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PIERCY
8/e
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.
8-2
Chapter Eight
Planning for
New Products
The Innovation
Mandate
8-4
Import ance of
New Products
New Pr oduct
Pl anning as a
Cu stom er Dr iven
Pro ce ss
New product
classifications:
1. Newness to market
2. Newness to company
High
New-to-world
products
10%
New product
lines
20%
Newness to company
Improvements/ Additions
revisions to to existing
existing product lines
products 26%
26%
Cost
reduction Repositionings
s 7%
11%
Low High
Newness to market
Source: New Product Management for the 1980s, Booz Allen & Hamilton Inc. 1982.
Finding Cus tomer 8-8
Value
Opport unit ies
Objective is to identify
needs for:
New products
Improvements to existing
products
Improvements in
production processes
Improvements in
supporting services
8-9
Matching Capabilities to
Customer Value Opportunities
Transformational Innovations
– “new-to-the-world” ideas
– Customers not always the
best guides
8-10
Customer
Expectations
Customer
Satisfaction
Gap OPPORTUNITIES
Actual (1) New Products
Product (2) Improvements
Performance (3) New and Improved
Processes
8-11
Characteri sti cs of
Suc cessf ul
Innovati ons
Creating an
Innovative
Culture
Selecting the
Leveraging Right
Capabilities Innovation
STRATEGIC Strategy
INITIATIVES
Developing an
Innovation Culture
Innovation Workshop for
top executives to
develop
an innovation plan.
Innovation Statement
highlighting objectives and
senior management’s
role and responsibilities.
Training programs for
employees and managers.
Communicate the priority
of innovation.
Speakers to expose
employees to innovation
authorities.
Source: Thomas D. Kuczmarski et al., “The Breakthrough Mindset,” Marketing Management,
March/April 2003, 43.
8-13
Th e Innovat ion
Strat egy Spells Out
Management’ s
Priorit ies for New
Product Oppor
1. Set specific tunit ies
New Product
Objectives.
2. Communicate the role of
New Products throughout
the organization.
3. Define the areas of
strategic focus:
Product Scope
Markets
Technologies
7. Include longer term
discontinuous projects in
the portfolio along with
incremental projects.
Source: Robert Cooper, “Benchmarking New Product Performance,” European Management Journal,
Feb. 1998, 1-7.
8-14
NEW PRODUCT
PLANNING PROCESS
Customer
Needs
Analysis
Screening
Idea Business
and
Generation Analysis
Evaluation
Marketing Product
Strategy Development
Development
Testing
Commercialization
8-15
Achieving Cross-
Functional
Interaction and
Coordination
R&D
Operatio Marketin
ns g
Finance
8-16
IDEA GENERATION
BENETTON’S STRATEGY
TO REVIVE APPAREL
IDEA GENERATION
“We didn’t take advantage of the [industry’s]
quick transformation,” says Silvana Cassano,
the ex-Fiat manager who assumed the post of
chief executive of Benetton Group on May 5.
The transformation saw the best retailers
turn into cutting-edge users of digital
technology. Benetton’s competitors-notably
Spain’s Zara and Sweden’s H&M Hennes &
Mauritz-have raised the bar for the entire
industry. These retailers can beam new styles
from the catwalk to the shop floor in less than a
month-and at bargain prices. Both deploy
sophisticated technology to track which items
are selling and which aren’t, so winners can be
speedily restocked and slow movers yanked
down from the racks. They’ve got the look
down, too-cool and minimal for the working
women who love Zara, and over-the-top trendy
for H&M’s teen fans. And Benetton’s look? Blan.
“The Benetton brand is out of fashion,” says
Sagra Maceira de Rosen, retail analyst at J.P.
Morgan Chase & Co. in London.
8-19
Benetton’s Strategy
(continued)
Source: “Has Benetton Stopped Unraveling?” Business Week, June 30, 2003, 76.
8-20
Direct
Search
Alliances/
Acquisition/ Technological
Licensing Innovation
METHODS
OF
National Exploratory
GENERATING
Policy Customer
IDEAS
Studies
Creative Facilitating
Methods Lead User
Linking Analysis
Marketing
and Technology
8-21
SCREENING,
EVALUATING, AND
BUSINESS ANALYSIS
IDEA GENERATION
SCREENING
(fit/feasibility)
CONCEPT EVALUATION
BUSINESS ANALYSIS
8-22
Busi ness
Anal ysi s
Revenue Forecasts
Preliminary Marketing
Plan
Cost Estimation
Profit Projections
Other Considerations
PRODUCT AND 8-23
PROCESS
DEVELOPMENT
NEW
PRODUCT
CONCEPT
PRODUCT
DEVELOPMENT MARKETING
AND USE STRATEGY
TESTING DEVELOPMENT
MARKET
TESTING
LAUNCH
8-24
Prod uct a nd
Proce ss
Devel opment
Development of the new product
includes:
– Product design
– Packaging design
– Decisions to make or purchase
product components
Collaborative Development
8-25
Identify use
situations
8-26
MAR KETI NG
STRA TEG Y AN D
MAR KET T ESTING
Marketing Strategy Decisions
– Market Targeting
– Positioning Strategy
Market Testing Options
– Simulated Test Marketing
– Scanner – Based Test Marketing
– Conventional Test Marketing
– Testing Industrial Products
– Selecting Test Sites
– Length of the Test
– External Influences
8-27
Scanner-based Test
Marketing
Less artificial than simulated
testing
Marketing Strategy
Market
Target(s)
Marketing
Objectives Program(s
)
8-30
VARIATIONS IN THE
GENERIC NEW
PRODUCT PLANNING
Technology Push
Processes
Platform Products
Process – Intensive
Products
Customized
Products