New product introductions can be classified according to newness to the market and newness to the company, resulting in the following types of new products:  entirely new products, new product lines that allow a company to enter an existing market with an existing product, new products that expand a company's product offering within a product line and new products that provide improved performance or greater value.

A) Finding Customer Value Opportunities

	Customer value:  The objective of customer value analysis is to identify needs for new products, improvements to existing products, improvements in production processes, and improvements in supporting services
	Matching capabilities to value opportunities:  Organizational capabilities should correspond well to product line extensions and incremental improvements
	Discontinuous innovations:  Customers are not always good guides to totally new product ideas

B)  Drivers of Successful Innovations

Creating an innovative culture is an essential initiative generating successful new products.

 

A) Developing a Culture and Strategy for Innovation

Open communications throughout the organization and high levels of employee involvement and interest are essential characteristics of innovative cultures

Successful new product planning requires generating a continuous stream of new product ideas and putting in place procedures and methods for evaluating new product ideas as they move through the planning stages

C) Responsibility for New Product Planning

Cross-functional interaction and coordination are essential to the success of new product planning

 

A)  Idea Generation

	Sources of new product ideas include: company personnel, customers, competitors, outside inventors, acquisitions, and channel members.
	Methods of generating ideas include:  purchasing publications, surveys of product users, company R&D labs, employee incentives, value chain members, acquisition of another firm

B)  Screening, Evaluation, and Business Analysis

	Screening:  A new product idea receives an initial screening to determine its strategic fit in the company or business unit
	Concept evaluation:  A team representing different business functions evaluates the ideas in more depth
	Business analysis:  An assessment is made of the estimated revenues and costs for developing and commercializing the new product.  This process includes revenue forecasting, preparation of a preliminary marketing plan, profit projections, and fit with various management guidelines

C)  Product and Process Development

	After completing the business analysis, management must decide to either begin product design or to cancel the project
	Product development process:  Includes product design, industrial design, process design, packaging design, and decisions to make or purchase various product components

D)  Developing Marketing Strategy and Market Testing

	Marketing strategy planning begins at the concept evaluation stage and continues during project development
	Target marketing:  Selection of the market targets for new products range from offering a new product to identifying a entirely new group of potential users
	Positioning strategy:  Product strategy regarding packaging, name selection, sizes, and other aspects of the product must be decided on.
	Market testing options: Whether to use simulated testing, scanner based testing, etc.; and selecting test sites and length of test period are issues that must be decided.

E) Commercialization

Introducing new products into the market requires finalizing the marketing plan, coordinating introduction activities, implementing the marketing strategy, and monitoring and controlling the product launch

 

Next Steps:  Please review the PowerPoint Overview slides (14 - 23) for this chapter.  Then proceed to the Discussion Area.