New Product Process and Likelihood of success (Lecture #12/13)

Question 1

What are the seven stages of the new product process?

Answer 1

1. New product strategy development
2. idea generation
3. screening and evaluation
4. business analysis
5. development
6. market-testing
7. commercialization

Question 2

Describe the new product strategy

Answer 2

-involves defining the role of the new product in terms of the firm’s overall corporate objectives

Question 3

what are the objectives of the new product strategy stage (stage 1)?

Answer 3

-identify markets and strategic roles of the new product

• strategic roles: types of innovation, time horizon, budget, role of new product, fit in firm’s portfolio, etc.
• need for cross-functional teams (different functional expertise working towards common goal)

Question 4

def. six sigma

Answer 4

a measure that delights customers by achieving quality through highly disciplined process that is focused on developing and delivering near-perfect product and services

Question 5

what stage is six sigma used/considered?

Answer 5

new product strategy development stage (stage 1)

Question 6

who are the lead users in the new product strategy development stage and what do they do?

Answer 6

lead users are early adopters and provide substantive feedback

lead users face needs that will be general in the new marketplace, but face them before marketplace encounters them

Question 7

describe the idea generation stage

Answer 7

involves developing a pool of concepts as candidates to become new products

Question 8

what are some sources of ideas

Answer 8

• customer and supplier suggestions
• employee and co-worker suggestions
• research and development breakthroughs
• competitive products
• R&D at Universities, inventors, and small tech firms
• new patents and trademarks
• scientific/tech reports and emerging trend lines

Question 9

describe the screening and evaluation stage

Answer 9

involves internal and external evaluations of the new product ideas to eliminate ideas that do not warrant further efforts

Question 10

describe the internal approach (screening and evaluation)

Answer 10

evaluate if the new idea matches corporate objectives and assess if it is feasible (technically, technologically, financially, time, etc.)

Question 11

describe the external approach (screening and evaluation)

Answer 11

• concept testing
• –written descriptions for potential customers to ask a lot of questions and generate a lot of feedback in : online tests, simulated lab tests, limited market tests

**security of tests must be ensured

Question 12

describe the business analysis stage

Answer 12

• will it be profitable?
• involves specifying the features of the product and the marketing strategy needed for its successful commercialization; and also making the necessary financial projections (objectively)

Question 13

describe the development stage

Answer 13

the product ideas that survive stage 4, proceed into actual development, which turn the idea on paper into a few prototypes

Question 14

describe the market testing stage

Answer 14

involves exposing actual products to prospective consumers under a few realistic purchase conditions to see if consumers buy them

Question 15

what are some examples of market testing

Answer 15

• test marketing (limited sale)
• simulated test markets (STM)(asking potential customers to evaluate against competitors)
• virtual reality market testing

Question 16

describe the commercialization stage

Answer 16

involves positioning and launching the new product in full-scale production and sales

Question 17

where do risks and uncertainties come from in the commercialization stage

Answer 17

the difficulty of mass-producing products developed in the laboratory, cost overruns leading to excessively high price, costly education of potential buyers, and bad timing

Question 18

how many fees are retailers now requiring and what are they?

Answer 18

2
slotting fees: a payment required of manufacturers to place a new item on a shelf

failure fees: a penalty payment by manufacturers to compensate the retailer for sales its valuable shelf-space never made

Question 19

What things improve likelihood of success? (5)

Answer 19

1. compatibility (compatible with the way the consumer currently consumes)
2. trialibility (try out product before committing to purchase, ie test drive)
3. complexity (more complex the new product, the less likely, it will be embraced)
4. observability (if we can observe other people having success with the product, increase likelihood of success)
5. Relative advantage (has to be better than current product)

Question 20

def. continuous innovation

Answer 20

where an existing
product undergoes marginal changes, without
altering consumption practices; no new
learning

Question 21

def dynamically continuous innovation

Answer 21

Some new learning; disrupt’s consumer’s normal routine

Question 22

def. discontinuous innovation

Answer 22

A new product is launched, very different from previous; new learning and significant
change in consumption habits

Question 23

def. cross-functional teams

Answer 23

group of people with different functional expertise working toward a common goal. It may include people from finance, marketing, operations, and human resources departments. Typically, it includes employees from all levels of an organization.

Question 24

Marketing information and methods used in the new-product process: New-product strategy development

Answer 24

purpose: Identify focus, structure, approach, and guidelines for innovation

marketing info and methods: Company objectives; use of
cross-functional teams, Six
Sigma, and lead users

Question 25

Marketing information and methods used in the new-product process: Idea generation

Answer 25

purpose: Develop concepts for possible products

marketing info and methods: Ideas from employees and
co-workers, consumers,
R&D, and competitors;
methods of brainstorming
and focus groups

Question 26

Marketing information and methods used in the new-product process: Screening and evaluation

Answer 26

purpose:
Separate good product
ideas from bad ones
inexpensively

marketing info and methods used: Screening criteria, concept tests, and weighted point systems

Question 27

Marketing information and methods used in the new-product process: business analysis

Answer 27

purpose: Identify the product’s features and its marketing strategy, and make financial projections

marketing info and methods: 
Product's key features,
anticipated marketing mix
strategy; economic,
marketing, production,
legal, and profitability analyses

Question 28

Marketing information and methods used in the new-product process: Development

Answer 28

purpose: 
Create the prototype
product, and test it in the
laboratory and on
consumers

mark info and methods: Laboratory and consumer
tests on product
prototypes

Question 29

Marketing information and methods used in the new-product process: Market testing

Answer 29

purpose: Test product and
marketing strategy in the
marketplace on a limited
scale

mark info and methods: 
Test markets, simulated
test markets (STMs),
virtual reality market
testing

Question 30

Marketing information and methods used in the new-product process: commercialization

Answer 30

purpose: Position and offer product in the marketplace

mark methods and info used:
Perceptual maps, product
positioning, regional
rollouts