New Products Planning &Development

New Products are critical for the future prosperity of all companies

Did you know?That 78% of all effort (person-days) on NPD teams goes to technological and/or production activitiesOnly 16% goes to marketing and nearly 7% is at launch

Pre launch marketing is only about 9% of activity

Just Have a Look At 3M, products less than 5 years old account for 25% of the salesIn 1981, 700 US companies indicated that new products would account for one third of all profits in the 1980s, an increase from one-fifth in the 1970s.

Failure to innovate40% of Major American Corporations that existed in 1975

No longer exist today

In a global war product innovation is everything.HP, 3M, Chrysler, Microsoft

The top reasons for failure

Detailed market study 74%Test Marketing 58%Product Launch54%Financial/Biz Analysis52%

New Product Also Fail Texas Instruments lost $600 million before withdrawing from home computer businessRCA lost $500 million on its videodisc playersFedex lost $340 million on its Zap MailFor lost $250 million on its EdselDuPont lost an estimated $100 million on a synthetic leather called Corfam, andBritish French Concorde will never recover its investment

Speed and Change Markets and technologies are changing quickly

Speed becomes the pivotal weapon

The ability to accelerate product innovation-to get new products to market ahead of competition andwithin the window of opportunity

Payoffs for Speeding Products to MarketYields competitive advantage if ahead of competitorYields higher profitabilitySpeed means fewer surprises

But youve got to do it right.Never, never take shortcuts on product development to achieve speed/time to marketRESULTS ARE JUST TOO COSTLY

What are New Products?Any change to the product visible to the customer or consumer, is a New Product

What are New Products?New to the world products (10%)New product lines (20%)Addition to the existing product lines (26%)Improvement of existing products (26%)Repositioning (7%)Cost reduction (11%)- Booz, Allen & Hamilton

Npd: Positioning Map

The SET FactorsSOCIALFunctional UtilityNeeded by target customers

The NPD Process

Idea Generation77% of innovations came from usersFor engineering plastics, 90% of innovations came from manufacturersIn wire termination equipment, 56% of innovations came from suppliers who could sell the equipments to manufacturersR&D sourced ideas succeeded 39% of the time, marketing sourced idea succeeded 64% of the time, management sourced ideas succeeded 51% of the timeIn contrast, supplier sourced ideas succeeded only 31% of the timeCustomer sourced ideas succeeded 39% of the time

Ideas are important; so is its handlingNew ideas are critical to NPDAn idea can from anywhereIdeas usually 3-4% of ideas survive this stageOnly about 1 in 3000 ideas become commercially successfulA 5-Point checklist at Siemens to evaluate ideas Customers, Market, Competencies, Time-scale and Strength & WeaknessesIdea Generation

Let ideas blossom; or they will wither!Idea Screening

Attractive ideas need to be refined into testable product concepts.Concept Dev. & TestingA Product Idea is a possible product the company might offer to the marketA product concept is an elaborate version of the idea expressed in meaningful consumer terms

Powerful strategies are essential for winning battles in the marketplaceStrategy Development The plan consists of 3 parts:Target market size, structure and behaviourPlanned product positioningSales, market share and profit goals

Business attractiveness is critical for strategies to succeedBusiness Analysis Strategies must also be evaluated for its business attractiveness

A Product must be commercially feasible propositionProduct Development See if the product can be translated into a commercially feasible product

Customers must be happy buying your products. Market Testing Find out if the customers delighted to have your products?

Ask yourself Are you successful in the marketplace?. Commercialization The litmus test for all marketers!

Issues in NPDSpeed and FlexibilityIncremental vs. Radical innovationExceptional performance in NPD

Key Elements of Best-In-Class Product Process

Climate, Team & Role of Senior Management