205-Note10 New Product.pdf - © Kwanho Suk New Product Development Agenda • New product development process • Product Life Cycle(PLC management •

205-Note10 New Product.pdf - © Kwanho Suk New Product...

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New Product Development © Kwanho Suk
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Agenda New product development process Product Life Cycle (PLC) management New Coke Case
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Categories of New Products New to the World Additions Improvements Repositionings Cost reductions
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New Product Development NPD is important Sustain growth/replace obsolete items Changing consumer preferences Keeping ahead of the competition NPD is costly and risky U.S. businesses spend nearly $100 billion a year on research and development Failure rates: 80% for consumer products, 33% for industrial products The Hall of Shame
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Cost of finding one successful new product
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Why New Products Fail? Poor new product Ideas Insignificant point of difference EX: McDonald s Arch Deluxe Too small and unattractive target markets Product incorrectly positioned, priced, distributed, or promoted Development costs are higher than expected New Product Failure
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New Product Development Process
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The New Product-Development Decision Process
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Stages of the NPD Process Step 1: Idea Generation Internal sources: R&D, employees External sources: Customers (complains, unique use of products, FGI) • Competitors Distributors and suppliers Step 2: Idea Screening Evaluating suggested ideas Two common mistakes Dismissing good ideas (e.g., IBM PC) Sticking to poor ideas (e.g., New coke) Arm & Hammer
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