Developing New Products Linda Rochford What is a
- Slides: 19
Developing New Products Linda Rochford
What is a new product? Types of “newness” New to the market (new to the world) New to the firm New to the customer
New to the Customer Continuous innovation Dynamically continuous innovation Discontinuous innovation
Why new products? Key to prosperity and future growth Ability to redefine, remake the industry and gain competitive advantage Stakes are high—investments, time, high odds of failure
What drives innovation? Technology Change in customer needs Shortened product life cycles (PLC) Global competition
The process of developing new products New product strategy Idea generation (ideation) Screening Preliminary technical analysis Preliminary production analysis Preliminary market analysis Market analysis
The process of developing new products Preliminary financial analysis Development In-house testing (alpha) customer testing (beta) Market testing (gamma) Precommercialization financial analysis Launch/commercialization
Evaluation of new products What are the appropriate measures for new product success? For assessing the new product development (NPD) process?
Evaluation of new products What are the appropriate measures for new product success? ROI Market share For assessing the new product development (NPD) process? Success rate (% products meeting the firm’s financial criteria) Average ROI Average market share
Relationship between innovativeness and performance Does this “U” shaped relationship seem intuitive to you? What are the implications of this relationship for firms developing new products?
Why do new product projects succeed or fail? Two major issues: Doing new product projects right. Doing the right new product projects. What’s the difference? What are the implications for new product managers and developers?
Why study new product failures?
Reasons for new product failure Failure to undertake key NPD activities. Poorly executed activities. What are the most overlooked and poorly undertaken activities?
Reasons for new product failure Resource allocation Little spent on front end activities Little balance in spending across all activities Disproportionate spending on technical activities Why is this such a serious problem?
Reasons for new product failure Lack of a marketing orientation Poor quality of execution Timing (moving too quickly or too slowly) Not enough up-front homework Lack of product value to the customer No focus, too many projects
Reasons for new product failure Lack of resources Lack of a systematic, disciplined NPD process
Reasons for new product success Unique, superior offering High performance to cost ratio (VALUE) Strong marketing orientation Understanding user needs Strong market launch Formal NPD process
Reasons for new product success Upper management support Well-defined product prior to development Quality technical execution Quality marketing activity execution Technological leverage Marketing leverage Market attractiveness
How should new product performance be measured? What things effect measurement? Time horizon Unwillingness to study failures Level of analysis (product versus program)
