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New Products & Services Kari Wetzel BUS 501 April 12, 2012.

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Presentation on theme: "New Products & Services Kari Wetzel BUS 501 April 12, 2012."— Presentation transcript:

1 New Products & Services Kari Wetzel BUS 501 April 12, 2012

2 New Product Success Rate Research has explored the uncertainty related with the development & sale of new products. Think about these organizations: RCAs VideoDisc Player Lost $500 million Time Inc.s TV-Cable Week Lost $47 million Pfizer invested in an anti- aging drug Lost $70 in the development Developing & producing products that fail is a part of business in all industries. Ex: Food Companies Organizations take ricks because product innovation allows them to stay current.

3 New Product Success Rate A survey by the Product Development and Management Association (PDMA) helps to determine what is successful. 100 ideas 33 Developed Projects 28 Pass All Testing 24 Fully Commercialized 14 Successful in Marketplace

4 Reasons for New Product Success Why are some products more successful than others? Success can be related to collaboration between technical & marketing departments Successful new products seem to be technologically sound & tailored to the customer needs. Project SAPPHO examined 17 pairs of new product innovation, with 1 success & 1 failure in each pair. 1.Successful innovating companies had a much better understanding of customer needs & paid much more attention to marketing. 2.Successful innovating companies made more effective use of outside technology & outside advice, even though they did more work in-house. 3.Top Management support in the successful innovating companies was from people who were more senior & had great authority.

5 Horizontal Coordination Model To achieve new product innovation, it involves 3 components- departmental specialization, boundary spanning, and horizontal coordination.

6 Horizontal Coordination Model Specialization All members needs to be competent at their tasks. Boundary Spanning Each department involved with the new product has linkage with relevant sectors in the external environment. Horizontal Coordination This means that technical, marketing, and production share ideas & information

7 Horizontal Coordination Model Famous innovation failures usually violate the horizontal linkage model. New Coke, Kelloggs Breakfast Mates, Susan B. Anthony Dollar. Many successful companies are including customers, strategic partners, suppliers, and other outsiders in the development of a new product. Open Innovation Extending the search for and commercialization of new products beyond the boundaries of the organization and even beyond the boundaries of the industry.

8 Horizontal Coordination Model Threadless Produces dozens of new T-shirt designs a month and has never produced a flop. They let potential customers tell them which shirts to make. Hold design competitions online where they can be voted on to be made into real shirts. The customers are essentially the company. They employ NO proeffsional designers, NO marketing department, NO advertising staff, and NO distribution to retailers.


10 Achieving Competitive Advantage: The Need for Speed 90% of executives say speed & agility have become major concerns for the companies in recent years. The rapid development of new products & services is becoming a major strategic weapon in the global marketplace. To stay competitive, companies are learning to turn ideas into new products & services incredibly fast.

11 Achieving Competitive Advantage: The Need for Speed Time-based Competition Delivering products & services faster than competitors, giving companies a competitive edge. Zara (Clothing Retailer) Gets new clothing in 2 times a week. Russell Stover 3 months for new low-carb candies instead of 12 months, like normal. Fast Cycle Teams A way to support highly important projects & deliver products & services faster. Multifunctional, and sometimes multinational. Works under stringent timelines and is given a good amount of company resources & empowerment in order to complete the project.

12 Achieving Competitive Advantage: The Need for Speed International Issues Can be an issue when designing a product that competes on a global scale & when marketing those products. Quaker Oats, Häagen Dazs, Levis Trying to improve horizontal communication & collaboration across geographical regions.

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