NEW PRODUCTS MANAGEMENT

McGraw-Hill/Irwin – Merle Crawford Anthony Di Benedetto 9th Edition Copyright © 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.

PART ONE

OVERVIEW AND OPPORTUNITY IDENTIFICATION/SELECTION

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Opportunity Identification and SelectionFigure I.1

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Chapter 1

The Menu

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Why Study New Products?

• New products are big business!– $100 billion spent annually just on technical phase.– Uncounted new products are marketed every year.– A single Web site may market hundreds or thousands

of products.– For many leading firms, a third or more of sales comes

from products that are less than five years old.

(3M)(TOYOTA Prius)(i Tune)(49% sale from new product)

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Innovation as an Investment

• Investment in innovation is critical to firm growth and even survival.

• Radical innovations (those that displace or obsolete existing products) are particularly crucial to the firm.

• Technology leaders view “business growth through innovation” as a major challenge facing them today. (ex. Huang)

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Some Hot New Products

• Apple iPod, iPod Nano, and iPhone• Motorola PEBL cell phone• Yamaha Morphous scooter• Microsoft Xbox 360 and Nintendo’s Wii• Kodak EasyShare-One camera• Plantronics Discovery 640 Bluetooth headset• Dyson Root 6 Hand Vacuum• Merck Gardasil cancer-preventing vaccine• Mazda CX-7

Can you add more?

Figure 1.1

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Products of the Future

• Intelligent refrigerators will track food inventories, and will either provide a hard-copy shopping list or send an electronic list to a home-delivery service.

• Intelligent wallpaper will transform a wall to a television, a computer screen, works of art, etc.

• Robotic lawn mowers will tend the grass within any specified boundary.

• “Nanny-cams” hidden in teddy bears permit parents to watch their children at daycare; camera-surveillance systems will keep an eye on latchkey kids home alone.

• Holographic storage will be used to store and retrieve home videos.

• Lasers and decay-preventive gum and toothpastes will minimize the need for the dentist’s drill.

• Robots will dispense gasoline, and know your preferred grade.

• “Smart” heart pacemakers will be placed in the wrist.

Source: Marian Salzman and Ira Matathia, “Lifestyles of the Next Millennium: 65 Forecasts,” The Futurist, July-August 1998.

Figure 1.2

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Global Product Development

• Procter & Gamble products are developed globally in the firm’s 22 research centers located in 13 countries. Market research and testing of the Swiffer occurred in the U.S. and France.

• Apple did product design and customer requirement definition in the U.S. and Japan in developing the iPod.

• Ikea identifies unmet customer needs and commissions in-house and outsourced designers to compete for the design. Worldwide manufacturing partners compete for the manufacturing rights. The firm also has excellent global logistics for product delivery to stores and customers.

Source: Loida Rosario, “Borderless Innovation: The Impact of Globalization on NPD Planning in Three Industries,” Visions, June 2006.

Figure 1.3

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Not All New Products Are Planned

• Microwave ovens (Pop con)

• Aspartame (NutraSweet)

• ScotchGard fabric protector

• Teflon

• Penicillin

• X-rays

• DynamiteIn each case, an accidental discovery -- but someone knew they had something when they saw it!

Figure 1.3

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What Is a New Product?• New-to-the-world (really-new) products (10% of new products):

Inventions that create a whole new market. Ex.: Polaroid camera, Sony Walkman, Palm Pilot, Rollerblade skates, P&G Febreze and Dryel.

• New-to-the-firm products (20%): Products that take a firm into a category new to it. Ex.: P&G brand shampoo or coffee, Hallmark gift items, AT&T Universal credit card, Canon laser printer.

• Additions to existing product lines (26%): Line extensions and flankers that flesh out the product line in current markets. Ex.: Tide Liquid, Bud Light, Apple’s iMac, HP LaserJet 7P.

• Improvements and revisions to existing products (26%): Current products made better. Ex.: P&G’s continuing improvements to Tide detergent, Ivory soap.

• Repositionings (7%): Products that are retargeted for a new use or application. Also includes retargeting to new users or new target markets. Ex.: Arm & Hammer baking soda sold as a refrigerator deodorant; aspirin repositioned as a safeguard against heart attacks; Marlboro retargeted as a man’s cigarette.

• Cost reductions (11%): New products that provide the customer similar performance but at a lower cost. May be more of a “new product” in terms of design or production. (自有品牌 )

Figure 1.5

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Easier Said Than Done?

• Top innovators such as Intel and Gillette stay focused and committed to innovation as a long-term strategic goal.

• Without such focus, firms can fall back to “tweaking” existing products and relying on minor product improvements, instead of true product innovation that results in new-to-the-world products or really new product lines.

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What About…

• New Services? (跑腿幫 )

• New Business-to-Business Products?

• New International/Global Products?

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What Is a Successful New Product?

90

40

10

0102030405060708090

Sometimes Quotedin Press

Research Reports Sometimes Claimed

Percent of Products that Fail

Although you may hear much higher percentages, careful studies supported by research evidence suggest that about40% of new products fail -- somewhat higher for consumerproducts, somewhat lower for business-to-business products.

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Classic Brand Names

• Budweiser• Ivory• Coca-Cola• Maxwell House• Kodak• General Electric• Steinway• Wrigley• Kleenex• Waterford

• L.L. Bean• Ford• John Deere• Maytag• JCPenney• Sears• Colgate• Hershey• Gillette• Ticonderoga

Which of these have the most value today as launch padsfor new products?

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The Conflicting Masters of New Products Management

• Three inputs to the new products process: the right quality product, at the right time, and at the right cost.

• These conflict with each other but may have synergies too.

• Issue: how to optimize these relationships in a new product situation.

Quality

Time Cost

Value

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Breakthrough Innovations that Changed Our Lives

• Personal Computer

• Microwave Oven

• Photocopier

• Pocket Calculator

• Fax Machine

• Birth Control Pill

• Home VCR

• Communication satellite

• Bar coding

• Integrated Circuit

• Automatic Teller

• Answering Machine• Velcro Fastener• Touch-Tone Telephone• Laser Surgery• Apollo Lunar Spacecraft• Computer Disk Drive• Organ Transplanting• Fiber-Optic Systems• Disposable Diaper• MS-DOS• Magnetic Resonance Imaging

Figure 1.6

This list was compiled in the early 1990s. Since then one would certainlyhave to add the Internet/World Wide Web. Anything else you would add?Which would you delete?

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So, Does All Of This Actually Work?

• Check the efforts of the best product developers in the business: the Outstanding Corporate Innovator award winners as selected by the Product Development & Management Association

• Recent winners: Hewlett-Packard, Dow Chemical, Maytag, Harley-Davidson, Bausch & Lomb, Keithley Instruments, New Pig Corporation.

• All have had a sustained commitment to innovation, with remarkable results in terms of new products.

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