Download - New Product Development01-07

Human Resources University

“N P d t D l t”

y

“New Product Development”

Year4, Semester 2

Lectured by: Mr. Eng Leaphea,MBATel: 012 722076Tel: 012 722076

Email: [email protected] ID: rikreaymagazineSkype ID: rikreaymagazine

128/03/2012

S lf I t d tiSelf-Introduction

Course: New Product DevelopmentLecturer: Mr.Eng Leaphea, MBA

Tel: 012 722076Email: [email protected]

rikreaymagazine (skype)Facebook.com/eng.leaphea

I t t ’ P filInstructor’s ProfileName: Eng Leaphea (Mr.)Name: Eng Leaphea (Mr.)Date of Birth: February 05, 1979Sex: MaleNationality: Cambodian C t t H/P 012 722076Contact: H/P: 012 722076Email: [email protected] Background

Working ExperiencesWorking Experiences02-04-2010 to 02-12-2010 10-12-2010 to Present

Working Experiences

• 2005 – Present • Lecturer

g p

Human Resources University Course: B M k Basic Marketing; Marketing Management; Public Relation; Strategic Marketing; New Product Development. Human Resource Management Human Resource Management

28/03/2012 5

Course Learning Objectives:Course Learning Objectives:

• Students will learn as follows:Students will learn as follows:– Chapter01: New Product in Global Marketing

Chapter02: New Product Development Process– Chapter02: New Product Development Process– Chatper03: Overview in New Product

DevelopmentDevelopment– Chapter04: Design

Chapter05: Special Issues in Development– Chapter05: Special Issues in Development– Chapter06: Product Use Testing

Ch t 07 St t i L h Pl i– Chapter07: Strategic Launch Planning28/03/2012 6

GradingGrading

• Your course grade will be determined as Your course grade will be determined as follows:– 20% on your attendance;20% on your attendance;

– 15% on the quality of your individual assignment solutionsassignment solutions

– 15% on the midterm test; and– 50% on the final exam.

28/03/2012 7

Course OutlineCourse OutlineWeek Description Hours1 Course Introduction 3 hours1 Course Introduction

Chapter01: New Product in Global MarketingNew Products Why New Product Succeed? k f d l

3 hours

Risks of New Product DevelopmentNEW PRODUCT LAUNCHES

2 Chapter01: New Product in Global Marketing 3 hours2 Chapter01: New Product in Global MarketingCHALLENGES IN NEW PODUCT DEVELOPMENTWhy do new products fail?

3 hours

y p f Several factors tend to hinder new-product development IDENTIFYING NEW PRODUCT IDEAS The following questions are relevant to this task: The following questions are relevant to this task:

28/03/2012 8

Course OutlineCourse OutlineWeek Description Hours3 Chapter02: New Product Development Process 3 hours3 Chapter02: New Product Development Process

ORGANIZATIONAL ARRANGEMENTOrganizing new-product developmentMANAGING THE DEVELOPMENT PROCESS:

3 hours

IDEAS Ten Ways to Create New-Product Ideas Idea Screening screening ideas, the company must avoid two types of screening ideas, the company must avoid two types of errorsMANAGING THE DEVELOPMENT PROCESS Concept Development and Testing

4 Chapter02: New Product Development Process Concept TestingMarketing Strategy Business Analysis

3 hours

Business Analysis

28/03/2012 9

Course OutlineCourse OutlineWeek Description Hours5 Chapter03: Overview in New Product Development 3 hours5 Chapter03: Overview in New Product Development

Creating New ProductsCORPORATE RESPONSEMARKETING RESPONSE

3 hours

VARIABLES AFFECTING NEW PRODUCT DEVELOP Change and Complexity InvisibilityInvisibility

Expense Control

Need for Speed “Can Do”

PATHS TO SUCCESS

28/03/2012 10

Course OutlineCourse OutlineWeek Description Hours6 Chapter04:Design 3 hours6 Chapter04:Design

What is Design? The Role of Design in the New Products Process Contributions of Design to the New Products Process

3 hours

Contributions of Design to the New Products Process Product Architecture

7 Chapter04:Design ( continue)Managing the Interfaces in the Design Process

3 hoursg g g

Participants in the Design Process Improving the Interfaces in the Design Process Computer-Aided Design and Design for

ManufacturabilityManufacturability

28/03/2012 11

Course OutlineCourse OutlineWeek Description Hours8 Chapter05: Special Issues in 3 hours8 Chapter05: Special Issues in

Development Speed to Market

3 hours

1- Techniques for Speeding Time to Market2- Overall Principles and Guidelines

The Role of Top Management during Development

9 Chapter05: Special Issues in Development Functional Interface Management

1- Managing the Interfaces

3 hours

g g2- Overall Principles and Guidelines

Strategies for Global Product Innovation

28/03/2012 12

Course OutlineCourse OutlineWeek Description Hours10 Chapter06: Product Use Testing 3 hours10 Chapter06: Product Use Testing

What Is Product Use TestingIs Product Use Testing Really

3 hours

Is Product Use Testing Really Necessary?1- Regarding Competitors’ Reactionsg g p2- Customer Needs Are Complex Sets3- Can We Deliver A Total Quality P d t?Product?

28/03/2012 13


Knowledge Gained from Product Use Testing

3 hours

Use TestingBeta testsGamma Testing gDiagnostic InformationDecisions in Product Use Testing H Sh ld W R h th U How Should We Reach the User

Group?

28/03/2012 14


How Much Explanation Should We Provide?

3 hours

Provide? How Much Control over Product Use Should There Be? Special ProblemBe Alert to Strange ConditionsSt t i f Gl b l P d t Strategies for Global Product Innovation

28/03/2012 15

Course OutlineCourse OutlineWeek Description Hours

13 Ch 07 3 h13 Chapter07: Strategic Launch PlanningI. SettingThe Strategic GivensR i iti th St t i G l

3 hours

Revisiting the Strategic Goals

14 Ch t 0714 Chapter07: Strategic Launch PlanningStrategic Platform DecisionsThe Target Market Decision

28/03/2012 16

Course OutlineCourse OutlineWeek Description Hours15 Chapter07: Strategic Launch Planning 3 hoursChapter07: Strategic Launch Planning

VI. Product PositioningVII. Creating Unique Value for the Chosen TargetVIII. Branding and Brand g

ManagementIX. Packaging

Number of weeks 15 weeksTotal hours 45 hoursCredits 3

28/03/2012 17

ChapterChapterNew Product in Global

Marketing1828/03/2012

NEW PRODUCTS------------------------------

What Is a New Product ? New products can be new to the New products can be new to the

marketplace or new to a company.

A new product for a company may or may A new product for a company may or may not be a part of an existing product line. A product line is a group of products that are p g p pclosely related because they function in a similar manner, are sold to the same customer groups are distributed through customer groups, are distributed through the same dealers, or all within certain price ranges. g

19By: Eng Leaphea, MBA

28/03/2012

New products can be classified as:New products can be classified as:• New-to-the-world products: • New product lines:• Additional to existing product lines:Additional to existing product lines:• Improvements in or revision to existing

d t products: • Repositioning: p g• Lower cost products:


28/03/2012

Why New Product Succeed?yThese are:• Introducing a unique but superior productIntroducing a unique but superior product.• Having market knowledge and marketing

proficiencyproficiency.• Having technical and production synergy

and proficiencyand proficiency.• Being in a large, high-need growth market. • Avoiding introducing a high priced • Avoiding introducing a high-priced

product with no economic advantage.


28/03/2012

A idi titi k t ith Why New Product Succeed? Avoiding a competitive market with

satisfied customers.

Avoiding products “new to the firm”.g p

Having a strong marketing Having a strong marketing communications and launch effort.

Having a market-derived idea with considerable investment involved.


28/03/2012

Risks of New Product Developmentp

This is due to a variety of factors: Costs will continue to rise. Competition will intensify, particularly from foreign

producers.producers. The life of products is likely to become shorter as

competitors duplicate existing products more quickly. The need for a more rapid pace in new product The need for a more rapid pace in new product

development may not be met by the development of new technologies.

Markets will continue to be fragmented, requiring companies to aim new products as smaller target segments.

Investment risks are likely to increase because of high Investment risks are likely to increase because of high interest rare.


28/03/2012

NEW PRODUCT LAUNCHESNEW PRODUCT LAUNCHES----------------------

• Evidence of Market InterestA t M k t E l ti• Accurate Market Evaluation

• Good Judgment in Development• Reasons for Success• Position, Promotion, and PricingPosition, Promotion, and Pricing


28/03/2012

CHALLENGES IN NEW PODUCT DEVELOPMENTDEVELOPMENT

---------------------- Companies that fail to develop new products are

putting themselves at great risk. Their existingproducts are vulnerable to changing customerproducts are vulnerable to changing customerneeds and tastes, new technologies, …

New technologies are especially threatening. Mostg p y gestablished companies focus on incrementalinnovation, disruptive technologies .N d t ti d t f il t di t bi t New products continued to fail at a disturbing rate.Recent studies put the failure rate of new consumerproducts at 95 percent in the United States and 90p ppercent in Europe.


28/03/2012

Why do new products fail? A high-level executive pushes a favorite idea

through in spite of negative market research f dfindings.

The idea is good, but the market size is overestimatedoverestimated

The product is not well designed. The product is incorrectly positioned in the market, The product is incorrectly positioned in the market,

not advertised effectively, or overpriced. The product fails to gain sufficient distribution

coverage or support. Development costs are higher than expected.

C tit fi ht b k h d th t d Competitors fight back harder than expected.26

By: Eng Leaphea, MBA28/03/2012

Several factors tend to hinder new-product development

Shortage of important ideas in certain areas

Fragmented markets

Social and governmental constraints

f d l Cost of development

C it l h t Capital shortages

Faster required development time Faster required development time27


IDENTIFYING NEW PRODUCT IDEAS--------------

Major sources of new-product ideas include internal sources customers competitors internal sources, customers, competitors, distributors and suppliers, and others

• It can pick the brains of its executives • It can pick the brains of its executives, scientists, engineers, manufacturing, and salespeople salespeople.

• Some companies have developed successful “entrepreneurial” programs that successful entrepreneurial programs that encourage employees to think up and develop new-product ideas.p p


28/03/2012

Good new-product ideas also come from watching d li t i t t Th and listening to customers. The company can

analyze customer questions and complaints to find new products that better solve consumer problem new products that better solve consumer problem.

Competitors are another good source of new-product ideas. p

Finally, distributors and suppliers contribute many good new-product ideasg

Other idea sources include trade magazines, shows, and seminars; government agencies; new-product

l d kconsultants; advertising agencies; marketing research firms; university and commercial laboratories; and inventorslaboratories; and inventors.


28/03/2012

THE NEW-PRODUCT DEPARTMENT----------------

An organizational design for addressing these requirements is a new-product development. the function of such a department is four foldfunction of such a department is four fold

To ensure that all relevant information sources are continuously tapped for new-product ideas; continuously tapped for new product ideas;

To screen these ideas to identify candidates for investigation;

To investigate and analyze selected new-product ideas; To ensure that the organization commits resources to

the most likely new-product candidates and its continuously involved in an orderly program of new-product introduction and developmentproduct introduction and development.


28/03/2012

The following questions are relevant to this task: How big is the market for this product at various

i ?prices? What are the likely competitive moves in response to

our activity with this product?our activity with this product? Can we market the product through our existing

structure? If not what changes and what costs will be structure? If not, what changes and what costs will be required to make the changes?

Given estimates of potential demand for this product p pat specified prices with estimated levels of competition, can we source the product at a cost that

ll ld d fwill yield an adequate profit?31


AssignmentAssignment

• Find out a company in Cambodia then do Find out a company in Cambodia, then do as follows:

List their products they are operating;– List their products they are operating;– Analyze their product Lines

28/03/2012 32

hChapter 2pNew Product New Product

Development Process p(NPDP)

By: Eng Leaphea, MBA28/03/2012 33

ORGANIZATIONAL ARRANGEMENTNew-product development requires seniormanagement to define business domains,g ,product categories, and specific criteria.

Budgeting for new-product development

• Senior management must decide how much tobudget for new-product development.

• R&D outcome are so uncertain that it is difficult touse normal investment criteria.


Organizing new-product developmentg g p p

• Many companies assign ibilit f d t responsibility for new-product

ideas to product managers, but… • Large companies often establish a g p

new-product department headed by a managerTh d t t’ j • The department’s major responsibilities include generating and screening new ideas, working g gwith the R&D department, and carrying out field testing and commercializationcommercialization.


MANAGING THE DEVELOPMENT PROCESS: IDEAS

Idea GenerationIdea Generation• The new-product development process starts

with the search of ideaswith the search of ideas.• New-product ideas can come from interacting

with various groups and from using creativityg p g ygenerating techniques.

Interacting with Others• Ideas for new products can come from

customers, scientists, competitors, employees,channels members and top managementchannels members, and top management.


Ten Ways to Create New-Product Ideas• Run formal session where groups of customers meet

with company engineers and designers to discussproblems and need and brainstorm potentialproblems and need and brainstorm potentialsolution.

• Allow time off scouting time for technical people to• Allow time-off scouting time- for technical people toputter on their own pet project

• Make a customer brainstorming session a standard• Make a customer-brainstorming session a standardfeature of plant tours.

• Survey your customer: Find out what they like and• Survey your customer: Find out what they like anddislike in your and competitors’ products.

• Undertake “fly on wall” or “camping out” research• Undertake fly-on-wall or camping out researchwith customers.


• Use iterative rounds: a group of customer in one roomfocusing on identifying problems, and a group of your

h i l l i h li i dtechnical people in the next room, listening andbrainstorming solutions. The proposed solutions arethen tested immediately on the group of customers.y g p

• Set up keyword search that routinely scans tradepublications in multiple countries for new-product

dannouncements and so on.• Treat trade shows as intelligence missions, where you

view all that is new in your industry under one roofview all that is new in your industry under one roof.• Have your technical and marketing people visit your

suppliers’ labs and spend time with their technicalpp ppeople-find out what is new.

• Set up an idea vault, and make it open and easilyd All l t i th id daccessed. Allow employees to review the ideas and

add constructively to them.By: Eng Leaphea, MBA

28/03/2012 38

Idea ScreeningIdea Screening• A company should motivate its employeesA company should motivate its employees

through rewards to submit their new ideas to anidea manager.g

• Idea should be written down and reviewed eachweek by an idea committee. The company then

h d id i hsorts the proposed ideas into three group:promising ideas, marginal ideas, and rejects.

• Each promising idea is researched by a committer• Each promising idea is researched by a committermember, who report back to the committee.


screening ideas, the company must g p yavoid two types of errors

• A DROP error occurs when the company• A DROP-error occurs when the companydismisses an otherwise good idea. It is extremelyeasy to find fault with other people’s ideas.y p p

• A GO-error occurs when the company permits apoor idea to move into development and

i li ti A b l t d t f ilcommercialization. An absolute product failureloses money; its sales do not cover variable costs.A partial product failure loses money, but its salep p f y,cover all its variable costs and some of its fixedcosts…


MANAGING THE DEVELOPMENT PROCESS

CONCEPT

TO

STRATEGY


Concept Development and Testing

Attractive ideas must be refined intotestable product concepttestable product concept.

A product idea is a possible product thei h ff h kcompany might offer to the market

A product concept is an elaborated versionof the idea expressed in meaningfulp gconsumer terms.


Concept DevelopmentConcept DevelopmentA product idea can be turned into several concepts.

Th fi i i Wh ill hi d ?• The first question is: Who will use this product?The powder can be aimed at infants, children,teenagers young or middle aged adults or olderteenagers, young or middle-aged adults, or olderadults.

• Second what primary benefit should this productSecond, what primary benefit should this productprovide? Taste, nutrition, refreshment, energy?

• Third, when will people consume this drink?Third, when will people consume this drink?Breakfast, midmorning, lunch, mid afternoon,dinner, late evening?


By answering these questions, a company can form several concept

• Concept 1: An instant breakfast drink for• Concept 1: An instant breakfast drink foradults who want a quick nutritiousbreakfast without preparationbreakfast without preparation.

• Concept 2: A tasty snack drink for childrent d i k idd f h tto drink as a midday refreshment.

• Concept 3: A health supplement for olderadults in the late evening before they go tobed.


Concept Testingp g• Concept testing involves presenting the product concept to

appropriate target consumers and getting their reactions. The concept can be presented symbolically and physically.

• However, a more concrete and physical presentation of the concept will increase the reliability of the concept test concept will increase the reliability of the concept test.

• Today, some marketers are finding innovative ways to make product concepts more real to consumer subject.

• Many companies routinely test new-product concepts with consumers before attempting to turn them into actual new productsproducts.


After receiving information, researchers measure product dimensions by having p y g

consumers respond to the following questions:q

• Communicability and believability• Need level• Need level• Gap level• P i d l• Perceived value• Purchase intention• User targets, purchase occasions,

purchasing frequency


Marketing Strategy

• Marketing strategy development is the designing an initial marketing strategy for a new product based on the product conceptp p p


Following a successful concept test, the new-product manager will develop a preliminaryproduct manager will develop a preliminarymarketing-strategy plan for introducing the newproduct into the market. The plan consist of threeproduct into the market. The plan consist of threesteps:• The first part describe the target market’s size, p g ,

structure, and behavior; the planned product positioning; and the sales, market share, and profit

l h h f fgoals sought in the first few years.• The second part outlines the planned price,

distribution strategy and marketing budget for the distribution strategy, and marketing budget for the first year.

• The third part of the marketing strategy plan The third part of the marketing strategy plan describes the long-run sales and profits goals and marketing-mix strategy over time

28/03/2012 48

Business AnalysisBusiness analysis involves a review of thesales, costs, and profits projections for asales, costs, and profits projections for anew product to find out whether they satisfythe company’s objectives.the company s objectives.• If they do, the product can move to the

product development stage.p p g

• To estimate sales, the company might look ath l h f l d d

p y gthe sales history of similar products andconduct surveys of market opinion


• It can then estimate minimum and maximum sales to assess the range of risk.

• After preparing the sale forecast After preparing the sale forecast, management can estimate the expected costs and profits for the product including and profits for the product, including marketing, R&D, operations, accounting and finance costs finance costs.

• The company the sues the sales and costs figures to analyze the new product’s figures to analyze the new product s financial attractiveness.


Chapter 3Overview in New

Product Development

28/03/2012 51

Creating New Products•Customers•Innovation

Peter Drucker: Creative imitation is a strategy gyaimed at market or industry dominance. But it is much less risk. By the time the creative imitator

h k h b bli h d d h moves, the market has been established and the new venture has been accepted..

An alternative approach still based on “imitation ” isAn alternative approach, still based on “imitation,” isto find the major problems associated with existingproducts in a market and to develop a product thatresolves them.


CORPORATE RESPONSECORPORATE RESPONSEP d ti C biliti• Production Capabilities

•Financial PerformanceFinancial Performance•Human Factors• Materials Supply

Ti•Time


MARKETING RESPONSE • Match with

Existing Product Lines

• Price and QualityDi t ib ti • Distribution Patterns

• Seasonality


VARIABLES AFFECTING NEW PRODUCT DEVELOPPRODUCT DEVELOP

I have observed that the new product development process as follows: process as follows: Is in place to create change. Is complex and getting more complex Is complex and getting more complex. Is attempting to conform to outside pressures. in many ways invisiblein many ways, invisible. very expensive. constantly under pressure to make it moveconstantly under pressure to make it move

faster. reserved for people with a “can do” attitude.


Change and Complexity• The creation of new products is not easy, and yet

the management of change is a crucial part of the the management of change is a crucial part of the new product development methodology.

• New product development is a “world” p pawareness adventure. We must look at markets, customers, distribution channels, marketing

h f ltechniques, finances, government regulations, forming standards,

• I’ll work with two examples recorded music • I ll work with two examples, recorded music and the personal computer, to help explain my thoughts on change and complexity thoughts on change and complexity.


Change and Conformity• The new product development process is

forced to conform to constraints thato ced to co o to co st a ts t atwere developed by different people overa period of time. Because the rules andpregulations are man-made,

• Generally, position conformity is morey p yreadily accepted in the developmentenvironment than the negative type.

• Let’s first explore a few facets associatedwith negative conformity.


Negative conformity typically startsNegative conformity typically startswith a directive from someone.S d i th “ t i lSecond is the “customer is alwaysright” point of view.

Third, there is a tendency in business toaim for what seems to be the “safe bet.”

The last major conformity issue of thistype is to adapt to “ (MIS).”yp p ( )


InvisibilityInvisibility• Where do we begin to make visible such

organization quality as communicationorganization quality as communication,teamwork, leadership, force multipliers,roles within the work society, and

ly

structural interaction?

h b h bl• What about the invisible structureassociated with technology, markets,economics and systems that is virtuallyeconomics, and systems that is virtuallyimpossible to model in the developmentof new products?


Expense Controlp• The creation of new high technologyg gy

products is very expensive process!

• Most likely there will be a need tonetwork computer and provide forp pelectronic information transfer.


Need for SpeedNeed for Speed• New products are the foundation for

continued business success in the highcontinued business success in the high-technology field. Ti k (TTM) i h f • Time to market (TTM) is the measure of an organization’s ability to convert idea into

i l d li I i commercial product reality. It is a competitive requirement; it is a strategy;

d i i i i bili and , it is an organization capability.


“Can Do”Ca oExperience shows that this attitude will grow

d d l ti if l and develop over time if people Think highly of themselves. Perform their work because they are Perform their work because they are

internally motivated. Strive to realize a driving vision.Strive to realize a driving vision. Establish short-, intermediate-, and long-

range goals. Develop a realistic appraisal of progress

toward achievement of their goals T k ti t h f Take time to have fun.


PATHS TO SUCCESSWinning Ways of Doing New Product

Development• Make new product

development a control process.

• Learn how to make decision quickly.

• Work with competitive p• Keep an eye on the world • Involve all relevant people

f th t t

• Work with competitive tools and methods.

• Entrust execution to t t lfrom the start.

• Assemble and act out information in concert.

competent people.• In the event of

problems, adjust only • Have a representative

object of the end product in view.

the effected areas.• Maintain the “can do”

vitality in the yorganization


Chapter 4p

D iDesigng

28/03/2012 64

Course OutlineCourse OutlineWeek Description Hours5 Chapter04:Design 3 hours5 Chapter04:Design

What is Design? The Role of Design in the New Products Process Contributions of Design to the New Products Process

3 hours

Contributions of Design to the New Products Process Product Architecture

4 Chapter04:Design ( continue)Managing the Interfaces in the Design Process

3 hoursg g g

Participants in the Design Process Improving the Interfaces in the Design Process Computer-Aided Design and Design for

ManufacturabilityManufacturability

28/03/2012 65

What Is Design?gWhat is design? One writer define it as “the synthesis oftechnology and human needs intotechnology and human needs intomanufacturable products.”

In practice, however, design as a term has manyuses To the car companies it can mean the stylinguses. To the car companies, it can mean the stylingdepartment. To a container company it meanstheir customer’s packaging people To atheir customer s packaging people. To amanufacturing department it most likely meansthe engineers who set final product specifications.g p p


The Role of Design in the dNew Products Process

As a proof of the important of designAs a proof of the important of design,consider several ways in which designexcellence can help firms archive a broadexcellence can help firms archive a broadspectrum of new product goals, as showin Figure 2 1in Figure 2.1.


Contributions of Design to the New Products ProcessDesign to Speed to Market

i f iff i i

Design for Ease of Manufacture

Design for Differentiation

Design to Meet Customer Needs

Design to Build or Support Corporate Identity

Design for the Environment


Product Architecture• Product architecture has been described as the

process by which a customer need is developedprocess by which a customer need is developedinto a product design. This is a critical step inmoving toward a product design as solid

hi i l i darchitecture improves ultimate productperformance, reduces the cost of changing theproduct once it is in production, and can speedproduct once it is in production, and can speedthe product to market.

• A process for product architecture development can be applied to make sure the product’s design will be in keeping with customer needs and ultimately the product innovation charterand, ultimately, the product innovation charter


1- Create the Product Schematic. Theschematic shows the components andschematic shows the components andfunctional elements of the product andhow they are interconnected. Severalyalternative schematics may be developedand explored at this stage.2 Cl t th S h ti El t H 2-Cluster the Schematic Elements. Herethe chunks (or modules) are defined. In thefigure, input, disk, output, and powerfigure, input, disk, output, and powerchunks are identified. Interaction amongthe chunks should be simple to changes

b il ff t d d h ld t kcan be easily effected, and one should takeadvantage of manufacturing capabilitieswhether possible.whether possible.


Indoor Wiring Diagram (Wall Mounted)

Wall Mounted (S **KA1E5 Series) Wiring DiagramWall Mounted (S- KA1E5 Series) Wiring Diagram

SW2 (TO ERASE GROUP CONTROL ADDRESS)

SW2

Refrigeration Cycle for 4, 5 & 6HP

High pressure

Low pressure switch

Gas bypass valve

Outdoor air intake temperature sensor

Indoor gas pipe sensor

4-way valve

Schrader valve

switchswitch

Suction pipe temperature sensor

Outdoor heat exchanger temperature sensor

Outdoor defrost temperature sensor

Indoor intake air temperature sensor

Muffler

Accumulator

Outdoor

Oil separator

Indoor heat exchanger temperature sensor

Indoor

Discharge pipe temperature sensor

Outdoor expansion valve

Receiver

StrainerIndoor

expansion valve

Strainer

DC 2-piston rotary compressor

Check valve

Liquid bypass valve

3-Create Geometric Layout. Here, using simulations, computer-aided design, or simulations, computer aided design, or other techniques, the product arranged in several configurations to determine the several configurations to determine the best solutions. For example, should the disk load in the front or the side of the disk load in the front or the side of the CD player?

4-Check Interactions between Chunks 4-Check Interactions between Chunks. Understand what happens at the interfaces between chunks In the CD interfaces between chunks. In the CD player, sound flows as a digital signal to the disk during recording and also as a the disk during recording and also as a digital signal from the disk during playbackBy: Eng Leaphea, MBA

28/03/2012 73

RC Transmission Channel Address Setting

Wireless remote controller can be set to 3 difference individual channel or 1 master transmission Wireless remote controller can be set to 3 difference individual channel or 1 master transmission channel.The 3 individual transmission channel will be display at screen as Address 1 , 2 , 3.The 1 master transmission channel will be display at screen as Group. (this is not group Control)

ll d h h d ff h l l ll l d hAll indoor units which are set to difference transmission channel also will only respond to the remote control which using master transmission channel.

Press Address button to scroll the transmission channel address.Press Address button to scroll the transmission channel address.1 1 2 2 3 3 GroupGroup1ADDRESS

1

Press and hold Auto Switch button at the indoor Press and hold Auto Switch button at the indoor unit until 3 beeps sound is heard (~11secs).unit until 3 beeps sound is heard (~11secs).

2ADDRESS

2

ADDRESS

Press any button of remote controller. Ensure the indoor is Press any button of remote controller. Ensure the indoor is acknowledged by a beep sound acknowledged by a beep sound 3

ADDRESS

3

GROUP

acknowledged by a beep sound. acknowledged by a beep sound.

Managing the Interfaces in th D i Pthe Design Process

• New product managers have to keep in• New product managers have to keep inmind that product design should not bethe responsibility of only the designer!t e espo s b ty o o y t e des g e !Today, they have to share this traditionalrole with several other functions.

• There are several participants in theproduct design task, some in a moregdirect role than other. One model of howthese people participate is shown in


Participants in the Design Process p gDirect Participants

• Research & DevelopmentSupportive Participants

• Design consultants• Research & Development• Industrial Designers and

Stylists

• Design consultants• Marketing Personnel• Resellersy

• Engineering Designers/Product Designers

• Resellers• Vendors/ Suppliers• GovernmentsDesigners

• Manufacturing Engineers and System Designers

Governments• Customers• Company Attorneysy g

• Manufacturing OperationsCompany Attorneys

• Technical Service


Improving the Interfaces in the Design Process

• Several techniques are currently being used to make surethat design is integrated correctly with other functionsduring the development phase, and that the productsbeing designed can be manufactured in a cost-efficientg gway.

• Important among these is collocation ( putting thei i di id l f ti l i lvarious individuals or functional areas in close

proximity). When the different groups are not in regularcontacts and cooperating there is a tendency forp g yinformation to be lost (or hidden). This causes wastedwork and slows the whole operation down. Many firmshave tried collocation to shorten communication lineshave tried collocation to shorten communication linesand increase team cohesion.


• Colocation helps integrate departments andimprove information flow and also allows theimprove information flow and also allows theteam members to identify and resolve productdevelopment problems more quickly. It must,development problems more quickly. It must,be carefully planned and handled.

• In many firms, the effects of collocation arey ,achieved without actual physical proximity ofteam members, using the resources ofcommunications technology. This is sometimesknown as digital colocation. As a final note,there is a recent increase in the use of globalthere is a recent increase in the use of globalteams (that is, teams comprising individualsfrom at least two different countries).from at least two different countries).


• Improved information technologies h il d such as e-mail, and company

databases combine with phone calls and regular mail to make global teams an increasingly feasible option.g y p

• In addition, partnering upstream with vendors is a possibility Most companies vendors is a possibility. Most companies tell us they are doing it, by using reverse marketing technology searches demands marketing, technology searches, demands that suppliers value engineer their product and by putting supplier people product, and by putting supplier people on the new product teams.


Computer-Aided Design and D i f M f t bilitDesign for Manufacturability

• That is the technology of the acronyms: CAD(computer aided design) CAM (computer(computer-aided design), CAM (computer-aided manufacturing), CAE (computer-aidedengineering), DFM (design for manufacturing),g g) ( g g)and variations.

• These technologies offer lots of advantages-l h t k t th t d t dpeople have to work together to understand

and use them, they force the integration of allneeds into one analytical set, they are fast, andy , y ,they do more than the human can do aloneeven if there were ample time.


Chapter 5Chapter 5Special Issues in Special Issues in

D l tDevelopment

28/03/2012 81

Course OutlineCourse OutlineWeek Description Hours6 Chapter05: Special Issues in 3 hours6 Chapter05: Special Issues in

Development Speed to Market

3 hours

1- Techniques for Speeding Time to Market2- Overall Principles and Guidelines

The Role of Top Management during Development

7 Chapter05: Special Issues in Development Functional Interface Management

1- Managing the Interfaces

3 hours

g g2- Overall Principles and Guidelines


28/03/2012 82

Speed to Marketp Many different industry settings that

cross-functional teams contribute cross functional teams contribute greatly to increasing speed to market. Far better is to use such devices as Far better is to use such devices as

benchmarking, where a firm studies other firmsother firms The way management measures

d t k t ( f tl ti speed to market (or, frequently, time to market), is often getting the idea to th h i d k f t ”the shopping dock faster.”.


Hearing about the value of being first to mindshare rather than being first to market mindshare rather than being first to market.

The firm with mindshare in a given product The firm with mindshare in a given product category is the one that the target market associates with the product category, and h h d d fthat is seen as the standard for competitors

to match.

Firms that strive for mindshare think not about the speed of an individual product’s p pdevelopment and launch, but rather about creating a dominant position in the mind of th tthe customer.

28/03/2012 84

1- Techniques for Speeding Time q f p gto Market

Accelerating time to market has been an important objective of innovating p j gfirms in recent years. Some observers have noted that the Some observers have noted that the

use of parallel processing by the Japanese automakers was a big factor Japanese automakers was a big factor in their emergence on the world

k tmarket.28/03/2012 85

Key Characteristics of Short-C l Ti FiCycle-Time Firms

• Extensive user involvement early in the ynew products process, capturing the “voice of the customer.”

• Cross-functional teams are dedicated to the new product.

• Suppliers are extensively involved.• The firms adopt effective design p g

philosophies and practices. • The most adapt firms are effective at p

organizational learning. 28/03/2012 86

2- Overall Principles and Guidelines

Some other considerations in cycle time acceleration may be summarized acceleration may be summarized succinctly-Do the job right the firs time.

T i i f i l d - Training of everyone involved. - Communication. Co u cat o . - Flexibility. - Fast decision. 28/03/2012 87

The Role of Marketing during D l tDevelopment

1- Marketing is Involved from the gBeginning of the Process

• Marketing people are now involved from Marketing people are now involved from the very beginning of the new product process and have a very important role process, and have a very important role. Throughout the process, they advise the new products team about how the new products team about how the product development underway fits in with the firm’s marketing capabilitieswith the firm s marketing capabilities

28/03/2012 88

• It is too easy to say that marketing’s role is to gather information from the marketplace to gather information from the marketplace. Too often, that means that marketing plays a gatekeeper role, funneling information from gatekeeper role, funneling information from the marketplace to the new products team

• Marketing eventually found out that there Marketing eventually found out that there was a bigger market out there that was very interested in, but not for the attributes originally thought to be most important. Clearly, the original technology-push i i h d d d k d innovation had done and market needs were now driving further technical development.

28/03/2012 89

2- Marketing Ramp-Up, or the “I Think We’ve Got It” PhaseGot It Phase

Contributions to the process throughout, the roles of both marketing and manufacturing changes as g g gthe process move along. Often, an important turning point occurs when the early prototypes are made and are passing performance tests made and are passing performance tests.

We might call this point the “I think we have got We might call this point the I think we have got it” phase and it is here that the team’s whole attitude toward the projects changes. They have to b i l i fi ld l d i il bili begin planning field sales and service availability for the product, investigate packaging and branding options, bring in the advertising agency branding options, bring in the advertising agency representatives.

28/03/2012 90

• In new product development, we ft h f “ f t i often hear of “manufacturing ramp-

up”- the stage at which manufacturing personnel plan the full-scale production of the product. p p

• Just like manufacturing ramps up from prototypes to full production from prototypes to full production, marketing can be said to ramp up for

d l h d k i product launch- and marketing ramp-up begins here.

28/03/2012 91

The Role of Top Management p gduring Development

• New product people claim that only • New product people claim that only top managements have the power to make decisions essential to their make decisions essential to their projects. But, in all fairness, top management support is needed for management support is needed for the overall new product program –they don not have time to be they don not have time to be champions for individual projects except rare crucial onesexcept rare, crucial ones.

28/03/2012 92

Specifically, how can top management help? They should be smart, experienced general managers, should be smart, experienced general managers, for starters. They should know how to make timely decisions, and realize the unique and

t di d f th d t t ff f extraordinary need of the new product staff for strategy direction.

The top manager should support (in fact The top manager should support (in fact, demand) a product innovation charter. Add, too, a longer-term financial view and a managerial style that supports risk-taking and good communication.

Top management’s interest and support should be Top management s interest and support should be clearly signaled by open statements of confidence, by appointments of people who clearly are y pp p p y“comers” in a firm.

28/03/2012 93

Functional Interface MManagement

• As we have seen, product innovation involves , ppeople from many different functional areas and backgrounds: sales and marketing, R&D, d i i i f t i design, engineering, manufacturing, operations, and so on.

• Part of challenge of new products is managing • Part of challenge of new products is managing the interfaces across the functional areas, as the key functions must co-operated often and y peffectively to improve product development performance.

28/03/2012 94

1- Managing the Interfaces• The essence lies in three statements:• - Top managers get the interfaces they p g g y

deserve, because they can eliminate most of the problems anytime they choose to do so.

• - Interface management primarily takes time, not skills. One new product manager

id h l d hi ’ bl b said he solved his team’s problems by giving at least 40 % of his time to seeing that all key players spent a lot of time with that all key players spent a lot of time with each other, on and off job.

28/03/2012 95

•- Participants who continue to be a problem should be taken be a problem should be taken out of new products team psituations; they get some perverse satisfaction out of perverse satisfaction out of reactions to their behaviors.

9628/03/2012

2- Overcoming Barriers to Market Orientation

Market information is not used if it does not conform to specifications. It is critical for management to create an environment of mutual trust among employees of all functional areas; higher levels of trust mean functional areas; higher levels of trust mean that managers will be more open to suggestions that might cause in the way gg g ythings are done.

Clearly, while we have seen great i t i t th i improvements in recent years on these issues, the problems remain, and more improvement still needs to be madestill needs to be made.

28/03/2012 97


Structurally, global product innovation y g pcan be handled in several ways:

1-Make no special arrangements. Export 1 Make no special arrangements. Export what is developed for the home market. On the one hand this is called market. On the one hand this is called the export approach, yet when market conditions around the world are conditions around the world are substantially the same, then this approach of one product for all approach of one product for all countries is called global strategy.28/03/2012 98

2 K h b 2- Keep structure the same, but develop versions of the new pitem to meet the needs of viable foreign markets This viable foreign markets. This approach is usually thought of

i i f h as a variation of the export approach or called ppinternational strategy.

28/03/2012 99

3- Use the facilities of the home firm, but 3 Use the facilities of the home firm, but have separate projects directed by managers in each viable foreign area managers in each viable foreign area. These foreign managers learn of

il bl t h l i i th h fi available technologies in the home firm, study their local markets to see how

h h l d heach might apply, and then set up projects to develop what is needed there. This is often called a multinational strategy.gy

10028/03/2012

4- Assign the basic responsibility for d h fproduct innovation to each foreign

business larger enough to have the resources for it. This usually means some local R&D, local manufacturing, , g,and almost totally local marketing.

Operational cultures and policies will vary greatly from country to country. vary greatly from country to country. This strategy ha no common name, but local drive would fitlocal drive would fit.

28/03/2012 101

5- The last alternative is a mix of the b i l ll d t i above, variously called matrix,

country of excellence. Essentially, the firm wants to be a major player in all viable markets of the world, in all viable markets of the world, but wants to develop strategies appropriate to each of those appropriate to each of those markets. It is often done by world region, continent, or other larger geographical division.geographical division.

10228/03/2012

Chapter 6pProduct Use Product Use

T tiTestingg28/03/2012 103

What Is Product Use Testing• Use testing means use under normal

operating conditions. A bank installs a newope at g co d t o s. ba k sta s a ewcheck cashing services at three branchpoints. The product will probably not bep p p yperfect at this time, for more reasons thanpoor design.

• Testing should continue until the team ussatisfied that the new product does indeed

l th bl fill th d th tsolve the problem or fill the need that wasexpressed in the original protocol.

28/03/2012 104

Is Product Use Testing Really g yNecessary?

I ll t d t t ti In one case, excellent product use testing resulted in the development of a successful launch strategy in the other product use testing launch strategy, in the other product use testing was probably never done, with predictably poor results poor results.

But even in consumer packaged-goods But even in consumer packaged goods industries, there should be more serious consideration of the counter arguments for use gtesting. Here they are.28/03/2012 105

1- Regarding Competitors’ Reactions A firm developing new items is well advised to

build its innovation on a technology basehere it has some insulation from competiti ewhere it has some insulation from competitive

copying.

Second, competitors today are finding thatcopying someone else has small gains-otherswill copies the innovator’s mistakes too andwill copies the innovator s mistakes too, andthe competitors were must worry about mostare themselves involved in technology-basedgydevelopments that cannot be thrown over onshort notice.

28/03/2012 106

2- Customer Needs Are Complex Sets• End-user is indeed complex and there is no

way it can be simulated in laboratories, whereway it can be simulated in laboratories, whereuse is isolated from user mistakes, competitivetrashing of the concept, and objections by thoseg p , j yin the user firm or family whose work or life isdisrupted by the change.p y g

• In addition, for new-to-world products, severalproduct use tests may be needed for a companyp y p yto “get it right” – what is important is that thecompany learns from its errors.

28/03/2012 107

3- Can We Deliver A Total Quality Product?• Recall the idea of the augmented product-

where there is a core benefit, then a formalproduct, and then the many augmentationsof service, warranty, image, financing, andso on.

• The new product process tends to focus onh b fi d h f l dthe core benefit and the formal product,

and even that may have implementationproblems But firms often just assume theyproblems. But firms often just assume theywill be able to deliver outer ring ofaugmented product qualityaugmented product quality

28/03/2012 108

the sales force will be able to explain the the sales force will be able to explain the new item well, early product breakdowns will not chase other breakdowns will not chase other potential buyers away, the finance division will approve generous division will approve generous financing arrangements, the advertising effectively answers competitors’ claims, effectively answers competitors claims, and warehouse personnel won’t make a simple mistake and destroy half the p yproduct.

10928/03/2012

Figure 6-1 Set of New Knowledge from Product Use Tests

P tiP tiPre-use sense reactionsPre-use sense reactions

Early use experiencesEarly use experiences

Major benefit results and problem solvingMajor benefit results and problem solving

Diagnostic informationDiagnostic information Diagnostic informationDiagnostic informationDiagnostic informationDiagnostic information Diagnostic informationDiagnostic information

28/03/2012 110

Knowledge Gained from Product Use T tiTesting

Pre-Use Sense ReactionsAlmost every product gives the user a change to reactto immediate sensations of color, seed, durability,

h i l it bilit d I iti l timechanical suitability, and so on. Initial reactions areimportant especially on service product.E l U E i Early Use ExperiencesThis is “does it work” knowledge. Key specifics are

h thi f f i bl thsuch things as ease of use, surface variables, can theymanage it, are there still bugs, and is there anyevidence of what the item will eventually doevidence of what the item will eventually do.

28/03/2012 111

Beta tests The ultimate use test of the protocol is to try it out atThe ultimate use test of the protocol is to try it out at

customers sites, to evaluate whether the product solveswhatever problems led to development of the productp p pin the first place.

These are short-term use tests at selected customerssites (external customers or, sometimes, employeesserving as internal customers). In fact, some have theirpeople competing to see who can find the most bugs ina new item-better now than later.

The tests are not designed to tell them about meetingcustomer needs and solving problems-such testingtakes longer than the few weeks usually allowed ontakes longer than the few weeks usually allowed oncomputer products.28/03/2012 112

Gamma Testing Beta testing may not meet all of the developer’s Beta testing may not meet all of the developer s

needs. In a beta test, users may not have had time tojudge whether the new product met their needs orwas cost effective for themwas cost-effective for them.

As a result, a third is becoming popular, gammatesting (gamma being the third Greek letter afteralpha and bets). It designates the ideal product usetest, where the item is put through its paces andgthoroughly evaluated by the end-user.

To pass this test the new item must solve whatever To pass this test, the new item must solve whateverproblem the customer had, no matter how long ittakes. Gamma testing is so critical on new medicinesand medical equipment that the United Statesand medical equipment that the United Statesdemands it; such testing can take up to 10 years.

28/03/2012 113

• Diagnostic Information– New products managers are looking for how items are– New products managers are looking for how items are

used, what mistakes are made. Use tests often suggestways to improve performance or to reduce cost. Newproduct developers also seek specific pieces ifproduct developers also seek specific pieces ifinformation needed to back up their claims. Marketerswant confirmation of target markets and productpositioningpositioning.

– Product integrity is also on trial during a use test, sinceg y gonly the user’s perceptions tell us whether the parts tietogether into a meaningful whole, and whether productfist application. Last, developers are watching for manypp p g yother red flag, a signal that users had some problemsunderstanding the new item or where show to acceptthe results they got, and so on.y g

28/03/2012 114

Decisions in Product Use Testing • Who Should Be in the User Group?

– Some use testing is down with lab personnel atg pthe plans where the products are firstproduced.

– Experts are the second testing group (forexample, the cooking staff in a test kitchen).E ill i f l id iExperts will give mare careful considerationthan will typical users and probably willexpress more accurate reactions They will notexpress more accurate reactions. They will notbe interested in the same things that interestcustomers, however.,

28/03/2012 115

Th thi d t t ti l i id l – The third test group option, employees, is widely utilized thought often criticized. Company loyalties and pressures and employees’ lifestyles and customer may distort opinions and attitudes. Obvious problems of possible bias can be overcome to some extent by concealing product identities and by carefully training concealing product identities and by carefully training and motivating the employee panel.

– Stakeholder are the next choice, and the set includesd dcustomers and non-customers, users and nonusers,

resellers. End-user advisers (such as architects), usersof competitive products, repair organization, andp p , p g ,technical support specialists whose reactions to newproducts have been sought.

28/03/2012 116

How Should We Reach the User Group?There are several options hereThere are several options here.• First we must decide on mode of contract: Mail

and personal are most common The mail method and personal are most common. The mail method is more limited than personal contact in type of product and depth of questioning, but it is more p p q g,flexible, faster, and cheaper.

• Burlington Industries used the telephone to ask g ppeople to serve on special one-time mail panels that evaluated mew fabrics. Business-to- business f f l hfirm often insist on personal contact, since they need closeness far beyond that on most consumer productproduct.

28/03/2012 117

Second, there is a choice between individualcontact and group contact. Most firms prefercontact and group contact. Most firms preferindividual contact, especially at this critical pointin the development cycle, but it may be cheaper todeal with groups. (traditional focus group is not ag p ( g pplace for use testing.)

Third the individual mode of contact brings up Third, the individual mode of contact brings upthe question of location. Should the test beconducted at the point of use (home, office, orfactory) or should it be conducted at a centralfactory), or should it be conducted at a centrallocation (test kitchen, shopping center, theater, orvan)? The point-of use location is more realisticand permits more variables to operate But itand permits more variables to operate. But itoffers poor experimental control and permits easymisuse.

28/03/2012 118

Should We Disclose Our Identity?

• A key issue, identity disclosure, concerns y , y ,how much the user should be told about the brand or maker identity of the product. Some testers prefer often disclosure while other testers prefer often disclosure, while other (the majority) prefer to keep it secret.

• It may be that the band cannot be hidden-as with many cars, some shoes, and many y ybusiness products. Persons have perceptions about various firms and brands.

28/03/2012 119

How Much Explanation Should We Provide? Some people conduct use tests with virtually no Some people conduct use tests with virtually no

comment other than the obvious “Try this.” But such tests run the risk of missing some of the specific testing needs.

d d f l ll d i l A second degree of explanation, called commercial,includes just the information the customer will get when actually buying the product later when actually buying the product later.

The third level is full explanation It may be necessary The third level is full explanation. It may be necessary to include a great deal of information just to ensure the product gets used properlyp g p p y

28/03/2012 120

How Much Control over ProductUse Should There Be?

• Most new medicines can be tested legally onlyunder the control of physicians. This total controlis essential when accurate data are required andis essential when accurate data are required andwhen patient safety is concern.

• Many industrial products also require total controlto avoid dangerous misuse. But most testers wantusers to experiment, to be free to make somemistakes, and to engage in behavior representative

f h t ill h l t h th d t iof what will happen later when the product ismarketed.28/03/2012 121

Over What Time Period Should theTest Be Conducted?

Some use tests require a single product experience; somerequire use over short periods of up to a week; and somerequire use over short periods of up to a week; and somerequire use over extended periods of up to six months.The initial, quick test predicts the early reactions of thosepeople we call innovators Failure here even ifpeople we call innovators. Failure here, even ifperceptions are unjustified, will often doom a goodproduct.

Tests over a month long are rare on consumer productand difficult to defend to management. But if a newpiece of business equipment will be positioned on itspiece of business equipment will be positioned on itscost-cutting advantage, the use test had better run longenough for the user to see a significant cost reduction.

28/03/2012 122

What Should Be the From of the ProductBeing Tested?

The opposing view favors building variants into the testpp g gsituation-colors speeds, sizes, and so on. The latterapproach is more education but also much more costly.S i l t l t t d i lti l i tiServices are almost always tested in multiple variations,give that it is usually easy to make the changes.

The decision rests on several factors, the first being howlikely the lead variant is to fail. No one wants toyelaborately test one form of the product and then havethat form fail.

28/03/2012 123

How should We Record Respondents pRejections?

Essentially, three options are available. First, a five-or seven-point verbal rating scale is generally used to record basic like/dislike data.record basic like/dislike data.

Second, the respondent is usually asked to compare thed t ith th d t th l dnew product with an other product, say, the leader or

the one currently being used, or both; this is a preferencescore; which can be obtained several ways. Third, fordi i ll d i tidiagnostic reasons, testers usually want descriptiveinformation about the product that covers any and allimportant attributes.

28/03/2012 124

A h fi i l d i t d i A research firm was involved in studying opportunities for a new sausage and had

i l k d t t th previously asked consumers to rate the sausage products then available on a

i t f tt ib t i l di i variety of attributes, including greasiness.

The results showed strong aversions to both of those attributes, which were associated with low overall scores for product quality.p q y

12528/03/2012

Who Should Do the Product Use Test?• The first choice here is between personal within

the company and personnel outside theTh fi h hcompany. The firm may or may not have the

necessary personnel skilled in information intechnology with analytical capabilitytechnology with analytical capability.

• Second the functions (marketing technical)• Second, the functions (marketing, technical)historically have jockeyed for control. But todaywe have the development team be responsible–we have the development team be responsiblethe sane team that handle the prototype concepttesting. If vendor personal are members of suchteams, then they too participate.

28/03/2012 126

Special Problem pDon’t Change the Data Just Because They

Came Out WrongCame Out Wrong• One firm discovered a user in a use, but the

president said “They’re just going to have to havepresident said, They re just going to have to haveto live with it.” Unfortunately, the use test did notask whether users were willing to live with it.gThey weren’t, and the product failed.

• In some tests technical and marketing peoplegwarn of user problems only to be told that theyare being negative-a real-life case of “kill the

”messenger.”28/03/2012 127

Be Alert to Strange Conditionsg• One industrial firm noticed that several

electrical measuring instruments showedelectrical measuring instruments showedsings of tampering after a field test.

• On examination, they found users weremaking a particular change to aid theg p gproduct’s function; after a few telephonecalls, they had an improved product designy p p gready to go out for more testing.

28/03/2012 128

What If We Have to Go Ahead without Good Use Testing? Use Testing? – Try to work some use testing into the early

marketing stages, and try to have some alternatives g g , yready to switch to as a hedge against negative outcomes.There are also surrogate tests available if time or – There are also surrogate tests available if time or money limitations prevent a full product use tests.

– Quick results are possible, for example, through Q p , p , gconstructive evaluation (the respondent uses the item, describing activities and explaining problems encountered) or retrospective testing (the user encountered) or retrospective testing (the user reviews videos of conventional product use testing previously done).

28/03/2012 129

Chapter 7Chapter 7

St t i L h Strategic Launch Planningg

28/03/2012 130

I. SettingI. Setting At this point in the new products process,

th t i d t b ild th t l the team is ready to build the actual marketing plan. The task should be easy if th it i i t t it the new item is an improvement to items already in the line.

Weak strategic planning then shows up when the product reaches the market and when the product reaches the market, and tactical error (such as insufficient resource allocation) can compound the problemallocation) can compound the problem.

28/03/2012 131

Strategic launch decision include both Strategic launch decision include both strategic platform decisions that set overall tones and directions, and strategic , gaction decisions that define to whom we are going to sell and how.

Tactical launch decisions are marketing mix decisions such as communication mix decisions such as communication and promotion, distribution, and pricing that are typically made after the strategic that are typically made after the strategic launch decisions, and define how the strategic decisions will be implemented.g p

28/03/2012 132

The Strategic Givensg In fact, they are such a problem that top

managements often set up venture groups or skunk managements often set up venture groups or skunk works, organizational form supposedly immune from whatever restrictions are endemic to the firm.

Sometimes the givens is an individual a strong member of upper management whose personal pp g p“druthers” become corporate law. A firm in the ethical drug products field had a sales manager totally committed to an indirect channel of outlet distribution.

28/03/2012 133

• The point is, they need to be identified d d d f h l hand studied. If the launch team wants to

challenge such restrictions, fine, but it h uld d arl and h uld b should do so early and should be

prepared to lose.

• Ultimately, as company organizations are now changing, most of these restrictions g gwill yield. They are silo or chimney holdings, and the horizontal management

hil h f d i d i d b philosophy of today is designed to bypass just such restrictions.

28/03/2012 134

Revisiting the Strategic Goalsg g Usually much has been learned in the new

products process, competitive conditions products process, competitive conditions may have changed, and customer or management needs may have changed.g y g

Therefore, at this early stage in the launch l i th l h ld b planning process, the goals should be

revisited and updated.

Unfortunately, business firm use a complex set of measures as goals and of measures for gindividual products is as follows:

28/03/2012 135

Customer Acceptance Measures C t r t n ( ) Customer acceptance (use) Customer satisfaction Revenue (dollar sales) Market share Unit volumeFinancial PerformanceFinancial Performance Margins Profitability

28/03/2012 136

Product Level Performance• Product cost• Time to launchTime to launch• Product performance• Q lit id li• Quality guidelinesOther• Nonfinancial measures peculiar to the

new product being launchedp gExample: competitive effect, image change, and morale change.change, and morale change.

28/03/2012 137

Strategic Platform DecisionsS eg c o ec s o s1. Type of Demand Sought

ff l l f dDifferent levels of product newness require different kinds of impact the l h hlaunch activities must have on demand: For a new-to-the-world product: For a product improvement or upgrade p p pg

to existing product For a new entry or line addition in an y

established market (such as Pepsi One): 28/03/2012 138

2. Permanence3. Aggressiveness4 C titi Ad t4. Competitive Advantage5. Product Line Replacementp6. Competitive Relationship7 S f M k E7. Scope of Market Entry8. Imageg

28/03/2012 139

Th T t M k t D i iThe Target Market Decision1/ Alternative Ways to Segment a 1/ Alternative Ways to Segment a Market

d End-Use Geographic and DemographicGeographic and Demographic Behavioral and Psychographic Benefit Segmentation

28/03/2012 140

2/ Micromarketing and Mass Customization

A current twist in target market selection is the trend toward smallness. These clusters have been labeled micro-marketslabeled micro-markets. Direct marketers have always used

tiger segments than have mass media marketers, stemming from media marketers, stemming from their databases.

28/03/2012 141

• The ultimate smallness and the The ultimate smallness, and the ultimate in building in customer value, is mass customization Great advances is mass customization Great advances in information technology and changes i k k in work processes make mass customization feasible for many products; the challenge is for managers to decide how best to proceed.p

14228/03/2012

3/ Targeting May Also Use Diffusion of Innovation

New products are innovations, and wecall the spreading of their usage thediffusion of innovation. Let’s look closer now at the factors that

affect this speed of the product adoptionprocess: the characteristic of thepinnovation product, and the extent towhich early users encourage other toy gfollow

28/03/2012 143

Product characteristicThere are at least five factors that measure

how soon a new product will receive trial.

1. The relative advantage of the new product.2 C ibili 2. Compatibility. 3. Complexity. 4. Divisibility (also called trial ability). 5.Communicability (also called 5.Communicability (also called

observability).

28/03/2012 144

VI. Product Positioning A product positioning statement is created by

completing this sentence: Buyers in the target p g y gmarket should buy our product rather than others being offered and used because: g

New products managers have a big advantage on positioning—the end-user’s memory slate is p g yclean; potential buyers have no previous positioning in mind for a new item. Now is the best chance ever to effect a particular positioning for their item.

28/03/2012 145

Positioning alternatives fall into Positioning alternatives fall into two broad categories

•The first is to position to an tt ib t ( f t f ti attribute (a feature, a function, or

a benefit). Attributes are the a benefit). Attributes are the traditional positioning devices

d t l and are most popular.

28/03/2012 146

The second alternative in positioning is p gto use surrogates (or metaphors). This says the product is better are not given; says the product is better are not given; the listener or viewer has to provide those If the surrogate is good the those. If the surrogate is good, the listener will bring favorable attributes to the productto the product. The market research techniques we

d l b f blencountered early on can be profitably put to use in developing a positioning strategy.

14728/03/2012

VII. Creating Unique Value for the Chosen Target

Once a market segment has been Once a market segment has been targeted and a positioning statement created for it we have statement created for it, we have a chance to cycle back to the product itself and see if we can enhance its value to the chosen enhance its value to the chosen market.

28/03/2012 148

As the first product is coming down the As the first product is coming down thepike, the first couple of line extensionsshould be in development. Then, aftershould be in development. Then, afterlaunch, when competitors are castingaround for ways to come out with catch-yup versions, we market them first. In the remainder of this section, we will

focus our attention on two of the ways inwhich we can increase unique value to thet t d t b di dtargeted customer—branding andpackaging.

14928/03/2012

VIII. Branding and Brand ManagementManagement

• Technically speaking, services have service marks, not trademarks, and businesses have trade names, not trademarks.

• Another definition is very important: registration. Historically, and still today in g y, ymost countries, the first use of a trademark had exclusive rights. But in the United gStates you can ask that your trademark be registered. g

28/03/2012 150

IX. Packagingg g1. What Is Packaging?g g

Three “containers” are usually i l d d i th t k i included in the term packaging,

•Primary packagingrimary packaging•Secondary packaging•Tertiary packaging

28/03/2012 151

2. The Various Roles of PackagingThese are easy to see These are easy to see.

• The major ones are containment (hold for transporting), transporting),

• protection (from the elements and the careless),• safety (from causing injury), f y ( g j y),• display (to attack attention), and to inform and

persuade.• All are important to a new product manager,

sometimes enough so that there are legal problems; packaging design is a part of logo and trademark packaging design is a part of logo and trademark, where rights can be valuable.

28/03/2012 152

3. The Packaging Decision Packaging is part of the new products

manager’s network But it is so manager s network. But it is so multifunctional it tends to have its own sub network (see Figure 17.13). network (see Figure 17.13).

It centers on a person most often called the director of packaging. The packaging decision may take months; it is a key target in most

l d d l accelerated development programs.

28/03/2012 153

MANY THANKS FOR MANY THANKS FOR YOUR PARTICIPATIONYOUR PARTICIPATION

15428/03/2012