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This syllabus may change throughout the quarter to accommodate speakers’ schedules and student feedback. Please always check Blackboard for the most up-to-date version.

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NEW YORK UNIVERISTY STERN SCHOOL OF BUSINESS

MKTG-GB.2370.30

New Product Development Professor Bryan Bollinger

Office: Tisch 912 Phone: (212) 998-0519 Email: bbolling@stern.nyu.edu Faculty Assistant: Christine Moore Office: Tisch 800B Phone: (212) 998-0507 Email: cmoore1@stern.nyu.edu Course Assistant: TBD Nature and Purpose of Course This course deals with the challenge of bringing to market elegant and efficient solutions to strong customer needs. This challenge is fundamental in customer-centric innovation, and is relevant whether you work for a startup or a large company, whether you sell products or services, and whether your customers are individual consumers or companies. We focus primarily on state of the art frameworks, concepts and tools that have been recently validated by innovative companies. We structure our learning around the following basic steps of the innovation process:

1. Opportunity identification 2. Idea generation 3. Design 4. Testing 5. Launch Required Readings Instead of inundating you with required readings, I have selected only a few that are critical for your understanding of the NPD process. In return, I expect in-depth, critical reading and not skimming the material while on the treadmill. Required Books Packet of Cases and Articles: Available at the NYU Bookstore. Other Resources Will and Vision: How Latecomers Grow to Dominate Markets by Gerard Tellis and Peter Golder. Two copies are on reserve in Bobst Library.

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Principles of Marketing Engineering by Gary Lilien, Arvind Rangaswamy, and Arnaud De Bruyn. A copy is on reserve in Bobst Library. Design and Marketing of New Products, 2nd ed., by Glen Urban and John Hauser. New Products Management, 8th ed., by Merle Crawford and Anthony Di Benedetto. Course Material on Stern Web Site A course web site is available on Blackboard. This site contains the course syllabus. Other important course material like PowerPoint presentations and handouts will be posted during the semester. Course Content and Evaluation Class Contribution (20%) The best learning experiences occur when students participate actively. You must be prepared to discuss all assigned readings and cases. Your comments should reflect a depth of understanding indicative of thorough analysis (including number crunching) and most often discussions with other students prior to class. You should be prepared to articulate and defend your position when called on to do so. Active participation of all students is required but quality and frequency of comments is more important than duration of each comment. These are the elements I will consider in evaluating your participation: 1. Are you a good listener? 2. Do you contribute to the learning environment by sharing your relevant business

experiences and those you read about? 3. Do your comments show evidence of thorough analysis? 4. Do you ask constructive questions of other students that help to deepen everyone's

understanding? 5. Do you distinguish between different kinds of data (i.e., facts and opinions)? 6. Are you willing to share ideas and information in a collegial fashion? 7. Are you willing to test new ideas, or are all comments "safe" (e.g., a repetition of the case

facts without new insights)? 8. Are you willing to interact with your classmates to help refine ideas? 9. Do your comments build on earlier comments to advance the discussion or are you merely

repeating earlier comments or raising points that do not fit into the current discussion? 10. Do your comments incorporate concepts presented in lectures, readings, and earlier cases? 11. Do you make your points succinctly? Rules of Class Discussion: Putting down legitimate comments (those not intended to be humorous) is unacceptable. Everyone's input, if not repetitious, must be valued and encouraged. Feel free to question or disagree with other students, however, such disagreement must be based on the idea and not the person. Respect for your fellow students is the sine qua non of great discussions and great learning experiences. Individual Assignments (40%)

• Select a company you are interested in and propose a growth strategy, backing up

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your arguments with data (you may want to use the R-W-W framework to organize your thoughts). The report is not to exceed 3 pages. (20%)

• Conjoint assignment (20%)

Group Project (40%) The project is intended to replicate the entire development process of a new product/service. Please make sure to fully document the development process, including ideas which are not subsequently acted upon. Your project grade will be based on the final project report and the in-class presentation. I will be looking to determine how well you were able to identify customer needs, delineate a market, translate customer needs into a prototype, define the value proposition, test the concept and outline the launch strategy. In addition, I will gather information from all team members on the relative contributions to the project and use appropriate weighting to arrive at the individual scores. To succeed in the marketplace, an offering needs to meet three criteria as illustrated by the Venn diagram below:

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The idea is to prototype, test and iterate until your offering satisfies all three conditions. Your report and presentation should touch on all three areas and provide solid evidence that (1) there is potential consumer demand, (2) you can create value for the company, and (3) the offering is technically feasible. We will have frequent check-ins during the course, so that I can provide you with timely feedback on your progress. There will be also several in-class opportunities to solicit input from your classmates. Here is a tentative timeline: 2/9-2/16 Form a team and decide on a vertical and place for needfinding research 2/16-2/23 Conduct observational research and depth interviews, synthesize 2/23 Present your team’s findings and POV 2/23-3/8 Decide on a new product concept, prepare proposal 3/8 Present new product proposal to class 3/8-4/5 Modify new product concept, prototype and iterate 4/5-4/12 Schedule a 30-minute meeting of your entire team with me 4/12-4/26 Conduct concept test, work on financials and marketing plan; iterate/refine 4/26-5/3 Prepare final presentation and report 5/3 Present final presentation 5/3-5/7 Finalize report 5/7 Final report due Administration 1. You should attend all class sessions, complete all readings before class, and hand in all

assignments at the beginning of class. Late assignments will be downgraded. Please minimize disturbances during class, i.e., talking, arriving late, leaving early, etc. If you must miss a class, please let me know in advance and then get notes from other students.

2. Laptops (including tablets) may not be used during lectures and discussions unless needed

for a specific activity. 3. Students are expected to adhere to the school’s honor code. Please ask me if you have any

questions about how the honor code applies to a specific situation. For this class, the most important aspect to be aware of is that the individual assignments need to reflect the work of the student handing them in. For the group projects, I encourage you to discuss them with your classmates both inside and outside of your group.

4. No extra credit assignments will be given in this course. Please see me right away if you are

concerned about your performance. 5. Deviations from the syllabus may be necessary.

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Schedule Overview Date Topic Hand

in/present

9-Feb Introduction: Reasons for innovation. The new product development process.

16-Feb Identification and evaluation of markets. Understanding customer needs.

Team composition

23-Feb Interpreting observational data. Student presentations. Idea generation: Lead user analysis and Open innovation

Empathy work and POV

1-Mar Idea generation: Brainstorming versus ideation templates Translating insights into a new product.

8-Mar Evaluating Opportunities. Project proposal presentations. Project proposal

22-Mar Refining the product concept and features. Perceptual Mapping.

29-Mar Conjoint analysis Conceptual framework. Company growth strategy

5-Apr Conjoint analysis: Application.

12-Apr Concept testing, Sales forecasting for nondurables. Conjoint assignment

19-Apr Diffusion of new products. Sales forecasting for durables.

26-April Launch Strategies. Challenges in marketing new products. Managing a product portfolio.

3-May Project presentations. Wrap up and lessons learned. Final Report Due May 7

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MODULE 1 - INTRODUCTION

___________________________________________________________________________ Session 1: February 9 ___________________________________________________________________________ Topics: Introduction: Reasons for innovation. New product development process and challenges. Objectives:

• Understand need for innovation • Understand how to evaluate markets • Explore the role of market entry strategies • Discuss class logistics

Case: IDEO Product Development, Harvard Business School case 9-600-143 Prepare:

• How would you characterize IDEO’s process, organization, culture and management?

• Should IDEO accept the Visor project as is (on a dramatically reduced schedule)? Please consider both IDEO’s and Handspring’s perspectives

Watch: • The Deep Dive http://www.youtube.com/watch?v=M66ZU2PCIcM

Read:

• Blank, Steven Gary, “Four Steps to the Epiphany”, chapter 1 and 2, Cafepress.com, 2004.

• Cooper, R., “Perspective: The Stage Gate Idea-to-Launch Process – Update, What’s New, and NexGen Systems”, Journal of Product Innovation Management, 2008.

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Session 2: February 16

Topics: Identification and evaluation of markets. Understanding customer needs. Objectives:

• Understand how to evaluate markets • Explore the role of market entry strategies • Learn the fundamentals of empathic design • Familiarize yourselves with methods and techniques for uncovering customer

needs Read:

• Kim, W. Chan, and Renée Mauborgne, “Blue Ocean Strategy,” Harvard Business Review, 2004.

• Bower, Joseph L., and Clayton M Christensen, “Disruptive Technologies: Catching the Wave,” Harvard Business Review, 1995.

• Patnaik, Dev and Robert Becker, “Needfinding: The Why and How of Uncovering People's Needs,” Design Management Journal, 1999.

• Becker, Robert, "Direct Observation: Some Practical Advice", Jump White Paper, Jump Associates, 1999.

• Design bootcamp bootleg http://dschool.stanford.edu/use-our-methods/

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Session 3: February 23

Topics: Interpreting observational data. Idea generation. Objectives:

• Discuss the challenges you faced while conducting qualitative research and interpreting the data

• Explore how the results of observational research can impact product development and strategy decisions

• Provide feedback on POVs • Learn how to identify and engage lead users in the innovation process • Understand the challenges of managing open innovation • Learn about brainstorming and ideation templates

Prepare:

• Pick a vertical based on your team’s passion and select a venue for observation that will tell you something interesting about people's needs in the chosen domain.

• Go in pairs and spend 3 hours taking photos or shooting video. Make notes about the place and how people are interacting in the space.

• Make three different interpretations of what you see, that is – find three alternative stories that fit the scene. Don't just stay at the observational level. Peel back the layers. Go deep.

• Again, in pairs conduct two or three depth interviews (ideally in situ). What themes do you see emerging?

• Meet with your teammates, discuss your findings and prepare a POV to present in class. Please email me your slides the day before class so that I can upload them to cut down transition times.

Read:

• Patnaik, Dev, "System Logics: How Companies Organize Their Offerings To Solve Big Needs", Design Management Journal, 2004 (optional).

• Thomke, Stefan and Eric von Hippel, “Customers as Innovators: A New Way to Create Value”, Harvard Business Review, 2002.

• von Hippel, E., S. Thomke, M. Sonnack, “Creating Breakthroughs at 3M,” Harvard Business Review, 1999.

• Huston, Larry and Nabil Sakkab, “Connect and Develop: Inside Procter & Gamble's New Model for Innovation”, Harvard Business Review, 2006.

• Podcast: http://www.scientificamerican.com/podcast/episode.cfm?id=online-gamers-help-solve-protein-st-11-09-21 (Paper at: Khatib et al, “Crystal structure of a monomeric retroviral protease solved by protein folding game players”, Nature Structural & Molecular Biology, 18(10) 2011.)

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Listren:

Session 4: March 1

Topics: Brainstorming versus ideation templates. Translating insights into a new product. Objectives:

• Discuss structured versus unstructured approaches to brainstorming/idea generation.

• Get practice brainstorming. • Introduce Prototyping as a learning tool. • Discuss the formulation of a design brief.

Read:

• Goldenberg, Jacob, David Mazursky, and Sorin Solomon, “Creative Sparks”, Science, 1999.

• Goldenberg, Jacob, Roni Horowitz, Amnon Levav, and David Mazursky, “Finding your Innovation Sweet Spot,” Harvard Business Review, 2003

• Nalebuff, Barry J., and Ian Ayres, “Why Not?: How to Use Everyday Ingenuity to Solve Problems Big and Small”, chapter 1 and 2, Harvard Business Publishing, 2006

• Ulwick, Anthony, “Turn Customer Input into Innovation”, Harvard Business Review, 2002.

• Schrage, Michael, “The Culture(s) of Prototyping”, Design Management Journal, 1993.

Watch:

• Rewarding failure: http://online.wsj.com/video/more-companies-rewarding-failure/751AC43B-98EE-4261-A2F7-045DDB76A44D.html

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Session 5: March 8

Topic: Evaluation of Opportunities Objectives:

• Introduce a typology of new products. • Discuss methods for evaluating opportunities. • Understand how new ideas are selected for funding. • Discuss what makes a successful new venture.

Read:

• Day, G., “Is it real? Is it worth it? Can we win?”, Harvard Business Review, 2007.

• McGrath, R. and Ian McMillan, “Discovery-driven planning”, Harvard Business Review, 1995.

Session 6: March 22

Topics: Refining the product concept and features. Perceptual mapping. Objectives:

• Understand how technical choices affect the positioning of a product • Get a sense for the tradeoffs faced when selecting product features • Learn about perceptual mapping

Case:

• Honda Today, Harvard Business School case 9-692-044. Prepare:

• Which option should Mr. Kamimura choose? To answer this question, analyze: o What is the impact of each option on the customer value of Honda

Today? o What is the impact of each option on the company value of Honda

Today? (direct financial impact, product line impact, impact on organization and corporate culture)

Exercise: • Positioning the Infiniti G20.

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Session 7: March 29

Topic: Conjoint analysis: Conceptual framework Objectives:

• Understand the concept of conjoint analysis • Learn the different methods for customer preference elicitation • Get a feel for the merits and limitations of conjoint for product design

Prepare:

• Go to http://www.sawtoothsoftware.com/solutions/conjoint_analysis • Click through the demo conjoint surveys for CBC, ACBC, ACA and CVA and

come prepared to discuss their pros/cons (you may want to jot down your thoughts as you are going through the tasks)

Read:

• Dolan, Robert J., “Analyzing Consumer Preferences”, Harvard Business Publishing, 1999.

• Green, Paul E., and Yoram Wind, “New Way to Measure Consumer Judgments”, Harvard Business Review, 1975.

• Page, Albert L. and Harold F. Rosenbaum, “Redesigning Product Lines with Conjoint Analysis: How Sunbeam Does It,” Journal of Product Innovation Management, 1987.

Session 8: April 5

Topic: Conjoint analysis: Application. Objectives:

• Become comfortable analyzing customer preferences using conjoint data • Learn how to calculate market shares based on conjoint data • Understand how demographic and benefit segmentation is performed and how it

can assist managers Case:

• GreenWare Prepare:

• Look at the draft of the conjoint questionnaire (see file “GreenWare Draft of Conjoint Questionnaire”). Which modification(s), if any, would you recommend? Your suggestions may relate to the format, the content, or any other aspect of the questionnaire.

• Download the data file “GreenWare Data” and bring your laptop to class.

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Session 9: April 12

Topics: Concept testing. Sales forecasting for nondurables. Objectives:

• Understand how concept test feedback is used in the product development process

• Learn about common sales forecasting tools for nondurables Read:

• Dolan, Robert J., “Concept testing note”, Harvard Business Publishing, 1989. • Shocker , Allan D., and William G. Hall, “Pretest Market Models: A Critical

Evaluation”, Journal of Product Innovation Management, 1986 (optional). Case: Nestlé Refrigerated Foods: Contadina Pasta & Pizza (A) Prepare:

• Would you launch the pizza? Analysis questions:

•  Using the BASES model described in Exhibit 9, forecast the estimated demand (trial and repeat) for the two pizza options under consideration: Pizza and Topping and Pizza Only. Most of the data needed for the forecasting exercise is available in Exhibit 21.

• Hints: o In Exhibit 21 there is a big difference between Contadina users and non-users

on the top two box scores. This will affect the forecast depending on what proportions are used for Contadina users vs. non-users in the population.

o On p. 14 (2nd to last paragraph), Nestlé’s marketing research department cautions us that parent brand usage could vary from 5% to 25%. It would be worthwhile to judge the sensitivity of the forecast under 5%, 15%, and 25% parent brand penetration scenarios.

o What do you learn from Exhibits 13, 14, and 15? o How does the pizza concept test data (Exhibit 19, 20, and 21) compare to the o pasta concept test data (Exhibit 6)? o What is your reading of Exhibits 23 and 24? o How would you compare the pizza opportunity to the pasta opportunity?

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Session 10: April 19

Topics: Diffusion of new products. Sales forecasting for durables. Objectives:

• Understand the diffusion process of different types of products • Discuss possible ways marketers can exploit social media to achieve marketing

objectives in launching new products • Get a feel for the dilemmas marketing managers face when trying to forecast the

adoption and diffusion of technology-intensive consumer durables.

Case: • Zenith: Marketing Research for HDTV

Prepare: • How much of the existing information on TV buyers can be used to assess the

HDTV market? • Prepare a forecast for HDTV demand from 1992-2011 under a pessimistic, likely,

and optimistic scenario. How do you define these scenarios? What additional information (if any) would you need to assess market potential/consumer preferences for HDTV?

Read: • Draganska, Michaela, “New Product Diffusion Models” • Gourville, John T., “Note on Innovation Diffusion: Rogers’ Five Factors”,

Harvard • Business Publishing, 2006.

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Session 11: April 26

Topics: Launch strategies. Challenges in marketing new products. Managing a product portfolio. Objectives:

• Understand how best to map product benefits to a marketing plan aimed at conveying those benefits and overcoming barriers to adoption

• Compare various communication approaches for launching a new product • Discuss non-traditional marketing strategies • Discuss challenges in launching new products

Reading:

• Gourville, John T., “Eager Sellers and Stony Buyers: Understanding the Psychology of New-Product Adoption”, Harvard Business Review, June 2006, Vol. 84 Issue 6, p98-106

• Marn, Michael V., Eric V. Roegner, and Craig C. Zawada, “Pricing New Products,” McKinsey Quarterly, 2003.

• Leslie, Mark and Holloway, Charles A., “The Sales Learning Curve”, Harvard Business Publishing, 2006.

Session 12: May 3

Topic: Project presentations Objectives:

• Present new product and entire development process to class. • Gain feedback from classmates to include in final project report.