The Marketing Oriented Technical Product Development Program

JACK G. CROCKETT ITHIN A company in product Wwork, the following actively engaged exist. development situation mig'ht All market and consumer data have been assembled and reviewed pertaining to a new product category of current interest to the company. Once management approval has been given, the New Product Manager takes over the assignment and in due time contacts each department head who will be involvedEngineering, Accounting, Research and Development, and so on. In his discussion with the Research and Development Manager, he conveys what management wants in the product. Out of these meetings comes an agreed set of specifications. Following similar meetings with other departments, the New Product Manager then coordinates all phases, including R & D, leaving the operating details to each participating department. The R D Manager then assigns the pi*oject to the appropri& ate laboratory, which in turn establishes the work schedule considered necessary to achieve success within the given time. Figure 1 illustrates this line of communication between the New Product Manager and the R & D Manager, and the subsequent communication and direct line of authority between headquarters R & D and the laboratory. The laboratory's direction from the main office has been in the form of general specifications. Initial experimentation is then done in a number of directions, to make sure "all bases are covered." For example, work might be done concurrently on a dry powder, a liquid form, and a dehydrated product. These variations are then evaluated, screened, reworked, re-evaluated, and so on. Eventually, final variations are selected for consumer testing by the company's Marketing Research Department. The test is then run as planned, and results come back with a rather horrifying answerthe product is rejected by the consumer panel. The next move is quite obviousback to the laboratory but this time with more specific direction from the consumer viewpointmore work, more experiments. What are the implications of this brief illustration ? 1. There was a considerable investment in time, without productive results, and with further delays weakening any strategic position the company may have had when it began to develop the product. 2. The added costs of going back to rework the program could push expenditures over those funds budgeted for the project. 3. What happened refiects unfavorably upon R & D's ability to develop the right type of product. 42

Managemen-I- has had fo endorse huge investment spending programs on new product development to insure market position and profits for the future. This places a tremendous burden upon the New Product Department. This article shows why the responsibilities for communicating and administering the technical development phases should be assigned to the central Marketing Research Department.

The Marketing Oriented Technical Product Development Program Lines of Communication How can the situation be eased? How can the laboratory be more productive? How can we minimize time requirements on the projects? How can the exceedingly high cost of development work be reduced? There is a simple -Answerbetter planningand better planning is possible by improving the communication and coordination procedures as they pertain to the development of new products. This does not imply that the New Product Department is functioning inadequately in its role of coordinating the overall projectthat is, preparing the complete marketing, plan, establishing payout period, and so on. There is a suggestion, however, that the range of coordinating responsibilities is usually .so broad in scope that there is seldom any provision for working in great depth in any one specific area, particularly in tbe vitally important one of technical product development. The desired improved procedures for which we are asking must take the form of a more direct and continuous relationship among those most intimately concerned with the product: management people, consumers, and E & D people (including the laboratory). In other words, it would be ideal if the laboratory technician could deal directly with top management to determine the precise direction for product development work. The technician would also need the same face-to-face contact with the product's user to determine specifications that are oriented to consumer wants and usage patterns. He also would want to go back to the consumer in the early stages of developmental work to verify that he is moving in the correct direction. While this elimination of all intermediate levels of discussion and correspondence would certainly go a long way toward correcting areas of misinterpretation, this is impractical. The next best solution would be to simplify the lines of communication to as much a direct one as is possible. This can be accomplished by utilizing, a single coordinating department, already in existence in most companies. At most, there would have to be some slight modification of the organizational structure and a redefining of the areas of responsibility. Use of Marketing Research Department The responsibility for coordinating and communicating- all information pertaining to product development should be given to the corporate or centralized Marketing Research Department. This does not convey any truly earth-shattering concepts, for the numerous contributions by marketing research in the new products area are known to most marketing people: for example, the assembling of data from both primary and secondary

43

Vice Pres. Marketing

Vice Prea. Manufacturing

New Producta

Marketing Ee search

Research elopnient

Der-

Specialist

Supervisor ConB/Product Research

Laboratory Director

Prajeot Supervlaor

of authority and camminioation

* FIGURE

- llnea of connnmication only

1. Organization chart showing existing lines, of authority and communication.

sources and their analysis in terms of new product opportunities; the use of advanced techniques in providing guidance on the consumer's susceptibility to a product before it is developed; consumer product testing to measure acceptance. The intent, therefore, is not merely to advocate better ways of doing the above activities, but rather to suggest supplementing these by having marketing research work more directly with the laboratories and on a continuing basis during all stages of the product development work. Advantages There are several advantages: 1. Marketing research has the closest communication with consumers and, therefore, knows more about their likes and dislikes, idiosyncrasies, and so on, than any other group in the company. This firsthand knowledge can be conveyed directly to

ABOUT THE AUTHOR. Jack &. Crocltetf is Manager, Marketing Research Department, the Nestle Co., Inc., White Plains, New York. He is presently on one year's leave from his position to attend the advanced Management School, I.M.E.D.E. (Institut pour I'Etude des Methodes de Direction de I'Entreprise), Lausanne, Switzerland. ^^^ A graduate of the University of Pitts^ H burgh, Mr. Crockett also holds an M.S. degree in Marketing Research from Colum bia University.

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Journal of Marketing, July, 1962 detailed work schedules. The primary concern would be to pre-select those various stages of development that could require some form of measurement and evaluation. This third function is clearly the "nuts and bolts" of the proposed approach, for it is the face-to-face contacts that would produce a workable relationship with the laboratory. Needless to say, the constant reminder coming from the consumeroriented marketing research people would go a long way toward getting these non-marketing people to think from this viewpoint. 4. Establish properly designed techniques for evaluating laboratory progress and administer the overall measurement program. This would utilize all known methods of experimental design, controlled-panel testing, and in inhome usage techniques. The work would be administered at both the laboratory level and through the centralized marketing research function, with final choice depending upon the stage of development. 5. Analyze and interpret all testing data. All information accumulated from the laboratories' testing procedures would be analyzed and interpreted by marketing research personnel. The purpose, of course, would be to interpret the data from the raarketing and consumer viewpoint, not just from the technical viewpoint. Authority and Relationships To bridge the gap between the main office and the laboratory, it would be extremely important that a trained research analyst be placed on location at the laboratory, to provide the necessary service to the technicians on an as-needed basis. He should command respect and be able to stand by his convictions, regardless of possible pressures. This analyst would be responsible for administering the laboratory testing program in accordance with tbe policies established by the centralized Marketing Research Department. While his range of activity would be specifically defined, there should be sufiicient latitude to enable him to exercise considerable judgment in the selection of test designs and analytical approaches. Overall responsibility for the entire program, of course, would fall on the Marketing Research Manager. This analyst would be an employee oi the laboratory, reporting directly to its administrative head. The relationship with the main office Marketing Research Department -would be an indirect one, limited strictly to functional matters and nothing else. This means an exchange of ideas, reviewing of analysis and interpretation, etc., but with no administrative authority implied. In addition to this functional relationship, the M;\rkeiing Research Manager (or appropriate sup-

the technical people, as they attempt to orient the product to the market. 2. The department reports directly to some aspects of top managementthe Vice President of Marketing, the Executive Vice President, or President> and these are the people with overall responsibility for providing new product direction. 3. The personnel are trained and experienced in the use of more advanced techniques of design and analysis, much more so than any other marketing group in the company. These characteristics would encourage a closer working relationship with laboratory people of similar aptitudes. 4. The forte of the marketing research people is their objective, systematic approach to analyzing and interpreting data. These aspects are vital in providing a direction for product work and in evaluating progress at the laboratory. 5. The department is, in itself, a coordinating unit within the marketing function, acting as the link between the consumer and marketing management. This additional activity would merely extend the coordinating function into other areas within the company, where a knowledge of the consumer is of importance. Five Functions There are five specific functions to be performed by the Marketing Research Department, in order to bring about a market-oriented program that goes beyond the concept stage and actually works. 1. Assist marketing management in planning product research programs. The Marketing Research Department's continuous analyses and investigations of consumers and markets put it in an ideal position to spot trends, determine new product opportunities, and plan changes in existing products as competitive needs warrant. 2. Define specific profiles of the new products based upon consumer and market data. All available data would be studied to define usage patterns, awareness levels, needs and attitudes, so that the product specifications could be closely attuned to the consumer. When none is available, marketing research would have the opportunity to recommend and execute the proper program of assembling this information. All this work, of course, would be done prior to the assignment being given to the Research and Development people. 3. Work directly with the laboratory in planning the project from the viewpoint of what stages of development to measure and evaluate progress. After the Research and Development Manager has programed the work with the laboratory, marketing research would help to establish the

The Marketing Oriented Technical Product Development Program

45

vice Prea. Uarketlng

Vioe Fres. Manufaoturing

Sew Prod-uots

Manager Uaricetlng Research

Manager Research i Dovelopment

Specialist

Supervisor /

Laboratory Direotor

Reaearoh inalyat

ProJeoE
Superriaar

n I

__ ^^ 4_^

- Lines of authority and communication - Lines of canmunioatlon on^ - Line of functicmal authority and commmicatioii

FIGURE

2. Organization chart showing proposed changes in relationships.

ervisor) would also deal with other main office departments. Most frequently this would be the K & D Department and the New Product Department, as consumer and market data are communicated to them for the purposes of defining and evaluating new products. Figure 2 illustrates the positioning of this analyst within the laboratory's organization and the necessary lines of communication, direct and functional authority, necessary to implement the program. Three Control Devices With the authority and responsibility would go the means of controlling the program, particularly since it is based on functional rather than direct administrative concepts. The means by which this control can be exercised are threefold. 1. Establish procedures for initiating and planning assignments, designed to measure the laboratory's progress on projects. A project request form, request for research, or some other similar procedure would suffice. Most established departments already utilize some such device, and so its use would merely be extended into this new area. As a new project is scheduled at the laboratory, the request would be completed by its Research Director and forwarded to the Marketing Research Manager at headquarters, with a copy going directly to the analyst at the laboratory. In

addition to initiating the project, the form would provide a place to state the necessary background information, time requirements, etc., so that the testing methods could be realistically planned. 2. Establish the necessary proced^ires regarding testing techniques and controls to measure against. A study plan device would be one way of doing this. In many companies, departments use a similar method to plan out their individual projects internally. When the analyst at the laboratory would receive his copy of the request form just described, he would be guided by it in developing an overall plan for measuring progress of the project, covering stages of testing, techniques to use, time and money requirements, etc. This would be reviewed and discussed with tbe person responsible for this work in the centralized research department, and when approved, "generalized" in layman terms as the overall proposed method of evaluating the specific laboratory's project. This would then be approved by appropriate department heads (probably Marketing Research and R & D), and the analyst would have his direction for administering the assignment. A second requirement is to develop standard operating procedures on testing techniques, so that the analyst at the laboratory can operate successfully within these prescribed policies in fitting the necessary measurement devices to the specific problem. For example, in testing for preference of one product over another, the test would almost always be preceded by some form of evaluation, to make sure there are enough differences to justify a preference test. While a number of techniques are available, the specific one to use could be left to the discretion of tbe analyst. S. Maintain control over the monies budgeted for consumer evaluation of products at all stages of testing. In companies where the entire marketing, research budget is centralized within the Marketing Research Department, it would need to be enlarged only slightly to cover the expended activity. In other companies where the department has no marketing research services budget, the Marketing Research and R & D Managers would develop the budget jointly, determining amounts of R & D money that would be required to assess the varied projects over the coming year; and then the Marketing Research Department would be responsible for controlling the budget. Three Steps The objective, of course, is to obtain a true evaluation of the laboratory's progress during early development stages, and also to measure the ultimate

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Journal of Marketing, July, 1962 rather a directional one. The results of this testing, step are then analyzed and interpreted in the light of how the experts evaluated the same products. As refinements are indicated, a new cycle of development is completed until the "ultimate" in this product has been achieved. The product is then ready for a final large-scale test, to confirm that it really is as good as the small panels indicated. 3. Final in-home test. The final large-scale test is usually carried out under as near normal conditions as can be duplicated. They are large enough in scope to measure sectional differences that may occur, as well as an analysis by major brand-using families. The views expressed in this article are based upon the principle of direct coordination and communication as the key to better planning. The need is to expand marketing research functions, by extending responsibilities into a nonmarketing area.

user's reactions to the product as quickly as possible before subsequent efforts are expended by the laboratory at final refinements. Three clearly-defined steps will cover most situations. 1. Initial evaluation hy 'panel of experts. This procedure, when carefully designed and controlled, will produce a valid, objective measurement of what the laboratory experts themselves think about the range of new product variations they have developed. Note that the evaluation at this stage is primarily for screening purposes, and in no way is to be taken as a measurement of preference by these experts. The only objective is to please the person who buysthe consumer. 2. Initial consumer acceptance testing. The screened products are then tested among small panels of consumers, usually ranging in sizes from 25 to 100. At this stage there is not so much interest in obtaining a representative reaction, but

^MARKETING MEMO

Sales Control and Automation , . .

Probably at this very moment some outwardly successful, intelligent, and competent vice-president in charge of sales for a nationally known and respectfully regarded organization is addressing the dignified meeting of a business management group. He is telling the attentive assemblage all about the greater efiiciency, control, and coordination obtained with the use of electronic computers and recorders for charting the individual salesman's activity. He is describing, eloquently and fervently, the brilliance and economy of this latest manifestation of managerial sagacity. Instead of the old-time sales report, his charges now record every movement of their peripatetic migrations on articulated cards which are consumed and digested by the business machines at the home office. The verdicts rendered by the awesome electronic marvels are unassailable, unchallengeable, and beyond reproach. Truly, a modern Oracle of Delphi intestined with diodes. The pathetic but realistic truth is that every word this vicepresident in charge of sales utters, each pious statistic he cites, the conclusions he offersall are apocryphal drivel, as meaningless as a politician's platitudes, utterly devoid of sense or truth. No, the machine has not lied to him. The electronic creation, with its transistorized arithmetic, functions perfectly, but it has been betrayed by a diet of falsificationthe cards. The cards represent not the truth, but sincere men's ability to triumph over well-oiled machinery. Frederick Pederson, "You Can't Control Salesmen," Industrial Marketing,
Vol. 46, No. 13 (December, 1961), p. 98.