CHP 8

Idea Generation and New Product Development

• The new product development process involves seven stages:

  1. Idea Generation

  2. Product Screening

  3. Concept Development

  4. Business Analysis

  5. Technical Implementation

  6. Market Testing

  7. Commercialization

• Successful market entrance depends on executing these stages effectively.

Evolution from Concept to New Product

• Various types of concepts represent stages from Idea Concept to Market Value.

• Corresponding phases in the new product process include:

  • Opportunity Identification

  • Concept Generation

  • Project Evaluation

  • Development

  • Launch

• Clarity is essential, with clarity scores ranging from 100% to 0% indicating varying levels of concept maturity.

Evaluation Tasks in the New Products Process

• Opportunity Identification/Selection

  • Direction: Identify where to focus efforts.

• Concept Generation

  • Initial Review: Determine whether the idea warrants further exploration.

• Concept/Project Evaluation

  • Full Screening: Decide on further development.

• Development

  • Progress Reports: Assess development milestones.

• Launch

  • Market Testing: Evaluate market viability before official launch.

The Full Screen Process

• Although often perceived as a necessary evil in product development, the Full Screen is critical for:

  • Forcing pre-technical evaluation.

  • Summarizing required actions for development.

  • Methods include simple checklists or complex mathematical models.

• Understanding why most product launches fail can inform better practices.

Process and Idea Screening

• A request for project proposal authorization occurs once key elements are defined, such as:

  • Product definition

  • Team formation

  • Budgeting

  • Skeleton development plan

• Idea Screening helps rank concepts based on technical, marketing, and financial criteria.

Purposes of the Full Screen

• Decide if technical resources should be allocated to a project:

  • Evaluate technical feasibility: Can it be done?

  • Assess commercial feasibility: Is it worth doing?

• Manage the product development process:

  • Recycle, rework, and rank concepts.

  • Track evaluations of unsuccessful concepts.

• Promote effective cross-functional communication.

Screening Alternatives

• Approaches include:

• Judgment or managerial opinion.

• Concept tests paired with sales forecasts to gauge consumer acceptance.

• Scoring models to quantify and compare project ideas.

Advantages of New Products

• Create consumer value through:

  • Differentiation.

  • Offering something new that meets customer needs.

Disadvantages of New Products

• Potential negatives include:

  • Chaos during the development process.

  • Uncertainty regarding market reception.

  • Time constraints and pressure.

  • Coordination challenges among multiple involved parties.

  • Adapting to changing facts in the market environment.

Successful Idea Statistics

• For every 100 generated ideas:

  • Fewer than 70 survive initial screening.

  • Less than 50 pass concept evaluation and testing.

  • Slightly more than 30 make it to development.

  • About 25 are successfully commercialized.

  • Approximately 15 of these products achieve commercial success.

Simple Scoring Model Example

• Evaluating ideas using weighted scoring:

  • Factors considered: Degree of fun, number of participants, affordability, capability.

  • Example scores:

    • Skiing: 11 points

    • Boating: 15 points

    • Hiking: 13 points

Percentage of New Product Projects' Outcomes

• Statistics show varying success rates:

  • Top performers have 45% commercial success.

  • Middle-tier performers achieve 34%.

  • Bottom tier sees only 21% success before product launch.

Understanding Customers' Minds

• Insights from Gerald Zaltman on creating effective marketing strategies based on customer psychology. (Harvard Business School)

New Product Development Example: Segway

• Highlight of product innovation and market entry with the Segway as a case study.

Scoring Factor Models

• Levels of understanding impact the ability to assess:

  1. Profit (Net present value).

  2. Chances of technical and commercial accomplishment.

  3. Sales expectations and market familiarity.

Example of a Scoring Model for Full Screening

• Consideration of factors including:

  • Technical accomplishment metrics.

  • Commercial accomplishment criteria.

The Scorers

• The Scoring Team responsibilities include:

  • Involvement from major functions like marketing, technical, operations, and finance.

  • Potential issues with scorers include biased scoring tendencies and groupthink impact.

IRI Scoring Model Reference

• Developed by experts to aid in forecasting project success probabilities.

A Profile Sheet for Evaluation

• Key factors to score on include:

  • Market size, growth, relatedness, capability, etc.