Published on March 20, 2014
University of Perpetual Help System Laguna Sto. Niño City of Biñan, Laguna College of Business and Accountancy Chapter 1 The New Product Process (New Product Management) Submitted by: Adarne, John Michael Alon, Nico Amandy, Rizza Mae Anorma, Mamie Argosino, Allen Joy BSBA-MM/ C3S
Submitted to: Dra. Yolanda Macauling The New Product Process What is New Product Process? • The next product in a company’s product line a design team goes through product development process steps. • A product that adopts or replaces an existing product.
• An old product package in a different way. STRATEGIC PLANNING -Is an organizations process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy. A successful Strategic Planning process should: • Describe the organization's mission, vision and fundamental values • Target potential business arenas and explore each market for emerging threats and opportunities • Understand the current and future priorities of targeted customer segments • Analyze the company's strengths and weaknesses relative to competitors and determine which elements of the value chain the company should make versus buy • Identify and evaluate alternative strategies • Develop an advantageous business model that will profitably differentiate the company from its competitors
• Define stakeholder expectations and establish clear and compelling objectives for the business • Prepare programs, policies, and plans to implement the strategy • Establish supportive organizational structures, decision processes, information and control systems, and hiring and training systems • Allocate resources to develop critical capabilities • Plan for and respond to contingencies or environmental changes • Monitor performance
Three main streams of activity feed strategic planning. 1. Ongoing marketing 2. Ongoing corporate planning 3. Special opportunity analysis They sort into four categories: 1. Underutilized resources 2. New resources 3. External mandate 4. Internal mandate Concept Generation -the act by which new concepts, or ideas are created. Also the definition of the second phase of the overall product innovation process, during which the concepts are created sometimes called idea generation or ideation. Pretechnical Evaluation -sometimes called screening. It is the stage when the ideas that came from the conception generation activity are evaluated.
Technical Development -This is the phase during which the item acquires finite form-a tangible good or a specific sequence of resources and activities that will perform an intangible service. Commercialization -Has described that the time or that decision where the firm decides to market a product. -should not mean the GO in a GO/NoGo decision. -the commercialization phase, for some products, is life in a pressure cooker. Launch -The debut of a product into the market. The product launch signifies the point at which consumers first have access to a new product. The Process Should Meet the Condition of the 13 Key Concepts Given in Chapter 2 • When a process is failing to produce, we usually find that one or more (often several) of the key concepts have been lost.
• Another of the 13 key concepts forces managers to be aware that they are developing three things, not just one. Making the middle stream of activity (evaluation) mandatory automatically forces the team to deal with the three primary causes of new product failure: need, meeting need, and marketing.
• The last of the 13 key concepts, called continuous new product process development, means that we have to measure the productivity of the process we are using. • Measuring performance requires preset management guidelines, usually called metrics, so now those who develop new processes must spell out exactly what that process is to produce, when, how much, etc. No more of this “developing the process on the run.” unless, of course an emergency demands it. • Stage gates- points where a stage of activity ends and process Example Before technical development begins full force, we like to have assurance from the intended end user (and that person’s or firm’s network of advisors) that what we intend to develop will indeed meet needs they have. • The stage gate should not be a toll gate, where everyone stops while some authority on high is appealed to, makes some ruling, and then allows work to resume.
• The first stage in most processes is strategic planning—opportunity identification and evaluation, combined with a statement how that opportunity will be used. • The end point is a strategy, and in this book is called a product innovation charter. • Some people have called stage gates info-gates. Some people called them accomplishments, or popular today, deliverables The Process should allow the Team and Its support group substantial degrees of freedom
• Empowerment can loosen up the stage gates, but there are many other ways team can be hobbled. Remember that a new products team is a horizontal form of management. Creating new products takes us across all function, thus risking conflict with all of the chimney’s or silos--- the functions, such as marketing and manufacturing. Each of the function (and not just the big ones) has its own rules or method of operation, sometimes call paradigms. Each is apt to be headed by a power player. The New Product Process must be flexible to changing conditions Change can be expected in what the customers wants, how competitors might respond and the new technologies being applied in the product. The New Product Process must deal with especially critical points in the development Moments of truth The customer and organization come into contact with one another in a manner that gives the customer to either change an impression about the firm. The New Product Process should integrate the team with the rest of the firm and the rest of the world
The New Product Process should permit a smooth launch A successful new product launch takes research, planning and a skilled and knowledgeable marketing team. The New Product Process should Organizational learning is an area of knowledge within organizational theory that studies models and theories about the way an organization learns and adapts Implication for Aspiring New Product Managers • Be multifunctional – have experience in more than one function • Be risk takers – willing to do whatever is necessary to bring a product to market • Be general manager types – more interested in managing than doing • Be a combination of optimist, realist; aggressor and team player, leader and follower • Have a strong creative bent to achieve better product characteristics and to carve out new ways of doing things • Be comfortable in environments where chaos and confusion seem to reign. Be able to work with depressives, euphorics, and those with no emotion at all
8 STEP PROCESS PERFECTS NEW PRODUCT DEVELOPMENT Every entrepreneur knows that productivity is one of the key ingredients for successful product development. One of the two key processes in Robert‟s Rules of Innovation is the NEW PRODUCT DEVELOPMENT PROCESS. A formalized, NPD process – also referred to and best practice: the Stage Gate® Process – is a must, from simple to sophisticated. The New Product Development process is often referred to as The Stage-Gate innovation process, developed by Dr. Robert G. Cooper as a result of comprehensive research on reasons why products succeed and why they fail. When teams collaborate in developing new innovations, having the following eight ingredients mixed into your team‟s new product developmental repertoire will ensure that it‟s overall marketability will happen relatively quick, and accurately – making everyone productive across the board. Step 1: Generating Utilizing basic internal and external SWOT analyses, as well as current marketing trends, one can distance themselves from the competition by generating ideologies which take affordability, ROI, and widespread distribution costs into account. Lean, mean and scalable are the key points to keep in mind. During the NPD process, keep the system nimble and use flexible discretion over which activities are executed.
You may want to develop multiple versions of your road map scaled to suit different types and risk levels of projects. Step 2: Screening The Idea Wichita, possessing more aviation industry than most other states, is seeing many new innovations stop with Step 2 – screening. Do you go/no go? Set specific criteria for ideas that should be continued or dropped. Stick to the agreed upon criteria so poor projects can be sent back to the idea-hopper early on. Because product development costs are being cut in areas like Wichita, “prescreening product ideas,” means taking your Top 3 competitors‟ new innovations into account, how much market share they‟re chomping up, what benefits end consumers could expect etc. An interesting industry fact: Aviation industrialists will often compare growth with metals markets; therefore, when Boeing is idle, never assume that all airplanes are grounded, per se. Step 3: Testing The Concept As Gaurav Akrani has said, “Concept testing is done after idea screening.” And it is important to note, it is different from test marketing. Aside from patent research, design due diligence, and other legalities involved with new product development; knowing where the marketing messages will work best is often the biggest part of testing the concept. Does the consumer understand, need, or want the product or service?
Step 4: Business Analytics During the New Product Development process, build a system of metrics to monitor progress. Include input metrics, such as average time in each stage, as well as output metrics that measure the value of launched products, percentage of new product sales and other figures that provide valuable feedback. It is important for an organization to be in agreement for these criteria and metrics. Even if an idea doesn‟t turn into product, keep it in the hopper because it can prove to be a valuable asset for future products and a basis for learning and growth. Step 5: Beta / Marketability Tests Arranging private tests groups, launching beta versions, and then forming test panels after the product or products have been tested will provide you with valuable information allowing last minute improvements and tweaks. Not to mention helping to generate a small amount of buzz. WordPress is becoming synonymous with beta testing, and it‟s effective; Thousands of programmers contribute code, millions test it, and finally even more download the completed end-product.
Step 6: Technicalities + Product Development Provided the technical aspects can be perfected without alterations to post-beta products, heading towards a smooth step 7 is imminent. According to Akrani, in this step, “The production department will make plans to produce the product. The marketing department will make plans to distribute the product. The finance department will provide the finance for introducing the new product”. As an example; In manufacturing, the process before sending technical specs to machinery involves printing MSDS sheets, a requirement for retaining an ISO 9001 certification (the organizational structure, procedures, processes and resources needed to implement quality management.) In internet jargon, honing the technicalities after beta testing involves final database preparations, estimation of server resources, and planning automated logistics. Be sure to have your technicalities in line when moving forward. Step 7: Commercialize At this stage, your new product developments have gone mainstream, consumers are purchasing your good or service, and technical support is consistently monitoring progress. Keeping your distribution pipelines loaded with products is an integral part of this process too, as one prefers not to give physical (or perpetual) shelf space to competition. Refreshing advertisements during this stage will keep your product‟s name firmly supplanted into the minds of those in the contemplation stages of purchase.
Step 8: Post Launch Review and Perfect Pricing Review the NPD process efficiency and look for continues improvements. Most new products are introduced with introductory pricing, in which final prices are nailed down after consumers have „gotten in‟. In this final stage, you‟ll gauge overall value relevant to COGS (cost of goods sold), making sure internal costs aren‟t overshadowing new product profits. You continuously differentiate consumer needs as your products age, forecast profits and improve delivery process whether physical, or digital, products are being perpetuated. Remember: The Process Is Loose The entire new product development process is an ever evolving testing platform where errors will be made, designs will get trashed, and loss could be recorded. Having your entire team working in tight synchronicity will ensure the successful launch of goods or services, even if reinventing your own wheel. Productivity during product development can be achieved if, and only if, goals are clearly defined along the way and each process has contingencies clearly outlined on paper. Referrence: Brands, Robert. (2013) Retrived on May 27, 2013 from http://www.innovationexcellence.com/blog/2013/05/27/8-step-process-perfects-new- product-development/
Top 10 Reasons Why New Products and Services Fail Why do fewer than 10%of all new products/services produce enough return on the company‟s investment to survive past the third year? Here‟s our Top 10 list of reasons new products and services fail to achieve performance objectives: 1. Marketers don‟t do a good job of assessing the marketing climate–many factors which impact marketing success are poorly understood; others are ignored all together. 2. All too often marketer‟s select a target group based on personal judgement (e.g., “let‟s go after the heavy users!”) 3. A messaging strategy which fails to ignite excitement about the new offering.
4. Some marketers actually design a product or service to maximize “appeal,” a sure-fire way to guarantee failure. 5. Marketers go with a pricing strategy which is not based on serious research or sound theory. 6. The advertising campaign generates an insufficient level of new product/new service awareness. 7. The new brand takes more share away from the parent brand than it does from competitors. 8. Over-optimism about the marketing plan leads to a forecast that cannot be sustained in the real world. 9. The marketing plan was not well implemented in the real-world. The gap between what was planned and what was achieved is substantial. 10. Marketers throw in the towel too soon. They pull the new product or service believing it and its marketing plan cannot be revived, when, in fact, there is potential for resurection. Referrence: http://www.copernicusmarketing.com/our-thinking/blog/2011/08/17/top-10- reasons-why-new-products-and-services-fail/
Product Fails in the Market Business Case is Flawed – This is where we would capture things like a product strategy that is not profitable, for example, your model was dependent on exponential growth – so even though you had consistently growing market share, it wasn‟t enough for the product to be considered “a success” by you. Picked the Wrong Market – Maybe this market is about to go away, like buggy whips or audio cassettes. Maybe the competitors in this market are just too good. Maybe entering this market is too divergent from your corporate strategy and dilutes focus and investment in your company‟s other products. Another example would be if your team does not have the skills and resources needed to win in a particular market. Takes Too Long to Enter Market – Whatever it is you‟re doing to enter the market, it took you too long. Competitors have “out-gunned” you, your customer‟s needs have changed, etc. This is to capture causes where even if everything else was good, you simply didn‟t move quickly enough. At first blush, I expect organizational problems (lack of alignment, bureaucracy, insufficient resources) will all land here.
Doesn’t Solve the Right Problems – This is where most product managers focus most of their time – making sure we‟re actually solving the right problems (the ones customers are willing to pay to solve). Problems of design – where weintended to solve the right problem, but the proposed solution doesn‟t cut it – would not be in this branch – they would be in the “not good enough” branch. Positioning & Sales Approach is Wrong – For the first iteration, this is my catch-all for marketing and sales. All of the problems that are “your potential customers don‟t think of your product as a solution to their problems (even though it is).” Also the problems of “your potential customers decided not to purchase (when they should have)” and “your potential customers have never heard of your product.” This is definitely an area where you can contribute more than I can to the framework. How would you (product marketing managers, I‟m looking at you) frame this? Product is Not Good Enough – Execution is key here. Not solving problems completely (although that might move to the “right problems” branch) is an example. Bad design is an example – both bad user-experience and bad architecture. Poor execution also lands here – broken windows, sloppy implementations, poor quality. For this branch to work, “product” is not just theproduct that your development team builds, but also your customer relationships, distribution, services, etc.
Referrence: http://tynerblain.com/blog/2012/02/08/why-do-products-fail/ New Product Development Process The New Product Development (NPD) Process, also known as Product Realization Process (PRP), is a company's formal process for controlling and monitoring the flow of ideas into successful product launches. In leading organizations, this is a structured process with the following typical objectives: Encourage and facilitate the review of a large number of new ideas or concepts Through rigorous analysis and decision making at specific review points, prioritize these to a few appropriately resourced programs with the highest likelihood of market success. Minimize the number of products that are cancelled in the later (most expensive) development stages or are released with unsuccessful results Accelerate time to market and reduce break-even times for the product program Continuous improvement of the development process The process can be visualized as a funnel with a large number of new product ideas entering the concept stage, narrowing to a fewer number of fully resourced product programs in subsequent stages. Separating each stage is a gate or phase review where a decision is made to kill the product, enter into the next stage or redirect back to a previous stage for additional work. A typical development process is show below:
The decision making team at the phase/stage reviews are senior executives who have the authority for approving and staffing new programs. Also called the Program Review Board or Gatekeepers, this team normally consists of the lead executive in the organization and leaders of key functional areas, including engineering, product management and manufacturing. Through these decisions, the Product Review Board manages the development pipeline, authorizes new programs, sets and communicates priorities, and allocates the necessary resources. Normally a champion with a new idea will schedule the initial (concept) review with the Product Review Board. He or she will informally solicit support from others in the organization as needed to prepare for the review. The focus of the concept stage is
to analyze the market opportunity for the product, and to develop a preliminary financial analysis and risk assessment. The concept review presentation will normally include a recommended list of cross-functional team members required to take the program through the next stage, and an hours estimate. The proposed team members should be discussed with the appropriate functional managers prior to the review. If approved at the concept review, the next stage of the product program will be staffed and scheduled based on the availability of these core project team members. Development Stages and Stage Reviews The visual illustration above shows an example product development process with five distinct stages. To better understand the activities of each stage, and the focus of the associated stage review, click on the following: Concept Stage The purpose of the concept stage is to rapidly evaluate a new product opportunity. This activity will be performed by a product champion with support from others in the organization as needed. The deliverable in this stage is the product concept proposal which is presented to the Product Review Board at the concept review. If approved at the concept review, the product program will be staffed and scheduled based on the availability of the project core team members. The project will then enter the definition/business case stage.
Development Stage The objective of the development, or implementation, stage is to develop the product based on the specifications and development plan approved at the Business Plan review. This stage encompasses the major design/development steps including software and hardware development, tooling, packaging design and prototype building. Testing Stage The objective of this stage is to complete product testing and analyze the readiness for volume production and the market launch. The steps in this stage include pilot manufacturing, testing and manufacturing process validation. Deployment (Launch) Stage The final stage of the New Product Development Process, the Deployment or Launch stage, includes the remaining steps required for full general release of the product. This stage includes ramp up to volume production, marketing and launch plan implementation, distribution and support. The post launch review should take place at least three to six months following the initial release of the product. In the post launch review, the overall product performance should be accessed as well as the level of customer acceptance/satisfaction with the product. Significant product issues should be covered as well as potential product enhancements. Lastly, there should be a review of the process in general, and any recommendations for corrective actions. Referrence: Kapp, Michael. (2009) from http://www.productstrategy.net/product- development-process/
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