development process to meet

the customers need

Proactive cannibalization

Threat to market share of organizations existing

products

Proactive cannibalization is essential- britannica

encyclopedia vs CD

To Innovate or Imitate? Entry Strategy and

the Role of Market Research

Decision to innovate or imitate

First, from a technology development

standpoint, it would seem reasonable that

imitation is easier than innovation.
Second, An incumbent facing the threat of
rival entry would likely consider innovating.
Third, duopoly profit and consumer reaction

Line of action and Payoffs:

Results:
Result 1: As duopoly profits 0 increase, under an

entrant imitation strategy, both firms increase their

R&D level, but under an entrant innovation
strategy, the incumbent increases its R&D level and
the entrant decreases its R&D level.
Result 2: As monopoly profits 1 increase, under an
entrant imitation strategy, the incumbent increases
its R&D level, whereas the entrant decreases its
R&D level, and under an entrant innovation
strategy, both firms increase their R&D levels.
Imitation- R&D of incumbent increases, entrant decreases
Innovation- R&D of both increase