lecture 3

• Criteria for assessing ideas in Phase II (Concept Generation)

  • Uniqueness
  • Need fulfilment
  • Feasibility
  • Impact
  • Scalability
  • Strategic fit
• Risks in making project selection decisions at the early phases of the new product process

  • Letting through too many bad ideas
  • Rejecting good ideas
• Four situations in the Risk/Payoff Matrix

  • AA cell (drop a concept that would ultimately fail)
  • BB cell (continue on a concept that would ultimately succeed)
  • AB cell (drop error - a winner is discarded)
  • BA cell (go error - a loser is continued to the next evaluation point)

  
• Four generic risk strategies

  • Avoidance
  • Mitigation
  • Transfer
  • Acceptance
• Decay Curve


  The hundreds or thousands of ideas the company may have started with gradually get reduced through the new products process
• Everything is tentative in product development projects, even up through marketing
• Potholes


  Major difficulties or damaging problems that product developers need to anticipate
• Concept testing should be supportive, not just about killing off ideas
• Surrogates


  Pieces of information that can substitute for what we want to learn but can't
• 1. T-A-R Model


  Awareness-Trial-Availability-Repeat, a model for diffusion of innovation
• An inadequate profit forecast can only be improved by changing one of the A-T-A-R factors

  
• Ideas that should be excluded based on the Product Innovation Charter (PIC)

  • Ideas that require technologies the firm does not have
  • Ideas to be sold to customers about whom the firm has no close knowledge
  • Ideas that offer the wrong degree of innovativeness (too much or too little)
  • Ideas wrong on other dimensions: not low cost, too close to certain competitors, and so on
• Concept Testing


  Testing what potential buyers think of the product
• Concept testing may not help when the prime benefit is a personal sense or when embodying new art and entertainment, or if users cannot visualize new technology
• Prototype Concept Testing


  Testing a full service description or physical prototype
• Product Concept


  A statement about anticipated product features (form or technology) that will yield selected benefits or problem solutions relative to other products already available
• Purposes of Concept Testing

  • Identify very poor concepts to eliminate
  • Estimate sales or trial rate/market share
  • Help develop the idea, not just test it
• Top-Two-Boxes Score


  The total number of times one of the top two boxes on the questionnaire (definitely or probably) was checked
• Formats for presenting concept statements

  • Narrative (verbal) format
  • Drawing or diagram
  • Model or prototype
  • Virtual reality
• Non-commercialized Concept Statement


  Presents just the facts
• Commercialized Concept Statement


  Sounds more like how the product would actually be promoted or advertised to customers
• Benefit Segmentation


  Identifying unsatisfied market segments and developing concepts ideally suited to their needs
• Joint Space Map


  Overlaying benefit segments onto a perceptual map to assess preferences of each segment for different product concepts

  
• Conjoint Analysis


  Used in concept testing to uncover relationships between attributes and customer preferences, and identify benefit segments
• Full Screen


  Having as much information as possible before undertaking technical work on the product
• Scoring Model


  An arrangement of checklist factors with weights used in the Full Screen
• Conjoint analysis


  Extremely useful in concept testing because of its ability to uncover relationships between attributes (features, functions, benefits) and customer preferences
• Benefit segments


  Can be identified in conjoint analysis
• Full screen


  We now have as much information as we are going to get before undertaking technical work on the product
• Purposes of the full screen

  • Helps the firm decide whether it should go forward with the concept or quit
  • Helps manage the process by sorting the concepts and identifying the best ones
  • Encourages cross-functional communication
• Scoring model


  An arrangement of checklist factors with weights (importances) on them
• Selecting factors for scoring model

  • If we could, we would use only one factor - net present value of the discounted stream of earnings from the product concept
  • Studies of product successes and failures have suggested several important success factors

  
• The scoring process


  1. Team members get acquainted with each proposal

  2. Each scorer rates each factor by selecting the most appropriate point on the semantic differential scales

  3. Scorings are multiplied by the assigned importance weights

  4. Factor totals are extended

  5. Ratings are then totalled to get the overall rating for that concept

  
• Scorers or judges


  • The four major functions (marketing, technical, operations, and finance) are involved, as are new products managers and staff specialists
• Weighting


  The most serious criticism of scoring models is their use of weights because the weightings are necessarily judgmental
• Profile sheet


  An alternative to scoring models, graphically arranges the 5-point scorings on the different factors

  
• Analytic Hierarchy Process (AHP)


  A general technique that systematically gathers expert judgment and uses it to make optimal decisions
• Management sometimes misuses scoring models
• Sales forecasting


  Typically the responsibility of the marketing person on the new product team
• Forecasting sales using traditional methods

  1. Time series and regression forecasts for current technologies in current markets

  2. Product life cycle analysis for new technology in current markets