NEW PRODUCTS
MANAGEMENT
McGraw-Hill/Irwin –
Merle Crawford Anthony Di Benedetto 9th Edition
Copyright © 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.
PART ONE
OVERVIEW AND OPPORTUNITY
IDENTIFICATION/SELECTION
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Opportunity Identification and Selection
Figure I.1
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Chapter 1
The Menu
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Why Study New Products?
• New products are big business!
– $100 billion spent annually just on technical phase.
– Uncounted new products are marketed every year.
– A single Web site may market hundreds or thousands
of products.
– For many leading firms, a third or more of sales
comes from products that are less than five years old.
(3M)
(TOYOTA Prius)
(i Tune)
(49% sale from new product)
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Innovation as an Investment
• Investment in innovation is critical to firm
growth and even survival.
• Radical innovations (those that displace or
obsolete existing products) are particularly
crucial to the firm.
• Technology leaders view “business growth
through innovation” as a major challenge
facing them today. (ex. Huang)
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Some Hot New Products
Figure 1.1
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Apple iPod, iPod Nano, and iPhone
Motorola PEBL cell phone
Yamaha Morphous scooter
Microsoft Xbox 360 and Nintendo’s Wii
Kodak EasyShare-One camera
Plantronics Discovery 640 Bluetooth headset
Dyson Root 6 Hand Vacuum
Merck Gardasil cancer-preventing vaccine
Mazda CX-7
Can you add more?
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Products of the Future
Figure 1.2
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Intelligent refrigerators will track food inventories, and will either provide a
hard-copy shopping list or send an electronic list to a home-delivery service.
Intelligent wallpaper will transform a wall to a television, a computer screen,
works of art, etc.
Robotic lawn mowers will tend the grass within any specified boundary.
“Nanny-cams” hidden in teddy bears permit parents to watch their children at
daycare; camera-surveillance systems will keep an eye on latchkey kids
home alone.
Holographic storage will be used to store and retrieve home videos.
Lasers and decay-preventive gum and toothpastes will minimize the need for
the dentist’s drill.
Robots will dispense gasoline, and know your preferred grade.
“Smart” heart pacemakers will be placed in the wrist.
Source: Marian Salzman and Ira Matathia, “Lifestyles of the Next Millennium: 65 Forecasts,” The
Futurist, July-August 1998.
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Global Product Development
Figure 1.3
• Procter & Gamble products are developed globally in
the firm’s 22 research centers located in 13 countries.
Market research and testing of the Swiffer occurred in
the U.S. and France.
• Apple did product design and customer requirement
definition in the U.S. and Japan in developing the iPod.
• Ikea identifies unmet customer needs and commissions
in-house and outsourced designers to compete for the
design. Worldwide manufacturing partners compete for
the manufacturing rights. The firm also has excellent
global logistics for product delivery to stores and
customers.
Source: Loida Rosario, “Borderless Innovation: The Impact of Globalization on NPD Planning in
Three Industries,” Visions, June 2006.
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Not All New Products Are Planned
Figure 1.3
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Microwave ovens (Pop con)
Aspartame (NutraSweet)
ScotchGard fabric protector
Teflon
Penicillin
X-rays
Dynamite
In each case, an accidental discovery -- but someone knew
they had something when they saw it!
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What Is a New Product?
Figure 1.5
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New-to-the-world (really-new) products (10% of new products):
Inventions that create a whole new market. Ex.: Polaroid camera, Sony
Walkman, Palm Pilot, Rollerblade skates, P&G Febreze and Dryel.
New-to-the-firm products (20%): Products that take a firm into a category
new to it. Ex.: P&G brand shampoo or coffee, Hallmark gift items, AT&T
Universal credit card, Canon laser printer.
Additions to existing product lines (26%): Line extensions and flankers
that flesh out the product line in current markets. Ex.: Tide Liquid, Bud
Light, Apple’s iMac, HP LaserJet 7P.
Improvements and revisions to existing products (26%): Current products
made better. Ex.: P&G’s continuing improvements to Tide detergent,
Ivory soap.
Repositionings (7%): Products that are retargeted for a new use or
application. Also includes retargeting to new users or new target markets.
Ex.: Arm & Hammer baking soda sold as a refrigerator deodorant; aspirin
repositioned as a safeguard against heart attacks; Marlboro retargeted
as a man’s cigarette.
Cost reductions (11%): New products that provide the customer similar
performance but at a lower cost. May be more of a “new product” in
terms of design or production. (自有品牌)
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Easier Said Than Done?
• Top innovators such as Intel and Gillette
stay focused and committed to innovation
as a long-term strategic goal.
• Without such focus, firms can fall back to
“tweaking” existing products and relying on
minor product improvements, instead of
true product innovation that results in newto-the-world products or really new product
lines.
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What About…
• New Services? (跑腿幫)
• New Business-to-Business Products?
• New International/Global Products?
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What Is a Successful New Product?
Percent of Products that Fail
90
90
80
70
60
50
40
30
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10
0
40
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Sometimes Quoted
in Press
Research Reports
Sometimes Claimed
Although you may hear much higher percentages, careful
studies supported by research evidence suggest that about
40% of new products fail -- somewhat higher for consumer
products, somewhat lower for business-to-business products.
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Classic Brand Names
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• L.L. Bean
Budweiser
• Ford
Ivory
• John Deere
Coca-Cola
• Maytag
Maxwell House
• JCPenney
Kodak
• Sears
• Colgate
General Electric
• Hershey
Steinway
• Gillette
Wrigley
• Ticonderoga
Kleenex
Which of these have the most value today as launch pads
Waterford
for new products?
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The Conflicting Masters of New Products
Management
• Three inputs to the new
products process: the
right quality product, at
the right time, and at the
right cost.
• These conflict with each
other but may have
synergies too.
• Issue: how to optimize
these relationships in a
new product situation.
Quality
Value
Time
Cost
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Breakthrough Innovations that Changed Our
Lives
Figure 1.6
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This list was compiled in the early 1990s.
have to add the Internet/World Wide Web.
Which would you delete?
Personal Computer
Microwave Oven
Photocopier
Pocket Calculator
Fax Machine
Birth Control Pill
Home VCR
Communication satellite
Bar coding
Integrated Circuit
Automatic Teller
Answering Machine
Velcro Fastener
Touch-Tone Telephone
Laser Surgery
Apollo Lunar Spacecraft
Computer Disk Drive
Organ Transplanting
Fiber-Optic Systems
Disposable Diaper
MS-DOS
Magnetic Resonance Imaging
Since then one would certainly
Anything else you would add?
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So, Does All Of This Actually Work?
• Check the efforts of the best product developers
in the business: the Outstanding Corporate
Innovator award winners as selected by the
Product Development & Management
Association
• Recent winners: Hewlett-Packard, Dow
Chemical, Maytag, Harley-Davidson, Bausch &
Lomb, Keithley Instruments, New Pig
Corporation.
• All have had a sustained commitment to
innovation, with remarkable results in terms of
new products.
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