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New Product New Product DevelopmentDevelopment

Kent

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Introduction Introduction

Overview New Product Development Process– 5 Stage Process

Competitive Weapon – SpeedCompetitive advantageHigher ProfitabilityFewer Surprises – New Product captures

conceived market opportunity

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IdeationIdeation

Categories of New Products:1. New-to-the-World Products

2. New Product Lines

3. Additions to Existing Product Lines

4. Improvements or revisions to existing products

5. Repositioning

6. Cost Reductions

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Roles & ResponsibilitiesRoles & Responsibilities

Interdisciplinary Teams– Marketing, Product Management, R&D, Technology

Group, Sales, Operations, Treasury, Finance, Legal, Compliance, Risk, Privacy, Communications

Finance Touch Points– Approves R&D expenditures, Funding requests for

technology, market studies, etc. – Business Case Development– Planning and Forecasting– Partners with Treasury, Product Management, Line of

Business Owner(s), Sales, etc.

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Preliminary Investigation Preliminary Investigation (Stage 1)(Stage 1)

Initial Screening Preliminary Market Assessment Detailed Market Study

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Build Business Case Build Business Case (Stage 2)(Stage 2)

Sixty-three percent of firms conduct a business or financial analysis prior to moving into Development– Determine Time to Break-even (recovery of

development costs)– Need more multi-departmental inputs, more

market information & inputs from customers– Need more formal/consistent procedures

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Product Development Product Development (Stage 3)(Stage 3)

Design and Development of the Product– Technology – Sales Training– Communications – External and Internal

Changes in Product Design– Technology solution may dicate product

changes In-House Product Testing

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Customer Product Testing Customer Product Testing (Stage 4)(Stage 4)

Undertaken in 66% of projectsGive a sample or prototype of product to

the customer at no charge or let try it with feedback loop

Rigorously designed customer test, complete with written testing procedures

On-site customer user test (IBMs Usability Testing lab)

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Trial SellTrial Sell

Test market– Less than 1/4th of projects feature an attempt

to gauge market acceptance based on a limited sell

Trial Production– Test the production system itself

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Pre-Rollout Business AnalysisPre-Rollout Business Analysis

Full Pre-Launch Business Review– Detailed Financial Analysis– Market Information Review

Sales forecasting Marketing costs

– Detailed Cost Review– Final Go/No Go decision based on market

acceptance or test market study review

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Full Production and Market Full Production and Market Launch Launch (Stage 5) (Stage 5)

Production Start up– Straightforward, few changes

Market Launch – Formal, distinct, and identifiable date– Clear Marketing Objectives– Coordinated launch between sales, service,

production and advertising– Sales force trained and ready

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PitfallsPitfalls

Primary reasons New Product Launch’s fail:– From Idea to Launch took too long– Financial reward not realized - fell below sales

and profit targets– Lack of quality process

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QuestionsQuestions

Q&A