Assessment item 3
NPD practices report
Due date: 06-May-2018
Length: 3,500 words*
Submission method options
Alternative submission method
This task requires you to critically evaluate the new product development practice of your own organisation or an organisation that would like to work with. (If you do not have direct access to an organisation you can complete this task using secondary research).
• Drawing on relevant literature on new product (or service) development models and factors for success in NPD - identify and discuss in detail critical success factors and issues that are relevant to the organisation you have chosen to study.
• Prepare a detailed analysis of the organisation's new product development practices, discussing in detail areas of strength and weakness. Make sure that you include in this discussion any specific details of the organizational context or industry context that are relevant for your analysis. As well as making your own observations, you can draw on interactions and conversations you may have had with relevant parties such a customers, suppliers and/or company employees.
• Finally make detailed recommendations for areas in which the company could improve their new product development practice. It is important in this section that you justify your recommendations by linking back to your earlier analysis and relevant NPD literature that you have previously discussed.
* Word limit includes executive summary but excludes reference list and appendices. Students may submit work that is +/- 10% of the word limit.
Your work should be referenced using APA-6 style.
Getting started: A good understanding of Topics 7 & 8 will provide you with a strong foundation for this assessment item. But don't stop there. You will also need to draw on a range of topics and sources depending on the particular context and issues of your chosen organisation.
This assignment is designed to give you the opportunity to examine in detail how new product development works in practice. Focusing on a particular organisation gives you the opportunity to appreciate how the particular context that a business operates in will influence the way it conducts new product development.
This task aligns with subject learning outcome 3:
• to be able to evaluate the new product practices of an organisation and make recommendations for improvement that demonstrate knowledge of success factors in new product development
Criteria to be Assessed HD 85-100% DI 75-84% CR 65-74% PS 50-64% FL 0-49%
Use of relevant literature on NPD or NSD models and factors for success
Value 30% Integration and originality in the selection and handling of relevant theory. Wide range of sources integrated in systematic way. Insightful and appropriate selection and use of theory from a good range of sources. Good selection of theory from a range of sources in a systematic way. Limited research - incomplete in some areas.
Inaccurate or inappropriate use of literature
Critical evaluation of chosen organisation
Value 30% Identifies and insightfully discusses areas of strength and weakness in NPD practices. Strong links to organisational context and relevant theory in evaluation. Identifies and clearly explains
areas of strength and weakness in NPD practices.
Links to organisational context and relevant theory in evaluation Identifies and discusses areas of strength and weakness in NPD practices. Discussion of some relevant issues in theory and organisational content in evaluation. Simple discussion of areas of strength and weakness in NPD practices. Works reflects limited engagement with organisational context or relevant theory. Not all aspects of task completed in sufficient detail. Poor evaluation.
Significant gaps in knowledge of innovation and lack of understanding of company’s NPD practices.
Recommendations to address areas of weakness
Value 30% Excellent recommendations made, linked to the evaluation. Theory used in insightful way to justify recommendations and discuss enhancement of NPD practices Very good recommendations made, linked to the evaluation. Used theory systematically to justify recommendations and discuss enhancement of NPD practices Good recommendations made, linked to the evaluation results / may not have linked back systematically to relevant theory
Some recommendations made / not well linked to the results of the evaluation or relevant theory
No recommendations made / no justification
Referencing using APA
Value 5% Highly accurate citations & reference list using APA-6 Mainly accurate citations & reference list using APA-6 Some inaccuracies in citations & reference list using APA-6 Makes attempt to provide citations & reference list using APA-6 Referencing is absent / not systematic
Value 5% Polished and imaginative approach / very professionally presented Logically organised / professionally presented / Shows organisation and coherence. Attempted to organise in a logical manner Disorganised / incoherent
Your assessment will be marked out of 100% and you will be given a mark out of 35.
1.Follow the Table of Content
3.Should use few Diagrams along with Content
4.Topics 7 and 8 are provided below you can Use that.
TABLE OF CONTENT.
Factors for new product and service success
On successful completion of this topic, you will be able to:
• Discuss factors that contribute to success in new product development and new service development
• Discuss problems with implementing new product programs and ways these problems can be addressed
• Identify and discuss key issues in best practice in NPD
SUCCESS IN NEW PRODUCT AND SERVICE DEVELOPMENT
Successful new products and services are important to the ongoing profitability of many organisations. Apple and Amazon are both highly successful organisations but have taken very quite different paths to success as outlined in the following video.
For a further perspective on new product success, page 145 of you textbook your text has an interesting case study on Harry Potter.
A successful product really can do more for an organisation than anything else. Just think of what the iPod did for Apple. Many companies will have revenue and profit targets that reflect their focus on new product development. For example, a company may set a target of 30% of sales revenue from products launched in the last 5 years or even more ambitiously in the last 2 years. With rapid changes in technology and consumer tastes companies can’t just rely on existing products for survival.
While success in new product development is highly valued, new product development is a risky and uncertain business. As Griffin (1997) points out in her seminal work on NPD practices, research on NPD highlights the following points about new product success:
• The success rate is stable at 59% of those products that make it to market.
• It takes 6.6 ideas to generate one success.
Much research has been done in the last twenty years to help identify factors that contribute to success in new product development and to explore ways of reducing risk of failure. There are no easy answers for success, but there are many lessons that existing and potential new product managers can learn.
In this topic we explore the processes and practices that can assist companies in improving their odds of success in both in new product development and new service development. Please note that there will be people who argue that the term NPD technically covers both physical goods and services. However as so much of the NPD literature has a physical goods focus I am dealing with services separately in some of the topics in this subject. As you work though the subject you will find there are many areas where concepts will be equally applicable to both physical goods and services but other areas where there are particular challenges inherent in new service development.
BEST PRACTICE IN NPD
What do we know about why products succeed, why they fail and what distinguishes winning businesses?
Robert Cooper (the founder of The Stage-Gate® Idea-to-Launch System which will be dealt with in detail in Topic 9) has been exploring these questions for many years. In an early work (Cooper 1999) he identifies eight critical success factors:
• Solid up-front homework – to define the product and justify the project
• Voice of the consumer – considered throughout the project
• Product advantage – differentiated, unique benefits, superior value for the customer
• Sharp, stable and early product definition – before development begins
• A well planned, adequately resourced, and proficiently executed launch
• Tough go/kill decision points or gates
• Accountable, dedicated, supported cross-functional teams with strong leaders
• An international orientation – international teams, multi-country market research and global or “glocal” products
Also back in 1990’s Griffin’s (1997) research found that that firms with both a new product development strategy and a formal process for developing products demonstrate superior performance in terms of: (i) percentage of sales by new products; (ii) success rates of new products and; (iii) meeting sales and profit objectives. The findings from both these authors continue to inform NPD practice
In Reading 7.1, a more contemporary article, Cooper and Edgett (2012) identify top performing businesses and the practices that distinguish these businesses from others. Their specific interest in this study is to address whether stage gate processes work, what facets of the process make a difference, and what form of governance works best for such processes. Results of their research provide insights into best practices in the idea-to-launch process including:
• Formal process is in place
• Process is viable and well documented
• Process is really used
• Process facilitates success
• Process incorporates checks
• Process is adaptable & scalable
Gatekeeping practices play a key role in the success of stage gate processes and are therefore a central driver of idea-to-launch performance. Gates are quality control checkpoints in the system. Gatekeepers are the decision makers tasked with selecting the best projects for development. As such gatekeepers are designated members of the management team members responsible for go/kill decisions at each gate.
Different individuals may take on the gatekeeping role on different projects depending on the risk involved in the project. In additions different individuals may take on the role of gatekeeper at different gates. Gatekeeper practices found to be strongly connected to positive innovation performance include:
• Defining specific go/kill criteria and deliverables for each gate
• Engaging in fact-based, objective decision making
• Ensuring that decisions are actually made at gate meetings
• Enlisting gatekeeper support for decisions
An emerging factor in successful new product and services development (capitalising on advances in ICT) is greater interaction with users and the harnessing of users’ creative potential by integrating users into core business processes. Reading 7.2 provides an examination of three companies, LEGO®, IBM and Coloplast (medical products and services), in quite different industries. Hieneth, Keinz and Lettl (2011) discuss the value of IT-based user centric business models and their potential as a source of sustainable economic advantage. Their analysis of the LEGO, IBM and Coloplast cases highlights the importance of continuous user integration, not only in the phase of generating novel ideas, but also later in the commercialisation process.
DEVELOPING SUCCESSFUL NEW SERVICES
If you wanted to look at a highly successful service it would be hard to go past eBay in terms of its impact on retailing worldwide. The following video provides a brief introduction to eBay’s success story.
The success story continues for eBay. The case study on page 508 of your textbook details the contribution of continual development of new services to the ongoing profitability of eBay.
Turning to academic research on services, Reading 7.3 focuses on the study of processes that successful companies go through in order to develop new services. Based on an extensive literature review, it establishes five main category factors that can determine the success of new services: organisational culture; marketing factors; services factors; market factors; and organisational process. There is a detailed discussion of the development of the elements within each of these factors.
Cooper, R. G., & Edgett, S. J. (2012, March-April). Best practices in the idea-to-launch process and its governance, Research-Technology Management, 55(2), 43-54. Retrieved from http://ezproxy.csu.edu.au/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=72242997&site=ehost-live
Hienerth, C., Keinz, P., & Lettl, C. (2011). Exploring the nature and implementation process of user-centric business models. Long Range Planning, 44(5), 344-374.
Jimenez-Zarco, A. I., Martinez-Ruiz, M. P., & Gonzalez-Benito, O. (2006). Success factors in new services performance: A research agenda. Marketing Review, 6(3), 265-283.
Retrieved from http://ezproxy.csu.edu.au/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=22546266&site=ehost-live
Visit the Web site http://www.pdma.org. This is the Web site for the Product Development & Management Association, a nonprofit association whose mission is to seek out, develop, organise and disseminate leading-edge information on the theory and practice of product development. How well do you think their website and associated hot-links, help fulfill that mission?
Cooper, R. G. (1999). From experience: The invisible success factors in a product innovation. Journal of Product Innovation Management, 16, 115-113.
Griffin, A. (1997). PDMA research on new product development practices: Updating trends and benchmarking best practices. Journal of Product Innovation Management, 14, 429-455.
Product and brand strategy
On successful completion of this topic, you will be able to:
• Explain the key role strategy plays in NPD
• Describe how new product strategy relates to corporate strategy and discuss the role of the Ansoff matrix in identifying strategic options
• Discuss the use of product platforms and product portfolios
• Explain how differentiation and positioning contribute to a product’s success in the marketplace
• Discuss the importance of brand strategy in NPD
THE ROLE OF STRATEGY IN NEW PRODUCT DEVELOPMENT
Research has shown (Griffin 1997) that firms with both a new product development strategy and a formal process for developing new products, demonstrate superior performance in terms of:
1. Percentage of sales by new products
2. Success rates of new products and
3. Meeting sales and profit objectives.
A new product development strategy provides direction for the new product development process.
“New product strategy is one part of the overall corporate strategy. It is a means to implement an organisation’s corporate overall strategy. This means that a new-product strategy depends on the organisation’s capabilities and it’s environment. Here are some questions that reflect the interface between corporate and new-product strategy. What are we good at? Where are we vulnerable? Why have we succeeded in the past?… Where are our major products in their product life cycles?…What technological changes can we expect?…What products and markets must be defended to maintain the corporate image? How much does our organisation depend on growth?...Can synergies with existing products be exploited in terms of materials, production lines, advertising, brand equity or promotion? These questions lead us to face the underlying issues: What business are we in, and what are our goals?”
Urban & Hauser 1993 p.18.
We can see that developing new products is not an end in itself but a means to achieving organisational objectives such as growth and profitability. Companies have various options they can pursue growth.
The Ansoff matrix
One way to explore these possible choices for growth is with the use of the Ansoff matrix,a tool employed by marketers to help evaluate possible strategies. This matrix:
• Provides a broad creative view of the product /market options available
• Helps develop scenarios that can be used to assess the risk of relevant marketing strategies
• Identifies areas which may require additional research or test marketing
You may have encountered this matrix, shown below in Figure 8.1, in previous marketing subjects.
Source: Trott (2012) Innovation Management and New Product Development, p. 422
Briefly the strategic options portrayed are:
Market penetration is wherecompanies can work to further penetrate their existing markets with by working more intensively with the products/brands they already have. This is the least risky for companies but does not have the same potential for growth and revenue as other options.
Market development occurs where current products are taken to new markets. This could be, for instance geographic or consumer to B2B (e.g. food products from end consumers to food service (restaurants, caterers) new markets. Companies such as Proctor & Gamble and Unilever have generated significant amounts of their growth from expanding their involvement in developing countries.
Product development involves focusing on current market(s) with new product offerings.
Diversification, the riskiest option – but also one that can highly rewarding if well executed - is where a company grows their business with new products for new markets.
Below in Figure 8.2 is an illustration of possible options for eBay in the different categories.
NEW PRODUCT STRATEGY
New product strategy is linked to marketing strategy, technology strategy and the overall corporate strategy. Trott (2005) looks at innovation strategies commonly found in technology intensive firms. These are:
• Leader/offensive where the aim is to launch first in the market.
• Fast follower/defensive where the company uses a substantial technology base to develop a product that improves on the original version in terms of lower cost, different design, additional features etc.
• Cost minimisation/imitative where strategy is based on being a low–cost producer and success is dependent on achieving economies of scale.
• Market segmentation specialist/traditional where the strategy is based on meeting the precise requirements of a particular market segment or niche.
Decisions on innovation strategy will be influenced by the technology position of the firm with respect to its competitors. An organisation’s new product strategy will reflect its innovation strategy. Key factors that will influence new product strategy include the organisation’s capabilities, its strategies and the environment within which it operates. New products will perform different roles at different times for different companies. Some NPD will be innovative while some will be incremental. Some NPD will be proactive, some reactive. Some firms want to be first to market, whereas others strive to be “second but better” or a low cost later entrant to the market.
Reading 8.1 highlights the critical point that there is no one-size-fits-all product development process. Designing new products for different business contexts requires different new-product development processes. The authors describe a framework to address this problem, allowing a firm to better align the design of its development processes to the specific aims of individual projects. The framework is illustrated with examples from Hewlett-Packard.
Is imitation a good strategy? New products will perform different roles at different times for different companies. Some NPD will be innovative while some will be incremental. Much discussion on strategy in NPD looks at radical and incremental innovation. But for a range of organisations imitation can be a viable strategy. While this could be thought of as a reactive strategy, if a company has competitive advantage in terms of cost of production and easy access to distribution this can be a path to strong sales and market share.
Take for example Sarah Lee with their Pizza D’oro brand in the single service espresso market. They saw an opportunity with Nepressso’s patent expiring in 2012 and have launched a range of espresso capsules advertised as being compatible with Nespresso machines. While Nespresso has very tightly controlled distribution through the online Nespresso club and company stores the Piazza D’oro brand is widely available in supermarkets.
Much discussion on strategy in NPD looks at radical and incremental innovation. But for a range of organisations imitation can be a viable strategy. While this could be thought of as a reactive strategy, if a company has competitive advantage in terms of cost of production and easy access to distribution channels, imitation can be a path to strong sales and market share. Think about the example of Nepresso machines and their “exclusive pods” and how these have been imitated and promoted by Aldi. (Refer back to the fast follower strategy mentioned above. In this case Aldi would be in an alliance to access the required technology.)
This reading will give you some insights into the practice of imitation of an innovation. Shenkar uses the term imitation to describe the replication or repetition of a product, a process, a practice or a business model. He provides numerous illustrative cases
New product strategy is clearly linked with differentiation and positioning.
• NPD strategy plays in a key role in how companies seek to differentiate themselves from competitors. Think Apple, 3M.
• Differentiation will draw on an organisation’s capabilities and strengths
• Differentiation will drive positioning of new products
PRODUCT PLATFORMS & PRODUCT PORTFOLIOS
Many firms find that it is not efficient to develop a single product. The term platform refers to a product family that shares similarities in design, development or production process. Platform development creates the architecture for a family of products.
We have here a number of examples of product platforms. I’ll pause and let you read them for yourself.
• Car industry: $3 billion on near car platform spread over several models
• Sony: 4 platforms for Walkman launched 160 products
• Boeing: passenger, cargo, short and long haul planes made from same platform
• Black & Decker: same motor for lots of tools
The concept of platforms can also be used with services such as:
• Health insurance where for instance you may have a core offering as a component of a number of different plans. And in,
• Financial services
Nespresso could be considered a brand platform. This occurs where you have a brand serving as a launching pad for a series of product.
For Nespresso there are three interlinked components in their platform:
• The nespresso machine – that guarantees coffee lovers consistently high quality espresso
• The coffee capsules – that provide consistent results and freshness
• The Nespresso club providing coffee capsules, advice on machine use and maintenance and accessories
Companies can gain a range of benefits from product platforms including:
• Reduced cost of production
• Shared components between models
• Reduced R&D lead times
• Reduced systemic complexity
• Better learning across project
• Improved ability to update products
In Reading 8.3 (an optional further reading) the authors discuss service process modularisation as a way to attempt to balance efficiency an customisation in services.Modularity, they explain generally involves the separation of an object into components (modules), and in turn, the combination of these components into customizable offerings (sometimes referred to as bundling). With a service however, the focus is on a process typically consisting of a combination of physical and non-physical elements. They discuss modularisation as a way to systematically combine service sub-processes, thus managing modularity on a more strategic level, that is, as a set of modular strategies, in addition to precise descriptions of underlying processes.
Often in new product development we are not focusing on just one product. Proposed new products should provide a fit and balance to existing products already being offered by the company. Companies attempt to have a balanced product portfolio. I’ll pause and let you read this list of characteristics that will be considered.
• Strategic goals (defending current base of products versus extending the base)
• Project types (fundamental research, process improvements, or maintenance projects
• Short-term versus long-term projects
• High-risk versus low-risk projects
• Market familiarity (existing markets, extensions of current ones, or totally new ones)
• Technology familiarity (existing platforms, extensions of current ones, or totally new ones
• Ease of development
• Geographical markets (North America, Europe, Asia)
BRANDING STRATEGY IN NPD
Branding is an important consideration in developing a new product:
• A successful brand combines an effective product, distinctive identity and added values as perceived by customers
• Brand strategy carries the company or product name into the market and shows how it will be positioned
The following video clip deals with branding by product innovation.
Finally, consider for a moment whether a company can go too far in the number of new products they introduce? This is what we would call product proliferation. The following video provides some insights on this issue.
Caution in over-utilizing category or brand extensions
Trott, (2012), Chapter 11
MacCormack, A., Crandall, W., Henderson, P., & Toft, P. (2012, January-February). Do you need a new product-development strategy? Aligning process with context. Research-Technology Management, 55(1), 34-43. Retrieved from
Shenkar, O. (2010). Fat copycats. In Copycats: How smart companies use imitation to gain a strategic edge (chap. 1, pp. 1-19). Boston: Harvard Business Press. Available on eReserve.
Carlborg, P., & Kindström, D. (2014). Service process modularization and modular strategies. Journal of Business & Industrial Marketing, 29(4), 313-323. Retreived from
Retreived from here
Crawford, C. M., & Di Benedetto, C. A. (2011). New Products Management
(10th ed.). Irwin McGraw-Hill.