NEW PRODUCT DEVELOPMENT Cristian Dohi, Lena Grosse, Nicklas Peele

International Marketing Management 521094 Consumer Behavior

AGENDA

1.  Premise

2.  Project management & new product development

3.  New product development models 3.1 8 step model 3.2 Stage-Gate model 3.3 SCRUM development

4.  Marketing inputs

5.  Risk & new product development

6.  Current issues

1. PREMISE

Project Management

New Product Development

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2. PROJECT

“A unique set of coordinated activities, with definite starting and finishing points, undertaken by an individual or organization to meet specific objectives within defined schedule, cost, and performance parameters.” (BS 6079-1)

“A temporary group activity designed to produce a unique product, service or result.” (PMI 2014)

"  Temporary: transience

"  Unique: not a routine operation 2

2. GENERIC PROJECT DEVELOPMENT CYCLE

Concept Definition Development Execution Delivery

Morris 2007, p. 196 3

2. MANAGEMENT

“…the art of arranging physical and human resources towards purposeful ends.” (Wren 2005, p. 12)

“A process consisting of planning, organizing, actuating and controlling, performed to determine and accomplish the objectives by the use of people and resources.” (Terry 1953, p. 14)

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2. PROJECT MANAGEMENT

"   First mentioned in 1953 in the US defense-aerospace sector

"   “It is the management discipline of how one initiates, develops, and implements projects for stakeholders success and includes portfolio and program management, project strategy, technology management, and commercial management as much as the traditional areas of project control and organization.” (Morris 2007, p. 196)

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2. PROJECT MANAGEMENT & NPD

"   New product development is a project criteria

"   Individuals of different technical/functional expertise are grouped in a subunit

"   Project management is the “parent” of new product development

New Product Development

Project Management

Input/Info

Source of error

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2. NEW PRODUCT DEVELOPMENT

“… consists of the activities of the firm that lead to a stream of new or changed product market offerings over time. This includes the generation of opportunities, their selection and transformation into artifacts (manufactured products) and activities (services) offered to customers, and the institutionalization of improvements in the NPD activities themselves.” (Loch & Kavadias 2008, p. 3)

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2. NECESSITY

"   Necessary for organic growth

"   Establish & survive

"   Innovation imperative

"   More sophisticated psychological, cultural & social needs

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2. CHALLENGES

"   Shorter product lifecycles

"   Intense competition

"   Information overload short attention span

"   “Information filters”

"   High development costs (R&D)

"   Social, economic, and legal constraints

High failure rates 9

3. MODELS FOR NEW PRODUCT DEVELOPMENT

1.  Kotler's 8-Stage Model

2.  Cooper's Stage-Gate Model

3.  SCRUM Development Model

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3.1 8 STEP MODEL

Kotler 2012, p. 595

Idea Generation

Idea Screening

Concept Development

Marketing Strategy &

Development

Commercial-ization

Market Testing

Product Development

Business Analysis

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3.2 STAGE-GATE MODEL

PDMA Process Stage-Gate n.d., p. 4 12

3.2 STAGE-GATE MODEL

Deliverables Gate Outputs

Output of the stage

Predetermined questions Decision

Date for next gate

Reduces risk Action plan for

next stage

PDMA Process Stage-Gate n.d. 13

3.2 STAGE-GATE MODEL

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3.3 SCRUM DEVELOPMENT

Agile SCRUM 2012, p. 41 15

3.3 STAGE-GATE VS. SCRUM

Cooper n.d.

Characteristic Stage-Gate SCRUM

Type of Model Macro-planning Micro-planning

Scope Idea-to-Launch Development & Testing

Organizational Breadth Cross-functional: Development (RD&E or technical, Marketing, Sales, Operations)

Technical (software code writers, engineers, IT people)

End Point A new launched product on the market

Developed and tested working software

Decision Model Investment model: go/kill involves a senior governance group

Largely tactical: actions needed for the next sprint

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4. MARKETING INPUTS: DISCOVERY

Inputs: •  Open innovation input •  Customer and employee input

Deliverables: •  Strategic fit, technical feasibility, market attractiveness

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4. DISCOVERY: RESEARCH METHODS

"   Multitude of methods used

"   Voice-of-Customer methods (Cooper & Dreher 2010)

"  Ethnography

"   Interviews

"   Focus groups

"   Lead user analysis

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4. SCOPING

Inputs: •  Market, financial, technical assessments

Deliverables: •  Review of deliverables at gate 1 •  Cost assessment

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4. SCOPING: RESEARCH METHODS

"   Persona creation

"   Laddering techniques

"   Analysis through consumer perspective

"   Segmentation

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4. BUILDING THE BUSINESS CASE

Inputs: •  Marketing, technical, business requirements

Deliverables: •  Business case •  Prototype

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4. BUSINESS CASE: RESEARCH METHODS

"   Online communities

"   Co-development

"   Conjoint analysis

"   Scenario techniques or narrative stories

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4. DEVELOPMENT

Inputs: •  Technical requirement specifications •  Marketing-mix strategies •  Financial and technical targets

Deliverables: •  Marketing and launch, operations, manufacturing, and

market test plans •  Physical product

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4. DEVELOPMENT: RESEARCH METHODS "   Beta-testing with innovators and lead consumers

"   Homework assignment for consumers (marketing mix)

"   What channels do they receive their information from?

"   What shape and design should the product have?

"   What is the normal price range for competing products?

"   Where do the consumers shop?

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4. TESTING

Inputs: •  Market test feedback

Deliverables: •  Reviewing marketing, operations, launch, and cost plans

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4. TESTING: RESEARCH METHODS

"   Different types of market tests:

"   Mini-launch in a controlled test market

"   Simulations

"   Sample testers

"   Sales wave research

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4. LAUNCH

Inputs: •  Production schedule and plan •  Monitoring plan •  Post-review analysis

Deliverables: •  Critical path schedule •  Lifecycle plan

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4. LAUNCH: RESEARCH METHODS

"   Customer satisfaction surveys

"   Complaint analysis

"   Social media/ WOM

"   Free trials

"   Customer contests

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4. FEEDBACK MECHANISMS

"   Current assessment of market conditions:

"   SWOT and/or Five Forces at each gate

"  Monitoring of consumer preferences

"   Assessment of value co-creation: "   Value to customer "   Value to company "   Comparison with competition "   Feasibility

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5. THE RISK FACTOR "   Internal and external uncertainties

"   Some are controllable and some are uncontrollable

"   Risks are limited to negative uncertainties

Goodman et al. 2007

Uncertainties are unavoidable

Unknown known Unknown unknown

Known known Known unknown

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5. WHAT IS RISK?

"   Composite Risk Index = Probability of occurrence x Impact

"   There are several types of risks in new product development:

"   Market risk

"   Technical risk "   Management risk

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5. STEPS TO DEFINE RISKS

"   Risk Analysis:

"   Identify risk

"  Assess risk and prioritize

"  Respond to risks

"  Track risk and control

Risk Analysis

Assess

Response

Control

Identify

Goodman et al. 2007/Zhang & Ma 2011 32

Risk

Avoid

Mitigate

Transfer

Accept

5. RISK RESPONSE PLAN

Goodman et al. 2007/Zhang & Ma 2011 33

6. CURRENT ISSUES

"   Outsourcing of new product development (Raassens, Wuyts & Geyskens 2012)

"   Research on Visceralisation "   The dimension of managers' intuition/“gut

feeling” (Roberts & Palmer 2012)

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THANK YOU FOR YOUR ATTENTION!

SOURCES "   Agile SCRUM 2012, Mysis, Paris.

"   British Standards Institute (BSI) 2010, BS 6079-1:2010 Project Management. Principles and guidelines for the management of projects, BSI, London.

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SOURCES

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SOURCES

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SOURCES

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SOURCES

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SOURCES