NEW PRODUCT MANAGEMENT
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CHAP1110.pptChapter 10
The Full Screen
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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).
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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.
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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.
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Screening Alternatives
- Judgment/Managerial Opinion
- Concept Test followed by Sales Forecast
(if only issue is whether consumers will like it)
- Scoring Models
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A Simple Scoring Model
Answer: Go boating.
Figure 10.2
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Values
Factors:
4 Points
3 Points
2 Points
1 Point
Degree of Fun
Number of People
Affordability
Capability
Much
Over 5
Easily
Very
Some
4 to 5
Probably
Good
Little
2 to 3
Maybe
Some
None
Under 2
No
Little
Student's Scores:
Skiing
Boating
Hiking
Fun
4
3
4
People
4
4
2
Affordability
2
4
4
Capability
1
4
3
Totals
11
15
13
Source of Scoring Factor Models
Figure 10.3
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A Scoring Model for Full Screen
Note: this model only shows a few sample screening factors. A more complete set is in the figure in the textbook.
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...
Figure 10.4
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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
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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. 51-57.
Figure 10.5
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Alternatives to the Full Screen
- Profile Sheet
- Empirical Model
- Expert Systems
- Analytic Hierarchy Process
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A Profile Sheet
Figure 10.6
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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.
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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)
Figure 10.7
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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)
Figure 10.7
(cont’d.)
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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.
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Diagram for Analytic Hierarchy Process (AHP)
Figure 10.8
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Choose one of the following:
Sedan, Subcompact, Two-Seater, SUV
Goal: Select Best New Car Project
Market Fit
Tech. Fit
Dollar Risk
Uncertainty
Product Line
Channel
Logistics
Timing
Price
Sales Force
Design
Materials
Supply
Mfg. Tech.
Mfg. Timing
Differential Advantage
Payoffs
Losses
Unmitigated
Mitigated
Product Line
AHP Results
Figure 10.9
| Level 1 Weights | Level 2 Weights | Highest Ranked Project | |
| Dollar Risk | 0.307 | ||
| Payoffs | 0.153 | Sedan | |
| Losses | 0.153 | Sedan | |
| Market Fit | 0.285 | ||
| Timing | 0.094 | Sedan | |
| Price | 0.064 | Subcompact | |
| Logistics | 0.063 | Sedan | |
| Channel | 0.036 | Subcompact | |
| Product line | 0.014 | Sedan | |
| Sales force | 0.014 | Subcompact |
AHP Results (continued)
Figure 10.9
| Level 1 Weights | Level 2 Weights | Highest Ranked Project | |
| Technical Fit | 0.227 | ||
| Differential advantage | 0.088 | Sedan | |
| Manufacturing timing | 0.047 | Subcompact | |
| Design | 0.032 | Subcompact | |
| Materials | 0.027 | Subcompact | |
| Manuf. technology | 0.023 | Subcompact | |
| Supply | 0.010 | Sedan | |
| Uncertainty | 0.182 | ||
| Unmitigated | 0.104 | Sedan | |
| Mitigated | 0.078 | Sedan |
Overall Project Selections from AHP
Figure 10.9
Recommendation: Sedan is preferred as it has the highest overall weight as calculated by AHP.
How did this happen? Sedan was ranked by the managers as among the highest on all of the most important criteria.
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Ranking of Alternatives:
Project Overall Weight
Sedan 0.381 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Subcompact 0.275 xxxxxxxxxxxxxxxxxxxxxxxxxxxx
Two-Seater 0.175 xxxxxxxxxxxxxxxxxx
SUV 0.170 xxxxxxxxxxxxxxxxx
Values
Factors:
4 Points
3 Points
2 Points
1 Point
Degree of Fun
Number of People
Affordability
Capability
Much
Over 5
Easily
Very
Some
4 to 5
Probably
Good
Little
2 to 3
Maybe
Some
None
Under 2
No
Little
Student's Scores:
Skiing
Boating
Hiking
Fun
4
3
4
People
4
4
2
Affordability
2
4
4
Capability
1
4
3
Totals
11
15
13
Choose one of the following:Sedan, Subcompact, Two-Seater, SUVGoal: Select Best New Car Project
Market Fit
Tech. Fit
Dollar Risk
Uncertainty
Product LineChannelLogisticsTimingPrice Sales ForceDesignMaterialsSupplyMfg. Tech.Mfg. TimingDifferential AdvantagePayoffsLossesUnmitigated Mitigated Product Line
Ranking of Alternatives:
Project Overall Weight
Sedan 0.381 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Subcompact 0.275 xxxxxxxxxxxxxxxxxxxxxxxxxxxx
Two-Seater 0.175 xxxxxxxxxxxxxxxxxx
SUV 0.170 xxxxxxxxxxxxxxxxx
