New Product Development

Harryadin Mahardika, PhD

Harryadin Mahardika• Pop Economist

• FEUI & laporsuap.com

• Research objective:– “to liberate and empower consumer...”

• Current research:– Consumer empowerment

– Consumer intervention/engineering

– Mobile advertising

• Contact:– harryadin.mahardika@ui.ac.id / harryadin@gmail.com

– @HarrySastro

2

Why study new products?

3

Gartner Hype Cycle 2012

Why Study New Products?• Innovation as an Investment: A successful new

product does more good for an organization than anything else that can happen– 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.

Apple’s product timeline

6

Global Product Development

• Increased globalization make NPD even more challenging today!– Procter & Gamble products are developed globally in the

firm’s 22 research centers located in 13 countries. Market research and testing of the Swiffer mop occurred in the U.S. and France.http://www.youtube.com/watch?v=PFbeP6YqHzg&NR=1

– 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.

Joint innovation

8

What Is a New Product?• 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.

What Is a New Product?

• 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.

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

Time Cost

Value

The New Products Process

The Basic New Product ProcessPhase 1: Opportunity Identification/Selection

Phase 2: Concept Generation

Phase 3: Concept/Project Evaluation

Phase 4: Development

Phase 5: Launch

The Evaluation Tasks in the New Products Process

Opportunity Identification/Selection

Concept Generation

Concept/Project Evaluation

Development

Launch

Direction;Where should we look?

Initial Review:Is the idea worth screening?

Full Screen:Should we try to develop it?

Progress Reports:Have we developed it?

Market Testing:Should we market it?

2-14

The Life Cycle of a Concept

Corresponding New Products Process Phases:Opp. Identification Concept Generation Project Evaluation Development Launch

Opportunity Identification and Selection

17

Segment Identification

Segmentation vs Fragmentation

19

SEGMENTATION FRAGMENTATION

Long tail: tapping niche

20

Competitor

Co-opetition: Compete and collaborate• Formed by a set of companies with shared interests for

market dominance• Clear objectives in terms of performance targets and life cycle• Required capabilities should be available in the mix of

partners• Value-added by a partners are seamlessly integrated • Information and knowledge sharing• Visible rules of Governance

22

Finding co-opetitors

23

Co-opetition: compete and collaborate

24

Co-opetitor

CASE STUDY: AIRBUS

26

Case Questions 1. Should Airbus produce A-3XX?2. How should Boeing response?3. How would the production of A-3XX change product

development/innovation in Airplane Manufacturing Industry?

27