CHAPTER 4
The first part of Design phase is Stage 2;
Build the Business Case: where
a formal market and financial
assessment are conducted.
Development Stage: The stage in the
NPD (new product development) process
where R&D and/or engineering is
conducted to develop the product/
service. The outcome of this stage is
typically a product/ service ready for mass
production.
Preliminary business plan to set a
roadmap to follow in the next stages of
Development.
Inputs for the Idea Screening Go/No
Go Gate Analysis
● List of potential ideas to take into
product design
● Market analysis of possible
segments
● Competitive analysis for segments
● Alignment with strategic direction
of organization
● Probable investment needed to
capture profitable market share
● Need to acquire outside
expertise/technologies
● Risk/ reward assessment
Gate1: Idea screening
The inputs would be the list of ideas
that have been generated through
Discovery process and the Identification
Assessment accumulated during the
market evaluation.
Idea Screening Gate: The gate at which
product ideas are screened to determine
if they should advance to the scoping
stage.
● The NDP process is a sequential
and conditional process
● The Go/No go evaluation
process must be easy to use and
grounded in the day-to-day
operations of the corporation
● The process is characterized by
uncertainty of information and the
absence of solid financial data
MUST-MEET CRITERIA
● Strategic alignment
● Favorable size of market
● Within technical capabilities or
ability to acquire technology
● Significant product advantages
compared to competition
● Environmental issues met:
government, economic, technical,
sustainable, etc.
● Risk versus return hurdles of
organization met
● Profit potential hurdles met
SHOULD-MET CRITERIA
● Strategic importance of project to
firm
● Unique product offering compared
to competitors
● Adequate market size versus
market growth
● Leverage core competencies of
firm-marketing, technical, and/or
manufacturing
● Technically feasible with low risk
● Certainty of return and/or profit or
sales
● Favorable competitive situation
● Index of attractiveness
requirement
Idea selection process: Avoiding two
errors:
1. Approving a potentially unprofitable
product and type.
2. Rejecting a potentially profitable
product
Index of attractiveness: divides the
expected return by the development cost
as a measure of how attractive the new
product is compared to other potential
new products
I= Index of attractiveness
T= Probability of successful technical
development
C= probability of commercial success
given that it is technically successful
D= Cost of development
One explanation for overestimating
probability of success might be
ENTREPRENEURIAL OPTIMISM
BIASNESS, where failure seems unlikely
to those championing the idea.
SCOPING STAGE: The NPD Stage in
which preliminary market assessment, a
preliminary technical assessment, and
preliminary business/financial assessment
are conducted. In this stage, opinions of
the customers are collected.
Preliminary market assessment:
Consolidates all the findings that were
accumulated during the market definition
stage.
Scoring Models: A method of scoring an
individual project to determine its
attractiveness compared to other potential
products.
Voice of the customer (VOC): Strives to
record in the customer’s own words the
benefits of a product or service
INCORPORATING VOICE OF THE
CUSTOMER IN THEIR DESIGN
PROCESS
● Capture voice of the customers
● Identify needs
● Prioritize needs
● Concept Development
● Design testing with customers
BENEFIT CHAINS: Determine why
customers have a particular need that is
not yet addressed by existing products.
Preference model: A quantitative method
that gathers consumer’s preferences for
features, benefits or attributes of a new
product/ service.
Zaltman’s metaphor elicitation
technique ( ZMET)- suggests that the
underlying values and meanings that
drive customers
Laddering: Quantitative technique for
finding the benefits an end user may see
in a new product.
Means- End Chain: it describes how a
product interacts with the customer
through its attributes, benefits, to deliver
values.
Attributes Problem Analysis workshop where the
- Concrete attributes main task is to brainstorm for new product
- Abstract attributes ideas.
Benefits
- Functional benefits Crowd Sourcing for new product Ideas
- Psycho- social benefits The practice of obtaining needed
Values services, ideas, or content by soliciting
- Instrumental values contributions from a large group of people
- Terminal values
Brainstorming- a technique developed in
CHAPTER 3 the 1950s and 1960s based on the belief
OPPORTUNITY IDENTIFICATION that randomized thoughts led to greater
● Idea Generation creativity.
● Opportunity Analysis
● Market Identification Attribute Listing- a method for
● Market Selection generating a new product idea where
● Concept development and attributes are listed for existing products
refinement
Individual creativity- the process where
IN-HOUSE IDEATION an individual, as opposed to a group,
● Engineering/Research identifies new product ideas.
● Sales
● Production Market profile analysis- procedure for
● Service Personnel matching a firm’s capabilities to market
● Marketing opportunities.
● Legal terms
● Top management Portfolio alignment- balancing the firm's
new product development strategy to
OUT-OF-HOUSE maximize return on investment in new
● Customers product development.
● Competitors
● Trade Partners Market identification- identify markets
● Design Firms that offer the best opportunities for the
● Suppliers organization.
Others
● Channels of Distribution Experience curve- this curve indicates
● Open Innovation that the unit cost of producing and
● The Global innovation grid distributing a product

Scenario generation- Brainstorming by Process Innovation- Innovation in the

developing scenarios of the future-best way a product or service is manufactured,
and worst cases as well as most likely created, or distributed,
Sleepy market- markets in which sales
are stable and innovation has been
absent can represent an attractive
opportunity if they are penetrated
effectively.
Substitution- Observing or measuring
directly which products substitute for one
another is another method for market
segmentation.
CHAPTER 2
Innovation Arena- Focus on the firm’s
core competencies that have been
identified in the corporate strategy.
Market/Customers/Product Categories-
Market size and profit margins can affect
the choice of development strategy.
Technology- the innovation strategy
cutting the edge of new technological
advances
Competition- The competitive
environment may be critical to selecting a
strategic posture.
Channels- In many markets, middlemen
serve a physical distribution, inventory,
selling, or servicing function.
Resources- in the form of monetary
funding, man-hours, facilities,
management guidance outsource funding
Risk willingness to accept occasional
failures should be a normal part of
business.
Reward- given in recognition of one's
service, effort, or achievement.
Proactive Innovation Process-
Preempting competition by being first on
the market
Reactive Innovation Process-
Addressing initiating pressures as they
occur, particularly in regards to new
competitive offerings.
Fast Follower- imitative strategy the firm
will quickly develop an imitation to counter
the attack on its market.
Second But better- the firm does not just
copy the competitive product, but
identifies ways to improve the product and
its positioning.
Defensive Strategy- protects the
profitability of existing products by
encountering competitive new products.
Customer ideation- is purposely reacting
to customer’s request and ideas.
PROACTIVE PROCESS
- An Alternative new product
strategy is for organizations to be
proactive and initiate change.
Innovative strategy- a proactive
innovation strategy where the focus is on
research and development efforts
Offensive Strategy a proactive
innovation strategy that improves on a
product or service by leapfrogging the
current technology
Creative Destruction- a term coined by
Joseph Schumpeter a process of
industrial mutation that incessantly
revolutionizes
Disruptive Technology- Improving a
product or service by leapfrogging the
current technology
Market/Customer Innovation– a
proactive innovation strategy where
customer needs are identified
Portfolio management for new products
is very similar to the concept of portfolio
management in financial investment.
3 goals of portfolio Management
● value maximization
● portfolio balance
● strategic alignment
Tools for portfolio Management
Economic Models include payback
period, break-even analysis
Portfolio Maps also called (bubble
diagram) plot project against on two
criteria
Strategic bucket a method for evaluating
a portfolio of products where the project
are allocated to buckets and then
resources are assigned to each class of
projects
Portfolio management is a mix of new
projects that as a combination seek to
maximize a firm’s profits.
CHAPTER 1
The “Frontline personnel “ are the face
of the company.
Employees’ close contact and potentially
long-term relationships with customers
Product Development Management
Association (PDMA)
Stage-gate innovation
process-systematic, structured process
for developing new products with gates
(stopping point)
Gates- points in the stage-gate innovation
process where the project’s viability is
assessed
STEPS AS A FRAMEWORK
Discovery- another name for the
opportunity identification stage.
Scoping- a process design stage of the
stage-gate process where screening of an
idea with a quick
Building the Business Case- a process
in the Design stage of the stage-gate
process involving detailed investigation
with primary research-both
Development- is the go/no go decision
gate whether the project should be move
into expensive and resource heavy
Testing- determines whether the product
as designed during the development
should be moved to testing and validation
Launch and post launch Review-
Process where the product/services that
are being designed are tested prior to
launch.
Typical components include:
● Engineering efforts/resources
requirements
● Marketing efforts/ resources
requirements
● Manufacturing efforts/ resources
requirements
● Company synergies with existing
product platforms
● Profitability and break even point.
Engineering issues addressed in the
product development phase may
include:
● Resources required
● Engineering operations planning
● Department scheduling
● Supplier collaboration
● Logistics planning
● Program review and monitoring
● Finalization of product attributes
and features
● Radical innovations: Innovations
that introduce both market and
technological discontinuities to the
marketplace.
THE PROACTIVE NEW PRODUCT
DEVELOPMENT PROCESS
New-to-the-firm products that take the
firm in a new direction
Repositioning: Products that take on
new uses, e.gLevi Jeans pants to fashion
statement, aspirin for heart attacks. This
category accounts for about 7% of new
products.
Cost reductions- Products that replace
existing products by providing similar
performance at a lower cost

Testing and Validation Testing involves

tests or trials in the marketplace

Looping: A type of new product

development process commonly used in
Software design

Types of New Products and

Customizing the Development Process
● Incremental innovation:
Innovations that have small
incremental technology or small
marketing changes to an existing
product.
● Innovation: An iterative process
initiated by the perception of a
new market
● Really new innovations:
Innovations that introduce either a
new marketing or technological
innovation.