New Product Development Strategy, Tactics & ProcessStrategy, Tactics & Process Anand Subramaniam

Knowledge speaks, but wisdom listens." 2 -Jimi Hendrix

Highlights NPD -Strategy NPD -Design NPD -Types NPD P 3 NPD Process NPD -Levers

Reason for New Product Failures Overestimating market size Poor marketing research Design problems Excessive development costs 4 p Incorrectly positioned, priced, or advertised Competitive reaction

New Product Development Strategy

New Product Development Strategy Original products Acquisition Product improvements P d difi i 6 Product modifications New brands through the firm s own R&D efforts.

NPD -Value Add NEW PRODUCT DEVELOPMENT 7 GROWTH PRODUCTIVITY IMPROVEMENT BRAND MAINTENANCE QUALTITY Line Extensions New Products New Packages Reduce Cost Formulas Packages Manufacturing Quality of Design Special Situations Regulatory Environmental Specifications

Conformance

NPD Strategy -Planning Levels MissionObjectivesMission Objectives PRODUCT BusinessUnitsIdentity Company Strategy 8 STRATEGY Technical Competencies Strategic Principles Organisation Alliances Project Mix Milestones Resource Levels PRODUCT PORTFOLIO STRATEGY Resource Allocations Technical Approaches Timing Deliverables PRODUCT DEVELOPMENT STRATEGY CategoriesBrandsProjectsBusiness Strategy Portfolio Strategy Project Strategy

Cross Functional Team Technology & Quality Packaging Engineering/Process Engineering Quality & Safety R h & D l Marketing Marketing Research Sales 9 Research & Development Industrial Engineer Mechanical Engineer Legal Affair Manufacturing Operations Logistics Procurement Supply Chain Quality Control Finance & Admin

New Product Development Design

Product Design Specification Patents Environment Materials Shelf life Packing Competition Weight Quantity Safety Testing Legal Maintenance Politics 11 Disposal Shipping Size Processes Customer Timescale Ergonomics Aesthetics Installation Performance Service life Plant Standards Quality assurance Storage DESIGN CORE

New Product Development Types

Product Development Types Generic Technology Push Platform Process Customisation (Market Pull) Products Intensive Description The firm begins with a market opportunity, then finds an appropriate technology to meet customer needs. The firm begins with a new technology, then finds an appropriate market. The firm assumes that the new product will be built around the same technological subsystem as an existing product. Characteristics of the product are constrained by the production process. New products are slight variations of existing configurations. Distinctions with respect to the generic Additional initial activity of matching Concept development assumes a Both process and product must be developed Similarity of projects allows for a highly structured process technology and technology together from the development market. platform. very beginning, or process. an existing Concept production Development is development process must be almost like a assumes a given specified from the production technology. beginning. process. Examples Sporting goods,

furniture, tools. Synthetic Fabrics Consumer electronics, Snack foods, cereal, chemicals, Switches, motors, batteries, computers, printers. semiconductors. containers.

New Product Development Process

New Product Development Process ConceptScreening* OpportunityIdentificationIdeaGenerationConceptDevelopment15 TestMarketing* ProductDevelopmentPositioningDevelopmentCommercialisation* StageGates MarketingPlanDevelopment

Opportunity Identification Internal sources Company employees at all levels External sources 16 External sources Customers Competitors Distributors Suppliers Outsourcing

Idea Generation (Ideation) Cross Functional Team Generate Ideas Brainstorming Suspend judgment Encourage creativity 17 Encourage creativity Identify Opportunity Areas Problem solving to bring new ideas to the table Sketching or prototype Idea prioritisation Generate New Product Concepts and evaluate against a set of company criteria for new products.

Concept Development Done by Marketing and/or Advertising Agency Conducting Focus Groups 18 Objectives Judge whether the concept fits the opportunity area, and constraints Refine and / or describe the product concept What it is : What benefit(s) will it deliver to the user Key information size, varieties, package, price

Market Research Options Qualitative Depth Interviews Focus Groups Expert Judgment 19 Pre-Prototype Post-Prototype Quantitative Surveys Concept Tests Perceptual Maps Conjoint Analysis Product Use Tests Lab Test Market Test Market

Concept Screening / Testing . Produce a Concept Board . Conduct a survey . Representative sample of end users via Internet, Panel . Show concept and ask buying intent, uniqueness, value . Analyse the results . Compare scores to internal criteria, benchmarks, norms . Forecast Trial . If end user shows interest in trying the product during the trial forecast, then the concept qualifies for development It clears the first stage gate.

Product Development . Initial stages with broad design parameters . Produce early prototypes . Show and obtain feedback from end users . Refine design . Fine tune & finalise design . Vary formulations on key ingredients . Conduct product testing amongst end users . Experimental designs offer most powerful learning . Optimise final design and packaging

Position Development Develop positioning Target : Benefit(s) : Frame of Reference : Support Develop communications strategies Media strategy 22 gy Test & refine copy Qualitative research Communications Check Produce, test and refine the advertisements Conduct final test (Stage Gate Review)

Marketing Plan Development . Final Positioning Statement . Target : Benefit(s) : Frame of Reference : Support . Sales Plan . Who will sell it? : Where will it be sold? . Advertising Media Plan . How will we advertise it? How will we advertise it? . Promotion Plan . Consumer promotion (coupons), Trade promotion (on-sale) . Production Plan . How will we make it? (make / buy analysis) . Financial Plan . How do we make the profit necessary to satisfy our share holders? . Fixed Costs : Variable Costs : Breakeven : Targeted ROI

Test Marketing Two Stages: Simulated Test Market Live Test Market 24

Test Marketing (Contd. ) . Simulated Test Market (STM) . Similar to Concept Test but with product . Provide samples to consumers who are interested in the concept . Measure both trial potential and reaction to product . Reaction to product is used to forecast repeat rate . Volume is forecasted on basis of both the trial forecast and the repeat forecast.

Test Marketing (Contd. ) . Live Test Market (LTM) . To measure actual sales volume Controlled Behavior Scan Conventional normal channels. Track sales rate, trial, repeat Compare to goals and identify gaps Investigate and close gaps 26

Commercialisation National expansion of product Develop market rollout plan Can involve significant capital investment B ick & M t : E i t 27 Brick & Mortar : Equipment Can involve distribution costs Slotting fees : Sales incentives Build product into a Platform Maintain growth and sustain competitive advantage

New Product Development Levers

Time to Market . Prioritise development projects . Don t overload resources . Rapidly staff the project according to plan . Emphasise design re-use to minimise development cost & schedule . Capture and document requirements and specifications completely . Tightly manage requirements . Plan concurrent development . Tightly synchronise development activities . Learn to work with partial information . Prepare to roll out the product early . Involve subcontractors and suppliers in development . Plan and coordinate production requirements . Resolve production problems quickly . Create a comprehensive, realistic project plan . Obtain personnel's commitment to the project plan . Communicate project plans and responsibilities . Identify project staffing requirements . Plan development resource requirements . Allocate and manage resources . Use modular design approach . Standardise parts and materials . Balance testing and time-to-market considerations . Create electronic mock-up of the product .

Simulate & analyse product designs early to minimise late iteration and physical prototypes. . Tightly integrate analysis & simulation with design . Use rapid prototyping technologies . Use collaboration systems to facilitate communication

Points to Note . New Product Development Process is used to reduce the risk of failure, and produce new winning products . It should start with an opportunity identification step . The Fuzzy Front End considers a lot of alternatives . Business analysis occurs throughout the process . Stage Gates are built in: . At the concept test stage to justify development costs . At the test market stage to justify going to market. . The Marketing Plan includes a comprehensive set of plans that involve Sales, Finance, Promotions, Advertising and Production

Opportunities multiply as they are seized." 31 -Sun Tzu

Good Luck h // li k di /i / d b i 32 http://www.linkedin.com/in/anandsubramaniam