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NEW PRODUCTS

MANAGEMENT
Merle Crawford
Anthony Di Benedetto
10th Edition

McGraw-Hill/Irwin Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 02

The New Products Process

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The Procter & Gamble
Cosmetics Saga
Starting point: senior management
commitment to new products.
P&Gs Cosmetics business unit had no clear
product strategy, unfocused product
initiatives, and too many customer segments
being targeted in short, a lack of focus.
P&G Cosmetics skillfully used all three
strategic elements and made the weak
business unit profitable.
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P&G Cosmetics and the PIC
Situation Assessment:
Underserved consumer market that wanted
quality facial product such as cleansers, eye
products, etc.
Supply chain was uncoordinated as production
and shipments were not tied to demand; market
forecasts were not driving shipping schedules.
PIC recommended a strategic focus on products for
the face other opportunities would not be pursued.

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P&G Cosmetics and the New
Products Process
P&G Cosmetics used a phased process like that
of Chapter 1.
Project teams established early in process.
Consumer research done early and used in the
process (the voice of the customer).
Tough evaluation steps were carefully
implemented as new products were compared to
best practices and benchmarks.

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P&G Cosmetics and the New
Product Portfolio
P&G Cosmetics systematically added new
products such that maximum buzz and
excitement was created in the
marketplace.
If already several eye makeup products on
the market, they would not immediately
launch another. Management called this
an initiative rhythm for product launch.

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P&G Cosmetics and the Role of
Effective Team Management
Senior Cosmetics executives were
committed to success as was corporate
level management.
Initiative Success Managers were hired to
lead strategy development, manage
evaluation meetings, train employees, etc.
The best team leaders were sought and
rewarded based on performance.
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The Phases of the New Products
Process

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The Evaluation Tasks in the New
Products Process
Opportunity Identification/ Direction;
Selection 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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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
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.

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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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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
(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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The Evolution from Concept to New
Product

Corresponding New Products Process Phases:


Opp. Identification Concept Generation Project Evaluation Development
Launch

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Methods for Accelerating Time
to Market
Have a clear product innovation charter.
Have a third-generation new products process
that permits overlapping phases.
Use a new product portfolio and careful project
selection to allocate scarce resources.
Focus on quality: get it right the first time.
Have an empowered cross-functional team.

Source: Robert Cooper (1993).

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Additional Techniques for
Accelerating Time to Market
Organization: not just an empowered team, but also effective
team leadership and focus on organizational learning and
knowledge transfer.
Intensify Resource Commitments: Integrate vendors and
resellers, get users involved and capture the Voice of the
Customer.
Design for Speed: use computer-aided design, rapid
prototyping, common components, get fast trial.
Rapid Manufacturing: standard processes, computer-aided
manufacturing, just-in-time delivery.
Rapid Marketing: Use rollouts, spend as needed to generate
awareness, offer trial purchasing.
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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 must be delivered, to achieve
success.
Speed to market with services is important, especially in
enhancing reputation, image, and customer loyalty.
Most important adjustments have to do with the customized
experience of each service customer.
Therefore the human interaction between service provider and
customer is of highest importance.
Consider how the customer evaluates the service: it may be
viewed as the sum of its parts.

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New Service Examples
Jet Blue: focused on friendliness, customized
experiences, easy communication by website,
stress on safety, gathers much customer
feedback.
FedEx: customers are co-creators and provide
early input, ethnographic studies suggest
opportunities such as greater access, more
digital services, and service offerings such as
photocopying (hence the purchase of Kinkos).

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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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Managing Breakthrough
Innovation
Incubation Stage
Involves customer and market interaction as well as
technical development.
Tolerate failure but learn from it (Google claims a 60%
failure rate on innovative products).
Longer and much more expensive than typical
business development, but required for breakthrough
opportunities.
Discovery-Driven Planning
Forecasts and plans evolve as more information
becomes available.
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The Probe-and-Learn Process for
New-to-the-World Products
Focused (limited-performance) prototypes
Example: Iomega Zip Drive: over 50
prototypes were built to test out ideas with
customers.
Lickety-Stick iterative process: non-
linear, more flexible process in which
dozens of prototypes may be tried
(lickety) before settling on one that
customers like (stick).
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