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
activities
Only 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 sales
In 1981, 700 US companies indicated that new products would
account for one third of all profits in the 1980s, an increase from onefifth in the 1970s.

Failure to innovate
40% 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
Product Launch

58%
54%

Financial/Biz Analysis

52%

New Product Also Fail

Texas Instruments lost $600 million before withdrawing from home
computer business
RCA lost $500 million on its videodisc players
Fedex lost $340 million on its Zap Mail
For lost $250 million on its Edsel
DuPont lost an estimated $100 million on a synthetic leather
called Corfam, and
British 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 and
within the window of opportunity

Payoffs for Speeding Products to

Market

Yields competitive advantage if ahead of competitor

Yields higher profitability
Speed means fewer surprises

But youve got to do it

right.

Never, never take shortcuts on

product development to achieve
speed/time to market
RESULTS 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 Factors

SOCIAL
Functional Utility
Needed by target
customers

The NPD Process

Idea Generation
77% of innovations came from users
For engineering plastics, 90% of innovations came from
manufacturers
In wire termination equipment, 56% of innovations came from
suppliers who could sell the equipments to manufacturers
R&D sourced ideas succeeded 39% of the time, marketing
sourced idea succeeded 64% of the time, management
sourced ideas succeeded 51% of the time
In contrast, supplier sourced ideas succeeded only 31% of the
time
Customer sourced ideas succeeded 39% of the time

Idea Generation

New ideas are critical to NPD

An idea can from anywhere
Ideas usually 3-4% of ideas survive this stage
Only about 1 in 3000 ideas become commercially
successful
A 5-Point checklist at Siemens to evaluate ideas
Customers, Market, Competencies, Time-scale and
Strength & Weaknesses

Ideas are important; so is its handling

Idea Screening

Ive got
A great idea

It wont
Work here

Its not the way

We do things

Weve tried
it before

Weve done
alright
Without it

This isnt the

Right time

It will cost
Too much

It cant
Be done

Lets discuss it
In our next
meeting

Let ideas blossom; or they will wither!

Concept Dev. & Testing

A Product Idea is a possible product the company
might offer to the market
A product concept is an elaborate version of the
idea expressed in meaningful consumer terms

Attractive ideas need to be refined into

testable product concepts.

Strategy Development
The plan consists of 3 parts:
Target market size, structure and behaviour
Planned product positioning
Sales, market share and profit goals

Powerful strategies are essential for

winning battles in the marketplace

Business Analysis
Strategies must also be evaluated for its
business attractiveness

Business attractiveness is critical

for strategies to succeed

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

A Product must be commercially

feasible proposition

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

Commercialization
The litmus test for all marketers!

Ask yourself
Are you successful in the
marketplace?.

Issues in NPD
Speed and Flexibility
Incremental vs. Radical innovation
Exceptional performance in NPD

Key Elements of Best-In-Class

Product Process

Climate, Team & Role of Senior

Management