chap 008
DESCRIPTION
chapterTRANSCRIPT
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CRAVENS
PIERCY
8/eMcGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All
Rights Reserved.
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Chapter Eight
Planning forNew Products
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
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Planning for New Products
The Innovation Mandate
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PLANNING FOR NEW PRODUCTS
Importance of New Products Customer Driven Process Steps in New Product Planning Idea Generation Screening/Evaluating/and
Business Analysis Product and Process
Development Marketing Strategy and Market
Testing Commercialization Variation in the Generic Planning
Process
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Importance of New Products
Innovation at top of potential value drivers (Ernst & Young)
Innovation initiatives extend beyond new goods and services to include ideas, processes, and business practices
Organizations must build a culture of innovation
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New Product Planning as a Customer Driven
Process New product
classifications:
1. Newness to market
2. Newness to company
New product types:
– Transformational innovations
– New product category– Product line extensions– Incremental improvements
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High
Low
New productlines20%
Improvements/revisions to
existingproducts
26%
Additionsto existing
product lines26%
Repositionings 7%
Costreduction
s11%
New-to-worldproducts
10%
High
Newness to market
New
ness t
o c
om
pan
y
Size of circle denotes number of introductions relative to total.
Source: New Product Management for the 1980s, Booz Allen & Hamilton Inc. 1982.
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TM 5-1
Customer value analysis
Objective is to identify needs for:
1. New products
2. Improvements to existing products
3. Improvements in production processes
4. Improvements in supporting services
Finding Customer Value Opportunities
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TM 5-1
Matching Capabilities to Customer Value Opportunities
– Fit between capabilities and product offering
Transformational Innovations
– “new-to-the-world” ideas– Customers not always the
best guides
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CustomerExpectations
CustomerSatisfactionGap
ActualProductPerformance
OPPORTUNITIES
(1) New Products(2) Improvements(3) New and Improved Processes
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Characteristics of Successful Innovations
STRATEGIC INITIATIVES
Creating an Innovative
Culture
Leveraging Capabilities
Selecting the Right
Innovation Strategy
Developing and Implementing Effective New
Product Processes
Making Resource
Commitments
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Developing an Innovation Culture
Innovation Workshop for top executives to develop
an innovation plan. Innovation Statement highlighting objectives and
senior management’s role and responsibilities.
Training programs for employees and managers.
Communicate the priority of innovation.
Speakers to expose employees to innovation authorities.
Source: Thomas D. Kuczmarski et al., “The Breakthrough Mindset,” Marketing Management, March/April 2003, 43.
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The Innovation Strategy Spells Out Management’s
Priorities for New Product Opportunities
1. Set specific New Product Objectives.
2. Communicate the role of New Products throughout the organization.
3. Define the areas of strategic focus:
Product ScopeMarketsTechnologies
4. Include longer term discontinuous projects in the portfolio along with incremental projects.
Source: Robert Cooper, “Benchmarking New Product Performance,” European Management Journal, Feb. 1998, 1-7.
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CustomerNeeds
Analysis
BusinessAnalysis
Screeningand
Evaluation
IdeaGeneration
MarketingStrategy
Development
ProductDevelopment
Testing
Commercialization
NEW PRODUCT PLANNING PROCESS
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Achieving Cross-Functional
Interaction and Coordination
R & D
Operations
Marketing
Finance
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Coordination of new product activities by a high-level general manager
Inter-functional coordination by a team of new product planning representatives
Creation of a project task force responsible for new product planning
Designation of a new products manager to coordinate planning between departments
Formation of matrix structure for integration new product planning with business functions
Creation of a permanent design center
Responsibility for New Product Planning
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Idea search: targeted or open-ended?
How extensive and aggressive?
What specific sources are best for generating a regular flow of new product ideas?
How can new ideas be obtained from customers?
Where will responsibility for the new product ideas search be placed?
What are potential threats from alternative (or disruptive) technologies?
IDEA GENERATION
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BENETTON’S STRATEGY TO REVIVE APPAREL IDEA GENERATION
“We didn’t take advantage of the [industry’s] quick transformation,” says Silvana Cassano, the ex-Fiat manager who assumed the post of chief executive of Benetton Group on May 5.
The transformation saw the best retailers turn into cutting-edge users of digital technology. Benetton’s competitors-notably Spain’s Zara and Sweden’s H&M Hennes & Mauritz-have raised the bar for the entire industry. These retailers can beam new styles from the catwalk to the shop floor in less than a month-and at bargain prices. Both deploy sophisticated technology to track which items are selling and which aren’t, so winners can be speedily restocked and slow movers yanked down from the racks. They’ve got the look down, too-cool and minimal for the working women who love Zara, and over-the-top trendy for H&M’s teen fans. And Benetton’s look? Blan. “The Benetton brand is out of fashion,” says Sagra Maceira de Rosen, retail analyst at J.P. Morgan Chase & Co. in London.
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Cassano is out to change that. The message he delivered in his first encounter with shareholders was short and powerful: Benetton is going to refocus on the apparel business, which encompasses the Sisley and Benetton brands.
It’s no secret that Benetton’s core casual wear business has suffered neglect. In 1994, founder Luciano Benetton launched an ill-fated diversification into sports equipment, snapping up trophy brands such as Prince (tennis rackets), Rollerblade (in-line skates), and Killer Loop (snowboards). But the strategy foundered and last year, Benetton sold the entire equipment division, booking $190 million in write-offs. The company posted its first annual loss-$10.5 million, on revenues of $2.3 million.
Benetton’s Strategy (continued)
Source: “Has Benetton Stopped Unraveling?” Business Week, June 30, 2003, 76.
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METHODSOF
GENERATINGIDEAS
DirectSearch
LinkingMarketing
and Technology
FacilitatingLead UserAnalysis
CreativeMethods
National Policy
ExploratoryCustomerStudies
Alliances/Acquisition/Licensing
TechnologicalInnovation
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IDEA GENERATION
SCREENING(fit/feasibility)
CONCEPT EVALUATION
BUSINESS ANALYSIS
SCREENING, EVALUATING, AND
BUSINESS ANALYSIS
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Business Analysis
Revenue Forecasts
Preliminary Marketing Plan
Cost Estimation
Profit Projections
Other Considerations
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NEWPRODUCTCONCEPT
PRODUCTDEVELOPMENT
AND USETESTING
MARKETINGSTRATEGY
DEVELOPMENT
MARKETTESTING
LAUNCH
PRODUCT AND PROCESS
DEVELOPMENT
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Development of the new product includes:– Product design– Packaging design– Decisions to make or purchase
product components
Product Development Process:– Product Specifications– Industrial Design– Prototype– Use Tests– Process Development
Collaborative Development
Product and Process
Development
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PURPOSE OF
USE TESTS
Does it have therequired attributes?
Verifyclaims
Ideas forimprovements
Identify usesituations
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MARKETING STRATEGY AND MARKET TESTING
Marketing Strategy Decisions
– Market Targeting
– Positioning Strategy Market Testing Options
– Simulated Test Marketing
– Scanner – Based Test Marketing
– Conventional Test Marketing
– Testing Industrial Products
– Selecting Test Sites
– Length of the Test
– External Influences
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Less artificial than simulated testing
Costs less than full-scale market test
Test is controlled by using IRI’s 2300 panel members in each test city
Cable TV enables use of controlled ad testing
Tests take about 12 months
Costs are $250,000+
Scanner-based Test Marketing
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COMMERCIALIZATION
The Marketing Plan
– Complete marketing strategy
– Responsibilities for execution
– Cross – functional approach
Monitoring and Control
– Real – time tracking
– Role of the Internet
– Include product performance metrics with performance targets
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Market Target(s)
Marketing Program(s
)
Objectives
Marketing Strategy
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Technology Push Processes
Platform Products
Process – Intensive Products
Customized Products
VARIATIONS IN THE GENERIC NEW
PRODUCT PLANNING