Step by step instructions to Improve Success Rate of New Product

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How to Improve Success Rate of New Product/Service Commercialization Krannert School of Management Purdue University October 21, 2009 Tom Wagner (BSIM'67)

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Presentation Topics Why this is critical? Five promoting outlines. Five key determinants of business achievement. Outline. Take-aways.

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The Challenge of Top Line Revenue Growth in Today's Economy "Speculators see little motivation to hold stocks. We have to see better incomes and top-line development" ( Jon Brorson, Director of Equities at Northern Trust) Revenue development dependent upon monetary development is out of date. New item/administrations key to income development. Any individual who seeks after a Marketing vocation will have obligation regarding new item/benefit commercialization. More than 30,000 new items are presented every year except no less than 80% of these fizzle.

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Mortality of New Product Ideas Number of Ideas 50 Idea Generation and Screening Business Analysis Development Testing Commercialization 0 Percentage of Time Source: Booz, Allen & Hamilton, Inc.

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Why Do New Ideas Fail? Neglect to offer novel advantage… don't address what clients truly need/require. Disparage rivalry Idea great however outline issues Product costs more to create than anticipated Rush to showcase without all around created promoting arrangement Move to gradually

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Introduce New Low Calorie Beer Rheingold versus Mill operator High Life

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Retain Leadership Kawasaki Personal Watercraft

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Move Down The Thermoplastic Compound Value Chain Resin Injection Molder Original Equipment Mfg. Compounder Reinforce-ment

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How Does Campbell Soup Target Italian Sauce Leader Ragu

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W.W. Grainger Service Penetration

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New Product/Service Planning Process Strategic Emphasis and Idea Generation Incremental or Innovation Is it Real? Can We Win? Is it Worth It? Approval Customer Needs and Wants. Versus Rivalry Strategic Positioning Features Benefits $ Values Customer Value Proposition Features Benefits $ Values

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New Product/Service Strategic Emphasis The best indicators of accomplishment are market information and request driven items and administrations. Victors keep away from enhancement amid downturns… they strengthen the center organizations by centering assets on playing to win on their principle field of rivalry. Enhancement weakens concentrate exactly when center is basic.

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New Product/Service Strategic Emphasis Market Development (Medium Risk) Diversification (Major Risk) Market Development (Medium Risk) Diversification (High Risk) New Markets: Product Development (Medium Risk) Market Penetration (Low Risk) Existing Market Penetration (Minimal Risk) Existing New Products/Services:

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Strive for Innovation

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Auto Tire Technology Status in 1975 Goodyear Reluctant to Invest in Radials Annual Tire Demand Bias Ply Tires Fiber Glass Belted Bias Tires Steel Belted Radial Tires 1965 1970 1975 1980 1985 1990 1995 2000

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Goodyear Lost Share to Radial Leader-Michelin Annual Tire Demand 1965 1970 1975 1980 1985 1990 1995 2000

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1971 Southwest Enters Airline Business

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U.S. Aircraft Industry Typical Incremental Differentiation by Traditional Large Airlines: American, Continental, United, Delta/Northwest, U.S Air had joined $23 billion working misfortunes in 2008. Southwest Chose Innovative Business Model: Low tolls, shorter flights, city-to-city (not centers), no nonsense, speediest flight turnaround, just Boeing 737, adaptable work rules. Hugh Success… working Income of $450 million in 2008.

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Innovation "Humankind has as of now accomplished all that it is equipped for concocting"

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Innovation "Humankind has as of now accomplished all that is fit for creating" Henry J. Elllsworth, Commissioner of the U.S. Patent Office, around 1900

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Chips Ahoy! 100 Calorie Pack 100 Calorie Packs have 285% retail value premium. Just 3 years after presentation yearly deals are $30 million. Working edge no less than 20% more noteworthy than conventional item.

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Don't Neglect Innovation for the Allure of Incremental Improvements Organizations instinctively tend to add components to a current item in light of the apparent needs and needs of clients which frequently brings about incremental upgrades that have little effect on clients' purchasing designs. Development incorporates: items, benefit, plans of action, net-working, and so forth. Try not to support innovativeness of inventiveness' purpose; rather urge imaginative answers for genuine issues. Development is great just if its helpful. Extraordinary thoughts are the starting, not the end, of business advancement.

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Sources of New Ideas Customers In-house Research and Development Competitive Activities Universities Consultants External Inventors Management Paying Attention to Unexpected Events

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Customer Focus The Center of Everything Marketing Does Product Price Customer Distribution Promotion

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Today's advertisers endeavor to create special systems by finding unsatisfied clients and offering them predominant esteem. They don't offer items… catch clients Hugh $ are spent on statistical surveying to comprehend client needs.. However ordinary, new items and administrations are acquainted just with bomb drastically. Client Focus

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R.J. Reynolds "Chief" Smokeless Cigarette New Product Failure

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"Head" Commercialization "Head" was expected to diminish or dispose of the undesirable symptoms for both smoker and individuals around smoker. R.J. Reynolds marketed in 1988 in the wake of committing quite a long while and roughly $1 billion to create and popularize. "Chief" pulled back 1989 after smokers grumbled of charcoal-like delayed flavor impression.

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What Will Drive Success: Rheingold versus Mill operator High Life

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Rheingold versus Mill operator High Life Rheingold Breweries in Brooklyn, NY created procedure to expel starch from lager in 1967. Presented as "Gablinger's Diet Beer" Advertisements demonstrated an extremely hefty man scooping spaghetti into his mouth and bringing down a Gablinger killed customary brew consumers.

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Miller Lite Beer Success Customer Focus Most lager is purchased by substantial consumers A brew that "fat" individuals could drink and not put on as much weight would NOT be gotten decidedly by the market. "Demonstrate to me a man worried about his waistline and I'll demonstrate to you a poor prospect for genuine brew drinking." Customers said they would be keen on a lager that was less documenting BUT still tasted extraordinary! Mill operator Brewing gained the light lager prepare when it purchased resources of Meister Brau. 1972 Miller Lite was propelled as "All that you needed in a lager… and less". The absolute most macho football players in U.S. pushed Miller Lite The low calorie lager classification has been a standout amongst the best sustenance and refreshment developments of the previous 25 years despite the fact that Miller did not imagine the innovation. Rheingold is no more extended in business.

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How to Learn What Customers Want Improvements to Kawasaki Jet Ski What should be possible to enhance Jet Ski ride?

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Improvements to Kawasaki Jet Ski What should be possible to enhance current Jet Ski ? Existing clients requested additionally cushioning on Jet Ski to make standing position more agreeable. Kawasaki reacted with a few incremental upgrades to unique outline. Kawasaki lost noteworthy share and its #1 initiative position.

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Voice of Customer Technique Face-to-Face talk with process Consumers at every progression down the esteem chain. Needs and needs communicated in client's own words and phrasing. Look for "Results" Prioritized by clients. Duty regarding creating arrangement rests with provider, not client.

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Examples of Probing Tell me more about … Why did that satisfy you ? Why do you accept … ..? Why did you choose … ..? Why is that huge ? Why do you propose that … ? Why might that be a change ? What do you mean by … .? What keeps you wakeful around evening time? Why do you purchase from us? If it's not too much trouble be more particular when you say… .

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Organizing and Prioritizing Customer Feedback Eliminate duplication Separate needs and properties from conclusions, arrangements, and numerical qualities Assemble like ascribes and come back to clients and request that organize

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Pitfalls to Avoid Offer arrangements when issues are raised Encourage client to talk about requirements or traits regarding our items and benefits and not theirs Judgmental tone, ie. Why did you do that? "Useful Fixedness" – rather test for results Imply we are going to alter their issues inside weeks Interrupt client Ask questions without intrigue and sensitivity Poor eye contact Settle for feelings and arrangements instead of test to reveal genuine needs and traits

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Advantages of VOC Survey Technique Traditional overview strategies request arrangements, yet.. Clients have constrained casing of reference "Me Too" arrangements offered Incremental upgrades and not striking changes VOC tests for Outcomes VOC sets up Values since there can be an enormous crevice between what clients need and what they will pay for.

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Yamaha Personal Watercraft Asked for "Results" Faster expectation to learn and adapt More dependability Longer rides without weakness Multiple riders

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Personal Watercraft – Using "Results" Results in New, Innovative Design Faster expectation to absorb information More soundness Longer rides without exhaustion Multiple riders Yamaha and Sea-Doo (Bombardier) increased huge share

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New Product/Service Planning Process Strategic Emphasis and Idea Generation Incremental or Innovative Is It Real? Is It Worth It? Could We Win? Approval Customer Needs and Wants. Versus Rivalry Strategic Positioning Features Benefi