mmmi - iv new product decision process

8/6/2019 MMMI - IV New Product Decision Process

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New Product Decision

ProcessChapter IV

New Product Decision Process Types of

new products Test Marketing of anew product, Packaging Purpose, Types

and New Trends in packaging


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New Product Decision


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Change is the only constant thingin this world


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New Product - Definition

A new product is any product which is

perceived by the customer as being new.


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Factors contributing to New

Product Development

Changing customer preferences

Technological changes

Government Policy


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New product options

Make (organic growth)

Buy (Inorganic growth)

Buy other companies Buy a license / brand or franchise of other

company


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New-Product Development

Strategies

New-Product Development

Strategies

OriginalProducts

Original

Products

Product

Improvements

Product

Improvements

Product

Modifications

Product

Modifications

New

Brands

New

Brands

AcquiredCompaniesAcquiredCompanies

Acquired

Patents

Acquired

Patents

Acquired

Licenses

Acquired

Licenses

Strategies for Obtaining New Products


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Examples

Speed Petrol

Probiotic Ice cream from AMUL

Moser baer CD/DVD Hippo baked snacks

Aliva Low calorie snacks


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Type of New Products

New to organization (30%)

New to the world

New product lines

Changes within existing products (70%)

Addition to existing product line

Revision or improvements

Repositioning

Cost reductions


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Causes of new product

failures

Causes of new product

failures Overestimation of Market Size Product Design Problems

Product Incorrectly Positioned, Priced or Advertised

Costs of Product Development

Competitive Actions

To create successful new products, the companymust:

understand its customers, markets and

competitors develop products that deliver superior value to

customers.


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Reasons of new product failures

Market / Marketing failure No clear product

differentiation (retail)

Small size of potentialmarket

Poor positioning

Misunderstanding ofcustomer needs

Financial failure

Low return on investments Timing failure

Too early (Kellogg's)

Too late

Technical failure Product did not work

Bad design

Organizational failure

Lack of organizationalsupport

Poor fit with organizationculture

Environmental failure

Regulations (Pharmaproducts)

Macro economic factors


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The Worlds

Most Innovative Companies

Apple

Google

Toyota

General Electric

Microsoft

Procter & Gamble

3M

Walt Disney

IBM

Sony

Wal-Mart

Honda

Starbucks

Target

BMW

Samsung


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Seven Notions of Innovation

See the future through the eyes of yourcustomer

Intellectual property and brand power are keyassets

Use digital technology to create tools forcustomers

Build a championship team

Innovation is a state of mind Speed is critical, so push your organization

Partner up if youre not the best


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Factors That Limit

New Product Development

Shortage of ideas

Fragmented markets

Social and governmental constraints Cost of development

Capital shortages

Faster required development time Shorter product life cycles


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What is a Venture Team?

A venture team is a cross-functional

group charged with developing a specific

product or business; intrapreneurs are

relieved of other duties and provided abudget and time frame.


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Criteria for Staffing Venture Teams

Desired team leadership style

Desired level of leader expertise

Team member skills and expertise Level of interest in concept

Potential for personal reward

Diversity of team members


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NPD Process

Idea Generation & Screening

Concept Development & Testing

Marketing strategy Feasibility analysis or business analysis

Product Development

Test Marketing Commercialization


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Process


Process

IdeaGeneration

IdeaScreening

ConceptDevelopment

and Testing

MarketingStrategy

BusinessAnalysis

ProductDevelopment

TestMarketing

Commercialization


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NPD Process

Step One - Idea generation & screening

Top management should clear about mission,

objectives & role of the new product.

In India NPD process is casual and Ad hoc.

Formal and continuous NPD is essential forevery organization to succeed in the ever

changing environment.

(Automobile, Pharmaceutical, IT, IT hardware,engineering Companies are evolving in this

regards)


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Sources of new ideas Changing customer needs and trends in consumer marketing (Customer

surveys, feedback through suggestions & complaints, problems) example WIMCO match box carbonized match sticks, Kenstar Automatic Machine Toploading, fully automatic, ultra compact, tumbling mechanism, Kenstar Le PureWater Purifier

Competitors following the leader(After Nano all auto makers realized the

need to develop low cost cars, Inspired from Kent RO, Aqua Guard come outwith RO offering) R & D Scientists (IIT, UDCT, CSIR) Laboratories Foreign Markets & media Employees especially sales representatives (Ford, Godrej, Thermax) Trade Channels

Internet Top Management (Product like Click Smokeless Tobacco, Calvin Care)

Not all sources are productive

(Customer needs, problems, expectations, feedback, R & D, competitors,sales executives are most vital)

NPD Process

Step One - Idea generation & Screening


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NPD Process


Techniques for generating new ideas

Group creativity techniques

Brain storming

Synectics

Need / Problem identification

Attribute listing

(Creativity is the key in generating ideas)


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Ways to Find Great New Ideas

Run informal sessions with customers

Allow time off for technical people to putter

on pet projects

Make customer brainstorming a part of

plant tours

Survey your customers Undertake fly on the wall research to

customers


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More Ways to Find Great Ideas

Use iterative rounds with customers

Set up a keyword search to scan trade

publications

Treat trade shows as intelligence missions

Have employees visit supplier labs

Set up an idea vault


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Drawing Ideas from Customers

Observe customers using product

Ask customers about problems with

products

Ask customers about their dream products

Use a customer advisory board or a brand

community of enthusiasts to discussproduct


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Idea Generation: Creativity

Techniques Attribute listing (list out the attributes and modify each

attribute) Forced relationships (list out various ideas & make

forced relationship with each other)

Morphological analysis (problem solution- breaksolution into processes various options for eachprocesses)

Reverse assumption analysis (reverse the oldassumptions and create offering in newer set ofassumptions)

New contexts (take familiar processes and change theircontexts)

Mind mapping (put series of thoughts on paper and mapthem )


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Idea Generation: Creativity

Techniques

Lateral Thinking

Gas station stores

Cyber cafes

Sony walkman

Nutribars


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NPD Process


Most important thing is You should not

dismiss good idea Drop error

(wedding shows)

Company permits a poor idea for further

development Go error


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NPD Process


Process to spot good ideas and drop poor ones as soon aspossible.

Many companies have systems for rating and screeningideas which estimate:

Market Size Product Price

Development Time & Costs

Manufacturing Costs

Rate of Return Then, the idea is evaluated against a set of general

company criteria.


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NPD Process

Step III - Concept Development & Testing

Product idea Possible product company

would offer to the market

Product concept elaborated version of

product idea which is spelled out in terms

of consumer.

Brand concept

N P d t D l t P


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CUST

OMERS

CUST

OMERS

COMPE

TITORS

COMPE

TITORS

DISTRI

BUTOR

S

DISTRI

BUTOR

S

SUPP

LIERS

SUPP

LIERS

New Product Development ProcessStep 1. Idea Generation

New Product Development ProcessStep 1. Idea Generation

Idea Generation is the SystematicSearch for New Product Ideas ObtainedInternally and From:

N P d t D l t P


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New Product Development ProcessIdea Screening

New Product Development ProcessIdea Screening


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N P d t D l t P

New Product Development Process


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New Product Development ProcessStep 4. Marketing Strategy Development

New Product Development ProcessStep 4. Marketing Strategy Development

Part Two Describes Short-Term:Products Planned Price

DistributionMarketing Budget

Part Two Describes Short-Term:Products Planned Price

Distribution

Marketing Budget

Part Three Describes Long-Term:

Sales & Profit GoalsMarketin Mix Strate

Part Three Describes Long-Term:

Sales & Profit GoalsMarketing Mix Strategy

Marketing Strategy Statement Formulation

Part One Describes Overall:Target Market

Planned Product PositioningSales & Profit GoalsMarket Share

Part One Describes Overall:Target Market

Planned Product PositioningSales & Profit GoalsMarket Share

N P d t D l t P



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New Product Development ProcessStep 5. Business Analysis

Step 6. Product Development

New Product Development ProcessStep 5. Business Analysis

Step 6. Product Development

Business Analysis

Review of Product Sales, Costs,

and Profits Projections to See if

They Meet Company Objectives

Business Analysis

Review of Product Sales, Costs,

and Profits Projections to See ifThey Meet Company Objectives

If Yes, Move to

Product Development

If Yes, Move to

Product Development

If No, EliminateProduct Concept

If No, Eliminate

Product Concept

N P d t D l t P



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New Product Development ProcessStep 7. Test Marketing

New Product Development ProcessStep 7. Test Marketing

StandardTest Market

Full marketing campaign

in a small number ofrepresentative cities.

StandardTest Market

Full marketing campaignin a small number ofrepresentative cities.

SimulatedTest Market

Test in a simulatedshopping environment

to a sample ofconsumers.

SimulatedTest Market

Test in a simulatedshopping environment

to a sample ofconsumers.

ControlledTest Market

A few stores that have

agreed to carry newproducts for a fee.

ControlledTest Market

A few stores that haveagreed to carry newproducts for a fee.

N P d t D l t P



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New Product Development ProcessStep 8. Commercialization

New Product Development ProcessStep 8. Commercialization

When?When? Where?Where? ToWhom?ToWhom? How?How?

Commercialization is theIntroduction of the New Product

into the Marketplace.

S di U

Speeding Up


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Speeding Up

Development

Speeding Up

Development

Step 1Step 1

Step 2Step 2

Step 3Step 3

Step 4Step 4

Step

1

S

tep

2

Step 3

Step 4

Sequential Simultaneous


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IMPROVING PRODUCT DEVELOPMENT

How well are wedoing? What improvementsare needed? Where do we

start? Should webenchmark?

Productplanning Integrated

productteams

Design formanufacturability

Projectplanning

Requirementsdefinition

Resourcemanagement

Solidsmodeling

Product data

management

Configurationmanagement

QFD

Earlyinvolvement

Analysis &simulation

Early supplierinvolvement

Empowerment

Designre-use

Top-downdesign

CAE


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Packaging

mmmi - iv new product decision process

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