1 1-1

McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.

2 1-2

NEW PRODUCTS

MANAGEMENTMerle Crawford

Anthony Di Benedetto

7th Edition

Irwin/McGraw-Hill, © 2003

3 1-3

OVERVIEW AND OPPORTUNITY IDENTIFICATION/SELECTION

PART

ONE

4 1-4

Opportunity Identification and SelectionFigure I.1

5 1-5

CHAPTER ONE

THE MENU

6 1-6

Some Hot New Products

• Honda's Insight -- a $20,000 two-seater that runs on a combination gasoline-electric motor and gets as much as 70 miles per gallon.

• Metricom's Ricochet modem -- allows wireless Web surfing at twice the speed of regular dial-up modems, for a price of $99 to $300 plus a $70 - $80 monthly charge.

• Italjet Velocifero -- a five-horsepower, two-stroke motorscooter that gets about 50 miles per gallon whose design is stylish enough to have landed it a position at the Museum of Modern Art.

• Ford Focus -- aimed at the youth market, complete with aftermarket add-ons; a huge success relative to the car it replaced, the Escort.

• BlackIce Defender -- software that protects your computer from hackers who try to take advantage of cable modems and other 24-hour Internet connections.

• Faber-Castell's new pencil -- silver and black in color, the new design features a triangular cross-section for easy handling and non-slip raised dots.

• IBM's T21 laptop -- ultra-thin and weighing only five pounds, it has a Pentium processor, a 14-inch display, and costs about $2,650.

• Chrysler PT Cruiser -- Thirties-styled car that achieved cult status almost overnight; Chrysler's backorder list was reportedly about 300,000 long at one point.

Source: Roy Furchgott, "The Best Products of 2000," Business Week, December 18, 2000, pp. 76-88.

Figure 1.1

7 1-7

Products of the Future

• Intelligent refrigerators will track food inventories, and will either provide a hard-copy shopping list or send an electronic list to a home-delivery service.

• Intelligent wallpaper will transform a wall to a television, a computer screen, works of art, etc.

• Robotic lawn mowers will tend the grass within any specified boundary.

• “Nanny-cams” hidden in teddy bears permit parents to watch their children at daycare; camera-surveillance systems will keep an eye on latchkey kids home alone.

• Holographic storage will be used to store and retrieve home videos.

• Lasers and decay-preventive gum and toothpastes will minimize the need for the dentist’s drill.

• Robots will dispense gasoline, and know your preferred grade.

• “Smart” heart pacemakers will be placed in the wrist.

• Source: Marian Salzman and Ira Matathia, “Lifestyles of the Next Millennium: 65 Forecasts,” The Futurist, July-August 1998.

Figure 1.2

8 1-8

Not All New Products Are Planned

• Microwave ovens

• Aspartame (NutraSweet)

• ScotchGard fabric protector

• Teflon

• Penicillin

• X-rays

• DynamiteIn each case, an accidental discovery -- but someone knew they had something when they saw it!

Figure 1.3

9 1-9

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

Figure 1-4

10 1-10

What Is a Successful New Product?

90

40

10

0102030405060708090

Sometimes Quotedin Press

Research Reports Sometimes Claimed

Percent of Products that Fail

Although you may hear much higher percentages, careful studies supported by research evidence suggest that about40% of new products fail -- somewhat higher for consumerproducts, somewhat lower for business-to-business products.

11 1-11

Classic Brand Names

• Budweiser

• Ivory

• Coca-Cola

• Maxwell House

• Kodak

• General Electric

• Steinway

• Wrigley

• Kleenex

• Waterford

• L.L. Bean

• Ford

• John Deere

• Maytag

• JCPenney

• Sears

• Colgate

• Hershey

• Gillette

• TiconderogaWhich of these have the most value today as launch padsfor new products?

Figure 1.5

12 1-12 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

Time Cost

Value

Figure 1-6

13 1-13 Breakthrough Innovations that Changed Our Lives

• Personal Computer

• Microwave Oven

• Photocopier

• Pocket Calculator

• Fax Machine

• Birth Control Pill

• Home VCR

• Communication satellite

• Bar coding

• Integrated Circuit

• Automatic Teller

• Answering Machine

• Velcro Fastener

• Touch-Tone Telephone

• Laser Surgery

• Apollo Lunar Spacecraft

• Computer Disk Drive

• Organ Transplanting

• Fiber-Optic Systems

• Disposable Diaper

• MS-DOS

• Magnetic Resonance Imaging

Figure 1-7

This list was compiled in the early 1990s. Since then onewould certainly have to add the Internet. Anything else you would add? Which would you delete?