A. NEW PRODUCT PLANNING
New product planning is a
vital activity in every company, and it applies to services as well as physical
products. Companies that are successful in new product planning follow a step
by step process of new product planning combined with effective organization
designs for managing new products. Experience and learning help these firms to
improve product planning over time.
Characteristics
of Successful Innovators
B. DEVELOPING
A CULTURE AND STRATEGY FOR INNOVATION
Several key initiatives
are pursued by companies that are successful innovators. These include (1) creating an innovative culture, (2) selecting
the right innovation strategy, (3) developing and implementing effective new
product processes, (4) making resource commitments, (5) leveraging distinctive
capabilities.
Innovation Culture
Creating (and strengthening)
an innovation culture can be encouraged by several interrelated management
initiatives.
1.
Plan and implement a two-day innovation workshop of top executive to
develop an innovation plan
2.
Develop an innovation statement highlighting the company’s objective and
senior management’s roles and responsibility.
3.
Conduct the priority of innovation via article, newsletters, and presentations
to employees, shareholders, and customers.
4.
Schedule innovation speakers on a regular basis to expose employees to
innovation authorities.
Strategy for Innovation
The organization’s
innovation strategy spells out management’s choice of the organizations’s most
promising opportunities for new products. A successful new-product strategy
includes:
1.
Setting specific, writen new product objectives (sales, profit
contribution, market share, etc)
2.
Communicating throughout the organization the role of new products in
contributing to the goals of the business.
3.
Defining the areas of strategic focus for the corporation in terms of
product scope, markets, and technologies.
4.
Including longer-term, transformational projects in the portofolio along
with incremental projects.
C.
DEVELOPING
EFFECTIVE NEW-PRODUCT-PLANNING PROCESSES
Successful
New Product Planning Requires
1.
Generating a continuing
stream of new product ideas tha will satisfy the organization’s requirements
for new products
2.
Putting in place
people, processes, and methods conducting activities and evaluating new product
ideas as they important each of the planning stages.
Responsibility
For New Product Planning
Various organizational designs may be
employed to coordinate interfunctional interactions that are necessary in
developing successful new products, including:
- Coordination
of new product activities by a high level business manager,
- Cross-functional
coordination by a new product planning team.
- Creations
of a cross functional project task force responsible for new product
planning.
- Desingnation
of a new-products manager to coordinate planning among departments.
- Formation
of a matrix organizational structure for integrating new product planning
with business functions.
- Creation
of a design center which is similar in concept to a new product team,
except the center is a permanent part of the organization.
The following initiaves are important
in effectively applying the planning process to develop and introduce new
product. First, the process involves
different business functions, so it is necessary to develop ways of
coordinating and integrating cross functional activies in the planning
process. Secong, compressing the time
span for product development creates an important competitive advantage. Third, the product planning acivities require
resources and must be managed so that the results deliver high levels of
customer satisfaction at acceptable costs.
Finally, the planning process can be used for new service development as
well as physical products.
New
Product Planning Process
D.
IDEA
GENERATION
Idea generation starts the process of
planning for a new product. There are
various internal and external soruces of new product ideas. Ideas are identified by information search,
marketing research, research and development, incentives and acquisition. Screening, evaluation and business analysis
help determine if the new product concept is sufficiently attractive to justify
proceeding with development.
Method
of Generation Ideas
—
Marketing research
survey of product users help to identify needs
that can be satisfied by new products.
—
Internal and External Development
Research and development
laboratories continue to generate many new product ideas.
—
Other Idea Generation Methods
Incentives may be useful to get new
product ideas from employees, marketing partners, and customers.
E.
SCREENING,
EVALUATING, AND BUSINESS ANALYSIS
1.
Screening
A new product idea receives an
initial screening to determine its strategic fit in the company or business
unit. Two questions need to be
answered: (1) is the idea compatible with the
organizations’s mission and objectives, (2)
is the product initiatives commercially corporate social responsibility
initiatives and the growing emphasis on sustainability among public policy
makers and interests underline new types of innovation opportunities for
companies.
2.
Concept Evaluation
After completing initial screening,
each idea that survives becomes a new product concept and receives a more
comprehensive evaluation. Several factor
of used in screening may be evaluated in the grater depth, including buyers
reactions to the proposed concept. A
team representing different business functions should participate in concept
evaluation.
3.
Business Analysis
Business analysis estimates the
commercial feasibility of the new product concept.
Product
Development Process
—
Product specifications: describe
what the product will do rather than how it should be designed.
—
Industrial design: many companies are placing increasing on the
ease of use and style of product.
Industrial design has become a major part of the new product development
process for many products.
—
Prototype:
the technical team uses the product specifications to guide the design
of one or more physical products.
Similar information in needed to guide software design and design of new
service. At this stage the product is
called a prototype since it is not ready for commercial production and
marketing.
—
Use test:
when testing of the protoype is feasible, designers can obtain important
feedback from users concerning how well the product meets the needs that are
spelled out in the product specifications.
—
Process development; the process for producing the product in
commercial quantities must be developed.
Manufacturing (producting) thr product at the desired quality level and
cost is a critical determinant of profitability.
Marketing
Strategy Decisions
—
Market targeting
Selection of the market targets for
the new product range from offering a new product to an existing target, to
identifying an entirely new group of potential users.
—
Positioning strategy
The core of this strategy is how
management want the new product to be positioned in the eyes and minds of the
targeted buyers.
Market
Testing
—
Simulated Test: The
distinguishing feature of simulated tests is that they are conducted in a
simulated shopping environment and may be used in place of or before a full
scale market test.
—
Scanner Based Test: the
test are conducted in a actual market environment. The test product must be made available each
test city.
—
Traditional Test: This
method of market testing introduces the product under actual market conditions
in one or more test cities.
—
Web Enabled Test: while
these tests offer less control tests, they are increasingly used to speed and
realtively low costs.
—
Testing Industrial Products: Market testing can be used for industrial
products. Selection of test sites may
need to extend beyond one or two cities to include sufficient market coverage.
—
Selecting test sites: test sites for consumer products should
exhibit the buyer and environmental characteristics of the intended market
target
How
Market Testing Relates to the Other Testing Steps
Commercialization
Commercialization completes the planning
process, moving the product into the marketplace to pursue sales and profit
performance objectives. Introduction new
products into the market requires finalizing the marketing plan, coordinating
market entry activities across business functions, implementing the marketing
strategy, and monitoring and controlling the product lunch.
—
The Market Plan
Market inroduction requires a
complete marketing strategy that is spelled out in the marketing plan. Tha plan should be coordinated with the
people and business functions responsible for the introduction, including
salespeople, sales and marketing managers, and managers from other functional
areas such as opertations, distribution, R & D finance, and human resource.
—
Monitoring and Control
Real time tracking of new product
performance at the market entry stage is extremely important. Standardized information services (e.g
information resoruces Inc) are available fro monitoring sales of products such
as foods, health and beauty aids, and prescription drugs.
