Title of Article : The influence of formal controls on customer interactivity in new product development Author :Joseph M. Bonner Journal :Industrial Marketing Management Date :2004 Page number : ARTICLE 1

NEW PRODUCT DEVELOPMENT o WHY? Survival in today’s dynamic business environment Changes in consumers’ needs, wants and preferences over time  the New Product Development (NPD) activities is an essential component Vital for businesses to keep track, react appropriately to such changes, and Fulfill these wants better than the competitors.

o HOW? The essence for a successful new product introduction to the market : understanding consumer needs and developing products that meet these needs effectively.  Interact and involve the consumers in the NPD stages and processes o WHAT HAD BEEN DONE? Researchers have since conceptualized several kinds of formal controls to influence the customer interactivity in the NPD process which include:

o Output control: desired ends to be achieved i.e. setting the performance standards/outcome e.g. specification standards, technical performance, quality, profitability and market share for the product developed. o Process control: means to achieve the desired ends e.g. highly specified procedures, frequent observations, evaluation of project members’ behaviors. o Team rewards: team based rewards to reinforce the team’s motivation towards meeting project outcomes e.g. $$$$

o HYPOTHESES? TEAM REWARDS OUTPUT CONTROL CUSTOMER INTERACTIVITY PROCESS CONTROL

o STUDY METHODOLOGY? Survey questionnaires Given to product development professional from diverse industries respondents : product managers, marketing managers, product development managers total of 441 questionnaires surveys were initially mailed respondent were asked to provide information about a recently completed project that is being introduced into the market over the past 12months. total of 95surveys (95projects) were returned and found useable – 24% response rate.

Types of formal controls Results Description Process Control Negatively related o Higher level of process control, reduces the degree of customer interaction o focuses the team inwardly in the process o avoid activities that they perceive will degrade the efficiency and speed of the process. o Interaction with customer will reveal new information and requires extra time that may threat the standard procedures. Output Control Positively related o Higher level of output control, increases the degree of customer interaction o motivates teams to seek external information from customers to achieve market success. o signals that the team, have a stake in the final outcome. Combinat ion Dependent on the output control level o Using the output control simultaneously can reduce the negative influence of process control. Influence of formal controls on customer interactivity in NPD

Types of formal controls Results Description Team Rewards Positively related o Rewarding individuals based on team outcomes increases customer interactivity o It increases team member’s dependence on each other and also with customer. o CONCLUSION? To produce a successful new product, NPD managers must be able to decide on the kind of formal control system to be used and their appropriate level. Since, each type have different result towards customers’ involvement level, he must also be able to make the needed adjustments when necessary in order to keep the project on track.