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Key Steps in
New Product
Development
2
Key Steps in
New Product Development
Idea Generation
'
Product Screening
'
Concept Testing
Business & Financial Analysis
Product Development
Test Marketing
Commercialization
3
Idea generation is a continuous,
systematic search for new
product opportunities. It involves
indicating sources of new ideas
and methods for generating them.
4
Methods for Generating
Ideas
Dimensional Analysis lists all of the physical
characteristics of a product type. Having obtained
such a list, creativity can be triggered by asking
questions such as: "Why is the product this
way?", "How could the product be changed?"
or "'What would happen if one or more of the
characteristics were removed?"
5
Problem Analysis is a need-assessment
technique designed to develop an
inventory of consumer problems in a
particular product or service category and
to serve as a basis for new product or
service ideas.
6
Benefit Structure Analysis determines
what specific benefits and characteristics
are desired by consumers within a
particular product or service category and
identifies perceived deficiencies in what
is currently provided.
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8
Product Screening
After the firm identifies potential
products, it must screen them. In
product screening, poor, unsuitable, or
otherwise unattractive ideas are
weeded out from further actions.
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• Today, many companies use a new-product
screening checklist for preliminary evaluation.
• In it, firms list the new-product attributes
considered most important and compare each
idea with those attributes.
• The checklist is standardized and allows ideas
to be compared.
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Concept testing is a quick and
inexpensive way of measuring
consumer enthusiasm. It asks potential
consumers to react to a picture, written
statement, or oral description of a
product. This enables a firm to
determine initial attitudes prior to
expensive, time-consuming prototype
development.
14
Product Development
Product development converts a
product idea into a physical form and
identifies a basic marketing strategy.
16
Test Marketing
Test marketing involves
placing a product for sale in
one or more selected areas
and observing its actual
performance under the
proposed marketing plan.
18
Rather than inquire about
intentions, test marketing
allows actual consumer
behavior to be observed.
The firm can also learn
about competitive reactions
and the response of channel
members.
19
After testing is completed, the firm is ready to
introduce the product to its full target market. This
is commercialization and corresponds to the
introductory stage of the product life cycle.
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Key Success Factors
in New Product
Development
22
An investigation of new product
practices in 700 firms by Booz-Allen
& Hamilton identified the
existence of common
characteristics in companies that
were successful at product
innovation
23
They are more likely to have had a formal
new product process in place for a longer
period of time than unsuccessful companies.
They are more likely to have a strategic plan
that includes a certain portion of company
growth from new products.
2. Organizational
Structure
Successful companies are more

likely to house the new product
organization in R&D or engineering
and are more likely to allow the
marketing and R&D functions to
have greater influence on the new
product process.
26
27
New product development
costs conform to the
experience curve: The more
you do something, the
more efficient you become
at doing it. This experience
advantage stems from the
acquisition of a knowledge
of the market and of the
steps required to develop
a
new product.
28
4. Management Style
Successful companies appear
not only to select a management
style appropriate to immediate
new product development needs
but also to revise and tailor
that approach to changing new
product opportunities
29
An empirical research by
Robert Cooper found three
key factors that distinguish
winning projects from the
losers
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three key factors for
effective product
development:
Factor 1: A High-Quality New
Product Process
Factor 2: A Clear and Well
Communicated New Product
Strategy for the Business
Factor 3: Adequate
Resources for New Products
31
Product Process
Some of these success factors
that top performers build into
their new product processes
include:
emphasizing the up-
front predevelopment
homework;
building in the voice of the
customer throughout 32
Product Process
demanding sharp, early
product definition
having tough Go/Kill decision
points where projects really do
get killed
and highlighting quality
of execution throughout
33
Factor 2: A Clear and
Well Communicated New
Product Strategy for the
Business
there are clear goals or objectives for the
business's total new product effort; for
example, what percentage of sales or
profits new products will contribute
to the business
34
t h e r e a r ec l e a r l y defined a r e n a s
specified areas of strategic focus, such
as products, markets, or
te c h n o l og ie s - to give direction to the
business's total new product effort
35
t h e role of new products in achieving
the business's goals and thenew
product strategy for the business are
clearly communicated to all who
need to know
36
Factor 3: Adequate Resources
for New Products
• Intop-performing businesses,
senior management has
devoted the necessary
and money, marketing and
resources-people
technical-to achieve the
business's new product objectives
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Key Steps in

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