NEW PRODUCTS MANAGEMENT Merle Crawford Anthony Di Benedetto
NEW PRODUCTS MANAGEMENT Merle Crawford Anthony Di Benedetto 10 th Edition Mc. Graw-Hill/Irwin Copyright © 2011 by The Mc. Graw-Hill Companies, Inc. All rights reserved.
Chapter 10 The Full Screen 10 -2
Difficulties in Concept Selection • One of the biggest challenges of product management. • What if every project under consideration has passed all the hurdles so far? • Lacking enough financial and human resources, the firm needs a good concept selection procedure, otherwise management must: – Guess (and select the wrong project) – Approve too many projects (and underfund everything). 10 -3
The Full Screen • A step often seen as a necessary evil, yet very powerful and with long-lasting effects. • Forces pre-technical evaluation, and summarizes what must be done. • Methods range from simple checklists to complex mathematical models. 10 -4
Purposes of the Full Screen • To decide whether technical resources should be devoted to the project. – Feasibility of technical accomplishment — can we do it? – Feasibility of commercial accomplishment — do we want to do it? • To help manage the process. – Recycle and rework concepts – Rank order good concepts – Track appraisals of failed concepts • To encourage cross-functional communication. 10 -5
Screening Alternatives • Judgment/Managerial Opinion • Concept Test followed by Sales Forecast (if only issue is whether consumers will like it) • Scoring Models 10 -6
A Simple Scoring Model Answer: Go boating. 10 -7
Source of Scoring Factor Models 10 -8
A Scoring Model for Full Screen Note: this model only shows a few sample screening factors. Factor Score (1 -5) Weighted Score Technical Accomplishment: Technical task difficulty Research skills required Rate of technological change Design superiority assurance Manufacturing equipment. . . Commercial Accomplishment: Market volatility Probable market share Sales force requirements Competition to be faced Degree of unmet need. . . 10 -9
The Scorers • Scoring Team: Major Functions (marketing, technical, operations, finance) New Products Managers Staff Specialists (IT, distribution, procurement, PR, HR) • Problems with Scorers: May be always optimistic/pessimistic May be "moody" (alternately optimistic and pessimistic) May always score neutral May be less reliable or accurate May be easily swayed by the group May be erratic 10 -10
Industrial Research Institute Scoring Model Technical success factors: Commercial success factors: • • • Proprietary Position Competencies/Skills Technical Complexity Access to and Effective Use of External Technology • Manufacturing Capability Customer/Market Need Market/Brand Recognition Channels to Market Customer Strength Raw Materials/Components Supply • Safety, Health and Environmental Risks Source: John Davis, Alan Fusfield, Eric Scriven, and Gary Tritle, “Determining a Project’s Probability of Success, ” Research-Technology Management, May-June 2001, pp. 51 -57. 10 -11
Alternatives to the Full Screen • • Profile Sheet Empirical Model Expert Systems Analytic Hierarchy Process 10 -12
A Profile Sheet 10 -13
Project New. Prod Screening Model • The idea is that by examining dozens of variables on real product successes and failures, one would be able to predict the likelihood of success of a new product at this early stage, and to identify weak spots that can be addressed before new product project approval. • Current practices splits the screening model into two groups: must-meet and should-meet criteria. • Must-meet are “yes-no” questions even one “no” screens the project out. • Should-meet are scales, and high scores offset (compensate for) any low scores. 10 -14
Criteria Based on the New. Prod Studies • Must-Meet Criteria (rated yes/no): – Strategic alignment – Existence of market need – Likelihood of technical feasibility – Product advantage – Environmental health and safety policies – Return versus risk – Show stoppers (“killer” variables) 10 -15
Criteria Based on the New. Prod Studies (continued) • Should-Meet Criteria (rated on scales): – Strategic (alignment and importance) – Product advantage (unique benefits, meets customer needs, provides value for money) – Market attractiveness (size, growth rate) – Synergies (marketing, distribution, technical, manufacturing expertise) – Technical feasibility (complexity, uncertainty) – Risk vs. return (NPV, IRR, ROI, payback) 10 -16
Analytic Hierarchy Process (AHP) • An analytical technique that gathers expert judgment and uses it to make optimal decisions. • In AHP screening models, the respondent identifies the key criteria in the screening decision, assessing which are the most important. Each choice (project) is rated on each criterion. • The AHP software calculates scores for each project and ranks them in terms of preferability. • AHP analytical models such as Expert Choice are commercially available. 10 -17
Diagram for Analytic Hierarchy Process (AHP) 10 -18
Abbreviated Output from AHP Recommendation: P 1 is preferred as it has the highest overall weight as calculated by AHP. How did this happen? P 1 was ranked by the managers as among the highest on all of the most important criteria. 10 -19
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