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Objectives - Product Development Module

Objectives - Product Development Module. Understand the role of product development as a source of company growth Be familiar with the product development process Be able to think conceptually about product development portfolios See the role of good market research

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Objectives - Product Development Module

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  1. Objectives - Product Development Module • Understand the role of product development as a source of company growth • Be familiar with the product development process • Be able to think conceptually about product development portfolios • See the role of good market research • Understand the value of being first to market • Opportunity to make a go/no-go launch decision

  2. Product Development Module Outline • Product Development as a Source of Company Growth • Definition of Product Development • The Product Development Process • Market Research • Portfolio Management

  3. To avoid chaos, a hierarchy must exist to guide product development Company Mission Why Do We Exist? Company Objective Where We Want to Go? Company Strategy How Will We Get There? Company Plans What Do We Do Now? > Programs > Product Development Projects > Tasks

  4. Companies Need to Address Strategic Planning on Several Levels Mission Objectives Identity Mission Objectives Company Strategy Business Units PRODUCT STRATEGY Business Strategy • Technical Competencies • Strategic Principles • Organization • Alliances Categories PRODUCT PORTFOLIO STRATEGY Portfolio Strategy Brands • Project Mix • Milestones • Resource Levels Project Strategy PRODUCT DEVELOPMENT STRATEGY • Resource Allocations • Technical Approaches • Timing • Deliverables Projects

  5. To assure success, you need good strategic management and good product development execution STRATEGIC MANAGEMENT PRODUCT DEVELOPMENT EXECUTION SDG 8/18/95

  6. THE NEED FOR ONGING NEW PRODUCT DEVELOPMENT • Life Cycles • Competition • Consumer/Customer Needs • New Technology • Government Regulation

  7. PRODUCT DEVELOPMENT ADDS VAULE IN SEVERAL WAYS PRODUCT DEVELOPMENT GROWTH PRODUCTIVITY QUALTITY BRAND IMPROVEMENT MAINTENANCE • Conformance • Special Situations • Regulatory • Environmental • Specifications • Quality of Design • Leveragble • Competitive • Advantage • Line Extensions • New Proiducts • New Packages • Reduce Cost • Formulas • Packages • Manufacturing • Procedures

  8. BOOZ ALLEN HAMILTON NEWNESS MAP Product Introductions from HIGH 700 Frims 11% 20% Newness to 26% 26% Company 7% 11% LOW LOW Newness to Market HIGH

  9. PHASES IN CONSUMER PRODUCT DEVELOPMENT Consumer Need Company Objectives IDEAS SCREENING Feasibility Financial Consumer Studies Review Research DEVELOPMENT PRODUCTION CONSUMER TRIALS TEST MARKET

  10. UNILEVER’S STAGE-GATING PROCESS Value Chain IDEAS FEASIBILITY IMPLEMENTATION LAUNCH K. Clark, Harvard GATE 1 GATE 2 GATE 3 Establish Commit Major Approval for Project Resources Launch

  11. Factors Common to Successful New Products • Unique and superior product . • Homework done prior to start of development . • Early product definition . • Strong market orientation . • Quality execution of marketing, technological and production activities

  12. MARKET RESEARCH OPTIONS Depth Interviews Qualitative Focus Groups Expert Judgement Surveys Product Use Tests Concept Tests Lab Test Market Perceptual Maps Test Market Quantitative Conjoint Analysis Pre-PrototypePost-Prototype Stage Stage

  13. Classic Symptoms of Poor Market Research • Data arriving too late. • Data not informative about the key decisions facing management. • Data documenting the obvious. • Decision-based fact finding. • Standardized market research process. Robert J. Dolan, Harvard Business School

  14. A matrix helps classify projects HIGH (Gain Strategic Advantage) NET PRESENT VALUE GIVEN SUCCESS LOW (Maintain Competitiveness) HIGH LOW Terminology from Strategic Decisions Group, Stanford Univ. PROBABILITY OF SUCCESS

  15. NEW PRODUCTS PIPELINE 2000 2001 1997 1998 1999 1996 DEVELOP TEST EXPAND

  16. A productive product development portfolio has balance • Capitalize on “Pearls” • Avoid “White Elephants” • Balance “Bread and Butter” and “Oyster” Projects • Keep a full pipeline

  17. PRODUCT ATTRACTIVENESS SCORECARD • Technical Risk • Commercial Risk • Strategic Fit • Reward

  18. Key Takeaways - Product Development Module • New Products are a source of company growth • Product Development Portfolios should be managed strategically • Being first to market pays dividends • If you are going to fail, fail early

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