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Innovation and New-Product StrategyWeek 9

Chapter 08

McGraw-Hill/IrwinCopyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Types of InnovationsInnovations can be classified according to:

Newness to the market The extent of customer value created

This has resulted in:1) Transformational innovation2) Substantial innovation3) Incremental innovations

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Transformational innovatian : Substantial innovation :Incremental innovations :

2

Finding Customer Value OpportunitiesObjective of customer value analysis is to identify needs for: New productsImprovements in existing productsImprovements in the processes that produce the productsImprovements in supporting services

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Finding New-Product Opportunities

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Finding New-Product OpportunitiesDifference between expectations and use experience may indicate a new productMatching capabilities to value opportunitiesTransformational innovations

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The Evolution of the Creative CompanyA New Corporate Model is Taking ShapeFocusing on Creativity and Innovation

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Characteristics of Successful Innovators

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Recognizing the Realities of Product CannibalizationCannibalization occurs when a new product attracts sales from an existing productProactive cannibalization consists of:The pursuit of a deliberate, ongoing strategy of developing and introducing new products that attract the buyers of a companys existing products

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New-Product PlanningDeveloping a culture and strategy for innovationDeveloping effective new-product-planning processesResponsibility for new-product planning

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Developing a Culture and Strategy for InnovationCan be encouraged by several interrelated management initiatives:Plan and implement a two-day innovation workshop of top executives to develop an innovation plan Develop an innovation statement highlighting the companys objectives and senior managements roles and responsibilities

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Developing a Culture and Strategy for InnovationConduct innovation training programs for employees and managers to encourage commitment and involvementCommunicate the priority of innovation via articles, newsletters, and presentations to employees, shareholders, and customersSchedule innovation speakers on a regular basis to expose employees to innovation authorities

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Strategy for InnovationA successful new-product strategy includes:Setting specific, written new-product objectives Communicating throughout the organization the role of new products in contributing to the goals of the businessDefining the areas of strategic focus for the corporation in terms of product scope, markets, and technologiesIncluding longer-term, transformational projects in the portfolio along with incremental projects

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Exhibit 8.4 - New-Product-Planning Process

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Responsibility for New Product PlanningCoordination of new product activities Inter-functional coordination Creation of a project task force responsibleDesignation of a new products manager Formation of matrix structureCreation of a permanent design center

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Idea GenerationSources of ideaMethods of generating ideas

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Sources of IdeasNew-product ideas come from many sources, including:R&D laboratoriesEmployeesCustomersCompetitorsOutside inventorsAcquisitionValue chain members

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The Search ProcessShould idea search activities be targeted or open-ended?How extensive and aggressive should new-product idea search activities be?What specific sources are best for generating a regular flow of new-product ideas?

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The Search ProcessHow can new ideas be obtained from customers?Where will responsibility for new-product idea search be placed?What are potential threats from disruptive technologies that may satisfy customers better than our products?

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Idea SourcesIdentifying the best sources of ideas depends on:Size and type of firmTechnologies involvedNew-product needsResourcesManagements preferencesThe organizations capabilities

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Business AnalysisEstimates the commercial feasibility of the new-product conceptRevenue forecastsPreliminary marketing planCost estimationProfit projections

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Product and Process DevelopmentProduct development process

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Product Development ProcessDevelopment of the new product includes:Product designIndustrial design Process (manufacturing) designPackaging designDecisions to make or outsource various product components

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Marketing Strategy and Market TestingMarketing strategy decisionsMarket testing

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Marketing Strategy DecisionsMarketing strategy planning begins at the concept evaluation stage and continues during product development

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Marketing Strategy DecisionsBetween designs, operations, and marketing, following activities should be decided:PackagingName selectionEnvironmental considerationsProduct informationColorsMaterialsProduct safety

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Marketing Strategy DecisionsMarket targeting: Selection ranges fromOffering a new product to an existing target, to identifying an entirely new group of potential usersPositioning strategy: The core of this strategy isHow management wants the new product to be positioned in the eyes and minds of the targeted buyers

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How Market Testing Relates to the Other Testing Steps

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The Marketing PlanMarket introduction requires:A complete marketing strategy that is spelled out in the marketing planPlan should be coordinated with the people and business functions responsible for the introduction, including:SalespeopleSales and marketing managersManagers from other functional areas such as operations, distribution, R&D, finance, and human resources

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Monitoring and ControlReal-time tracking of new-product performance at the market entry stage is importantStandardized information services are available for monitoring sales of productsTo track how well the product is performing, it is important to include:Product performance metrics Performance targets in the new-product plan

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Variations in the Generic New-Product-Planning ProcessNew-product-planning process is based on the logic of being market driven and focused on customer needs

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Summary of Variants of the Generic Development Process

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Summary of Variants of the Generic Development Process

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TUGAS KELOMPOK PRESENTASI

CASE 6 10 : British Airport Authority CASE 6 14 : Rover AutomobileCASE 6 17 : Procter & Gamble Co.CASE 6 20 : Hongkong Disneyland

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