Chapter 1:

The Strategic Elements of Product

Development
TOPICS
 Product Life Cycle

The main
focus of this
subject

NPD extends the PLC

Source: http://slideplayer.com/slide/7020577/
 Discussion Questions

• Why is this an important field to study?

Why study new products?
 Why Study New Products?
• New products are big business!
• Innovation as an investment.
– Radical innovations (those that displace or make
obsolete current products and create totally new
product categories) are particularly crucial to the
firm.
• New Products process is exceedingly difficult.
• A high percentage of sales and profits from
new products.
• NPD is fun and exciting!

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Incremental vs. Breakthrough

Minor improvements made with existing

methods and technologies
versus
Change in basic methods and technologies
Explore more examples….
 Globalization and NPD

• NPD has become more challenging due to

increased globalization.
– To take advantage of worldwide business
opportunities
– To increase the efficiency and effectiveness
of innovation.

NPD as a Global Process: Examples such as

P&G, Apple, Ikea, and Bungie Studios

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Product Development as a Global Process
 Not All New Products Are Planned

• A Raytheon engineer working on experimental radar

noticed that a chocolate bar in his shirt pocket melted. He
then “cooked” some popcorn. The firm developed the first
commercial microwave oven.
• A chemist at G. D. Searle licked his finger to turn a page of
a book and got a sweet taste. Remembering that he had
spilled some experimental fluid, he checked it out and
produced aspartame (NutraSweet).
• A 3M researcher dropped a beaker of industrial compound
and later noticed that where her sneakers had been
splashed, they stayed clean. ScotchGard fabric protector
resulted
What Is a New Product?
 What Is a New Product?
Figure 1.5

• New-to-the-world (really-new) products

(10% of new products): Inventions that
create a whole new market. Examples:
Polaroid camera, Sony Walkman, Palm
Pilot, Rollerblade skates, P&G Febreze and
Dryel.

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 What Is a New Product?
Figure 1.5

• New-to-the-firm products (20%): Products

that take a firm into a category new to it.
Examples: P&G brand shampoo or coffee,
Hallmark gift items, AT&T Universal credit
card, Canon laser printer, Apple iPhone.

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 What Is a New Product?
Figure 1.5

• Additions to existing product lines (26%):

Line extensions and flankers that flesh out
the product line in current markets.
Examples: Tide Liquid, Bud Light, Apple’s
iMac, HP LaserJet 7P.

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 What Is a New Product?
Figure 1.5

• Improvements and revisions to existing

products (26%): Current products made
better.
Examples: P&G’s continuing improvements
to Tide detergent, Ivory soap.

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 What Is a New Product? Figure 1.5

• Repositionings (7%): Products that are

retargeted for a new use or application. Also
includes retargeting to new users or new
target markets.
Examples: Arm & Hammer baking soda sold
as a refrigerator deodorant; aspirin
repositioned as a safeguard against heart
attacks; Marlboro retargeted as a man’s
cigarette.

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 What Is a New Product? Figure 1.5

• Cost reductions (11%): New products that

provide the customer similar performance but
at a lower cost.

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 Discussion Question

• What leads to new product success?

Provide an example of new product and

explain the reason(s) for success.
The Number ONE reason for
SUCCESS
How Product Development is Different?

The new products team ideally is cross-functional

The Strategic Elements of Product
Development
 The Basic New Product Process
Figure 2.1

Chapters 1-3 Phase 1: Opportunity Identification/Selection

Chapters 4-7 Phase 2: Concept Generation

Chapters 8-12 Phase 3: Concept/Project Evaluation

Chapters 13-15 Phase 4: Development

Chapters 16-20 Phase 5: Launch

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