Summary New Products Management – 12th edition
Chapter 1 – The Strategic Elements of Product Development
• The reason firms invest in new products is that they hold the answer to the most firms’ biggest
problems (a successful new product does more good for a firm than anything else). Another
reason for studying about new products is that the new products processes is exceedingly
difficult.
• Reasons why products fail are that the firm doesn’t understand the customer; underfunds the
required R&D; doesn’t do the required homework before development (ready-fire-aim
approach); doesn’t pay enough attention to quality; lacks senior management support; chases
a moving target.
• Product development has become more challenging due to increased globalisation. Firms are
seeing new product development as a global process in order to take advantage of worldwide
opportunities and increase their efficiency and effectiveness of innovation.
• Firms with a global innovation culture have the most effective global new product programs.
Having a global innovation culture means that a firm is open to global markets, mindful of
differences in customer needs and preferences, and respectful of different subsidiaries around
the world.
• The new products team ideally is cross-functional, comprising personnel from marketing, R&D,
engineering, manufacturing, production, design, and other functional areas as well.
• Heuristics are rules of thumb that firms have found work for them.
• The term product innovation applies to the total operation by which a new product is created
and marketed, and it includes innovation in all of the functional processes.
• Sometimes the new product process is accidental, or serendipitous.
• The term new product can mean different things to different people.
- New-to-the-world products, or really new products: inventions that create a whole new
market.
- New-to-the-firm products, or new product lines: products that take a firm into a category
new to it, the products are not new to the world but are new to the firm.
- Additions to existing product lines: ‘flanker’ brands, or line extensions, designed to flesh
out the product line as offered to the firm’s current markets.
- Improvements and revisions to existing products: current products made better.
- Repositioning: products that are retargeted for a new use or application.
- Cost reductions: new products that simply replace existing products in line, providing the
customer similar performance but at a lower cost.
• The number one reason for success is a unique superior product.
• The specific jobs in the new product field are: the functional representative (e.g. marketing
researcher or a production planner); the project manager or team leader; the new products
process manager (responsible for helping project managers develop and use good new
product processes.
• Three strategic elements underlying product development are:
- New products process: takes the new product idea through concept evaluation, launch
and postlaunch.
- Product innovation charter: essentially a strategy for new products.
- A well-managed product portfolio: helps the firm assess which new products would be
the best additions to the existing product line.
• The basic new products process: opportunity identification and selection → concept
generation → concept/project evaluation → development (includes both technical and
marketing tasks) → launch. (phases are not sequential but overlapping)
• Product development is truly multifunctional, where all functions work together on a cross-
functional team to accomplish the required tasks.
, • Each phase of the basic new products process is always followed by a Go/No Go decision. An
evaluation task that includes conditional Go decisions is sometimes called a fuzzy gate.
• New products process might look very different to new-to-the-world, breakthrough products
as compared to more incremental new products.
• Characteristics as overlapping phases, fuzzy gates and flexibility are feature of what is called
the third-generation new products process, which is the way most firms interpret the basic
new products process.
• The product innovation charter (PIC) is developed by senior management and provides
guidance to all functional areas involved in innovation, to avoid that any idea would seem to
be all right, which leads to too many underfunded products.
Chapter 2 – The New Products Process
• The product innovation charter (PIC) is a systematic way for managers to develop a new
product strategy that considers the goals for their product innovation efforts and how these
efforts fit overall business strategy.
• The new products process does not usually begin with a new product idea, and only ends
when the new product is successful, not when it is launched.
The phases in the new products process
• Phase 1: opportunity identification
and selection.
- Three main streams of activity
feed strategic planning for new
products: ongoing marketing
planning, ongoing corporate
planning, and special
opportunity analysis.
- From these three activities, the
following opportunities can be
identified: an underutilized
resource, a new resource, an
external mandate, an internal
mandate (e.g. the product
innovation (/acquisition) gap.
- The process of creatively
recognizing opportunities is
called opportunity identification.
• Phase 2: concept generation.
- Problem find-solve approach:
the most fruitful ideation
involves identifying problems
people or businesses have and
suggesting solutions to them.
• Phase 3: concept/project evaluation
- Before development work can
begin on new ideas, they need to
be evaluated, screened, sorted out; this activity is sometimes called screening or pre-
technical evaluation.
- A concept test is used to see what potential consumers thought about a concept, these
views all come together in what is often called the full screen.
- If the decision is to go ahead, the evaluation turns into project evaluation, where we no
longer evaluate the idea but rather the plan we propose for capitalizing on that idea.
, - Firms use Quality Function Deployment, for which a more common term is product
description, product definition, or product protocol, which involves a statement of what
is wanted from the new product (the benefits).
- The first three phases comprise what is called the fuzzy front end or simply front end (of
the new product process).
• Phase 4: development
- Resource preparation; also includes preparing the team.
- The major body of effort: the item or service itself, the marketing plan for it, and a
business (of financial) plan that final approval will require.
- If the product is real and customers like it, some firms make a comprehensive business
analysis before moving into launch (final Go/No Go decision).
• Phase 5: launch
- The term launch, or commercialization, has described that time or that decision when the
firm decides to market a product (the Go in Go/No Go).
- The critical step is the market test, a dress rehearsal for the launch, and managers hop
any problems discovered are fixable between dress rehearsal and opening night.
- Planning for the launch management: when spacecraft are launched, a plan of tracking
has been carefully prepared.
• Evaluation tasks throughout the new products process:
- Phase 1: opportunity concept – a
company skill or resource, or a
customer problem.
- Phase 2: idea concept – the first
appearance of an idea; stated concept
– a form or a technology, plus a clear
statement of benefit.
- Phase 3: tested concept – is has passed
an end-user concept test, need is
confirmed; fully screened concept – it
passes the test of fit with the
company’s situation; protocol concept
– a product definition.
- Phase 4: prototype concept – a
tentative physical product or system
procedure, including features and
benefits; batch concept – first full test-of-fit with manufacturing; process concept – the full
manufacturing process is complete; pilot concept – a supply of the new product enough
for field testing with end users.
- Phase 5: market concept – output of the scale-up process from the pilot; successful
concept (i.e., new product) – it meets the goals set for it as the start of the project.
• A complementary process to the phased new product process is agile product development.
• Agile-Stage-Gate, a blending of agile product development with the traditional new products
process, has been successfully employed with computer hardware and other manufactured
goods.
• Accelerated product development (ADP): speeding the product to market; accelerating time
to market offers many benefits to the firm.
• Five methods to accelerate time to market: a clear product innovation charter; overlapping
phases or parallel processing; portfolio management approach; focus on quality at every
phase complements the PIC; an empowered cross-functional team.
• The firm with the first to mindshare in a given product category is the one that the target
market associates with the product category and that is seen as the standard for competitors
to match; so to create a dominant position in the mind of the customer.
