New Product Development
From Mind to Market Product Development Cost-Benefit Value Equation Deliver Value Customer Opportunity Innovation Need New Venture Mindset Entrepreneur Networking People Raise Assets Resources Finance
Anticipate and satisfy needs
The Innovation Space Design/Sociology/ Engineering/ope- Anthrapology rtions/quality Needs/wants Customer Empathic design requirements Applied Product specs ethnography QFD VOC Desirable Feasible Successful Innovations Marketing/Economics/Psy- ? ? ? chology Salable Product characteristics, attrubutes Conjoint analysis Perceptional mapping, prefrernce modelling
Breakthrough Innovations Pocket calculator Automatic teller D? Camcorder F? CAT Scan S? CAD/CAM
New-Product Development Process Analytical Research Incubation Thinking Idea Generation Prototype Development Idea Screening Test Marketing Concept Development & Testing Commercialization Business Analysis Creative Drivers Ideas Thinking
Five D’s Exploratory Research/Secondary Resources Ethnography/Online Communities Target Definition/Needs Assessment Design Specifications Ideation/Concept Development Concept Evaluation Features Trade-off Prototype Evaluation Positioning Launch
How the Entrepreneur C Combines Creativity R Rearranges/Reverse E s A Enhances/Enlarges T Adapts/Adopts E Transforms/Modifies New S Eliminates Value Proposi Substitutes -tion?
The Basic New Products Process Opportunity Identification and Selection Concept Generation Concept/Project Evaluation Development Technical tasks Marketing tasks Launch
Product Definition What will it do ? Who will buy it ? What will be its rough dimensions ? What styling features will it have ? What are the major competitors ? What functional features should it have ? What are the psychological descriptors or semantics of the product ? What is its context ?
Successful Product/Service Ideas New product should have relative advantage over the existing offering Be compatible with beliefs, attitudes and changes in buyer behavior Be simple vis-à-vis functionality Be easy to communicate (benefits of) to potential users Convince buyer (satisfy a key need)
Need, Form and Technology in Action
The New Product Concept Need-form concepts Need Form New Products Form- Need- technology technology concept concepts Portable and Technology Personal Music
Need/Technology/ Design Across and Within Generations
Five Critical NPD Success Factors #1: Differentiated product that delivers unique benefits and superior value to the customer #2: Strong market orientation market driven and customer focused new product process Uncover unmet needs and problems #3: Sharp and early product definition #4: Market attractiveness as a key project selection criterion #5: Speed is everything! but not at the expense of quality of execution
Analysis of Need How is this need being satisfied ? Is the present method inefficient ? Ineffective ? What can be improved ? What is good about the present method of satisfying the need ? Why will this new way be better and succeed ? What is the relative cost of the present method v/s the proposed method ? Is there an unmet need inherent in this opportunity ? What is it ?
Meeting Customer’s Needs Articulate Collect Plan for Develop market customer product marketing needs options plan opportunity and extended Identify Define product lead users market family segment Identify Set target competitive sales price products points
Technology – Usability Continuum Super-Computer Laptop Computer Camera Computer Cellular workstation Phone Coffee Maker Wrist Watch Coffee Vending Automobile Hard Disk Drive Technology-Driven User-Driven Products Products
Value Benefits Assurance Quality Place Style Credit Delivery Brand/ Service reputation Technology Belonging Shopping ease Altruism Personalization What is the precise source of value to the: Purchaser?/User?/Producer?/Provider?
Technical Requirements What is the problem really about? What implicit expectations and desires are involved? Are the stated customer needs, functional requirements and constraints truly appropriate? Scope and limitations for creative design Characteristics / properties the product must / must not have Technical and technological conflicts in the design task
Crucial Technical Specifications Design: the functional design of the product and attractiveness in appearance Durability: of the materials from which the product is made Reliability: ensuring expected performance under normal operating conditions Product safety: posing no potential dangers under normal operating conditions Standardization: through elimination of unnecessary variety among potentially interchangeable parts/objects
Some Product Development Tradeoffs
New Product Development Challenge Superior Use Value of Equation Resources
Requirements Specification New Product Idea Opportunity Evaluation Secondary Information Primary Information Perceived Value Customers Value Cost Evaluation Positioning Marketing require- ments specification To Development
Factors for Market Failure of Technological Products Customer expectation not met No innovative advantage perceived Information about product is scarce, unclear or difficult Need for product is not seen Unique attributes not seen Poor selection of target market Poor communication of product benefits Distribution channel selection Pricing problems
Customer Discovery, Validation and Design When you validate a customer, you Identify a problem that potential customers have are conducting preliminary research to determine whether you have the right This may lead to: customer and solution a market niche not served, Does the solution currently a potential improvement in an existing exist? Is it a way to actually solve the product or problem? an opportunity for a breakthrough product Can you solution be produced, or process protected? This “front end” of product development is How much will it cost to most impactful; unclear product definitions produce? result in higher costs and higher rates of failure How much time will it take to bring to market? Early on, determine the potential for intellectual property protections, and plan to file for patent protection at the best time Learn how your development process will be affected by laws or regulations You need preliminary drawings to estimate costs and manufacturing processes, and to apply for a patent, if patentable From these drawings come the prototype or model
Overview of the Product Development Cycle The product development cycle consists of a series of tasks which appear linear, but are not 1. Customer identification or discovery 2. Customer validation and design 3. Business creation Identify a problem that potential customers have This may lead to: a market niche not served, a potential improvement in an existing product or an opportunity for a breakthrough product or process This “front end” of product development is most impactful; unclear product definitions result in higher costs and higher rates of failure
Product Development Milestones Eureka Idea formation and evaluation stage Alpha Concept testing stage Beta Product use testing stage Gamma Market testing stage Delta Post-launch testing stage
New Product Failure The probability of success at launch is 60% Figure shows the typical percentage of new products that succeed, fail, or are killed during development Kill rate during development is higher for best performing products, so failure rate is lowest Research reveals that the principal reason for new product failure is lack of good market and industry analysis
New Product Failure Lack of resources for new product development results in 5 problems: 1. Poor execution 2. Time-to-market increases 3. First-to-market opportunities are missed 4. projects are made simpler so that more can be done with less 5. Team morale declines
New Product Checklist
Go-To-Market The final phase is go-to-market or launch strategy Determine the means by which you will commercialize your technology or product: License the technology to another company Develop it into applications Start a business to make and distribute the product Sell the technology Joint venture with another firm
Exploring the Opportunity What is the opportunity? Why? Who for? How does the opportunity create new value? How is it different? What benefits will the customers obtain which are not currently available? How does the opportunity score on the four essential qualities? Attractive; anchored in a product/service that creates value; timely; and durable How to realize the opportunity? Where? When? Scale?
Sample Feature-Benefits Table Features Benefits
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