Lecture # 19 NEW PRODUCT DEVELOPMENT

Product Protocol

Contents of a Product Protocol Target market Product positioning Product attributes (benefits) Competitive comparison Augmentation dimensions Timing Marketing requirements Financial requirements Production requirements Regulatory requirements Corporate strategy requirements Potholes 12-3

Competitive Comparaisons and Augmentation Dimensions Benchmarking has been mentioned, but there are many other competitive standards that can be put into a protocol—matching some important policy, the degree of differentiation we have to meet, and many aspects of the marketing plan (e.g., size of sales force, price, distribution availability, and more). Information on competitive comparison can be derived from perceptual maps, and the gaps appearing on the perceptual map can provide guidance on selecting an appropriate competitive position. Just as the product itself was described in attributes above, the augmentation ring of the product can also be cited. Sometimes the product itself may be “me-too,” but still is a legitimate competitive offering as it may offer the customer a new level of service, a better warranty, or better distributor support. Recall that there are three rings in the fully augmented product—ring one (core benefit) is covered in the positioning statement, ring two (the formal product) is covered in the attribute requirements, and ring three (augmentations) is covered here.

Other Components of the Product Protocol There are several other components of the protocol that we will handle here very briefly. Timing: Most new products today must come out faster, but not all do. Some involve major technical breakthroughs that cannot be put on the clock. The distinction needs to be clear to all. And if there is a date to meet, it should be right here. Financials: Typically, the protocol will include price level, discounts, sales volume, sales dollars, market share, profits, net present value, and many of the other financial data. Production: This one is much like marketing requirements, some focusing on what the function will prepare to do and what that will accomplish—thus, plants to be built, volumes, and quality to be achieved. Regulatory Requirements: These are highly varied, but managements today understand the need to have advanced understanding on them.

Other Components of the Product Protocol Corporate Strategy Requirements: Key ideas (such as core competencies) will have already been captured in the product innovation charter. Also, at this time, the assurance of upper management support is important. Potholes: As we have seen before, there are potholes in product innovation, just as they are on that stretch of highway as you drive at night—and they are capable of bringing a new product down. Management that doesn’t take a good look ahead deserves to hit one. We don’t usually drive into known potholes, so listing them here helps.

Narrow Version of Protocol: End-User “I Want” List This is the “I Want” list for a new lawn leaf blower/vacuum. These are benefits — how they are achieved is determined during development. Manufacturer stands behind product — two year full warranty. Electrically and mechanically safe. Good value and lasts a long time — top quality component parts, state-of-the-art manufacturing. Makes yard clean-up easier — most powerful blower you can buy. Converts from blower to vacuum without tools. Electrical cord does not come loose. Can be used with existing extension cord. Easy to maneuver. Clog-free vacuuming. Tubes go together and stay together. 12-7

Protocol Stated as Benefits: Built NY Product concept: carrier for two wine bottles. Customer benefits: Protective, insulating, ergonomic, lightweight, reusable, inexpensive, flexible (easy to fold) Result: neoprene wine bottle carriers (inexpensive, easy to cut and dye into designer colors). Spinoffs included beer carriers and baby-bottle carriers. 12-8

A Sample Protocol: Trash Disposal System Must automate trash disposal at factory cost not to exceed $800. Clean, ventilated, odor-free, no chance of combustion. Must be safe enough to be operated by children; outside storage safeguards against children and animals. Size must be small enough to work as kitchen appliance, to provide easy access and eliminate need for double handling of trash. Simple installation Decor adaptable to different user tastes. If design requires opening of exterior walls, structural integrity and insulation against elements must be maintained. User-friendly, automatic operation, easy to maintain by technical service people. 12-9

Example of Difficulty of Translating Idea Into Product: Morton Hot Salt The Voice of the Customer (VOC) might suggest this is a great idea. But how to translate it into a product? How spicy? How different from regular chili powder? Flavored more like cayenne or chipotle? Without specific, precise information, food engineers are left just to guess. 12-10

Protocol Within the New Products Process End User  Market Contact  New Product Group  R&D Contact  Engineers PROTOCOL Unmet Needs Inventory of Statement of Needs to Benefits to How to Deliver the And Problems Needs Be Fulfilled by Product Deliver Requested Benefits Benefit to Feature Conversion (Specs) Finished Prototype Evaluate Prototype; R&D Delivers Features Delivered; Product Confirmed Further Development Prototype Lab Assesses Performance End User  Market Contact  New Product Group  R&D Contact  Engineers 12-11

Quality Function Deployment (QFD) A technique designed to insure that customer needs are focused on throughout the new product project. First step is the House of Quality (HOQ): gathers desired attributes from customers and translates them to engineering characteristics. Requires inputs from marketing and technical personnel; encourages communication and cooperation across the functional areas. 12-12

QFD and Its House of Quality 12-13

Benefits in QFD Example Compatibility Print quality Ease of use Productivity 12-14

Technologies in QFD Example Postscript compatible Resolution Edge sharpness Duplex printing Hours training required Speed (text) Speed (graphics) 12-15

Tradeoffs in QFD Example Improving resolution slows down text printing and really slows down graphics printing. Increasing edge sharpness slows down both text and graphics printing. Duplex printing speeds up text and graphics printing. Postscript compatibility improves resolution and edge sharpness. 12-16

Moving to Later Stages of QFD House of Quality: Customer Attributes Engineering Characteristics Parts Characteristics Process Operations Production Requirements Parts Deployment: Process Planning: Production Planning: Converted to: Source: Adapted from John R. Hauser and Don Clausing, “The House of Quality,” Harvard Business Review, May-June, 1988. 12-17

QFD Realities Substantial cost and time commitment. Only mixed results in some applications. Requires top management support and commitment. Must be viewed internally as an investment. Requires good functional integration. May work better if the team members have a successful track record of working together before. 12-18

Improving QFD Efficiency Concentrate on only some of the Engineering Characteristics: the most critical, or the ones where improvements are easy to accomplish. Organize the Engineering Characteristics into groups, and designate responsibility to functional areas. Do cost-benefit analysis on each Engineering Characteristic to determine which provide the greatest benefit relative to cost of improvement. 12-19