A Practical Guide to Successfully Growing your Business and Profitability through New Products

Copyright K. Murray 2008, 2013

TEC Meeting Agenda:

A Practical Guide to Successfully Growing your Business through New Products

1. The Case for the NPD Strategy

2. The Basics

Unmet Needs and being Market Driven

Ideas and Idea generation NPD Process

3. Succeeding at the Business of New Products

Succeeding in Commercialization ROI and measuring results Platforms: Strategic linkage and streams of new products

Some of my new product experience

San Jamar Product Platforms 2003

WASHROOM AND HAND HYGIENE

The leader in universal towel & tissue dispensing.

FOOD SAFETY & SANITATION

The innovative leader in Food Safety & risk management tools.

COUNTER SERVICE
A leader in food safe countertop dispensing & specialty products.

Safe Ice Handling Washroom & Hygiene

Safe Food Prep

Smart Counter Dispensing

Bar Smart Solutions Clean Hands Safe Hands

Why spend time and $$$ on new product development?

. The Case for the NPD Strategy Blue Ocean Concept: Meaningful uncontested space is more profitable Time tested strategy for profitable growth Who isnt interested in better solutions? New products open doors

Why spend time and $$$ on new product development?

Apple Results:
2012 iPod+ iPhone+ iPad+ units 35.2MM 125.0MM 58.3MM $$$$ $14.1B $80.5B $32.4B
Source: Apple 10K

Why spend time and $$$ on new product development?

Revenue=$140MM
Sale Price=$420MM

Why spend time and $$$ on new product development?

San Jamar Results: 2/3 of our steady (double digit) growth due to new products Basis for much greater attention from critical impact accounts 350% profit growth!!

Driving to Unmet Needs

Unmet Needs and being Market Driven

At the core of every new product an unmet or underserved need in the marketplace

Key Action: Market Dialog

The best stimulus for new ideas!

Driving to Unmet Needs

Unmet
(or under-served)

Product and Benefit

Light enough for everyday wear and still contains collagen, vitamins A, C, E, pro-vitamin B5 and emblica

Need
Daily Care is Beautiful

Healthy Color: Natural glow without sun-damage

Can be applied daily or as needed to build and control a natural-looking sunless tan." Sprays at an angle - so you can reach back & legs - No rubbing required - rub-free formula that doesn't leave a greasy residue on your hands

Freedom to Enjoy Outdoors: Sun protection easily, with minimal application downside

Created and permitted by

Improved service and hygiene in BAR SERVICE:

Full service restaurants, hotels, golf courses, recreation, country clubs as well as traditional bars and taverns all with bar service Growing Market: Growth in most market

Large and growing market framework:

segments with bar service outpacing industry lodging, recreation, drinking places Source: Technomic Jan 2008

Large and growing unmet needs in both improved service and improved hygiene
Operator discussions highlighted key needs

Uncovering Unmet Needs: End-User Focus

End User Dialog

Needs!

Uncovering Unmet Needs: End-User Focus

Industry Groups
We listen, we observe, we create: Partnerships with leading restaurant chains, health professionals and industry partners in product development to address key operator challenges
Product Design Leadership Award

Ideas and Idea generation

Where do good ideas come from? Anywhere!

Good ideas come from anywhere

Good ideas come from anywhere

Good ideas come from anywhere

Ideas and Idea generation

Where do good ideas come from? Anywhere!

Quality of ideas is directly proportional to quantity of ideas Work at idea generation!

Ideas and Idea generation

Divergent vs. convergent thinking

Ideas and Idea generation

Where do good ideas come from? Anywhere!

Quality of ideas is directly proportional to quantity of ideas Work at idea generation! Trigger ideas with stimulus Idea-work is group work

Ideas Stimulus

NewProductWorks GfK Strategic Innovation

Formerly Arbor Strategy Group (ASG) www.arborstrategy.com

Ideas Stimulus

Other great sources of idea stimulus

End-user work
Customers Industry salespeople Inventors Designers Industry experts Innovations in other industries

Business literature

Ideas and Idea generation

Idea-work is group work

Ideas and Idea generation

Where do good ideas come from? Anywhere!

Quality of ideas is directly proportional to quantity of ideas Work at idea generation!

Trigger ideas with stimulus

Idea-work is group work

Benefits, benefits, benefits!

Ideas and Idea generation

Real Benefits!
Saves labor
Saves/makes money Saves lives Saves energy

Vs fake benefits
The only one to
Does it all Higher Quality

Ideas and Idea generation

Emotional Benefits: Most successful brands tied to emotional benefits Consumer Targets: Family, Life values, Life-style B to B: Trust, Success, Loyalty

New Product Process and risk management

New Product Development Funnel

Development of a product and risk/approval march together Cross-functional development teams

Concept Development: 600 level

Phase 1: See the Future Phase 2: Be the Future

STRATEGIC OPPORTUNITY Deliverables DEFINITION

1. Synthesis of Internal Learning and Category Situation 2. Qualitative Assessment: Consumer View & Insight Mining 3. Future Innovation Analysis: Macro Trends & Innovation Tree 4. Emerging Technology Assessment 5. Opportunity Identification: Future Market Map & Strategic Platforms

IDEATION & CONCEPT DEVELOPMENT

1. Innovation Concept Ideation: Concept Factory 2. Concept Development: Skeletons Consumer-Ready 3. Concept Evaluation/ Refinement: Consumer Discovery 4. Feasibility Assessment 5. Quantitative-Ready Concept Format 6. Final Presentation: Comprehensive Growth Blueprint

6. Quantitative Opportunity Assessment: FutureScape

7. Phase 1 Presentation & Platform Work Session

GfK Strategic Innovation

Formerly Arbor Strategy Group (ASG)

www.arborstrategy.com

New Product Development Funnel

Stage Gates

Initial Screen for prelim. feasibility

Idea Generation and preliminary Opportunity Concept developmentIdeas Identification Identifying the product embodiment, Building the Business Case Engineering Development, Marketing Plan Validation, Testing, Feedback,
Review

Managing Risk: 1. 2. 3. Verifying/scaling the underlying unmet need Determining if your idea really meets it Determining if the product really delivers

Assessment

Launch Prep
Final Review

Commercialization

New Product Development: Managing the investment risk

Phase of development Concept development

Typical Expenditures Moderate:

Key validation steps you should perform:

Market

dialog to validate idea appeal EG Focus groups, In-depth interviews

Prototype

Product development and scale up Commercialization

Moderate to Heavy:

user experience Deep market dialog to validate intended business model

Product

performance validation (in-field and torture-testing) Test products Note: Different categories or types of market
have different investment and risk profiles

Moderate to extremely heavy

Getting feedback early: Use rougher stimulus

Extreme Condition Sun Protection

Coppertone Extreme Condition Sun Protection

Now theres a sunscreen strong enough to protect you from the suns rays even in the most extreme conditions

Now theres a sunscreen strong enough to protect you from the suns rays even in the most extreme conditions The solar intensity of the tropics and high mountain altitudes requires advanced sun protection. Even more so when your skin is exposed to the dangers of sunlight reflecting off snow or water. Extreme Sun Protection offers protection to the max. We combined micronized titanium dioxide with SPF 50 to insure maximum sunscreen block, especially for your hands and face. Its waterproof and sweat proof, too. Use Extreme when you want the best protection from the sun. If its strong enough for extreme conditions, its strong enough to protect you every day.

Getting feedback :

Use phase-appropriate stimulus to get the right feedback

Black & White Concept Art

Test-Ready Concepts

Real-Time Concept Sketches Prototypes

New Product Development Teams

Charter: Develop and implement a NPD process within the company culture which becomes the foundation for producing successful new products
Bill of Rights for Team Members: Team define the project and buy-in

Participate as a full-fledged team member, Contribute fully to the project, Help the team resolve problems
Consider the teams work as a priority as a part of the team members real job

Listen to others and be open to their ideas

Accountability: Carry out assignments between meetings and report back when expected

Succeeding at the Business of New Products Succeeding in Commercialization Launch Teams, 3 Year Launch, Launch Box Payback and ROI Assessment and Measuring success Streams of new products built on Platforms

Succeeding in Commercialization: The Launch Team

Launch Team Responsibility Area: 1.Team establishment/basis for interest buy-in TIMING Beginning of Phase 3

2.Marketing Plan
3. Volume Estimate 4. SKU, Merchandising and Packaging Strategy 5. Customer planning 7. Competitive Assessment 8. Marketing plan timeline 9. Internal Training/Communication 10. Item Master set-up Packaging specifics 11. Production Forecast 12. Fine tuned Marketing plan 13. Customer Sell In

By End of Phase 3
End of Phase End of Phase 3 End of Phase 3 End of Phase 3 End of Phase 3 Start with Phase 4 During Phase 4 Release to Production Release to Production During Shipping

14. Assessment/Adjustment

Quarterly after Launch

Succeeding in Commercialization: 3 Year Launch

Typical Volume Build: Commercial Markets

250
Launch

200 150 100 50 0 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 New

Commercialization: Launch Box Concept

Platform Solutions
All the tools to hit the ground running!
Rep & Dealer Support Programs
Product Sample Kits with Accessories Merchandising Shelf Talkers for Showrooms Private Label Options National advertising to dealers, end users.

Selling Tools
Sell Sheets: Product and System Customizable Email Blast Platform Website: videos, lit and more Sales Meeting Support: Power Points, handouts Selling tips: benefits for all stakeholders

Succeeding at the Business of New Products Succeeding in Commercialization Payback and ROI Assessment and Measuring success Streams of new products Platforms Getting started

ROI, Payback and Assessment Examples:

Project types
Smaller/more incremental project

Incremental volume
Modest

Simple Payback
One year, + or -

Internal Rate of Return

Very high, with very low risk

Larger/more groundbreaking project

Product improvement

Large

Longer

Can be very high, but much larger risk/variability

Usually very high (IF evaluated vs. competitive marketplace)

Varies based on business objective

Target One year, +/-

Platforms and Streams of Products

Product Benefit Space

Unmet Market Needs

Platform Sweet Spot

Brand Equity

Company Core Competencies

Introducing products in a platform

The Safe Food Prep System: Addressing

safety/sanitation problems in the prep room

Introducing!

Saf-T-Grip sales nearly $200M in the first few months of launch!

tm

Safety Wrap Station

Portable Wrapping Station with integrated labeling tools

Versa-Prep System
designed for the way you want to prepare food FER Product of the Year!!

Saf-Check has already attracted major auditor, end user and health inspector interest
tm

Growth through New Product Innovation San Jamars growth (and profit growth!) took off when we systematically focused on innovating around our core categories.