open floor association for consumer research conference visual persuasion product attribute...
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Open FloorOpen Floor
Association for Consumer Research Conference
Visual Persuasion
Product Attribute Preference for German Car Buyers/Attribute Value FunctionsFunction
Symbolic
Experiential
Product Design and Big Five Personality
Open FloorOpen Floor
Association for Consumer Research Conference (Continued)
Persuasive Appeals for Aesthetic Product Consumption
Product Personalization (Mass Customization)
Counterfeit Goods
Psychology of Category Design
Pretty and Ugly
Brand Experience Scale
Open FloorOpen Floor
Joe Cote Support LetterPressing managerial need for
assessing technologies/products
The NPD Literature gap in the commercialization of existing technology
Commercialization of existing technology literature is publishable
Open FloorOpen Floor
Groups for BA 590 Project If You Want to Switch…
Get OK from BOTH (all?) Groups
Let Me Know
Finalize by Next Class
Open FloorOpen Floor
Today…Q and A for “Marketing Review”
Slides
Lecture/Discussion
Project Overviews2-3 Minute Presentation
Class Feedback
Review/Preview
Q and A Marketing ReviewQ and A Marketing Review
Helpful/Not Helpful?
Specific Questions…
Any Additional Info needed?
PART ONEPART ONE
OVERVIEW AND OPPORTUNITY OVERVIEW AND OPPORTUNITY IDENTIFICATION/SELECTIONIDENTIFICATION/SELECTION
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Opportunity Identification and Opportunity Identification and SelectionSelection
Figure I.1
CHAPTER 1CHAPTER 1
THE MENUTHE MENU
McGraw-Hill/Irwin Copyright ©2006 The McGraw-Hill Companies, Inc. All right reserved.
Some Hot New ProductsSome Hot New Products
Kawasaki Z1000 – a “naked” sport bike with a minimal plastic body designed to show off the inner workings.
Trivection ovens – GE’s Profile and Monogram ovens use a combination of thermal, convection, and microwave technology.
PalmOne Treo 6000 – A handheld PDA with phone, speakerphone, camera, music player, and keyboard.
Clorox Bleach Pen – A gel pen that lets you put bleach where you want to, such as on mildew between shower tiles.
Apple’s iTunes Music Store – Allows you to download hundreds of thousands of songs from the Internet to save or play on an Apple iPod.
P&G’s Mr. Clean Magic Eraser – Melamine scouring pad with an eraser-like function: it wears down with use.
Toyota Prius – Hybrid car with futuristic styling and 55 MPG gas mileage.
Figure 1.1
Products of the FutureProducts of the Future
Intelligent refrigerators will track food inventories, and will either provide a hard-copy shopping list or send an electronic list to a home-delivery service.
Intelligent wallpaper will transform a wall to a television, a computer screen, works of art, etc.
Robotic lawn mowers will tend the grass within any specified boundary.
“Nanny-cams” hidden in teddy bears permit parents to watch their children at daycare; camera-surveillance systems will keep an eye on latchkey kids home alone.
Holographic storage will be used to store and retrieve home videos.
Lasers and decay-preventive gum and toothpastes will minimize the need for the dentist’s drill.
Robots will dispense gasoline, and know your preferred grade.
“Smart” heart pacemakers will be placed in the wrist.
Figure 1.2
Source: Marian Salzman and Ira Matathia, “Lifestyles of the Next Millennium: 65 Forecasts,” The Futurist, July-August 1998.
Not All New Products Are Not All New Products Are PlannedPlanned
Microwave ovens Aspartame (NutraSweet) ScotchGard fabric protector Teflon Penicillin X-rays Dynamite
In each case, an accidental discovery -- but someone knew they had something when they saw it!
Figure 1.3
What Is a New Product?What Is a New Product? New-to-the-world (really-new) products (10% of new products):
Inventions that create a whole new market. Ex.: Polaroid camera, Sony Walkman, Palm Pilot, Rollerblade skates, P&G Febreze and Dryel.
New-to-the-firm products (20%): Products that take a firm into a category new to it. Ex.: P&G brand shampoo or coffee, Hallmark gift items, AT&T Universal credit card, Canon laser printer.
Additions to existing product lines (26%): Line extensions and flankers in current markets. Ex.: Tide Liquid, Bud Light, Apple’s iMac, HP LaserJet 7P.
Improvements and revisions to existing products (26%): Current products made better. Ex.: P&G’s continuing improvements to Tide detergent, Ivory soap.
Repositionings (7%): Products that are retargeted for a new use or application. Ex.: Arm & Hammer baking soda sold as a refrigerator deodorant; aspirin repositioned as a safeguard against heart attacks.
Cost reductions (11%): New products that provide the customer similar performance but at a lower cost. May be more of a “new product” in terms of design or production.
Figure 1.4
What About…What About…
New Services? New Business-to-Business
Products? New International/Global
Products?
What Is a Successful New What Is a Successful New Product?Product?
90
40
10
0102030405060708090
Sometimes Quotedin Press
Research Reports Sometimes Claimed
Percent of Products that Fail
Although you may hear much higher percentages, careful studies supported by research evidence suggest that about40% of new products fail -- somewhat higher for consumerproducts, somewhat lower for business-to-business products.
Classic Brand NamesClassic 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
Which of these have the most value today as launch padsfor new products?
The Conflicting Masters of The Conflicting Masters of New Products ManagementNew 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.
Quality
Time Cost
Value
Figure 1.6
Breakthrough Innovations that Breakthrough Innovations that Changed Our LivesChanged Our Lives
Personal Computer Microwave Oven Photocopier Pocket Calculator Fax Machine Birth Control Pill Home VCR Communication satellite Bar coding Integrated Circuit Automatic Teller
Answering Machine Velcro Fastener Touch-Tone Telephone Laser Surgery Apollo Lunar Spacecraft Computer Disk Drive Organ Transplanting Fiber-Optic Systems Disposable Diaper MS-DOS Magnetic Resonance
Imaging
Figure 1.7
This list was compiled in the early 1990s. Since then one would certainly have to add the Internet/World Wide Web. Anything else you would add? Which would you delete?
CHAPTER 2CHAPTER 2
THE NEW PRODUCTS PROCESSTHE NEW PRODUCTS PROCESS
McGraw-Hill/Irwin Copyright ©2006 The McGraw-Hill Companies, Inc. All right reserved.
The Basic New Product The Basic New Product ProcessProcess
Phase 1: Opportunity Identification/Selection
Phase 2: Concept Generation
Phase 3: Concept/Project Evaluation
Phase 4: Development
Phase 5: Launch
The Evaluation Tasks in the New The Evaluation Tasks in the New Products ProcessProducts Process
Opportunity Identification/Selection
Concept Generation
Concept/Project Evaluation
Development
Launch
Direction;Where should we look?
Initial Review:Is the idea worth screening?
Full Screen:Should we try to develop it?
Progress Reports:Have we developed it?
Market Testing:Should we market it?
Phase 1: Opportunity Phase 1: Opportunity Identification/SelectionIdentification/Selection
Active and passive generation of new product opportunities as spinouts of the ongoing business operation. New product suggestions, changes in marketing plan, resource changes, and new needs/wants in the marketplace. Research, evaluate, validate, and rank them (as opportunities, not specific product concepts). Give major ones a preliminary strategic statement to guide further work on it.
Activities that Feed Strategic Activities that Feed Strategic Planning for New ProductsPlanning for New Products
Ongoing marketing planning (e.g., need to meet new aggressive competitor)
Ongoing corporate planning (e.g., senior management shifts technical resources from basic research to applied product development)
Special opportunity analysis (e.g., a firm has been overlooking a skill in manufacturing process engineering)
Sources of Identified Sources of Identified OpportunitiesOpportunities
An underutilized resource (a manufacturing process, an operation, a strong franchise)
A new resource (discovery of a new material with many potential uses)
An external mandate (stagnant market combined with competitive threat)
An internal mandate (new products used to close long-term sales gap, senior management desires)
Phase 2: Concept GenerationPhase 2: Concept Generation
Select a high potential/urgency opportunity, and begin customer involvement. Collect available new product concepts that fit the opportunity and generate new ones as well.
Phase 3: Concept/Project Phase 3: Concept/Project EvaluationEvaluation
Evaluate new product concepts (as they begin to come in) on technical, marketing, and financial criteria. Rank them and select the best two or three. Request project proposal authorization when have product definition, team, budget, skeleton of development plan, and final PIC.
Stages of Concept/Project Stages of Concept/Project EvaluationEvaluation
Screening (pre-technical evaluation) Concept testing Full screen Project evaluation (begin preparing
product protocol)
The first stages of the new products process are sometimes called the fuzzy front end because the product concept isstill fuzzy. By the end of the project, most of the fuzz should be removed.
Phase 4: Development (Technical Phase 4: Development (Technical Tasks)Tasks)
Specify the full development process, and its deliverables. Undertake to design prototypes, test and validate prototypes against protocol, design and validate production process for the best prototype, slowly scale up production as necessary for product and market testing.
Phase 4: Development (Marketing Phase 4: Development (Marketing Tasks)Tasks)
Prepare strategy, tactics, and launch details for marketing plan, prepare proposed business plan and get approval for it, stipulate product augmentation (service, packaging, branding, etc.) and prepare for it.
Phase 5: LaunchPhase 5: Launch
Commercialize the plans and prototypes from development phase, begin distribution and sale of the new product (maybe on a limited basis) and manage the launch program to achieve the goals and objectives set in the PIC (as modified in the final business plan).
The Life Cycle of a ConceptThe Life Cycle of a Concept
Figure 2.3
Corresponding New Products Process Phases:Opportunity Identification Concept Generation Project Eval. Development Launch
Techniques for Attaining Speed Techniques for Attaining Speed in a New Product Projectin a New Product Project
Accelerating Product Development through Managing the Organization Use projectization: project matrix and
venture teams. Use small groups to thwart bureaucracy. Empower, motivate, and protect the team. Destroy turf and territory. Make sure supporting departments are
ready. Clear the tracks in shared departments.
Techniques for Attaining Speed Techniques for Attaining Speed (continued)(continued)
Intensify Resource Commitments Integrate channel members and customers, use
parallel or concurrent engineering Design for Speed
Computer-aided design, rapid prototyping, design-aided manufacturing, common components
Prepare for Rapid Manufacturing Simplified documentation and process planning,
just-in-time delivery (flexible manufacturing) Prepare for Rapid Marketing
Use rollouts, invest in immediate market awareness, facilitate trial purchasing
Key Characteristics of Short-Key Characteristics of Short-Cycle-Time Firms Cycle-Time Firms
Extensive user involvement early in the new products process.
Cross-functional teams are dedicated to the new product.
Suppliers are extensively involved. The firms adopt effective design
philosophies and practices. The most adept firms are effective at
organizational learning.
What About New Services?What About New Services?
Successful new services tend to come from firms that use a systematic process much like the new products process – the tools all fit.
Iterations may be more frequent since they are less expensive.
Unique, superior service, providing value and benefit as perceived by the customer, must be delivered, to achieve success.
Speed to market with services is important, especially in enhancing reputation, image, and customer loyalty.
What About New-to-the-World What About New-to-the-World Products?Products?
The challenges are different, but the first phase remains the same: opportunity identification and development of a strategic statement.
Clear connection required between the radical innovation and the firm’s strategic vision.
The new products process is more explanatory: need to bring in Voice of the Customer (VOC) early.
Lead users may be critical here (see Chapter 5 discussion).
The Probe-and-Learn Process for The Probe-and-Learn Process for New-to-the-World ProductsNew-to-the-World Products
Focused (limited-performance) prototypes
Example: Iomega Zip Drive: over 50 prototypes were built to test out ideas with customers.
“Lickety-Stick” iterative process: non-linear, more flexible process in which dozens of prototypes may be tried (“lickety”) before settling on one that customers like (“stick”).
BA 590BA 590
Break
CHAPTER 3CHAPTER 3
OPPORTUNITY IDENTIFICATION OPPORTUNITY IDENTIFICATION AND SELECTION:AND SELECTION:
STRATEGIC PLANNING STRATEGIC PLANNING FOR NEW PRODUCTSFOR NEW PRODUCTS
McGraw-Hill/Irwin Copyright ©2006 The McGraw-Hill Companies, Inc. All right reserved.
Why Does a Firm Need a New Why Does a Firm Need a New Products Strategy?Products Strategy?
To chart the group’s/team’s direction What technologies?/what markets?
To set the group’s goals and objectives Why does it exist?
To tell the group how it will play the game
What are the rules?/constraints? Any other key information to consider?
Corporate StrengthsCorporate Strengths
New products in this firm will: Use our fine furniture designers (Herman Miller) Gain value by being bottled in our bottling system
(Coca-Cola) Utilize innovative design (Braun) Be for babies and only babies (Gerber) Be for all sports, not just shoes (Nike) Be for all people in computers (IBM) Proliferate our product lines (Rubbermaid) Be almost impossible to create (Polaroid) Use only internal R&D (Bausch & Lomb)
Product Platform PlanningProduct Platform Planning
Many firms find that it is not efficient to develop a single product. Platform: product families that share similarities in design, development, or production process.
Car industry: $3 billion price tag on a new car platform is spread out over several models. Sony: four platforms for Walkman launched 160 product variations. Boeing: passenger, cargo, short- and long-haul planes made from same platform. Black & Decker: uses a single electric motor for dozens of consumer power tools.
Opportunity Identification: Opportunity Identification: Greenfield MarketsGreenfield Markets
Find another location or venue: Once McDonald’s had taken up the best locations for traditional fast-food restaurants, it continued its U.S. expansion by placing stores inside Wal-Marts, in sports arenas, and elsewhere. Starbucks Coffee complemented coffee-shop sales by selling its coffee beans and ice creams in supermarkets.
Leverage your firm’s strengths in a new activity center: Nike has recently moved into golf and hockey, and Honeywell is looking into casino opportunities.
Identify a fast-growing need, and adapt your products to it: Hewlett-Packard followed the need for “total information solutions” that led it to develop computing and communications products for the World Cup and other sporting events.
Find a “new to you” industry: P&G in pharmaceuticals, GE in broadcasting (NBC), Disney in cruises, Rubbermaid in gardening products – either through alliance, acquisition, or internal development.
Source: Allan J. Magrath, “Envisioning Greenfield Markets,” Across the Board, May 1998, pp. 26-30.
What is the Product Innovation What is the Product Innovation Charter (PIC)?Charter (PIC)?
It is the new product team’s strategy. It is for Products (not processes). It is for Innovation (think of the
definition of new product). It is a Charter (a document specifying
the conditions under which a firm will operate).
The Contents of a Product The Contents of a Product Innovation CharterInnovation Charter
Background
Key ideas from the situation analysis; special forces such as managerial dicta; reasons forpreparing a new PIC at this time.
Guidelines
Any "rules of the road," requirements imposed by the situation or by upper management.Innovativeness, order of market entry, time/quality/cost, miscellaneous.
Goals-Objectives
What the project will accomplish, either short-term as objectives or longer-term as goals.Evaluation measurements.
Focus
At least one clear technology dimension and one clear market dimension. They match andhave good potential.
A Sample PIC for a Chemical A Sample PIC for a Chemical ProductProduct
Focus: The XYZ Company is committed to a program of innovation in specialty chemicals, as used in the automobile and other metal finishing businesses, to the extent that we will become the market share leader in that market and will achieve at least 35 percent ROI from that program on a three-year payout basis. We seek recognition as the most technically competent company in metal finishing.
Goals-Objectives: These goals will be achieved by building on our current R&D skills and by embellishing them as necessary so as to produce new items that are demonstrably superior technically, in-house, and have only emergency reliance on outside sources. The company is willing to invest funds, as necessary, to achieve these technical breakthroughs.
Guidelines: Care will be taken to establish patent-protected positions in these new developments and to increase the safety of customer and company personnel.
PIC Special GuidelinesPIC Special Guidelines Degree of Innovativeness
First-to-market Adaptive product Imitation (emulation)
Timing First Quick second Slow Late
Miscellaneous Avoidance of competition with certain firms Recognition of weaknesses Patentability Product Integrity
Tips for PIC DevelopmentTips for PIC Development
Note where you are starting -- what decisions have already been made?
Watch for any and all opportunities. Confirm interesting opportunities. Keep balance between focus and freedom --
wildcatting can pay off too. Speed usually assumed a well-established, close-
to-home PIC. PICs less useful in cases where personal tastes rule
(art, games, foods) or where the biggest task is developing a new technology (wait till you have it).
More TipsMore Tips
Poor implementation will still ruin a good PIC (e.g., Bic perfume in lighter fluid package).
Watch for PIC conflicts -- e.g., a “flood the market” line extension strategy may hurt real innovation. Some charters dictate separate organizations.
Once in place, live by it. Use at all stages -- organization, concept generation, concept evaluation, technical, and, yes, marketing!
Change it only when necessary, or when you get information you have been waiting for.
Dimensions for Assessing Dimensions for Assessing Strategic FitStrategic Fit
Strategic goals (defending current base of products versus extending the base).
Project types (fundamental research, process improvements, or maintenance projects).
Short-term versus long-term projects. High-risk versus low-risk projects. Market familiarity (existing markets, extensions
of current ones, or totally new ones). Technology familiarity (existing platforms, extensions of
current ones, or totally new ones). Ease of development. Geographical markets (North America, Europe, Asia).
Strategic Portfolio Model for One Strategic Portfolio Model for One SBU in Exxon ChemicalSBU in Exxon Chemical
Low Market Newness High Market Newness
Low Product Newness Improvements to Existing Products(35%)
Additions to Existing Product Lines(20%)
Medium Product Newness Cost Reductions(20%)
New Product Lines(15%)
High Product Newness Repositioning(6%)
New-to-the-World Products(4%)
Source: Adapted from Robert G. Cooper, Scott J. Edgett, and Elko J. Kleinschmidt. Portfolio Managementfor New Products, McMaster University, Hamilton, Ontario, Canada, 1997, p. 63.
Figure 3.8
A Portfolio Diagram at a Hewlett-A Portfolio Diagram at a Hewlett-Packard DivisionPackard Division
Figure 3.9
Project OverviewsProject Overviews
Each Group Captain
2-3 Minutes
Class Feedback/Discussion on… Opportunities
Information
Sources
Challenges
Review…Review…
All On Same Page for Course Content/Deliverables
Marketing Basics
Today: Chapters… 1 (menu)
2 (The New Products Process)
3 (Opportunity ID and Selection)
Project Overviews
Next Week…Next Week…
Chapters… 4 (Prep)
5 (Ideation)
6 (Attribute I)
7 (Attribute II)
Distribution of Midterm I Due the Following Week
Cover in-depth Next Week
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