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| Question | Answer |
| Definition of NPD | Overall process of strategy, organization, concept generation, product and marketing plan creation and evaluation, and commercialization of a new product. |
| 5 types of New Products | New to the market New category entries Additions to Product Lines Product Improvements Repositionings |
| New to the Market | Products that are brand new to consumers. |
| New Category Entries | New to the firm products |
| Additions to product lines | An extension of existing products. E.g. Diet coke, tide liquid detergent |
| Product improvements | Existing product with enhanced features or technology. E.g. Iphone 6 |
| Repositionings | When existing products are used to target a new need. E.g. Arm and hammer toothpaste. |
| Why is a new product important? | Accounts for 30-40% of company profit |
| Major factor of new product sucess | Superiority and uniqueness. Most times products fail because of no need for the product but there is a need but product didn't meet that need. |
| What is an innovation | A new product that makes the existing product obsolete and changes the market trend. |
| Two types of innovation | Process innovation - applies to manufacturing or distribution process Product innovation - applies to total operation by which a new product is created and marketed. |
| 3 conflicting forces of new products that form value | Quality, time, and cost Improvements on quality have negative effects on time and cost. |
| Why is NP and innovation management important? | Creative destruction Competitive advantage through differentiation Cost efficiency Quality superiority |
| 5 phases of new product process | Opportunity identification Concept generation Concept evaluation Development Launch |
| Opportunity Identification | Generate new product opportunities as spinouts of ongoing business operation |
| Concept Generation | Select a high urgency opportunity and begin customer involvement. Collect available new product concepts that fit the oppportunity. |
| Concept Evaluation | Evaluate new products concepts on technical, marketing, and financial criteria. Rank them and select the best two or three. |
| Development | Technical tasks: Design prototypes, test and validate prototypes against protocol, design and validate production process for best prototype. Marketing Tasks: Prepare strategy, tactics, and launch details for marketing plan. |
| Launch | Commercialize the plans and prototypes from development phase, begin distribution and sale of the new product, and manage the launch program to achieve the goals and objectives set in the PIC. |
| Initiation Vs. Implementation | Initiation is also called the fuzzy front end. Consists of the first 3 phases. Implementation consists of the final two phases. |
| Stage-Gate process | A conceptual and operational road map for moving a new product project from idea to launch. |
| Stage Vs. Gate | Stages are concurrent NPD activities. Stages are where the project team undertakes key NPD tasks to gather information needed to advance the project to the next gate. Gates are where the decisions on Go/Kill and prioritization are made. Helps allocate resources to best projects by killing mediocre projects. |
| 3 reasons on why a firm needs a NP strategy | 1)Chart the group's direction 2)Set the group's long-term goals and short-term objectives 3)Tell the group how it plays the game |
| 3 major inputs of NP startegy | 1) Corporate strategy 2) Product platform planning 3) Opportunity identification |
| What is a mission statement? | Top level strategy statements made by corporate leaders that guide a whole firm. |
| Corporate Strategy Vs. NP Strategy | Corporate strategy focuses on managing a company while a NP strategy is dealt by product managers. |
| Strategic Business Units | NPD will happen under the marketing or NP manager |
| What is a NP Team? | Often called a company within a company. Does budgeting, financial planning, assign tasks and responsibilities. OFten has PIC and is governed by mission statement. |
| Product Platform | A technology, design, or subsystem that can be shared by one or more product families. |
| Why do we need Product Platform Planning? | Creates cost efficiencies by sharing resources such as r&d and people. Downside is that new product can cannibalize the old product. |
| Opportunity Identification 4 sources of NP Strategy Opportunity | 1) Underutilized resources - not enough research on tech breakthrough 2) New resources - intro of venture capital, new r&d people 3) External mandates - Govt regulation/deregulation 4) Internal mandates - change in corp leadership and focus |
| What is the Product Innovation Charter? | The NP Team's strategy in a document specifying the conditions under which a firm will operate for new product development. |
| Describe the 4 elements of PIC | 1) BAckground - Why did we develop this new product? 2) Focus - Must have a clear tech/market dimension that match and have good potential 3) Goals/Objectives - What the product will accomplish 4) Guidelines - Rules of the road with regard to requirements, innovativeness, order of market entry, time/quality/cost. |
| 3 elements of Focus in PIC | 1) Technology driver (r&d lab, product specialization) 2) Market driver (customer group problems, end use or activity) 3) Dual driver (putting a tech and market driver together to yield a precise focus) |
| Goals/Objectives | Goals are long-term Objectives are short-term |
| Guidelines Advantages of the 3 types of business | 1) Pioneer - pre-empt the market and become dominant force, relationship with channel members, setup standard for reference point, brand equity, access to resources 2) Quick second to market - can takeover with a more improved product for the niche market created by the pioneer 3) Slower - firm knows outcome of pioneer's efforts so has time to make a more meaningful adaptation 4) Late entry - usually a price entry keyed to manufacturing skills |
| 4 types of Strategic Business | 1) Prospector - looks for new business 2) Analyzer - finds new ways of doing existing business 3) Defender - Moves early enough to save business 4) Reactor - Research price of competitors and make cheaper |
| Four steps of concept generation | 1) Prepare for ideation 2) Problem identification 3) Solve Problem 4) NP concept generation |
| 2 dimensions of creativity | 1) Novelty 2) Meaningfulness |
| 4 perspectives of creativity | 1) Personality 2) Process 3) Product 4) Environment |
| What are the 2 types of creativity? | Artistic - deals with novelty - better alone Scientific - deals with meaningfulness - better in groups |
| What is creativity? | The foundation of innovation. Object is considered creative if it is different from the existing practice in a meaningful way to the audience. |
| What is NP Creativity? | Degree to which new products are perceived to represent unique differences from competitors' products in ways meaningful to target customers. |
| What is a product concept? | A verbal statement of what is going to be changed and how customer stands to gain or lose before technical development. |
| What are the 3 required inputs of product concept? | 1) Form - the physical thing created 2) Technology - the source by which the form is obtained 3) Benefit or need - the value to the customer that customer sees a need or desire for |
| Difference between product concept and new product. | Product concept meets 2 of the 3 required inputs. New product meets 3 out of 3. |
| Soft bubble gum example of product concept | Benefit - "Consumers want a gum that doesn't take 5 minutes to soften" Form - "We should make a softer, more flexible gum" Technology - "There's a new chemical mixing process that prevents drying out of food and keeps it moist" |
| 3 patterns of concept generation | 1) NTF - most typical - customer need -> develops tech -> produces form (e.g. printer combo) 2) TNF -Develops tech -> finds need in a customer segment -> produces form (e.g. Rubbermaid molding machine for plastics) 3) FTN - Most rare - Envisions form -> develops tech to produce form -> tests with customers to see what needs are delivered (e.g. airplane by wright bros) |
| 5 sources of NP concepts | 1) Technology 2) NP Team 3) End users 4) Other insiders 5) Other outsiders |
| Why do we need concept evaluation? | Similar to the gate process. Allocates resources to the best project ideas. |
| What are the evaluation tasks for the 5 phases of NPD? | 1) Setup direction 2) Initial review 3) Full screen 4) Progress report 5) Market testing |
| What is the Cumulative Expenditure Curve? | Evaluates total expenditures during the NPD process over time. Y axis - % of expenditures X axis - time from ideation to launch |
| CEC High tech products Vs. Consumer products | High tech products have high development costs in the beginning but over time price for launch becomes relatively less. Consumer products are the opposite because R&D costs are low but marketing and launch costs become relatively higher because they need new packaging, new price, etc. |
| What is the Decay Curve? | Shows the percentage of any firm's new product concepts that survive through the development period from 100% in concept generation to 2% in launch Y axis - the number of ideas started at 100% X axis - Time from concept generation to launch |
| What are the two types of Decay Curves? | 1) Slow Decay Curve - when a firm keeps ideas longer. Usually with consumer products. 2) Rapid Decay Curve - when a firm drops unnecessary ideas faster. Usually high tech firms |
| What is Rolling Evaluation? | When a project is assessed continuously rather than at gates. |
| What are 4 caveats in using rolling evaluation? | 1) Financial analysis needs to be built up continuously, not at once in beginning but not enough data is available early on for complex financial analyses 2) Do not run the risk of killing off too many good ideas early 3) Marketing should begin early in the NPD process, then continues on the rollouts 4) KEY: NPD participants avoid "good/bad" mindsets, avoid premature closure. They need open-mindedness and flexibility |
| What are potholes? | Major difficulties of the new product. (e.g. Anti-trust laws for microsoft, FDA approval for pharmaceutical companies, medical study on brain damage and cell phones for Sprint) |
| Describe people dimension | Strong proposals may be hard to stop in later stages once it gets support from more people during the NPD process. Hurdles should be tough and demanding especially late in the NPD process, a concept evaluation should do early testing, we need an evaluation system that supports and protects developers and offers reassurance. |
| What is the ATAR Model? | A quantitative or mathematical evaluation tool to estimate expanded units of sales and profit of a new product. |
| What are the 4 elements of ATAR Model to calculate buying units? | 1) Awareness - percentage of owners who will be aware of product in 1 year 2) Trial - percentage of aware owners who will decide to try new product 3) Availability - percentage of stores that will carry and make available the product 4) Repeat - percentage of actual owners who will buy a second one |
| What is the ATAR equation? | Total Expected Profits = Units sold x (Revenue from unit - Cost of unit) Profits = (Potential Buyers x Aware x Trial x Avail x Repeat) x (Revenue per unit - Cost per unit) |
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