Developing new products

1. Discovery of new ideas and mehods

1. Commercializing an invention by bringing it to the market

1. Delay increases the risk others getting to the market first
2. Consumer priorities may change

1. Revisions and improvements to existing products (repositioning and cost reductions)

1. Depth of product mix

1. Move into a new market)
2. Width of product mix

1. Highest risk

1. Encourage teamwork
2. Improve the provision of marketing information to R&D
3. Take R&D people out of the lab
4. Develop informal relationships with R&D
5. Learn about technology
6. Formalize the product development process

1. Make organizational design changes

   Annotations:

   • Place marketing and R&D next to each other, give them more autonomy
2. Show personal interest in NPD
3. Provide strategic direction
4. Encourage teamwork
5. Increase resources
6. Understand marketing's importnace

1. Project teams
   1. Cross-functional team for NPD
      1. Better decision-making
      2. Shared responsibility
      3. Advantage from collective expertise
      4. Helps in preventing "tunnel vision and inflexibility of problem solving"
2. Product and brand managers
   1. Assignment of product managers to product lines and/or brand managers to individual brands
      1. Responsible for managing exisitng product lines/brand and developing new ones
   2. Common in high-volume, relative low-value products such as groceries, toiletries and drinks industries
3. New product departments and committees
   1. Oversee the process of NPD review the projects, decide wether to continue them, etc.

1. Setting objectives - target market, market share gain, profitability, technological leadership, resource allocation

1. Brainstorming
   1. The technique where a group of people generate ideas without initial evaluation; only when the list of ideas is complete is each idea then evaluated
2. From the marketing environment

1. Using criteria

   Annotations:

   • market attractiveness, fitting between product and company objectives, capability of the company to produce and market the product, etc.

1. Testing new product ideas with potential customers
2. Group discussions with questionnaires
3. Online marketing research
   1. Community sites
4. Heed functional fixedness
   1. The tendency of people to evaluate new products in terms of what they already know. Can impede innovation
   2. Overcome it through the scenario method where the new product concept is explained and visualized to the consumer (scenario: description of how the new product is used in a new to the consumer setting so they appreciate the added value)

1. A review of the projected sales, costs and profits for a new product to establish whether these factors satisfy company obectives
2. Break-even analysis
   1. States the quantity needed to be sold to cover costs
   2. Used to see if the project is financially feasable
3. Sensitivity analysis
   1. How price, cost and customer acceptance will impact sales revenue and profits

1. Principles for effective management of cross-functional teams in the product development stage
   1. Clear mission and objectives
   2. Organization of team members
   3. Project plan with a work plan, resource requirements and evaluation objectives
   4. Project leaders should not only manage the team internally but also externally by keeping in contact with the market
   5. Responsibilities - shared within the team, but also as individual members of their departments
   6. Executive sponsorship - a senior management member who is the link between the project team and the top management; also acts as a coach and mentor
2. Simultaneous engineering
   1. The involvement of manufacturing and product development engineers in the same development team in an effort to reduce development time
3. Product testing
   1. Focuses on the functional aspects of the product and on consumer acceptance

1. The limited launch of a new product to test sales potential
2. Simulated market test
   1. Consumers are put in a simulated market and product penetration (the proportion of consumers who buy the new product at least once) and repeat purchase (the rate of which purchasers buy again) are measured
3. Test marketing
   1. The launch of a new product in one or a few geographic areas chosen to be representative of the intended market
   2. Gives more accurate sales penetration and repeat purchases estimates
   3. Benefits

      Annotations:

      • Facilitates the "go/no go" national launch decision and the effectiveness of the marketing mix
   4. Problems

      Annotations:

      • The geographic area(s) may not be representative for the national level, making sales projections more inaccurate
      • Competitors may give incentives to distributors to give them more shelf space, and thus denying the new product of some
      • Needs to run for some time so repeat purchases can be measured. This way, competitors may go first to the market
      • Gain the cooperation of distributors

1. Developing a commercialization strategy for a new product
   1. Target market
      1. Diffusion of innovation process

         Annotations:

         • Connect with product life-cycle

         Attachments:

         • Managing Products
         1. The process by which a new products spreads through a market over time
         2. Understand the characteristics of the innovator and early adopter categories to target them at launch. They are the leaders in market acceptance and perception of the product => have a big influence over the success of the new products
         3. Shows that target group and message need to be modified over time as new categories of customers enter the market
   2. Differential advantage
      1. Divisibility
         1. The degree to which the product can be tried on a limited basis
2. Product replacement strategies
   1. Facelift
      1. Product churning
         1. A continuous and rapid spiral of new product introductions
3. Success factors when commercializing technology
   1. Being faster to market
   2. Supplying a wider range of markets
   3. More product launches
   4. Using a wider breadth of technologies

Annotations:

• Slower response of competitors when introducing firm has a big market share. Faster response by competitors with bigger market share than the one of the introducing firm