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CHAPTER 5

CHAPTER 5. New Product/Service Development and Portfolio Models. New product development models. 1) Exploration - the search for new product ideas to meet company objectives. 2) Screening - a quick analysis to determine which ideas are pertinent and merit a more detailed study.

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CHAPTER 5

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  1. CHAPTER 5 New Product/Service Development and Portfolio Models

  2. New product development models 1) Exploration - the search for new product ideas to meet company objectives. 2) Screening - a quick analysis to determine which ideas are pertinent and merit a more detailed study. 3) Business analysis - the expansion of the idea into a concrete business recommendation including product features and a program for the product. 4) Development - turning the product idea into a ready-made product, demonstrable and producable. 5) Testing - the commercial experiments necessary to verify earlier business judgments about the product. 6) Commercialization - full-scale production and launching of the product into the marketplace.

  3. Marketing Objectives Environmental Analysis Formulation of new service objectives and strategy Internal Sources External Sources Idea generation Idea screening Customer Contact Personnel Prospects Concept development Concept testing Budget Development Market Assessment Business analysis Project authorisation New service development model (1)

  4. Users Service design and testing Operations Personnel Process and system design and testing Marketing programme design and testing Users All Personnel Personnel training Service testing and pilot run Users Test marketing Full-scale launch Post-launch review New service development model (2) Source: Scheuing and Johnson (1989)

  5. Second generation stage-gate new product system Full Detailed Testing Production Investigation & & Market (Business Case) Preliminary Validation Launch Development Preparation Investigation Stage Stage Stage Stage Stage Gate Gate Gate Gate Gate $ Idea 3 1 2 4 5 1 2 3 4 5 Initial Second Decision Post- Pre- Post Screen Screen on Development Commercia- Imple- Business Review lization mentation Case Business Review Analysis Source: Cooper and Kleinschmidt (1991)

  6. $ $ Third generation new product system Stage 1: Stage 3: Stage 5: Preliminary Development Full Production & Investigation Market Launch Gate Gate Gate Gate Gate IDEA 1 2 3 4 5 Stage 2: Post Stage 4: Detailed Implementation Testing and Investigation Review Validation Source: Cooper (1994)

  7. Goals of portfolio management for new products (i) Maximizing the value of the portfolio Allocating resources so as to maximize the valueof the portfolio against one or more corporate objectives (e.g. profitability). (ii) Achieving a balanced portfolio Obtaining a desired balance of new products-projects in terms of certain parameters, such as durability of competitive advantage (short-term, long-term), risk (high, low), markets, product categories, technology, etc. (iii) A strong link to strategy Ensuring that: (1) the final portfolio of new products reflects the corporate strategy; (2) the breakdown of expenses across projects, products, markets, etc. is directly tied to corporate strategy; and (3) all projects and products are on-strategy.

  8. Tools and techniques of portfolio management for new products

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