Product Innovation and Validation

UNIT - II

Topics to be Covered

• What is New Product?
• NPD Process
• Idea generation systems
• Concept test
• Product testing
• Pre- launch
• Market test
• Final evaluation using “Stage/ Gate process
• Product validity
• Break Even Analysis
• Financial and Market Analysis.

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Bose noise masking sleeping buds

The devices have a rechargeable micro-battery for two nights of sleep per charge, noise-isolating ear tips and sound-masking technology that includes soothing sounds preloaded on the built-in flash memory. They come with an Ear pod-like charging case that will keep the buds charged when not in use. As the sleep buds are designed to sleep in, you can set a personal alarm for the morning, letting you wake up without your partner hearing the alarm sounds.

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Bone Conduction Technology

What is a New Product?

• A new product is any product, which is perceived by the customer as being new.

- It could be repositioning of existing products

- Offering the existing products at low prices

- Making improvements in the existing product

- Adding new product items to the existing product line

Idea Generation

• The process of new product development starts with the search for product ideas.
• To be successful, it is important that this search should not be casual.
• Some marketing experts believe the greatest opportunities and highest leverage with new products are found by uncovering the best possible set of unmet customer needs/ technological innovation.
• NPD ideas can come from interacting with various groups and using creativity generating techniques

Idea Generation Techniques

• SCAMPER
• Brain Storming
• Synectics
• Attribute Listing
• Morphological Analysis
• Forced Relationship
• Brain Writing
• Reverse Thinking

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• Synectics is a creative problem solving technique that uses analogies to solve problems.
• It is the process of thinking disconnected elements.
• It is the way of mentally taking things apart and putting them together to furnish new insight for all types of problems.
• It was developed by Gordon and prince.

Ex:- Students may compare the cardiovascular system to a highway, drawing as many connections as possible between two.

- If blood cells are like delivery trucks travelling through the vascular system to deliver oxygen to the body’s organs, then blood clot is like a traffic jam preventing the blood cells from making their vital deliveries.

• Attribute listing is an analytical approach to recognize new forms of a system or product by identifying/recognizing areas of improvement.
• To figure out how to enhance a particular product, it is broken into parts, physical features of each component are noted, and all functions of each component are explained and studied to see whether any change or recombination would damage or improve the product.

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Attribute Listing of TV

Shape: Rectangular

Size: 50 inches

Weight : 20 kgs

Exterior: injection molded plastic

Housing

Picture tube

Audio system

Electronic parts

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• Morphological analysis (MA) is a method for identifying, structuring and investigating the total set of possible relationships contained in a given multidimensional problem complex.
• MA allows small groups of subject specialists to define, link, and internally evaluate the parameters of complex problem spaces, creating a solution space and a flexible inference model

Forced Relations

• It is an easy technique involving the joining of totally different ideas to come up with a fresh idea. Though the solution may not be strictly unique, it frequently results in an assortment of combinations that are often useful.
• A lot of products we see today are the output of forced relationships (such as a digital watch that also has a calculator

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• Brain Writing is a method for quickly generating ideas by asking participants to write their ideas on paper/ online rather than announcing them in traditional group brainstorming sessions.
• Brain writing is also called 6-3-5 method
• 6 people of each write down 3 ideas on a large sheet of paper
• They pass this paper on to the participant next to them who will then add another 3 ideas to the paper. This is done 5 times and generates 6×18 = 108 ideas in less than an hour. This method can also be carried out in another setting for example 4-3-2.

Reverse thinking can force a small team that's been focused on a problem for a long time to think about it completely differently - and come up with a broad range of new ideas that might help to solve it.

• A large food processing company gets the idea of producing a powder to add to milk to increase its nutritional value and taste. This is a product idea, but consumers don’t buy product ideas; They buy product concepts.
• A product idea can be turned into several concepts.

- Who will use this product? (Infants, Children, Teenagers, Young/Middle-aged adults/Older adults.

- What primary benefit should this product provide? (Taste, Nutrition, Refreshment, Energy)

- When will people consume this drink? (Breakfast, Midmorning, Lunch, Mid afternoon, Dinner, Late evening)

• By answering these questions, a company can form several concepts

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• Concept 1:- An instant breakfast drink for adults who want a quick nutritious breakfast with out preparation.
• Concept 2:- A tasty snack for children to drink as a midday refreshment.
• Concept 3:- A health supplement for older adults in the late evening before they go to bed.

• Following a successful concept test, the new product manager will develop a preliminary three part strategy plan for introducing the new product into the market.
• The First part describes the target market’s size, structure and behavior
• The second part outlines the planned price, distribution strategy, and marketing budget for the first year.
• The third part of the marketing strategy plan describes the long run sales and profit goals and marketing mix strategy over time.

• Management needs to prepare sales, cost and profit projections to determine whether they satisfy company objectives.

- Estimating total sales

- Estimating costs and profits (Breakeven analysis/Risk analysis)

• The job of translating target customer requirements into a working prototype is helped by a set of methods known as quality function deployment (QFD)
• The methodology takes the list of desired customer attributes (CAs) generated by market research and turns them into a list of engineering attributes (EAs)
• Physical Prototype
• Alpha Testing (Internal Testing)
• Beta Testing (External Testing)

Market Testing

• Consumer goods market testing
• Business goods market testing

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Commercialization

• When (Timing) :- First entry, Parallel entry, Late entry
• Where (Geographic Strategy)
• To Whom ( Target Market Prospects)
• How (Introductory Market Strategy)

STAGE/GATE PROCESS

• Market research is performed through all stages and not in the normal fashion of waiting for the project or product completion and then client-testing begins.
• This innovative theory has become the fastest way to get from production to product and from product to customer with a gated-control process.
• Stage/Gate Process “is a cross-functional approach that involves many different business function areas throughout the entire product innovation cycle.“

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Stage-Gate Example�

• each stage of the project or product development is completed and then must pass through a managerial gate before a project team moves forward to the following stage.
• Stages in the Stage-Gate Process often are developed simultaneously as well.
• Suppose a coffee company is looking to manufacture a coffeemaker that allows for one-cup processing with no filters; cup-sized grounds are utilized that come in individual serving sizes and a water carafe connected to the coffee maker must be kept full so the coffeemaker is ready to go at a moment’s notice.

• While coffeemakers such as this do exist, this is a good stage-gate example to utilize. Let’s call our coffeemaker the Grinder’s Delight.

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Gate 1 and Stage 1�

• Gate 1 (Idea) – Here, we have the preliminary product—Grinder’s Delight. If the idea is feasible through analysis then it proceeds out of Gate 1 and to Stage 1. Let’s say here the idea passes analysis so we move to the scoping stage, or as in the Stage-Gate Process, the “go" stage.
• Stage 1 (Scoping) – Here the ideas begin on the features of the Grinder’s Delight. The project team feels it has all the necessary elements that a customer would want and offers it to the gate.

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Gate 2 and Stage 2�

• Gate 2 (Second Screen) – In this second gate, an analysis reveals that the Grinder’s Delight is only able to achieve an 8-ounce cup of coffee, but what if a customer wants the option to have an 8-ounce or 12-ounce cup? This is called the “kill" gate process and managers prompt for attention to the Stage 1 team. Once the Stage 1 team has included the feature for the 12-ounce cup options it can pass through Gate 2.
• Stage 2 (Build Business Case) – In Stage 2, a team can cross-functionally be working on market research, customers' wants and needs, pricing, and competition as well as manufacturing techniques and processes. These processes once they are deliverables must again go through a gate—Gate 3.

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Gate 3 and Stage 3�

• Gate 3 (Go to Development) – Let’s say here that all is well with the Stage 2 team; however, the suppliers of needed parts for the Grinder’s Delight can’t be pinned down or determined. Again, although part of Stage 2 is set, the Stage 2 team vendor problem becomes a “kill" and doesn’t pass through Gate 3.
• Stage 3 (Development) – Here again, in the development stage, we can see a problem if the manufacturing is hindered due to vendor problems. While the Stage 2 team may be able to run with designs and such, they can only purse the final manufacturing process once the managers of Gate 3 have given a “go" on the vendor situation.

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Gate 4 and Stage 4�

• Gate 4 (Go to Testing) – Once the product is given to Gate 4 for analysis, it should be ready for testing. Problems at this gate level are either given a go or killed and returned for improvements.
• Stage 4 (Testing and Validation) – Still the Stage 4 team may be able to run with testing on initial product testing to see what is missing. They can return back through Gate 4 for updates or communicate with the Stage 3 team on when suggested and approved changes will be available.

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Gate 5 and Stage 5�

• Gate 5 (Go to Launch) – Our product of the Grinder’s Delight must be ready to roll before it can pass the team in Gate 5. This means everything from concept to marketing principles to manufacturing and testing must have been accurately and satisfactory resolved before the product goes to a real-time launch.
• Stage 5 (Launch) – Here, our Grinder’s Delight is launched, and perhaps even a new stage-gate example can begin using these same stages and gates on consumer acceptance and market needs.

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Because the Stage-Gate Process is more iteration-driven where testing and acceptance are performed throughout the project and not at the end, the desired outcome of the project is usually shortened.

Break Even Analysis (BEA)

• A break-even analysis is an economic tool that is used to determine the cost structure of a company or the number of units that need to be sold to cover the cost.
• Break-even is a circumstance where a company neither makes a profit nor loss but recovers all the money spent.
• The break-even analysis is used to examine the relation between the fixed cost, variable cost, and revenue. Usually, an organization with a low fixed cost will have a low break-even point of sale.

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Financial Analysis

• Financial analysis is the examination of financial information to reach business decisions.
• This analysis typically involves an examination of both historical and projected profitability, cash flows, and risk.
• It may result in the reallocation of resources to or from a business or a specific internal operation.