SIIB      

       

 

New  Product  Development  “New  Strategy  and  Cross  Functional  Teams  in  NPD”  

Scavenging  Report  Rohan  Arora  

12020241132  -­‐  Marketing  

20/10/2013                  

“The point is, it is new, so it is often risky.”

 

1  

What  is  a  New  Product?  

 •  New-­‐to-­‐the-­‐world  (really-­‐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:  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:  Line  extensions  and  flankers  in  current  markets.  Ex.:  Tide  Liquid,  Bud  Light,  Apple’s  iMac,  HP  LaserJet  7P.    •  Improvements  and  revisions  to  existing  products:  Current  products  made  better.  Ex.:  P&G’s  continuing  improvements  to  Tide  detergent,  Ivory  soap.    •  Repositioning:  Products  that  are  retargeted  for  a  new  use  or  application.  Ex.:  Arm  &  Hammer  baking  soda  sold  as  a  refrigerator  deodorant;  aspirin  repositioned  as  a  safeguard  against  heart  attacks.    •  Cost  reductions:  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.    Why  New  Product  Development?  • Increasing  global  competition  in  all  major  markets:    More  new  products  from  new  competitors    • Shorter  and  shorter  product  lifecycles:  Companies  are  forced  to  churn  out  new  innovations  and  

new  products  in  shorter  times  and  greater  frequency

 

2  

A  New  Strategy  to  New  Product  Development  

NPD  in  today’s  world  can  be  ddivided  into  two  distinct  stages:    

1. A  truth-­‐seeking  early   stage,   focused  on  evaluating  novel  products’  prospects  and  eliminating  bad  bets  

2. A   success-­‐seeking   late   stage,   focused   on  maximizing   the   value   of   products   that   have   been  cleared  for  development.  

 

Various  Activities  to  be  performed  at  different  Stages  of  Product  Development  

      Early                 Late  

Reduce  Risk   Maximize  Value  

Experiment   Focus  on  the  Product  

Focus  on  different  Methods  for  the  product   Commercialization  

Operate  with  low  fixed  costs,  low  capital.   Operate  with  high  fixed  costs,  high  capital  

Work  in  small,  experiment-­‐based  teams   Work  in  large,  product  based  teams  

Undertake  Testing   Refine  the  product  

 

New  Product  Strategy  

The  basic  purpose  of  new  product   strategy   is   to  provide  unifying  direction.   It   specifically  notes  and  tempting   development   areas   that   are   off   limits;   it   clearly   specifies   those   areas   where   effort   is   to  proceed;  and  it  adds  any  other  direction  appropriate  and  relevant  to  the  firm.    A  firm  going  for  NPD  needs  to  keep  in  mind:  

• Market  and  Technology  Mix  • Degree  of  Innovation  • Price  and  Quality  ranges  • Promotional  requirements  • Strengths  &  Weakness  of  the  firm  • Competitive  environment  and  how  to  avoid  it  • Production  requirements  • If  new  technology,  then  Patent  requirement  • Risk  factors  • Market  Research  • Break  Even  sales  

3  

 Stages  in  New  Product  Development:  

     Key  Success  Factors:  Cross-­‐Functional  teams  

 

The   primary   key   success   factor   of   the  development   process   is   the   use   of  cross-­‐functional   teams.   The   influence  of   cross-­‐functional   teams   on   product  performance   or   the   cost   of   product  development   and   on   the   speed   of  product   development   has   been  demonstrated   as   a   competitive  advantage  and  is  critical  to  the  success  to   many   companies.   As   a   measure   of  successful   product   development,   cost  of  development  is  viewed  as  much  less  significant   as   the   advantage   gained   by  rapid   product   development.   A   firm  needs   to   have   cross-­‐functional   teams  to  be  successful,  whether  new  product  or  no  new  product.        

4  

 Bibliography    1. “Product  Design  and  Development”  by  K.  T.  Ulrich  and  S.  D.  Eppinger  2. “Best  practices  in  new  product  development”  by  Roland  Berger  3. “Success  Factors  Of  New  Product  Development  Processes”  By  Schimmoeller,  L.,  J.  4. “New  Product  Development”  by  Springer  5. “A  More  Rational  Approach  to  New-­‐  Product  Development”  by  Eric  Bonabeau,  Neil  Bodick,  and  Robert  W.  Armstrong