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New Product Development > Concept/Project Innovation > Flashcards

Concept/Project Innovation Flashcards

1
Q

Concept/Project Evaluation:

A
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2
Q

The Evaluation System:

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3
Q

Criteria for Early Stage Screening Assessment:

A
  • Uniqueness: Is the idea original? Is it easily copied by competitors?
  • Need fulfilment: Does it meet a customer need?
  • Feasibility: Can we develop and launch it?
  • Impact: How will our firm be affected?
  • Scalability: Can we become more efficient in production?
  • Strategic fit: Does it match with corporate strategy and culture?
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4
Q

Sample Idea Screening Techniques:

A

Unilever requires that a brief be written for each new idea under consideration, including:

  • Customer need
  • Technical specifications
  • “Idea solution” (benchmarks and standards)
  • “Must-haves” (minimum requirements)
  • “Killers” (what might cause it to fail)
  • What is already known
  • Budget and timeline
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5
Q

Cumulative Expenditures Curve:

A
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6
Q

Risk/Payoff Matrix at Each Evaluation:

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  • Cells AA and BB are “correct” decisions
  • Cells BA and AB are errors, but they have different cost and probability dimensions
  • Usually, BA (the “go” error) is much more costly but don’t forget opportunity costs!
  • Consider how “new-to-the-world” the product is as that has an impact on the risk level
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7
Q

Planning the Evaluation Systems: Four Concepts:

A
  • Rolling Evaluation (tentative nature of new products process)
  • Potholes
  • People
  • Surrogates
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8
Q

Rolling Evaluation (“Everything is Tentative”):

A
  • Project is assessed continuously (rather than a single Go/No Go decision)
  • Needs continuous financial analysis
    • But not enough data early on for complex financial analyses
  • Run risk of killing off too many good ideas early
  • Marketing begins early in the process

Key: new product participants avoid ”good/bad” mindsets, avoid premature closure

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9
Q

Potholes:

A

Know what the really damaging problems are for your firm and focus on them when evaluating concepts.

Examples:

  • Campbell Soup focuses on manufacturing cost and taste
  • Drug companies focus on FDA approval
  • Software developers may focus on customer unwillingness to learn how to use complex software
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10
Q

People:

A
  • Proposal may be hard to stop once there is buy-in on the concept
  • Need tough demanding hurdles, especially late in new products process
  • Personal risk associated with new product development
  • Need system that protects developers and offers reassurance (if warranted)
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11
Q

Surrogate Questions:

A
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12
Q

A-T-A-R Formula:

A

Profits = Units Sold x Profit Per Unit

Units Sold = Number of buying units
× % aware of product
× % who would try product if they can get it
× % to whom product is available
× repeat measure (what is the average number of units bought per person per year, including repeats)

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13
Q

The A-T-A-R Model: Definitions:

A
  • Buying Unit: Potential target market
  • Aware: Has heard about the new product with some characteristic that differentiates it
  • Trial: Willing to try new product
  • Available: Find new product in the store
  • Repeat: The product is bought at least once more, or (for durables) recommended to others
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14
Q

Points to Note About A-T-A-R Model:

A
  • Each factor is subject to estimation
    • Estimates improve with each step in the development phase
  • Inadequate profit forecast can be improved by changing factors and doing a what-if analysis
    • If profit forecast is inadequate, look at each factor and see which can be improved, and at what cost
    • In our example, could retail margins be increased to increase distribution? Could more advertising spending lead to more awareness?
    • Consider qualitative issues as well (advertising theme or execution)
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15
Q

Many Ideas Are Eliminated Before Concept Testing:

A
  • PIC eliminates most new product ideas even before they are developed into concepts
  • Ideas of the following types are excluded:
    • Ideas requiring technologies the firm does not have
    • Ideas to be sold to customers about whom the firm has no close knowledge
    • Ideas that offer too much (or too little) innovativeness
    • Ideas wrong on other dimensions: not low cost, too close to certain competitors, etc
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16
Q

PIC Components:

A
17
Q

Market Analysis and Initial Reaction:

A
  • Market analysis: in-depth study of the market area that the PIC has selected for focus.
    • Conducted immediately after PIC approval
  • Initial reaction: preliminary, inexpensive assessment of concepts, which may be flowing very quickly at this point
    • Avoid “bazooka effect” (quickly blasting out concepts without forethought)
    • Respect the “fragility of ideas”—have more than a single person involved
    • Use more than pure intuition—keep records and stay objective
18
Q

Suggested Questions for the Initial Reaction:

A

Market Worth: what is the attractiveness of the new product to the targeted customer population?

Firm Worth: Is the new product project viewed positively by management? Does this new product project enhance the firm’s competencies?

Competitive Insulation: Can the product’s advantage be maintained against competitive retaliation?

19
Q

Concept Testing Cautions and Concerns:

A
  • If the prime benefit is a personal sense (aroma, taste)
  • If the concept involves new art and entertainment
  • If the concept embodies a new technology that users cannot visualize
  • If concept testing is mishandled by management, then blamed for product failure
  • If customers simply do not know what problems they have:
    • Consider: how useful would be the concept test results for the Ferris wheel? The first microwave? Diet fast food burgers?
20
Q

What Is a Product Concept Statement?

A

A statement about anticipated product features (form or technology) that will yield selected benefits relative to other products or problem solutions already available

  • Example: “A new electric razor whose screen is so thin it can cut closer than any other electric razor on the market”
  • Recall the importance of getting responses to product concepts and not simply ideas (Chapter 4)
21
Q

Purposes of Concept Testing:

A
  • To identify very poor concepts so that they can be eliminated.
  • To estimate (at least crudely) the sales or trial rate the product would enjoy (buying intentions, early projection of market share).
  • To help develop the idea (e.g. make tradeoffs among attributes).
22
Q

Procedure for a Concept Test:

A
  1. Prepare concept statement
  2. Clarify specific purposes
  3. Decide format(s)
  4. Select commercialization
  5. Determine price(s)
  6. Select respondent type(s)
  7. Select response situation
  8. Define the interview
  9. Conduct trial interviews
  10. Interview, tabulate, analyze
23
Q

Some Key Issues in Concept Testing:

A
  • Concept statement: narrative, drawing, model?
  • Respondent group: Lead users? Large users?
  • Response situation: Where? How?
  • Interviewing sequence: Is the concept understandable? Believable? Important? Interesting? Realistic? Would it work? What problems do they see? Would they buy?
  • Test procedure, change and implement, study findings.
24
Q

Concept Test: Verbal Description Examples:

A

“Here is a tasty, sparkling beverage that quenches thirst, refreshes, and makes the mouth tingle with a delightful flavor blend of orange, mint, and lime”.

“It helps adults (and kids too) control weight by reducing the craving for sweets and between-meal snacks. And, best of all, it contains absolutely no calories”.

“Comes in 12-ounce cans or bottles and costs 60 cents each”.

25
Q

Concept Test—Verbal Description plus Sketch:

A
26
Q
A

Combines best features of focus groups and surveys: 100 participants gather information about the concept via a simulated ad

  • Moderator guides respondents through computer exercise (stating purchase intentions, responses to prices, etc. on 11-point scales)
  • Early results from this dataset are used by the moderator to develop original open-ended questions on new concepts or combinations of attributes
  • Dozens of concepts can be evaluated in a three-hour session
27
Q

Analyzing Results with Benefit Segmentation: Swimsuit Market

A
28
Q

Benefit Segment Profiles in Car Industry

A
29
Q

Market Research to Support Concept Testing: BASES:

A

300 adult female respondents surveyed Nestle Refrigerated Foods example (Contadina Pasta)

  • 75% top-two-boxes score (24% definitely + 51% probably would buy)
  • Median top-two-boxes score for this category: 61%.
  • Split respondents into favorable (the 75% in the top two boxes) and unfavorable
  • Both groups liked the same things: product is natural, offers variety, is fresh, saves time, is easy to prepare
  • Most common negative: price
30
Q

Difficulties in Concept Selection:

A

One of the biggest challenges of product management

  • What if every project under consideration has passed all the hurdles so far?
  • Lacking enough financial and human resources, the firm needs a good concept selection procedure, otherwise management must:
    • Guess (and select the wrong project)
    • Approve too many projects (and underfund everything)
31
Q

Full Screen =

A

Process by which the new product concepts that passed the initial screen are thoroughly evaluated on product advantage, market competitiveness, marketing synergy, and technical synergy.

Each new product concept is evaluated on three sets of factors that research has shown are highly correlated with new product success and are aligned with the Critical Success Factors.

LINK

32
Q

Purposes of the Full Screen:

A
  • To decide whether technical resources should be devoted to the project
    • Feasibility of technical accomplishment – can we do it?
    • Feasibility of commercial accomplishment – do we want to do it?
  • To help manage the process
    • Recycle and rework concepts
    • Rank order good concepts
    • Track appraisals of failed concepts
  • To encourage cross-functional communication
33
Q

A Simple Scoring Model:

A
34
Q

Sources of Scoring Factor Models:

A
35
Q

The Scores:

A

Scoring Team:

  • Major Functions (marketing, technical, operations, finance)
  • New Products Managers
  • Staff Specialists (IT, distribution, procurement, PR, HR)

Problems with Scorers:

  • May be always optimistic/pessimistic
  • May be ”moody” (alternately optimistic and pessimistic)
  • May always score neutral
  • May be less reliable or accurate
  • May be easily swayed by the group
  • May be erratic

New Product Development (4 decks)

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