SCREENING OF NEW

PRODUCT IDEAS
Dr M R Suresh, SDMIMD
Stages of new product
development process
Strategy
Idea generation
Screening
Concept development and testing
Business Analysis
Product development and testing
Test marketing
Commercialization /Launch
Screening of ideas
Idea screening- the first evaluation of innovative
ideas
A term applied to different approaches to
evaluating new product ideas
Screening is the first in a series of evaluations
beginning when the collection of new product
ideas is complete
Follows therefore that the initial evaluation cannot
be very sophisticated
The purpose of screening is an initial assessment
to weed out unsuitable ideas
The mortality curve
Curve A
Slow kill rate- many new product ideas being
allowed to go through generation and
development stages
Implications wasted development and
evaluation expenditure on ideas that would not
be launched and which therefore would not
generate return
Development resources being spread over a
larger number of development projects,
jeopardizing the resources and quality given to
anyone
Longer development effort as effort is spread over
a large number of projects
Contd..
Curve B- faster kill rate
Implications?
Lower costs as concept and product
development occurs for a smaller number of
products
Possible killing of products with potential
due to insufficient development and testing
Cooper et al showed in 2004 that best
performing companies did significantly more
idea screening than other firms
contd
In some industries Rand D costs are very high,
early expenditure may be higher, marketing
costs may be low. Other industries it may be
the other way (e.g basic cosmetics)
If development activities can take place based
on rigorous screening, resources can be
more sharply focused

Influence of risk in screening
Killing off product ideas which may have
potential
Developing product ideas which might fail
Must have a strategic orientation
If go error is fatal, screening process must be
more stringent
If drop error is risky, the process must be lees
stringent relatively
Effective screening
Based on evaluation of firms strengths and
weaknesses in the light of the market,
technological and market opportunities
Take the example of a medium sized engg
manufacturer
Potential market size, avoiding large
competition, fit with engg capabilities,
development costs, fit with distributors
Which is an attractive idea?
Type of screens
Kucmarski (1992)
Growth role
Category
Strategic role
New product type
Internal strength
Financial risk
1.Growth screen
Enter a new category of business that represents a new
addition to the company's portfolio (e.g ITC sunfeast
noodles)
Expand a companys global /domestic market share within a
product category ( e.g new variations by Maggi noodles)
Deliver a price advantage which will allow firms to gain
market share at the expense of competition
Create a whole new category of product-market, strategically
expanding sales
(e.g Danone, the dairy giant developed a range of soya
based foods to take advantage of growth in demand for dairy-
free foods)
(e.g Indian IT companies trying to develop products for
government)

2.Category screens
Can be used to encourage new product project in categories
where the company capability is most suited. Demand a
new product idea which:
Has proven consumer attractiveness (volume)
Is not dominated by one or two major players
Demonstrates growth potential
Has room for additional products which might offer benefits to
the consumer
Does not require marketing or other investment which the
company cannot match easily
(e.g BakeMark UK, a subsidiary of Dutch ingredients firm
launching Spicy Naan for the UK market)
(Imitation is a risk, new product idea should have definite
advantage)
Useful as it provides guidelines judging new categories to
explore

3.Strategic role screens
Are usually statements which define competitive, market and
business requirements that new products are expected to
satisfy
Vary from industry to industry, but flows from new product
strategy

Demand a new product idea:
Are technologically superior to products currently available?
Capitalize on existing distribution and delivery systems
Are able to provide a foothold in product markets currently
outside the companys sphere of activity
Allow the company to develop technical or marketing skills in
a new sphere
Are aimed at growth markets
Will use up excess capacity
4.Screen for new product types
Classify ideas into:
New to world
New to market
New to company
New item/ product line
5.Internal strength screens
Raise issues which examine whether the idea:
Makes use of patented technology
Increase of use of an efficient manufacturing
system
Capitalizes on existing marketing and sales efforts
Exploits technological, engineering, design or
marketing skills
Similar to category screens?
Category screens focus on competitive
position and attempt to screen out categories of
product-market which may be deemed
inappropriate

6.Financial screens
Objective of any NPD is generate profits
Historic Roadblocks to Creativity
I think there is a world market for maybe five computers.
Thomas Watson, Chair, IBM, 1943.
Computers in the future may weigh no more than 1.5
tons. Popular Mechanics, 1949.
I can assure you that data processing is a fad that wont
last out the year. Business books editor, Prentice-Hall,
1957.
So we went to Atari and said, ...Well give it to you. We
just want to do it. Pay our salary, well come work for
you. And they said no. So then we went to HP, and
they said We dont need you, you havent got through
college yet. Steve J obs, co-founder, Apple Computers.
640K of RAM ought to be enough for anybody. Bill Gates,
Microsoft, 1981.
4-16
Barriers to Firm Creativity
Cross-functional diversity: Diversity leads to
more creative stimulation but also to problem
solving difficulties.
Allegiance to functional areas: Team members
need to have a stake in the teams success, or
wont be loyal to the team.
Social cohesion: If interpersonal ties among
team members are too strong, candid debate
may not occur, resulting in less innovative ideas.
Role of top management: Management should
encourage the teams to be adventurous,
otherwise only incremental changes will occur.
Figure 4.4
4-17
Required Inputs to the Creation Process
Form (the physical thing created, or, for a service, the set
of steps by which the service will be created)
Technology (the source by which the form is to be
attained)
Benefit/Need (benefit to the customer for which the
customer sees a need or desire)
Technology permits us to develop a form that
provides the benefit.
4-18
Some Patterns in Concept Generation
Customer need firm develops technology
produces form
Firm develops technology finds match to
need in a customer segment produces form
Firm envisions form develops technology to
product form tests with customer to see
what benefits are delivered
Note: the innovation process can start with
any of the three inputs.
4-19
New Product Concepts and the
New Product
Need Form
Technology
New
Product
C=
Concepts
C
C
C
Figure 4.4
4-20
The Toilet Brush Example
Idea: A new and improved toilet brush.
Concept: A toilet brush that contains detergent,
refillable, and easy for the customer to attach
to the handle.
Product (executions of this concept):
Lysol Ready Brush
Scrubbing Bubbles Fresh Brush
Clorox Toilet Wand
Others?
4-21
What a Concept Is and Is Not
IS: Learning needs of computer users can be met by
using online systems to let them see training videos
on the leading software packages. (good concept;
need and technology clear)
IS NOT: A new way to solve the in-home
training/educational needs of PC users. (need only;
actually more like a wish)
IS NOT: Lets develop a new line of instructional
videos. (technology only, lacking market need and
form)
4-22
Screening-process and criteria:
Market and firm characteristics (Cooper)
Product performance, uniqueness, market potential, technical
feasibility, intuition (Hart and others)
Factors that should be central to the screening
procedure:
tech feasibility, demand/market need, competition, buyer
behaviour, channel behaviour, corporate strategy, product
advantage, marketability, makeability
At each stage, evaluation more complete, may repeat criteria
but becomes tighter with more reliable data.
As far as idea screening is concerned it flows from the
product strategy of the firm, PIC and somewhat related to
firm specific goals.
More complex screening takes place in subsequent stages
bring customer dimension i.e concept testing and evaluation
Risk/Payoff Matrix at Each Evaluation
Cells AA and BB are correct decisions.
Cells BA and AB are errors, but they have different
cost and probability dimensions.
Decision A
Stop the Project Now
B
Continue to Next Evaluation
A. Product would fail if
marketed AA BA
B. Product would succeed if
marketed AB BB
Generic risk strategies
To be considered by the Product Management
team
Avoidance: eliminate risk
Mitigation: reduce risk to an acceptable level
through redesign or increasing product
reliability
Transfer : shift risk to an organisation better
equipped to handle
Acceptance: Develop a contingency plan
Planning the Evaluation System: Four
Concepts
Rolling Evaluation (tentative nature of new
products process)
Potholes firm competencies
People need to have strict standards
Surrogate questions
An A-T-A-R Model of Innovation Diffusion
How to forecast sales and profit for proposed new item?
Profits = Units Sold x Profit Per Unit

Units Sold = Number of buying units
x % aware of product
x % who would try product if they can get it
x % to whom product is available
x % of triers who become repeat purchasers
x Number of units repeaters buy in a year

Profit Per Unit = Revenue per unit - cost per unit
Figure 8.5
The A-T-A-R Model: Definitions
Buying Unit: Purchase point (person or
department/buying center).
Aware: Has heard about the new product with some
characteristic that differentiates it.
Available: If the buyer wants to try the product, the
effort to find it will be successful (expressed as a
percentage).
Trial: Usually means a purchase or consumption of the
product.
Repeat: The product is bought at least once more, or
(for durables) recommended to others.
Figure 8.6
8-28
A-T-A-R Model Application
10 million Number of owners of video cellphones
x 40% Percent awareness after one year
x 20% Percent of aware owners who will try product
x 70% Percent availability at electronics retailers
x 20% Percent of triers who will buy a second unit
x Rs50 Price per unit minus trade margins and
discounts (Rs100) minus unit cost at the
intended volume (Rs 50)
= Rs5,600,000 Profits
8-29
Points to Note About A-T-A-R Model
1. Each factor is subject to estimation.
Estimates improve with each step in the development
phase.
2. Inadequate profit forecast can be improved by
changing factors.
If profit forecast is inadequate, look at each factor and
see which can be improved, and at what cost.
Getting the Estimates for
A-T-A-R Model
xx: Best source for that item.
x: Some knowledge gained.

Figure 8.7
Item Market
Research
Concept Test Product Use
Test
Component
Testing
Market Test
Market Units XX X X X
Awareness X X X X
Trial XX X X
Availability X XX
Repeat XX X
Consumption X X X XX
Price/Unit X X X X XX
Cost/Unit X XX
Many Ideas Are Eliminated At the Idea screening
stage
PIC eliminates most new product ideas even before they are
developed into concepts as it provides the backdrop for idea
management and screening
Ideas of the following types are excluded:
Ideas requiring technologies the firm does not have. (e.g
KMF getting into cow cheese or higher end cheese
varieties)
Ideas to be sold to customers about whom the firm has no
close knowledge. (selling FRP based technologies for
household construction)
Ideas that offer too much (or too little) innovativeness.
(prefabricated houses)
Ideas wrong on other dimensions: not low cost, too close
to certain competitors, etc.
Market Analysis and Initial Reaction
Market analysis: in-depth study of market area that the PIC
has selected for focus.
Conducted immediately after PIC approval.
e.g coiled springs study for an engg firm
Initial reaction: preliminary, inexpensive assessment of
concepts, which may be flowing very quickly at this point.
Avoid quickly eliminating out concepts without
forethought
Do not include idea source in initial reaction.
Respect the fragility of ideas -- have more than a
single person involved.
Use more than pure intuition -- keep records and stay
objective.
Suggested Questions for the Initial Reaction
Market Worth: what is the attractiveness of the
new product to the targeted customer
population?
Firm Worth: Is the new product project viewed
positively by management? Does this new
product project enhance the firms
competencies?
Competitive Insulation: Can the products
advantage be maintained against competitive
retaliation?
Concept Testing Cautions and Concerns
If the prime benefit is a personal sense (aroma,
taste).
concept involving new art and entertainment (e.g
Harry Potter series).
concept embodying a new technology that users
cannot visualize. (e.g virtual reality products)
If concept testing is mishandled by management,
then blamed for product failure.
customers simply do not know what problems they
have in many situations, situations of new physical
experience
These concerns have to be handled in concept
evaluation as much as possible
9-35
Why concept evaluation and
testing- some issues
This stage is viewed as an extension of idea
generation and screening, those ideas that
screened to be of potential value are
developed and screened further to get
specifications that would have greater appeal
to consumers
The more detailed the effort the greater the
chance of lesser development costs and the
later prototypes developed would more closely
match customer needs and preferences
Iterative cycles
37
Consumer purchases for end benefits
Concept testing seeks to understand
consumers' perceptions of
characteristics, end benefits and
acceptance of the concept
Marketing manager's job is to bring in
the voice of the market
New product development involves
marketing, R&D, and production

Relationship between product and needs
Multilevel view of product satisfaction
Core benefit, generic product, augmented product,
potential product
Limitation of Kotlers approach as per Saren and
Tzokas (1994)
Conceptualization of the product in isolation from the
customer-supplier context
Regarding product as an autonomous unit that can be
deconstructed and understood in its basic elements is
wrong
Existence of a product for consumption is not realized
by its material nature but by its symbolic meaning that
society, consumers, producers have ascribed by means
of culture, use/experience and their interaction
The pluri-signified product
Object (physical , tech features), Supplier (credibility,
service, technical capability), Buyer (context,
perceptions, needs, ability, objectives, expected
advantages). Helps focus not only on needs but the
underlying purpose and relationship between
customer, object and supplier

Process of concept testing
Test of perception, influenced by all that
influences perception
Information given about the product concept
Timing of evaluation
Context of the concept
Nature of the product concept: emotive to
functional continuum
40
Concept
Is an idea to satisfy consumer need
Essence of the product
Concept testing
a system to redefine, reshape and coalesce
ideas to arrive at a basic concept for a
product that has good chances of market
acceptance.
Concept tests are conducted to
Qualitatively assess relative appeal
Provide information for further product
development and advertising
Indicate potential segments
41
CONCEPT SCREENING TEST
to get a feel of market acceptance
to identify potential ideas for further development
New product screening test
Alternative buying incentive
PROCEDURES
Use concept statement
Interviewing - mall intercept
New product concept screening (8 ideas)
Alternative buying incentive (12 to 15)
Questions asked - purchase intent, frequency,
uniqueness, believability, importance of sales message
Sampling - non probability
Purchase intention score
42
Concept
Six possible combinations of concept
communication mode and tone
Mode can be words only, visual only,
words plus visual
Tone can be factual, persuasive
Studies in USA in the context of Pfizer
indicate use of visuals increased
purchase intention scores by 20%
Implication is that nave comparison of
concept scores across types is risky
43
Procedures
Concept presentation: Sheets, advts, actual prototype of
products. No. of concepts is few. Description of the product.
USE A CONTROL CONCEPT
Interviewing : Central location, mall intercept, cost
constraints
Questions asked - purchase intent, frequency, key benefit,
believability, uniqueness, attribute ratings, overall rating
Non probability sampling
Purchase intention scores
For non durable goods, the frequency of purchase is
important
Purchase intent is an indicator of trial, but does not tell
whether the proposed product is part of a consumer's daily
life or special occasion item
Concept test ought to throw light on % households inclined
to try, expected number of purchases, expected units per
purchase
44
Concept screening - diagnosis
Managers seek to understand purchase intention measures.
For this purpose standard questions on
uniqueness/differentiation from other products etc are
included
Specific attribute diagnostics seek to probe which
attributes/benefits contribute to purchase intention using
open ended questions or on scales measuring perception
/importance of attributes
e.g. ease of preparation ( excellent to poor)
ease of preparation ( very important to not
important)
The above data can be used for quadrant analysis. Rating
(excellent to poor on X axis), Importance (Not important to
very important on Y axis )
Concept testing does not differentiate purchase intention of
triers and repeat buyers. Satisfaction is not an aspect in a
concept test