Unit 6 New Product Development

TECHNOLOGY ENTREPRENEURSHIP (ENT600)

UNIT 6 : NEW PRODUCT DEVELOPMENT

E

hi D

FBM (2009)

ENT600/UNIT 6 : NEW PRODUCT DEVELOPMENT

1

Definition of New Product Development • New product development is defined as the process by which entrepreneur designs and creates new product or service that will be sold to customers

E

hi D

FBM (2009)

ENT600/UNIT 6 NEW PRODUCT DEVELOPMENT

2

Definition of New Product Development • New product development is defined as the process by which entrepreneur designs and creates new product or service that will be sold to customers

E

hi D

FBM (2009)


2

The Importance of New Product Development • For For Surv Surviv ival al – – Introduction of new product provides a platform for the company to compete – Companies – Companies that are able to develop and introduce new and improved prod roducts will have a distinct advantage to compete – Competition has become more intense as techno technolog logica icall produc products ts becom become e more more compl complex ex and the technological product life-cycle getting shorter – Companies – Companies face threat of losing market share when competitors come up with their new products – Thus company have to come up with new products to ensure survival E

hi D

FBM (2009)


3

The Importance of New Product Development • Strategy for growth – Dev – Development elopment of new products can ensure business to grow by: • Introducing new products to existing markets • Introducing new products to new markets

E

hi D

FBM (2009)


4

Defining a New Product • The outcome of product development process is a new product • The new product can be: – a completely new product – not a completely new product but an existing product that has undergone significant improvements • A new product is any product “perceived to be new” in the mind of the consumers 5

Classifications of new products Two classification of new products: • Completely New Product • Improvements on Existing Products Completely New Product • New-to-the world products – The first of its kind (new inventions) – Create new market • New to the firm (new product lines) – New to the company but not new to the marketplace Entrepreneurship Dept, FBM (2009)

6


6

Improvements on Existing Products •

Addition to existing lines – Subsets to the new product lines – Perhaps targeted to different market segments

•

Improvements and revisions to existing products – New products to replace existing products with cosmetic and functional enhancements

•

Cost reductions – Offer no new benefits to the consumer other than possibly reduced price – Provides enormous added-value to the firm (financial rewards too)

•

Repositioning – New applications to existing products – More to do with consumer perception rather than technical development

E

hi D

FBM (2009)


7

Product and New Product Development • A product is an item or service that serves the needs of customers • A product has many dimensions, which includes: • Features • Quality Specifications • Packaging • Price • Brand Name • Technology • Theoretically, it is possible to label a product as new when any changes or modifications are made to any of the product dimensions

E

hi D

FBM (2009)


8

Product Dimensions

Packaging

Quality Specifications

Price

PRODUCT

Features

E

hi D

FBM (2009)

Brand Name

Technology


9

Different examples of changes in product dimensions that can create a new product: • Changing the performance capabilities of the product (e.g. a new, improved washing detergent) • Changing the application advice for the product (e.g. the use of liquid instead of powder detergent) • Changing the after-sales service for the product (e.g. frequency of service for a motor car)

E

hi D

FBM (2009)


10

Different examples of changes in product dimensions that can create a new product (cont.): • Changing the promoted image of the product (e.g. the use of bio-degradable packaging material) • Changing the availability of the product (e.g. the use of vending machines for topup cards)

E

hi D

FBM (2009)


11

New Product Development Process • New product development process for technology ventures usually begins with research and development to product design to concept testing to building prototypes and to test marketing (before full-scale commercialization)

E

hi D

FBM (2009)


12

Product Development Process 1. RESEARCH AND DEVELOPMENT

2. PRODUCT DESIGN

3. CONCEPT TESTING

4. BUILD PROTOTYPE

5. TEST MARKETING

COMMERCIALIZATION E

hi D

FBM (2009)


13

Product Development Process:

1. Research and Development • New product is often characterized by very high rate of failures • This may be due to very limited historical or preliminary data • Therefore, research and development is a critical step in the new product development • Research and development (R & D) refers to organized efforts that are directed towards discovering new knowledge, product or process • Usually, innovation is involve in the R & D for new product E

hi D

FBM (2009)


14


1. Research and Development (cont.) • Product development research is conducted to: – helps company to response to market changes more effectively – understand the attitudes of customers towards the new technology that is going to be introduced


2. Product Design • Product design refers to the conceptual translation of a new product idea or concept • It includes design of the product and its architecture (physical design), artistic design (aesthetics) as well as the required parameters to satisfy the market needs

E

hi D

FBM (2009)


16


2. Product Design (cont.) • When designing the product, the basic product performance criteria must be taken into consideration. This includes: – Performance – Reliability – Safety in use – Durability – Special features

Product Design:

Product Performance Criteria • Performance – The main characteristics of the product or services • Reliability – The consistency of performance and dependability • Safety in use – Risk of injury or harm • Durability – The useful life of the product • Special features – extra characteristics 18


3. Concept Testing • Concept testing is the initial test for most new product designed • It involves the process of using quantitative and qualitative methods to evaluate consumer response to a product idea prior to the introduction of product to the market

E

hi D

FBM (2009)


19


3. Concept Testing (cont.) • It involves showing a preliminary description of the product or service idea to prospective customers to gauge customer interest and purchase intent • If strong acceptance is found, the next step will be the preparation of the prototype

Purpose of Concept Testing • The main purpose of concept testing are: – To choose the most promising alternative from a set of alternatives – To get an initial notion of the commercial prospects of a concept – To find out who is most interested in the concept – To indicate what direction further development work should take

E

hi D

FBM (2009)


21

Concept Testing: The Process • Define the purpose of the test • Choose a survey population • Choose a survey format • Communicate the concept • Measure customer response • Interpret the results

E

hi D

FBM (2009)


22

Example: Concept Testing for the emPower Electric Scooter (shown below)

E

hi D

FBM (2009)


23

Example: Concept Testing for the emPower Electric Scooter • The purpose of concept test: – To identify what market to be in? • Sample population – College students who live 2-5 km from campus – Commercial transportation • Survey format: – Face-to face interview Entrepreneurship Dept, FBM

ENT600/UNIT 6 : NEW PRODUCT

24

Example: Concept Testing for the emPower Electric Scooter • Communicating the concept can be done by: – Verbal description – Sketch – Rendering (a drawing in perspective of a proposed structure) – Storyboard (illustrations or images displayed in sequence for the purpose of previsualizing) – Physical appearance model Entrepreneurship Dept, FBM


25

Example: Concept Testing for the emPower Electric Scooter Example of Verbal Description • The product is a lightweight electric scooter that can be easily folded and taken with you inside a building or on a public transportation • The scooter weighs about 15 kilos. It travels at speed of up to 20 km/hr and can go about 20 km on a single charge • The scooter can be recharged in about 2 hours from a standard electric outlet. • The scooter is easy to ride and has a simple controls – just an accelerator and a brake

E

hi D

FBM (2009)


26

Example: Concept Testing for the emPower Electric Scooter (Sketch)

Entrepreneurship Dept, FBM


27

Example: Concept Testing for the emPower Electric Scooter (Rendering)

E

hi D

FBM (2009)


28

Example: Concept Testing for the emPower Electric Scooter (Storyboard)

E

hi D

FBM (2009)


29

Example: Concept Testing for the emPower Electric Scooter (Physical Appearance Model)

E

hi D

FBM (2009)


30

Example: Concept Testing for the emPower Electric Scooter : Customer Response • Measure of customer response through survey: – Part 1: Qualification – Part 2: Product Description – Part 3: Purchase Intent – Part 4: Comments – Part 5: Interpret Results Entrepreneurship Dept, FBM


31

Example: Concept Testing for the emPower Electric Scooter: Measure Customer Response • Part 1: Qualification – How far do you live from campus? • If not within the specified radius, thank the respondent and end interview – How do you currently get to campus from home? – How do you currently get around campus?

E

hi D

FBM (2009)


32

Example: Concept Testing for the emPower Electric Scooter: Measure Customer Response

• Part 2: Product Description – Present the concept description as in the previous verbal description – Get comments from respondents

E

hi D

FBM (2009)


33

Example: Concept Testing for the emPower Electric Scooter: Measure Customer Response

• Part 3: Purchase Intent – If the product were priced according to your expectations, how likely would you be to purchase the scooter within the next year?

I would definitely not purchase the scooter

E

hi D

FBM (2009)

I would probably not purchase the scooter

I might or might not purchase the scooter

I would probably purchase the scooter


I would definitely purchase the scooter

34

Example: Concept Testing for the emPower Electric Scooter: Measure Customer Response • Part 4: Comments – What would you expect the price of the scooter to be? – What concerns do you have about the product concept? – Can you make any suggestions for improving the product concept?

E

hi D

FBM (2009)


35

Example: Concept Testing for the emPower Electric Scooter: Measure Customer Response • Part 5: Interpreting the results – From the data set gathered during the interview, forecast the potential of the product for commercialization – Make estimate in terms of: • Size of the market • Selling price • Sales forecast Entrepreneurship Dept, FBM


36


4. Build Prototype • A prototype is the first physical depiction model of the new product or service • It is usually in a rough or tentative mode • This model has the essential features of the proposed product or services but the model is open to modification • Prototypes can be used to elicit comments from designers and users to learn more about the product • One of the objectives of having prototype is it permits usability testing

37

Usability of Products • Usability is a measure of a user’s experience when interacting with a product • Five factors determining usability: – Ease of learning – Efficiency of use – Memorability – Error frequency and severity – Satisfaction

E

hi D

FBM (2009)


38

Usability of Products •

Ease of learning – How long does it take to learn the product’s operation?

•

Efficiency of use – Once experienced, how fast can the user complete the necessary steps?

• Memorability – Can the user remember how to use the product? • Error frequency and severity – How often do the users make errors, and how serious are these errors? • Satisfaction – Does the user like operating the product? E

hi D

FBM (2009)


39

Unit 6 New Product Development

Recommend Documents