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McGraw-Hill/Irwin

2003 The McGraw-Hill Companies, Inc., All Rights Reserved.

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NEW PRODUCTS
MANAGEMENT
Merle Crawford
Anthony Di Benedetto
7th Edition
Irwin/McGraw-Hill, 2003

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PART
ONE
OVERVIEW AND OPPORTUNITY
IDENTIFICATION/SELECTION

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Opportunity Identification and Selection

Figure I.1

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CHAPTER ONE

THE MENU

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Some Hot New Products

Figure 1.1

Honda's Insight -- a $20,000 two-seater that runs on a combination gasoline-electric

motor and gets as much as 70 miles per gallon.
Metricom's Ricochet modem -- allows wireless Web surfing at twice the speed of
regular dial-up modems, for a price of $99 to $300 plus a $70 - $80 monthly charge.
Italjet Velocifero -- a five-horsepower, two-stroke motorscooter that gets about 50
miles per gallon whose design is stylish enough to have landed it a position at the
Museum of Modern Art.
Ford Focus -- aimed at the youth market, complete with aftermarket add-ons; a huge
success relative to the car it replaced, the Escort.
BlackIce Defender -- software that protects your computer from hackers who try to
take advantage of cable modems and other 24-hour Internet connections.
Faber-Castell's new pencil -- silver and black in color, the new design features a
triangular cross-section for easy handling and non-slip raised dots.
IBM's T21 laptop -- ultra-thin and weighing only five pounds, it has a Pentium
processor, a 14-inch display, and costs about $2,650.
Chrysler PT Cruiser -- Thirties-styled car that achieved cult status almost overnight;
Chrysler's backorder list was reportedly about 300,000 long at one point.

Source: Roy Furchgott, "The Best Products of 2000," Business Week, December 18, 2000, pp. 76-88.

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Products of the Future

Figure 1.2

Intelligent refrigerators will track food inventories, and will either provide a
hard-copy shopping list or send an electronic list to a home-delivery service.
Intelligent wallpaper will transform a wall to a television, a computer screen,
works of art, etc.
Robotic lawn mowers will tend the grass within any specified boundary.
Nanny-cams hidden in teddy bears permit parents to watch their children at
daycare; camera-surveillance systems will keep an eye on latchkey kids
home alone.
Holographic storage will be used to store and retrieve home videos.
Lasers and decay-preventive gum and toothpastes will minimize the need for
the dentists drill.
Robots will dispense gasoline, and know your preferred grade.
Smart heart pacemakers will be placed in the wrist.
Source: Marian Salzman and Ira Matathia, Lifestyles of the Next Millennium: 65 Forecasts, The
Futurist, July-August 1998.

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Not All New Products Are Planned

Figure 1.3

Microwave ovens
Aspartame (NutraSweet)
ScotchGard fabric protector
Teflon
Penicillin
X-rays
Dynamite
In each case, an accidental discovery -- but someone knew
they had something when they saw it!

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What Is a New Product?

Figure 1-4

New-to-the-World Products
Polaroid camera, in-line skates, Kevlar, word-processing software

New Category Entries

Hewlett-Packard PCs, Hallmark gift items, Discover Card

Additions to Product Lines

line extensions or flankers

Product Improvements
frozen yogurt, Miller Lite, Windows 98, plain-paper fax

Repositionings
Arm & Hammer baking soda

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What Is a Successful New Product?

Percent of Products that Fail
90
90
80
70
60
50
40
30
20
10
0

40

10

Sometimes Quoted
in Press

Research Reports

Sometimes Claimed

Although you may hear much higher percentages, careful

studies supported by research evidence suggest that about
40% of new products fail -- somewhat higher for consumer
products, somewhat lower for business-to-business products.

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Classic Brand Names

Figure 1.5

Budweiser
Ivory
Coca-Cola
Maxwell House
Kodak
General Electric
Steinway
Wrigley
Kleenex
Waterford

L.L. Bean
Ford
John Deere
Maytag
JCPenney
Sears
Colgate
Hershey
Gillette
Ticonderoga

Which of these have the most value today as launch pads

for new products?

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The Conflicting Masters of New Products

Management

Figure 1-6

Three inputs to the new

products process: the right
quality product, at the right
time, and at the right cost.
These conflict with each
other but may have
synergies too.
Issue: how to optimize
these relationships in a
new product situation.

Quality

Value

Time

Cost

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Breakthrough Innovations that Changed

Our Lives

Figure 1-7

Personal Computer
Microwave Oven
Photocopier
Pocket Calculator
Fax Machine
Birth Control Pill
Home VCR
Communication satellite
Bar coding
Integrated Circuit
Automatic Teller

Answering Machine
Velcro Fastener
Touch-Tone Telephone
Laser Surgery
Apollo Lunar Spacecraft
Computer Disk Drive
Organ Transplanting
Fiber-Optic Systems
Disposable Diaper
MS-DOS
Magnetic Resonance Imaging

This list was compiled in the early 1990s. Since then one
would certainly have to add the Internet. Anything else you
would add? Which would you delete?