NEW PRODUCT PROCESSES

Lecture By: Dr. Y.S. Cheah

Sunway University Business School
Sunway University

Chapter 2
The New Products Process

The Basic New Product Process

Figure 2.1

Phase 1: Opportunity Identification/Selection

Phase 2: Concept Generation

Phase 3: Concept/Project Evaluation

Phase 4: Development
Phase 5: Launch
Note: the linear sequencing is not typical in real life because in real world the
activities will overlap. This is important for accelerating time to market of new
product.

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The Basic New Product Process

Important

to note what else is involved?

Accelerate time to market (Article No. 8 in ELearn)

Multifunctional programme All functions and (increasingly customers) work together
on a: Project to develop New Product/Services

Cross-functional team

The Evaluation Tasks in the New Products

Process
Figure 2.2

Opportunity Identification/
Selection

Direction;
Where should we look?

Concept Generation

Initial Review:
Is the idea worth screening?

Concept/Project Evaluation

Full Screen:
Should we try to develop it?

Development

Progress Reports:
Have we developed it?

Launch

Market Testing:
Should we market it?
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The Evaluation Tasks in the New Products

Process
Figure 2.2

Concept Generation

Concept/Project Evaluation

Initial Review:
Is the idea worth screening?

Full Screen:
Should we try to develop it?

Development

At concept evaluation phase, careful screening is required, as concept that

pass this phase move on to development and begin incurring significant
costs.

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The Evaluation Tasks in the New Products

Process
Figure 2.2

Launch

Market Testing:
Should we market it?

At launch, the main questions concern whether the product should be

launched, and later, how well it has done as compared to expectation.

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Phase 1: Opportunity Identification/Selection

Active and passive generation of new product
opportunities as spinouts of the ongoing
business operation.
New product suggestions, changes in marketing
plan, resource changes, and new needs/wants
in the marketplace.
Research, evaluate, validate, and rank them (as
opportunities, not specific product concepts).
Give major ones a preliminary strategic
statement to guide further work on it.

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Activities that Feed Strategic Planning for

New Products
Ongoing marketing planning (e.g., need to
meet new aggressive competitor)
Ongoing corporate planning (e.g., senior
management shifts technical resources
from basic research to applied product
development)
Special opportunity analysis (e.g., a firm
has been overlooking a skill in
manufacturing process engineering)
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Sources of Identified Opportunities

Helps identify the following: -

An underutilized resource (a manufacturing

process, an operation, a strong franchise)
A new resource (discovery of a new material
with many potential uses)
An external mandate (stagnant market
combined with competitive threat)
An internal mandate (new products used to
close long-term sales gap, senior
management desires)
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Phase 2: Concept Generation

Select a high potential/urgency opportunity, and
begin customer involvement. Collect available
new product concepts that fit the opportunity and
generate new ones as well.
The Product Concept stage
Most fruitful ideation involves identifying
problems, people or businesses have and
suggesting solutions to them.

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Phase 3: Concept/Project Evaluation

Evaluate new product concepts (as they
begin to come in) on technical, marketing,
and financial criteria.
Rank them and select the best two or
three.
Request project proposal authorization
when have product definition, team,
budget, skeleton of development plan, and
final PIC.

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Phase 3: Concept/Project Evaluation

FUZZY FRONT END
Screening or pre-technical
evaluation
Range from quick look,
discounted cash-flow to net
present value.

Next: First formal type of

evaluation end-user
screening or technical
screening

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Phase 3: Concept/Project Evaluation

Concept test
Full screen

} Use scoring model of some type that

} results in a decision to go ahead or

quit.
If go ahead Project evaluation evaluate the plan
proposed for capitalisation. Involves preparing a
statement of what is wanted from the new product.
Firms using QFD (Quality Function Deployment) see this
as first list of customer needs Product description or
definition. In text : Product protocol Why? It means
agreement amongst various groups before extensive
technical work begins.
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Stages of Concept/Project Evaluation

Screening (pretechnical evaluation)

Concept testing
Full screen
Project evaluation (begin preparing
product protocol)
The first stages of the new products process are sometimes
called the fuzzy front end because the product concept is
still fuzzy. By the end of the project, most of the fuzz should
be removed.
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Phase 4: Development (Technical Tasks)

Specify the full
development process, and
its deliverables.
Undertake to design
prototypes, test and
validate prototypes against
protocol, design and
validate production
process for the best
prototype, slowly scale up
production as necessary
for product and market
testing.
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Phase 4: Development (Technical Tasks)

This phase the item acquires a finite form
a tangible good or a specific sequence of
resources and activities that will perform a
service.
Sketch of a marketing plan and gradually
fleshed out (made more useful):
Resource Preparation (esp. new to world
product)

Need for special training,

New reward systems,
Revision in the firms usual project review system and
Special permissions.

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Phase 4: Development (Technical Tasks)

The Major Body of Effort
Development of 3 things:
Items or Services itself
The Marketing Plan for it
The Business (Financial) Plan

Items/Services
The concept (product) stream involves:
Industrial design& bench work (goods) or systems
design (services), prototypes, product specifications
and so on.

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Phase 4: Development (Technical Tasks)

Marketing Plan
Periodic marketing scans (to keep up with the
changes in the market)
Make marketing decision strategic and tactical
Marketing decisions are completely interlaced
with technical decision on:
Package design
Brand name selection
Tentative marketing budgets

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Phase 4: Development (Technical Tasks)

Comprehensive Business Analysis
If the product is real and the customer likes it,
some firms make a comprehensive business
analysis before moving into launch.
Financial analysis still not firm, but good enough
to assure management that this project will be
worthwhile.
Financials will be tightened during the launch
phase where the actual Go/No Go points is
reached.
How soon the Go depends on the industry and
the investment required.

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Phase 4: Development (Marketing Tasks)

Prepare strategy, tactics, and launch details

for marketing plan, prepare proposed
business plan and get approval for it,
stipulate product augmentation (service,
packaging, branding, etc.) and prepare for it.

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Phase 5: Launch
Commercialize the plans and prototypes from
development phase, begin distribution and sale
of the new product (maybe on a limited basis)
and manage the launch program to achieve the
goals and objectives set in the PIC (as modified
in the final business plan).

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Phase 5: Launch
Launch or Commercialization
The launch decision is more of attitude
Most projects dont have a Go/No Go decision
Usually the last few weeks before and after
announcing the new product is really the launch
phase.
Everything is rush/everything is critical
Critical step (if company takes it) Market Test for
the Test Market.
Public announcement of the new product the
advertising, sales call and so on The Launch
Launch Management
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The Life Cycle of a Concept

Figure 2.3

Corresponding New Products Process Phases:

Opp. Identification Concept Generation Project Evaluation Development Launch

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Techniques for Attaining Speed in a New

Product Project
Figure 2.4

Accelerating Product Development through

Managing the Organization

Use projectization: project matrix and venture teams.

Use small groups to thwart bureaucracy.
Empower, motivate, and protect the team.
Destroy turf and territory.
Make sure supporting departments are ready.
Clear the tracks in shared departments.

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Techniques for Attaining Speed

(continued)

Figure 2.4
(contd.)

Intensify Resource Commitments

Integrate channel members and customers, use parallel
or concurrent engineering

Design for Speed

Computer-aided design, rapid prototyping, design-aided
manufacturing, common components

Prepare for Rapid Manufacturing

Simplified documentation and process planning, just-intime delivery (flexible manufacturing)

Prepare for Rapid Marketing

Use rollouts, invest in immediate market awareness,
facilitate trial purchasing
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Prototyping

Prototyping

Rapid Prototyping -SLS

Wax Sculpting

Fabricated Model

Cast Urathane Samples

Vacuum Forming

Key Characteristics of Short-Cycle-Time Firms

Figure 2.5

Extensive user involvement early in the

new products process.
Cross-functional teams are dedicated to
the new product.
Suppliers are extensively involved.
The firms adopt effective design
philosophies and practices.
The most adept firms are effective at
organizational learning.
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What About New Services?

Successful new services tend to come from
firms that use a systematic process much like
the new products process the tools all fit.
Iterations may be more frequent since they
are less expensive.
Unique, superior service, providing value and
benefit as perceived by the customer, must be
delivered, to achieve success.
Speed to market with services is important,
especially in enhancing reputation, image, and
customer loyalty.

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What About New-to-the-World Products?

The challenges are different, but the first phase remains
the same: opportunity identification and development of
a strategic statement.
Clear connection required between the radical innovation
and the firms strategic vision.
A firm may establish a transition management team to
move the R&D innovation project to business operating
status.
The new products process is more explanatory: need to
bring in Voice of the Customer (VOC) early.
Lead users may be critical here (see Chapter 5
discussion).
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The Probe-and-Learn Process for New-to-theWorld Products

Focused (limited-performance) prototypes

Example: Iomega Zip Drive: over 50
prototypes were built to test out ideas with
customers.

Lickety-Stick iterative process: nonlinear, more flexible process in which

dozens of prototypes may be tried
(lickety) before settling on one that
customers like (stick).
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The Probe-and-Learn Process for New-to-theWorld Products

END OF LECTURE

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