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New Products Management

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					New Products Management
 Part I: Overview, and Opportunity
       Identification/Selection

            Chapter 1
            The Menu
                                                        Figure 1-2



        The Excitement of Recent
                Winners
•   Apple’s eMate            •   Plymouth Spyder
•   Gillette MACH3           •   Kodak digital camera
•   Lego’s Mindstorms        •   VW’s new Beetle
•   The web site             •   Direct TV
•   Star Wars Episode I      •   Ski blades
•   Titanic                  •   Turbo Tax software
•   Amazon.com               •   GM’s EV2
•   Beanie Babies            •   Sippy cup
•   Sony’s Crash Bandicoot   •   John Deere’s Gator
•   Dilbert                  •   Electronic tags
•   Windows 98               •   Lincoln minivan
             New Products
• Are crucial to successful growth and
  increased profits in many organizations.
• Innovation is important but risky.
• New products account for 28% of the
  companies’ growth (Booz, Allen, and
  Hamilton).
• 35% of revenue is from new product (less
  than 10 years old).
                                                                     Figure 1-4




         What Is a New Product?
• New-to-the-World Products
   – Polaroid camera, in-line skates, Kevlar, word-processing software
• New Category Entries
   – Hewlett-Packard PCs, Hallmark gift items, Discover Card
• Additions to Product Lines
   – line extensions or flankers
• Product Improvements
   – frozen yogurt, Miller Lite, Windows 98, plain-paper fax
• Repositionings
   – Arm & Hammer baking soda
      The Product Life Cycle
• Introduction
• Growth
• Maturity
  – expand the product line
  – redesign the product
  – develop new products
• Decline
                     Initiating Factors
•   Financial Goals
•   Sales and Market Share Growth
•   Competitive Actions
•   Life Cycle
•   Technology
•   Globalization
•   Regulation
•   Material Costs and Availability
•   Invention
•   Demographic and Lifestyle Changes
•   Customer Requests
•   Supplier Initiatives and Reactions
•   Alliances
    Breakthrough Innovations that                          Figure 1-7



         Changed Our Lives
•   Personal Computer         •   Answering Machine
•   Microwave Oven            •   Velcro Fastener
•   Photocopier               •   Touch-Tone Telephone
•   Pocket Calculator         •   Laser Surgery
•   Fax Machine               •   Apollo Lunar Spacecraft
•   Birth Control Pill        •   Computer Disk Drive
•   Home VCR                  •   Organ Transplanting
•   Communication satellite   •   Fiber-Optic Systems
•   Bar coding                •   Disposable Diaper
•   Integrated Circuit        •   MS-DOS
•   Automatic Teller          •   Magnetic Resonance Imaging
    Penalty for Failure to Innovate
•   Ford
•   Bowmar (calculators)
•   Xerox (PC)
•   Osborn (portable PC)
•   Fedex (zap mail)
          Managing the Process
• Success depends on many factors.
   – Satisfying needs
   – Relative advantages
   – Market size
   – Growth rate
   – Competition
• Key notion is to understand the consumer and the
  relationship to the product.
• Sufficiently large target market.
                                                     Figure 1-6


  The Conflicting Masters of New
      Products Management
• Three inputs to the new                Quality
  products process: the right
  quality product, at the right
  time, and at the right cost.
                                         Value
• These conflict with each
  other but may have
  synergies too.
                                  Time             Cost
• Issue: how to optimize
  these relationships in a
  new product situation.