New Product Development

1. New Product Development

2. A variety of perspectives from which to analyse the development of new products

3. Some thing to consider… Figure 9.6 Dropout rates for R&D projects Source: Adapted from D.L. Babcock (1996) Managing Engineering Technology: An Introduction to Management for Engineers, 2nd edn, Prentice Hall, London.

4. Stages in NPD Idea generation Commercialization> • Test • Marketing Idea screening • Product • development Concept development and testing Marketing Strategy development Business strategy http://www.tutor2u.net/business/presentations/marketing/newproductdevelopment/default.html

5. _________________________ From • R&D dept • Production team • Sales team • Employees • Customers • Competition • External sources • Market research > Don’t forget the social determinist and Individualist school of innovation!

6. Creativity versus innovation • Creativity is the generation of new ideas. • Innovation is the implementation of creative ideas. For Example: if a scientist has a number of ideas about how to build a household robot, she is creative. If she applies those ideas to build a household robot, she is innovative. http://www.businessinnovationinsider.com/images/2006/05/Creativity%20to%20innovation.jpg

7. 45% of lucrative business ideas — whether breakthrough products or services, new uses for old ones, or ways to cut costs— come from employees…PricewaterhouseCoopers

8. Individual creativity versus organisational creativity Individual creativity • People can learn to be more creative by reading books, participating in workshops, learning creative thinking techniques etc Organisational creativity • Making an organisation more creative and more innovative is much more complex, requiring the establishment of a culture of innovation together with tools for creative collaboration;

9. Creative collaboration a greater variety of people participating in the idea generation process equals a higher level of creativity and innovation.

10. variety of people with different backgrounds and areas of expertise required • at minimum, that teams are made up of people from different divisions within the company. At best, those people will also come from different locations or countries.

11. Collaboration can happen in … • Creative teams • Management placed for project or • Self created by asking for assistance by friends (though usually from same area of expertise) • Brainstorming groups • When appropriate, business partners, customers and others from outside the • company should be brought in to participate. • Networking • seek the assistance of a colleague for ideas, advice or help – across company • staff directories and discussion forum tools can help encourage • people to network outside their departments and immediate contacts • Open collaboration • through web based discussion forums • a totally open environment to solve problems.

12. 2. Screening ideas • Screen good ideas and drop poor ones asap. • Checked for • Technical feasibility • Financial feasibility and marketability • Evaluate its demand, marketability, and profit potential • Give ratings to ideas >

13. Criteria for evaluating new products • Sufficient demand ? • Profitable? • Likely payback period? • Fit firm’s image ? • Lifecycle of the product ? • State of market and competitors ? • Capability company to successfully produce and market product ? • Ease of manufacture ?

14. Remember I.Ansoff’s matrix

15. Product vs market (extended Ansoff’s growth matrix) Product Market penetration

16. 3. Concept development • Detailed version of new product (in documented user terms – a user requirements / functional list) • Turing ideas into tangible products – customers perceive as being valuable • Concept testing : with groups of consumers Nokia has released images of Aeon, a concept phone that combines two touch-sensitive panels mounted on a fuel-cell power pack Devices like this are all part of Nokia's vision of 'wearable technology'. Users could wear the lightweight panels as a badge, or connected to a wrist-strap.

17. 4. Marketing strategy development • Initial marketing strategy based on product concept • Formal market research for product’s potential

18. 5.Business analysis • Review of sales, costs, profit projection • Estimate potential sales, income, breakeven point, profit and return on investment from new ideas

19. 6. Product development • R& D turns idea into product • Develop product concept into physical product, via prototypes or simulations • Engineering and production issues resolved via this process • Consider materials, production processes, quality and safety

20. Design mix • Formal design – aesthetics • Functional design – performance, ,does it work is it reliable ? • Economy of manufacture – does design allow manufacture efficiently and cost that allows profit ?

21. 7. Test marketing • Pilot in small geographical area • Field experiment in realistic setting • Aims: • Forecast probable results of a national launch • Test operational effectiveness of the marketing plan • Identify possible problems • Assess customer reactions

22. Problems with test marketing: • Test market may not be true indicator • Environment may change from test to national launch • Competition may disrupt • By exceptional marketing activity • Launching own product • Alerts competition to new product • Simulated test marketing is getting more sophisticated

23. 8.Commercialisation/ product launch • Introducing new product into the market • Timing is critical for success • Heavy promotional expenditure • Choice of introductory pricing • Well targeted and positioned

24. We have already seen organisational creativity and collaboration in the form of : • Creative teams • Brainstorming groups • Networking • Open collaboration • These ideas can be extended to serve a NPD cycle …

25. Idea generation Commercialization • Test • Marketing Idea screening • Product • development Concept development and testing Marketing Strategy development Business strategy Models of NPD • Departmental • Activity stage (and concurrent engineering) • Cross functional • Decision stage models • Conversion process • Responsive Models Network models >

26. Departmental • Each department is responsible for certain tasks and once finished ‘passed over to next dept’ – over the wall’ • Ad • Each dept ‘knows what IT needs to do’ • Disad • Forward and backwards • Lots of rework

27. Departmental • R&D provides interesting ideas • Engineering – develop prototypes • Manufacturing – viable mass manufacturing • Marketing – then plan and conduct the launch

28. Activity stage • Similar to departmental • Build around the activities • Lots of feedback loops • Simultaneous nature of activities (varying in intensity) • Ad • Groupings according to activity • Disad • Even more passing and therefore, procrastination

29. An activity-stage model

30. Cross functional (TEAMS) • Dedicated team representing people from a variety of functions • Ad • Full representation • Disad • Organisation and project management disciplines need to be well developed

31. Decision stage models • Set of decisions points or gateways must be passed. • Iterative and uses f/b loops http://www.stage-gate.dk

32. Conversion process • Numerous inputs into a black box, converted into a product output • Input’s such as customer requirements, technical ideas, manufacturing capabilities all provide a product output • Not disciplined , or measurable, or defined Response model • Behaviourist approach to decisions • Organisational response to new proposals and ideas http://www.blackwell-synergy.com/doi/abs/10.1111/j.1467-9310.2006.00413.x for articles on innovation (journals)

33. Network models – most recent thinking • Accumulation of knowledge from • variety of sources eg marketing, manufacturing, R&D • And over the progression of project from initial idea to development PLUS • external linkages (additional information flow into organisation)

34. A network model of NPD