Introduction to new product development. Delivered by Harryadin Mahardika at Faculty of Business and Economics, Universitas Indonesia

1. New Product Development
Harryadin Mahardika, PhD

2. Harryadin Mahardika
• Pop Economist
• FEUI & laporsuap.com
• Research objective:
– “to liberate and empower consumer...”
• Current research:
– Consumer empowerment
– Consumer intervention/engineering
– Mobile advertising
• Contact:
– harryadin.mahardika@ui.ac.id / harryadin@gmail.com
– @HarrySastro
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3. Why study new products?
Gartner Hype Cycle 2012
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4. Why Study New Products?
• Innovation as an Investment: A successful new
product does more good for an organization than
anything else that can happen
– Investment in innovation is critical to firm growth
and even survival.
– Radical innovations (those that displace or
obsolete existing products) are particularly crucial
to the firm.
– Technology leaders view “business growth
through innovation” as a major challenge facing
them today.

5. Apple’s product timeline

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7. Global Product Development
• Increased globalization make NPD even more
challenging today!
– Procter & Gamble products are developed globally in the
firm’s 22 research centers located in 13 countries.
Market research and testing of the Swiffer mop occurred
in the U.S. and France.
http://www.youtube.com/watch?v=PFbeP6YqHzg&NR=1
– Ikea identifies unmet customer needs and commissions
in-house and outsourced designers to compete for the
design. Worldwide manufacturing partners compete for
the manufacturing rights. The firm also has excellent
global logistics for product delivery to stores and
customers.

8. Joint innovation
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9. What Is a New Product?
• New-to-the-world (really-new) products (10% of
new products): Inventions that create a whole new
market. Ex.: Polaroid camera, Sony Walkman, Palm
Pilot, Rollerblade skates, P&G Febreze and Dryel.
• New-to-the-firm products (20%): Products that take a
firm into a category new to it. Ex.: P&G brand shampoo or
coffee, Hallmark gift items, AT&T Universal credit
card, Canon laser printer.
• Additions to existing product lines (26%): Line
extensions and flankers that flesh out the product line in
current markets. Ex.: Tide Liquid, Bud Light, Apple’s
iMac, HP LaserJet 7P.

10. What Is a New Product?
• Improvements and revisions to existing products
(26%): Current products made better. Ex.: P&G’s
continuing improvements to Tide detergent, Ivory soap.
• Repositionings (7%): Products that are retargeted for a
new use or application. Also includes retargeting to new
users or new target markets. Ex.: Arm & Hammer baking
soda sold as a refrigerator deodorant; aspirin repositioned
as a safeguard against heart attacks; Marlboro retargeted as
a man’s cigarette.
• Cost reductions (11%): New products that provide the
customer similar performance but at a lower cost. May be
more of a “new product” in terms of design or production.

11. The Conflicting Masters of New
Products Management
• Three inputs to the new
products process: the right
quality product, at the right
time, and at the right cost.
• These conflict with each
other but may have
synergies too.
• Issue: how to optimize these
relationships in a new
product situation.
Quality
Value
Time
Cost

12. The New Products Process

13. The Basic New Product Process
Phase 1: Opportunity Identification/Selection
Phase 2: Concept Generation
Phase 3: Concept/Project Evaluation
Phase 4: Development
Phase 5: Launch

14. The Evaluation Tasks in the New
Products Process
Opportunity Identification/
Selection
Direction;
Where should we look?
Concept Generation
Initial Review:
Is the idea worth screening?
Concept/Project Evaluation
Full Screen:
Should we try to develop it?
Development
Progress Reports:
Have we developed it?
Launch
Market Testing:
Should we market it?
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15. The Life Cycle of a Concept
Corresponding New Products Process Phases:
Opp. Identification  Concept Generation  Project Evaluation  Development  Launch

16. Opportunity Identification and Selection

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18. Segment Identification

19. Segmentation vs Fragmentation
SEGMENTATION
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FRAGMENTATION

20. Long tail: tapping niche
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21. Competitor

22. Co-opetition: Compete and collaborate
• Formed by a set of companies with shared interests for
market dominance
• Clear objectives in terms of performance targets and life cycle
• Required capabilities should be available in the mix of
partners
• Value-added by a partners are seamlessly integrated
• Information and knowledge sharing
• Visible rules of Governance
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23. Finding co-opetitors
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24. Co-opetition: compete and collaborate
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25. Co-opetitor

26. CASE STUDY: AIRBUS
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27. Case Questions
1. Should Airbus produce A-3XX?
2. How should Boeing response?
3. How would the production of A-3XX change product
development/innovation in Airplane Manufacturing
Industry?
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