Session 01 introduction

New Product Development

Session 1: Introduction
June 6, 2010

© 2010 Dr. Jay Jootar
Slides downloadable from www.vcthailand.com

Agenda
• Let’s breaking the ice
• “New Product” defined
• Why study New Product Development?
• Issues in New Product Development
• Course plan


Dr. Jay Jootar ดร. เจน จฑา
Professional
• Current: Venture Catalyst
NECTEC (Executive Board)
• Finance: Asset Plus Securities, JP Morgan
• Consulting: McKinsey & Co.
• Hi-tech: ITT Industries, Intel Corporation,
Envoy Network, Verizon Comm.,
True Corp
Education
• PhD: MIT Sloan School of Management
• MBA: MIT Sloan School of Management
• Bachelor of Engineering: Chulalongkorn University


Newness defined
• New to the market
– What are customer behavior towards new products?
• New to the company
– How companies can manage the impacts of new
product to the way they do things?


Categories of New Product
• New-to-the-world products
• New product lines
• Additions to existing product lines
• Improvements and revisions to existing products
• Repositionings
• Cost reductions


Drivers of New Product
• Technology advances
• Changing customer needs
• Shortening product life cycles
• Increased world competition


Success stories

Worldwide Thailand
• Apple Computer • Hi-speed Internet
• Microsoft Windows • Raknarok
• Microsoft Office • Red Bull
• Google • Oishi Green Tea
• iPod, iPhone, iPad • Pepsi Max/Diet Coke


Apple Computer

Windows 7

Question: Why did Apple lost market share to Wintel (PC based on Intel hardware and Microsoft OS)?


Microsoft Windows

MS DOS (on IBM PC) Windows 98 Windows 7

Question: What are the other competing O.S. and how do they compare to Microsoft Windows?


Microsoft Office

Question: How important is Microsoft Office to Microsoft as a company?


Google

Question: How does Google make money?


iPod, iPhone, iPad

Question: What would happen to the competition between iPhone, Android, and Blackberry?


hi-speed internet

Question: What are the most important challenge facing True hi-speed in the near future?


Ragnarok

Question: What is the basis of competition in online game?


Mama


Red Bull

Question: What is the basis of success for Red Bull?


Oishi Green Tea


Pepsi Max/Diet Coke

Question: What would you do if you were Pepsi to grab more market share from Coke Zero?


New product driving financials
• New products (less than 5 years) account for
– 33% of U.S. company sales, on average.
– In some dynamic industries, the figure is 100%.
– In top 22% of the U.S. benchmark firms, 49.2% of sales and
profits are derived from new products
• For successful new products,
– average ROI is 96.9%,
– payback period is 2.5 year,
– and market share in their defined target markets is 47.3%


Product underlies other 3 P’s
Marketing

Prom ot ion

Place

Price ( & Quant it y)

Pr oduct

Know ledge, Process & Syst em , Cult ur e

Non-Marketing


High odds of failure


Shrinking life cycles


Problems and Pitfalls
• A lack of market orientation
• Poor quality of execution
• Moving too quickly
• Not enough up-front homework
• A lack of product value for the customer
• No focus, too many projects, and a lack of
resources
• The lack of systematic new product process
with discipline


Lack of NPD process consistency


Two right things to do
A. Doing the right projects

B. Doing the projects right


Doing the right projects
• The number one success factor is a unique
superior product: a differentiated product that
delivers unique benefits and superior value to
the customer

• Look to the world product – An international
orientation in product design, development,
and target marketing provides the edge in
product innovation


• Leveraging core competencies is vital to
success – “step-out” projects tend to fail

• Products aimed at attractive markets do
better: market attractiveness is a key project-
selection criterion


• Sharp and early product and project definition
is one of the key differences between winning
and losing at new products

• Successful businesses build tough Go/Kill
decision points into their new product
process, where projects really do get killed:
better focus is the result.


Doing the projects right
• A strong market orientation – a market-driven
and customer-focused new product process –
is critical to success

• More predevelopment work – the homework
– must be done before product development
gets under way


• A well-conceived, properly executed launch is
central to new product success. And a solid
marketing plan is at the heart of the launch

• The right organizational structure, design,
and climate are key factors in success


• Top management support doesn’t guarantee
success, but it sure helps. But many senior
managers get it wrong

• New product success is controllable: More
emphasis is needed on completeness,
consistency, and quality of execution of key
tasks from beginning to end of project


• The resource must be in place- there is no
free lunch in product innovation.

• Speed is everything! But not at the expense
of quality of execution

• Companies that follow a multistage,
disciplined new product success fare much
better


Objective
1. Provide understanding of end-to-end
management of new product development
process
2. Equip with necessary tools for different
stages in the process
3. Practice the skills for building a
successful products/service


Methods
Lecture
• Background Theory
• Methodology review and practice
• Case examples

Papers
• Real business and execution plan development


Process-oriented Lecture

Conceptualize Develop Launch

 Opportunity Product  Pre-launch testing
development  System Architecting and Planning
 Market Space  Development process  Managing through
Mapping Life-Cycle
 Project Management
 Product Decisions
Marketing
 Business Model
 Pricing New Product
Design
 Sales and Channel
 Marketing Strategy
Management
 Total Business
 Marketing
Case Development
Communication


Class schedule
TOPICS Assignment Due
INTRODUCTION 1 06-Jun-10 Introduction
CONCEPT 2 13-Jun-10 Opportunity Development
3 20-Jun-10 Market Space Mapping
4 27-Jun-10 Positioning and Core Capabilities Assignment 1
5 04-Jul-10 Business Model Design
6 11-Jul-10 Marketing Strategy
7 18-Jul-10 Total Business Case Development
DEVELOP Product 8 25-Jul-10 System Architecting
9 01-Aug-10 Development Process Assignment 2
10 08-Aug-10 Project Management
Marketing 11 15-Aug-10 Pricing New Product
12 22-Aug-10 Sales and Channel Management
13 29-Aug-10 Marketing Communication
LAUNCH 14 05-Sep-10 Launching new product
15 12-Sep-10 Business plan presentation Assignment 3


Grade
Score breakdown Percent of total
Paper #1: Opportunity 15
Paper #2: Business Model 25
Paper #3: Total Project Plan 35 Group
Business plant presentation 15
Class participation 10 Individual

100


Papers
• Group of at most 4 students
• Act as group of entrepreneurs eager for capital from
investors with real markets & products
• Submit paper and present business case and execution
plan to review for capital request
• Potential for a real business after class


Text Book
• Cooper, R. G., “Winning at New Products:
Accelerating the process from idea to launch”,
2001, Basic Books


Session 01 introduction

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