NEW PRODUCTS MANAGEMENT Merle Crawford Anthony Di Benedetto 10 th Edition McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 10 The Full Screen 10-2

Difficulties in Concept Selection One of the biggest challenges of product management. What if every project under consideration has passed all the hurdles so far? Lacking enough financial and human resources, the firm needs a good concept selection procedure, otherwise management must: –Guess (and select the wrong project) –Approve too many projects (and underfund everything). 10-3

The Full Screen A step often seen as a necessary evil, yet very powerful and with long-lasting effects. Forces pre-technical evaluation, and summarizes what must be done. Methods range from simple checklists to complex mathematical models. 10-4

Purposes of the Full Screen To decide whether technical resources should be devoted to the project. –Feasibility of technical accomplishment — can we do it? –Feasibility of commercial accomplishment — do we want to do it? To help manage the process. –Recycle and rework concepts –Rank order good concepts –Track appraisals of failed concepts To encourage cross-functional communication. 10-5

Screening Alternatives Judgment/Managerial Opinion Concept Test followed by Sales Forecast (if only issue is whether consumers will like it) Scoring Models 10-6

A Simple Scoring Model Answer: Go boating. 10-7

Source of Scoring Factor Models 10-8

A Scoring Model for Full Screen Note: this model only shows a few sample screening factors. Factor Score (1-5) Weight Weighted Score Technical Accomplishment: Technical task difficulty Research skills required Rate of technological change Design superiority assurance Manufacturing equipment... Commercial Accomplishment: Market volatility Probable market share Sales force requirements Competition to be faced Degree of unmet need

The Scorers Scoring Team: Major Functions (marketing, technical, operations, finance) New Products Managers Staff Specialists (IT, distribution, procurement, PR, HR) Problems with Scorers: May be always optimistic/pessimistic May be "moody" (alternately optimistic and pessimistic) May always score neutral May be less reliable or accurate May be easily swayed by the group May be erratic 10-10

Industrial Research Institute Scoring Model Technical success factors: Proprietary Position Competencies/Skills Technical Complexity Access to and Effective Use of External Technology Manufacturing Capability Commercial success factors: Customer/Market Need Market/Brand Recognition Channels to Market Customer Strength Raw Materials/Components Supply Safety, Health and Environmental Risks Source: John Davis, Alan Fusfield, Eric Scriven, and Gary Tritle, “Determining a Project’s Probability of Success,” Research-Technology Management, May-June 2001, pp

Alternatives to the Full Screen Profile Sheet Empirical Model Expert Systems Analytic Hierarchy Process 10-12

A Profile Sheet 10-13

Project NewProd Screening Model The idea is that by examining dozens of variables on real product successes and failures, one would be able to predict the likelihood of success of a new product at this early stage, and to identify weak spots that can be addressed before new product project approval. Current practices splits the screening model into two groups: must-meet and should-meet criteria. Must-meet are “yes-no” questions even one “no” screens the project out. Should-meet are scales, and high scores offset (compensate for) any low scores

Criteria Based on the NewProd Studies Must-Meet Criteria (rated yes/no): –Strategic alignment –Existence of market need –Likelihood of technical feasibility –Product advantage –Environmental health and safety policies –Return versus risk –Show stoppers (“killer” variables) 10-15

Criteria Based on the NewProd Studies (continued) Should-Meet Criteria (rated on scales): –Strategic (alignment and importance) –Product advantage (unique benefits, meets customer needs, provides value for money) –Market attractiveness (size, growth rate) –Synergies (marketing, distribution, technical, manufacturing expertise) –Technical feasibility (complexity, uncertainty) –Risk vs. return (NPV, IRR, ROI, payback) 10-16

Analytic Hierarchy Process (AHP) An analytical technique that gathers expert judgment and uses it to make optimal decisions. In AHP screening models, the respondent identifies the key criteria in the screening decision, assessing which are the most important. Each choice (project) is rated on each criterion. The AHP software calculates scores for each project and ranks them in terms of preferability. AHP analytical models such as Expert Choice are commercially available

Diagram for Analytic Hierarchy Process (AHP) 10-18

Abbreviated Output from AHP Recommendation: P1 is preferred as it has the highest overall weight as calculated by AHP. How did this happen? P1 was ranked by the managers as among the highest on all of the most important criteria