New Product Strategy Marketing 4250 January 30, 2007

The NPD Process Phase 1: Opportunity Identification and Selection Phase 2: Concept Generation/ Ideation

Product development at McDonalds What motivated this latest wave of new product development? In the past, how/where did McD’s get its ideas for new products? How do they get the ideas now? Why has that process changed? How many ideas does McD’s start with to get a handful of good ones? What are some of the constraints that guide their new product development process?

What is a Product Concept? A concept includes: a specific product form (the attributes) a specific technology (the source of the form) a specific benefit for a particular usage situation see Page and Rosenbaum (1992), “Developing an Effective Concept Testing Program for Durables,” J Product Innovation Mgmt

Translating the “Voice”-of-the-Customer Customer Verbatims Interpreted Needs Observations Product Concepts Product Specifications Scenario Planning Or Market Driving Forecasting

Empathic Design... Customer Verbatims Interpreted Needs Observations Product Concepts Product Specifications Scenario Planning Or Market Driving Forecasting

Empathic Design Empathic design means understanding user needs through empathy with the user world rather from user articulation of needs. Methods used: - Observing users’ behavior. - Interpretation of user’s environment, and extrapolation of trends into the future. - Anthropological exploration - NPD designers live in user’s environment, and consider how to solve unspoken problems.

Empathic Design Five types of information acquired from empathic design : 1. Unintended product uses (e.g., Cheerios; PAM) 2. Fit between product and user’s environment (e.g., Intuit’s “Follow Me Home Program”) 3. User customization (e.g., laundry detergent mixtures) 4. Intangible product attributes (e.g., emotional appeal.. Huggies pull ups) 5. Unarticulated user needs (e.g., Minivan seats)

Developing Interpreted Needs Interpreted Needs - Translate “voice”-of-the-customer comments or actions into a format useful to the design and development team.

Translating Observations into Interpreted Needs (Empathic Design) Observation Capture “data” - use video or still pictures, don’t write Show “data” to people who didn’t observe first-hand and discuss observations Brainstorm for solutions

Translating Verbatim Statements into Interpreted Needs Identify the benefit and not the function (what the product does, not how it should/must do it). “I want a 1/4” hole, not a 1/4” drill bit.” Describe an attribute of the product or the user If possible, avoid words like “must” and “should.”

Designing a Kitchen Tool Customer CommentInterpreted Needs “It hurts my hand.” “The tool is comfortable.” “It only does one thing.” “The tool can peel, gouge, cut, etc.” “It is not very attractive.” “The tool looks stylish.”

Designing a Coffee- Making Machine “I would like it to remind me of an English butler.” ”I hate it when it drips if I pull out the pot or the filter.” “I don’t like having the cord stretched all over the counter.” “I just want a good tasting cup of Joe.” The product is elegant and unassuming, with clean lines. The product keeps itself and the area around it clean. The product has good cord management. The product makes good coffee. The product heats and keeps water at the appropriate temperature. Verbatim NeedsInterpreted Needs

Structuring the Interpreted Needs Categorize the interpreted needs into a smaller number of categories. What “primary interpreted needs” labels should we attach to these categories?

Prioritizing Interpreted Needs Kano Classification (one approach ) L = Linear Satisfiers (“The more the merrier.”) N = Neutral/Indifferent (“No big deal.”) M = Must Haves (“I won’t buy without!”) D = Delighters (“What an unexpected treat!”)

Kano’s Model of (Non-Linear) Customer Satisfaction Customer Satisfied Customer Dissatisfied See (1) Matzler, et al.., 1996, Journal of Product & Brand Mgmt (2) Matzler and Hinterhuber, 1998, Technovation (3) Center for Quality MgmtCenter for Quality Mgmt Must Have (M) Delighter (D) Linear Satisfier (L) Requirement Fulfilled Requirement Not Fulfilled Indifferent (I)

EMPATHIC (OBSERVATION) VS. USER ARTICULATION (INQUIRY) Empathic (Observation) User Articulation (Inquiry) - Innovation possible beyond what users are able to tell you. - Technique relies upon real actions. - Users may be unable to articulate needs (e.g unnoticed workarounds). - Interview/interaction process may bias response. Strengths Weaknesses - Technique relies upon well- trained observers who can convert observations to innovative solutions. - Inability to measure attitudes. - Information can be acquired on attitudes and reasoning from users. - Easy to acquire information.