Innovation and New-Product

Strategy

McGraw-Hill/Irwin

Week 9
Chapter 08

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

Types of Innovations
Innovations can be classified according to:
Newness to the market
The extent of customer value created

This has resulted in:

1) Transformational innovation
2) Substantial innovation
3) Incremental innovations

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Finding Customer Value

Opportunities
Objective of customer value analysis is to identify needs
for:
New products
Improvements in existing products
Improvements in the processes that produce the
products
Improvements in supporting services

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Finding New-Product Opportunities

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Finding New-Product Opportunities

Difference between expectations and
use experience may indicate a new
product
Matching capabilities to value opportunities
Transformational 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

Cannibalization
Cannibalization occurs when a new
product attracts sales from an existing
product
Proactive 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 Planning
Developing a culture and strategy for
innovation
Developing effective new-productplanning processes
Responsibility for new-product planning

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Developing a Culture and Strategy

for Innovation
Can 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 Innovation
Conduct innovation training programs for employees
and managers to encourage commitment and
involvement
Communicate the priority of innovation via articles,
newsletters, and presentations to employees,
shareholders, and customers
Schedule innovation speakers on a regular basis to
expose employees to innovation authorities

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Strategy for Innovation

A 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 business
Defining the areas of strategic focus for the
corporation in terms of product scope, markets, and
technologies
Including 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 Planning

Coordination of new product activities

Inter-functional coordination
Creation of a project task force responsible
Designation of a new products manager
Formation of matrix structure
Creation of a permanent design center

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Idea Generation
Sources of idea
Methods of generating ideas

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Sources of Ideas
New-product ideas come from many sources,
including:

R&D laboratories
Employees
Customers
Competitors
Outside inventors
Acquisition
Value chain members

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The Search Process

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

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The Search Process

How 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 Sources
Identifying the best sources of ideas depends
on:

Size and type of firm

Technologies involved
New-product needs
Resources
Managements preferences
The organizations capabilities

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Business Analysis
Estimates the commercial feasibility of the
new-product concept

Revenue forecasts
Preliminary marketing plan
Cost estimation
Profit projections

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Product and Process Development

Product development process

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Product Development Process

Development of the new product includes:

Product design
Industrial design
Process (manufacturing) design
Packaging design
Decisions to make or outsource various product
components

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Marketing Strategy and Market

Testing
Marketing strategy decisions
Market testing

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Marketing Strategy Decisions

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

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Marketing Strategy Decisions

Between designs, operations, and marketing,
following activities should be decided:

Packaging
Name selection
Environmental considerations
Product information
Colors
Materials
Product safety

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Marketing Strategy Decisions

Market targeting: Selection ranges from
Offering a new product to an existing target, to
identifying an entirely new group of potential users

Positioning strategy: The core of this strategy

is
How 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 Plan

Market introduction requires:
A complete marketing strategy that is spelled out in the
marketing plan

Plan should be coordinated with the people and

business functions responsible for the
introduction, including:
Salespeople
Sales and marketing managers
Managers from other functional areas such as operations,
distribution, R&D, finance, and human resources

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Monitoring and Control

Real-time tracking of new-product
performance at the market entry stage is
important
Standardized information services are
available for monitoring sales of products
To 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 NewProduct-Planning Process

New-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
Authority
CASE 6 14
CASE 6 17
Co.
CASE 6 20
Disneyland

: British Airport
: Rover Automobile
: Procter & Gamble
: Hongkong

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