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New Product Development


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Introduction to new product development. Delivered by Harryadin Mahardika at Faculty of Business and Economics, Universitas Indonesia

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New Product Development

  1. 1. New Product Development Harryadin Mahardika, PhD
  2. 2. Harryadin Mahardika • Pop Economist • FEUI & • Research objective: – “to liberate and empower consumer...” • Current research: – Consumer empowerment – Consumer intervention/engineering – Mobile advertising • Contact: – / – @HarrySastro 2
  3. 3. Why study new products? Gartner Hype Cycle 2012 3
  4. 4. 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.
  5. 5. Apple’s product timeline
  6. 6. 6
  7. 7. 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. – 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.
  8. 8. Joint innovation 8
  9. 9. 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.
  10. 10. 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.
  11. 11. 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
  12. 12. The New Products Process
  13. 13. The Basic New Product Process Phase 1: Opportunity Identification/Selection Phase 2: Concept Generation Phase 3: Concept/Project Evaluation Phase 4: Development Phase 5: Launch
  14. 14. The Evaluation Tasks in the New Products Process Opportunity Identification/ Selection Direction; Where should we look? Concept Generation Initial Review: Is the idea worth screening? Concept/Project Evaluation Full Screen: Should we try to develop it? Development Progress Reports: Have we developed it? Launch Market Testing: Should we market it? 2-14
  15. 15. The Life Cycle of a Concept Corresponding New Products Process Phases: Opp. Identification  Concept Generation  Project Evaluation  Development  Launch
  16. 16. Opportunity Identification and Selection
  17. 17. 17
  18. 18. Segment Identification
  19. 19. Segmentation vs Fragmentation SEGMENTATION 19 FRAGMENTATION
  20. 20. Long tail: tapping niche 20
  21. 21. Competitor
  22. 22. 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
  23. 23. Finding co-opetitors 23
  24. 24. Co-opetition: compete and collaborate 24
  25. 25. Co-opetitor
  26. 26. CASE STUDY: AIRBUS 26
  27. 27. 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