Npd idea generation & idea screening & concept testing tools

Idea Generation
Idea Screening
Concept Testing Tools
Ehsan Riahi
Baran Emam
Neda Jafarian
Azadeh Shomali
Mahdi yazhari Kermani
New Product Development
Dr. Sadeghi

2
Importance of NPD
> The existence of a business linked with the course of its products.
> Products’ life cycle. eventually dies out.
> So long-term operation of a business depends on the on going
development of new products.

3
Importance of NPD
rapid
development
of new
technologies
forced business
to adopt (NPD)
as a necessary
and unavoidable
business
practice.
gradual
increase of
the
competition
the shift
change in
customer
needs and
attributes

4
Importance of NPD
> David S. Hopkins and Earl L. Baily
> research has shown that 40% of new consumer products, 20% of new
industrial products and 18% of new services related products have
failed completely as products.
> To avoid development of a new product that will not be a success in a market and
to minimize the costs of such a development a NPD Roadmap can be used.
> through a series of logical steps, starting from the process of idea generation and
ending at the launch of the product into a market.

5
Comparisons of the Process of NPD

Kotler Commonly presented linear NPD model
6

Comparison of the idea mortality curve
obtained from the survey of previous studies
7

8
The First 3 Steps
Idea
Generatio
n
Idea
Screening
Concept
Testing
Tools
Develop
Marketing
Strategy
Business
Analysis
Product
Developm
ent
Test
Marketing
Commerci
alization
Idea
Generation
Idea
Screening
Concept
Testing Tools

9
The Importance of First 3 Steps

10
Cash flows and new product development
The First 3 stages of NPD represent the formation and development of an idea prior to
its taking any physical form.
In most industries it is from this point onwards that costs will rise Significantly. It is
clearly far easier to change a concept than a physical product.

11
Idea Generation
Idea
Generation
Idea
Screening
Concept
Testing Tools

12
Idea Generation
> Idea Generation is the Systematic Search for New
Product Ideas Obtained Internally or Externally
> Idea generation is a process in which creative thinking is
used to produce large amount of ideas for new products.
> It is very important that all ideas no matter how ludicrous
or extreme may sound, to be gathered.

13
Characteristics of a good Idea Generation Process
1. should be on - going
2. have a specific purpose
3. involve the whole of the company
4. use a variety of methods
5. have one person in charge
6. not evaluate the gathered ideas
7. one should not criticize the ideas of others
8. should be freewheeling and generate as many ideas as possible
the problem of this level is to generate as many ideas as
possible and manage them in such a way that it will be
possible and easy for screening them later on.

14
Sources for Idea Generation
Customer
Scientific
research
Competitors
dealers and
representativ
Miscellaneou
s sources
es
Top
management

15
> 1. Customer-defined needs and wants
These are the result of several actions:
• Direct customer surveys. to solicit feedback and to obtain information in a
directed manner.
• Focused group discussions. multiple-person input and prompted discussion to
generate ideas.
• Suggestion systems and communication from customers. unsolicited feedback
from users and relatively anonymous input from stakeholders of the company.
• Customer complaints. an excellent feedback system for those who truly listen
to the customer complaint for what it actually is and take the additional step to
correct it through a product implementation.

16
> 2. Scientific research
This method generally occurs as a result of a scientific breakthrough
of totally new technology or, more often, from applied research.
Scientific research is usually responsible for breakthrough products
or processes.
3. Competitors
Watch what your competitors are doing in the way of new product
development and introduction.
They are a yardstick measurement of marketplace activity .

17
> 4. Company dealers and representatives
These sales channels can feed back customer ideas and also
generate ideas of their own.
However, this medium must be evaluated in light of any individual
agendas that may exist.
The sales function is market-share driven. This is not necessarily the
best source of new product ideas because feedback may be slanted
to make their sales job easier, rather than toward what may be in the
best interest of the firm in total.

18
> 5. Top management
This can be a valuable source or a destructive influence in product
development.
Top management has the largest bat with which to drive a new
product development idea through the organization.
A program can be initiated and implemented in short order and with
amazing results. However, less-than-constructive results can occur in
cases in which supporting data, primary customer feedback, and due
diligence are not practiced in favor of exercising executive privilege.

19
> 6. Miscellaneous sources
Some of the miscellaneous sources are:
Inventors
patent counsels
university laboratories
government agencies
industrial consultants
marketing research firms
industry journals and periodicals.

20
Tools For Idea Generation
Ideas for new products can easily come from any sources. When all data is
collected a series of tools can help the company quantify these needs and
translate them into new product ideas.
I. Brainstorming
II. Competitive Intelligence
III. Conjoint Analysis
IV. Delphi Technique
V. Morphological Charts
VI. Six Thinking Hats
VII. TRIZ - Idea generation using a problem-solving tool

21
Key Factors for Successful Idea Generation
> Time Pressure
> Try smart incentives
> trying harder and providing more “meat” around each idea
> following instructions more accurately
> actual number of ideas

22
Key Factors for Successful Idea Generation
> Try smart incentives

23
Idea Screening
Idea
Generation
Idea
Screening
Concept
Testing Tools

24
Idea Screening
> Once all viable ideas are gathered and managed, they must be
further developed, examined, prioritized and evaluated so that a
single product idea is selected for further development into a
product concept. This whole process is called screening and is the
main problem to solve in this Level using different tools and
techniques.

25
Idea Screening
> Actually, The second step in the new-product development process is
idea screening which involves screening new product ideas in order
to spot good ideas and drop poor ones as soon as possible. Because
product-development costs rise dramatically in later stages,
companies must proceed only with product ideas that will turn into
profitable products. One way to keep information organized is to
have executives write up new-product ideas on a standard form that
can be reviewed by a new-product committee. A well-designed
system for rating and evaluating new-product ideas prevents
problems at latter stages.

26
Idea Screening
> Two potential risks in screening
> Dropping ideas too early means missed opportunities!
> Developing the "wrong" ideas means wasted resources in terms of
time, financial investments and may risk your activities with your
current portfolio

27
Idea Screening
> An initial screening is the first decision to commit resources to the
idea and to decide whether a NPD project starts or not. This gate is a
"gentle" screen of certain "must meet" and "need to/should meet"
criteria.
> Must meet criteria: corporate policy, strategic fit, magnitude of
market opportunity, product advantage, project feasibility,
availability of resources, regulations, impact on corporate image.
> Need to/should meet criteria: synergy (with product portfolio,
production lines and capacity etc.), market attractiveness,
competitive advantage, organizational and operational issues.
> .

28
Idea Screening
> Screening Ideas Against Company's Marketing Strategies
> Screening Ideas Against Company Sales and Profitability Minimums
> Screening Ideas Against Key Customers and Buyers

Idea Screening
> Alignment with your Product Innovation Strategy
> Degree of compatibility with the company’s values & principles (ex:
29
moral, health, environmental)
> Market attractiveness / opportunity
> Project feasibility
> Degree of product advantage over other options
> Ability to leverage existing company resources

30
Idea Screening
> The challenge at this gate is to identify and decide on the
"right" ideas for further exploration. Your task is to strike a
balance between what is desirable (especially from a consumer
point of view) and what is feasible both in technical and market
terms. A good strategy is also to keep a balanced portfolio of
NPD projects in the pipeline with varying degrees of risk (low,
medium and high) and rewards (short-, medium- and long-term).
> As precise information about market responses and technical
requirements is not present at this stage you also need to rely
on your intuition or gut feeling.

31
Tools and Solutions
> Assessing New Product Feasibility
Is there a need?
Is it real?
Will the customers buy?
Will it satisfy the market?
Is the product real?
Can it be made?
Differentiation?
Can we win?
Low cost position?
Industry structure?
Company competitive?
Organizational effectiveness?
Is the return adequate?
Is it worth it?
Is the risk acceptable?
Supports company's objectives?
Satisfy other needs?
Other factors?

32
Tools and Solutions
> Qualitative Research
> Dot Sticking (voting)
> Delphi Method
> Discussion Boards
> PMI Analysis (weighting)
> SWOT Analysis

33
Qualitative Research
> an original company research tool on a subject such as new product
ideas or concepts, which is concerned with getting a "feel" for the
research topic without doing a numerical and statistical
measurement. One can think of Qualitative Research as an in - depth
- interview or conversation with a target of potential users of the
new product.

34
Dot Sticking (voting)
> Step 1. Each concept or idea must be presented in a similar
way having the same amount detail
> Step 2. The participants must be then selected
> Step 3. Dots are allocated to each of the participants.
Depending on the number of concepts or ideas these can be 3
to 5. Different colored dots can be used to indicate different
things such as performance, functionality, design etc.
Participants can use his or her dots to indicate choice, by
sticking them next to the concept or idea drawing.

35
> Step 4. After all participants have used their corresponding dots,
dots for each concept or idea are summed and the best concept
is declared. Also a second round of dot sticking can take place by
selecting the best 2 or 3 strongest concepts or ideas.
> Step 5. It is sometimes helpful and necessary to understand the
reason of the voting or dot sticking. In this case the participants
are required to indicate or note likes and dislikes about the
concepts by using post-it notes. This enables the design team to
keep strong features of rejected concepts in mind.
> .

36
> a concept or idea selection tool that engages a wide number of
people in the process.
> It is a simple tool and easy to administer but does not provide rich
feedback on the reasons or motivations of the people involved in
the process.
> It can be a powerful tool if the target customers are involved in the
process. The tool is extremely useful when there are a lot of
potential or competing ideas on the table.

37
Delphi Method
Structuring of
information flow
Regular feedback
Anonymity of the
participants

38
Delphi Method
Advantageous
> free expression of opinions
> encourages open critique
> and facilitates admission of errors when revising earlier judgments.

39
Discussion Boards
> A discussion board is an asynchronous communication tool that
allows one individual to post a comment or question online.
Other individuals who are members of the same discussion
board may read that comment/question, and respond with
their own remarks over time.

40
PMI Analysis (weighting)
> an improvement of the weighting the pros and cons technique.
When one has selected a course of action, PMI is a good method
of evaluating this course. This method can be used in any case
when decision-making plays a great role in the success of a
project. In the case of NPD it can be used in any Level but can be
extremely helpful during Level 2 where screening and evaluating
new product ideas take place and a decision for the best one
must be made.

41
PMI Analysis (weighting)
Plus Minus Implications
More going on (+5)
Have to sell house (-
6)
Easier to find new
job? (+1)
Easier to see friends
(+5)
More pollution (-3)
Meet more people?
(+2)
Easier to get places
(+3)
Less space (-3)
More difficult to get
own work done? (-4)
No countryside (-2)
More difficult to get to
work? (-4)
+13 -18 -1
scores the table as 13 (Plus) - 18 (Minus) - 1
(Implications) = - 6

42
SWOT Analysis
> a very effective way of identifying one's Strengths and
Weaknesses, and of examining the Opportunities and Threats
one can face. Carrying out an analysis using the SWOT
framework can help focusing activities into areas where the
company is strong, and where the greatest opportunities lie. By
Performing a SWOT analysis, one can use the analysis results to
screen new product ideas against the characteristics of one's
company and ultimately its strategic goals.

43
SWOT Analysis
> Strengths:
> What are your advantages?
> What do you do well?
> What do other people see as your strengths?
> Weaknesses:
> What could you improve?
> What do you do badly?
> What should you avoid?.

44
SWOT Analysis
> Opportunities:
> Where are the good opportunities facing you?
> What are the interesting trends you are aware of?
> Useful opportunities can come from such things as:
> Changes in technology and markets on both a broad and narrow
scale
> Changes in government policy related to your field
> Changes in social patterns, population profiles, lifestyle changes, etc.
> Local Events

45
SWOT Analysis
> Threats:
> What obstacles do you face?
> What is your competition doing?
> Are the required specifications for your job, products or services
changing?
> Is changing technology threatening your position?
> Do you have bad debt or cash-flow problems?

46
Product portfolio analysis
> In this process, new projects are evaluated, selected, and
prioritized. Existing projects may be accelerated, killed, or
de-prioritized and resources are allocated (or reallocated)
to the active projects

47
Goals of Portfolio Management
1. Value Maximization
2. Balance
3. Business Strategy Alignment
The three main approaches are: top-down (strategic buckets);
bottom-up (effective gate keeping and decision criteria) and top-down
and bottom-up (strategic check).
4. Pipeline Balance
5. Sufficiency

48
FMEA (Failure Modes and Effects Analysis),
> a structured approach to the analysis of route causes of product
failure
> the estimation of the severity of impact to the product
> the effectiveness of strategies for prevention.
The output of the analysis:
> the generation of action plans to prevent, detect or reduce the
impact of potential modes of product failure.

49
Concept Testing Tools
Idea
Generation
Idea
Screening
Concept
Testing Tools

50
Concept testing definition
> Process of using quantitative and qualitative methods to evaluate
consumer response to a product idea prior to the introduction of a
product to the market

51
Product development process

53
Problems Solved with Concept Tests
• Modifications and upgrades can reformulate and
add new life to existing products and
services. Again, identifying the optimal bundle
of features is a priority. Differentiating those
features that are "need to haves" vs. "nice to
haves” is critical in creating products or
services that are truly “New and
Improved” “New Release” and “Upgrade”
worthy
Product
Modificatio
n/Upgrade

54
•Many products and services offer upgrade or
migration paths. For the customer, it is a reflection
of a need for the next level of sophistication.
Understanding the key features and benefits is
critical in mapping consumer needs to the likelihood
of upgrading an existing product or adopting a new
technology.
Migration
path

55
• Identify which benefits are most important to customers
and which features are most likely to lead to the fulfillment
of that promise. Features can be categorized into those
which are "need to haves" vs. "nice to haves." Customer
need must be identified and prioritized for
product development and advertising.
New
Product
Concepts

56
•The most effective concept tests assess the use experience of a
specific product or service and determine how that experience
can be improved
Product
Usability-
Serviceability
•No one underestimates the importance of price expectations in
new product adoptions.
Pricing and
Incentives

57
What is a Concept Test?
> For Product Marketing, a product concept test is conducted when
the product is in the conceptual stage, where only the core concept
is defined, through a story board, sketches, graphics, or even a
product mock-up. The concept should be developed to the point that
it conveys the product attributes, the desired positioning and the
intended brand personality.
> The concept test is pre-design, and differs from a pre-test or test
market, which are conducted later in the development cycle - based
on a finalized product design. Pre-tests and test-markets are a final
check point at avoiding a major market error.

58
Types of “Concept” Tests
(I) Concept Screenings
(II) Concept Test-Positioning - Demand Analysis
(III) Pre-Market Concept Tests

59
Type I: Concept Screening
> Identifies concept ideas that are sufficiently promising to merit further
consideration and development
> Believability, Relevance
> Perceived Uniqueness, Value
> Trialability: Potential for trial
> Relative Attribute Performance Advantages
> Integration of multiple measures, leading to a more sensitive forecast.
> Provides trial potential based on multiple measures that go beyond
purchase intent.

60
Type II: Concept Test-Positioning - Demand
Analysis
Selected measures from the Type I Concept Test, plus measures that…
> Presents consumers with test concepts defined to include the
concept and competing brands in product consideration sets.
> Identify potential opportunity size for a chosen concept, including
preliminary sales estimates.
> Strengths/Weaknesses analysis based on attributes/benefits

61
Type III: Pre-Market tests
> Measures attractiveness of a new product or service before its launching
into the market by identifying its strengths and weaknesses.
> Allows to evaluate the level of agreement between the concept and the
specific brand attributes.
> Detects communication problems that may interfere with appropriate
comprehension by the target segment.
> Provides purchase intention indicators, with scenarios varying from most
optimistic to most conservative.
> Minimizes the risk of failure in the market by allowing product and
communications adjustments before launch.
> Possible with both qualitative and quantitative techniques.

62
Considerations in the Concept Test
 Core Idea vs. Positioning/Commercial Concept Statement
 New Brand vs. Old Brand vs. No Brand
 Concept statement: narrative, drawing, model?
 Respondent group: Lead users? Large users?
 Response situation: Where? How?
 Purchase Measure Decisions:
 Buyer Intent
 Frequency
 Price
 Product Diagnostics
 Attribute Diagnostics

63
How can concepts be tested?
> Focus Groups
> One-on-One Personal Interviews
> Mall Intercept
> Phone Interviews
> Postal Surveys
> Internet Surveys
> Hybrids (e.g., phone-mail-phone)
> Prototyping & Rapid prototyping
> Alpha, Beta & Gama Tests

64
Ask the right people...
time
The Chasm Sales
Early Market Mainstream Market
Technology
Enthusiasts
Visionaries Pragmatists Conservatives
See (1) Rogers (1995) Diffusion of Innovations
(2) Moore (1991) Crossing the Chasm
(3) www.chasmgroup.com

65
Ask the right questions...
> How important is the product “experience”?
Does the customer have to “touch & feel” the product to understand the
benefits offered?
“Simulate” the Experience

66
Concept Testing Process
> Define the purpose of the test
> Choose a survey population
> Choose a survey format
> Communicate the concept
> Measure customer response
> Interpret the results
> Reflect on the results and the process

67
Concept Testing Example:
Electric Scooter

68
Scooter Example
> Purpose of concept test:
What market to be in?
> Sample population:
College students who live 1-3 miles from campus
Factory transportation
> Survey format:
Face-to-face interviews

69
Communicating the Concept
> Verbal description
> Sketch
> Photograph or rendering
> Storyboard
> Video
> Simulation
> Interactive multimedia
> Physical appearance model
> Working prototype

78
Survey Format
> PART 1, Qualification
How far do you live from campus?
• <If not 1-3 miles, thank the customer and end interview.>
How do you currently get to campus from home?
How do you currently get around campus?
> PART 2, Product Description
<Present the concept description.>

79
Survey Format
> PART 3, Purchase Intent
If the product were priced according to your
expectations, how likely would you be to purchase the
scooter within the next year?
I would
definitely
not
purchase
the scooter.
I might
or might not
purchase
the scooter.
I would
definitely
purchase
the scooter.
I would
probably
not
purchase
the scooter.
I would
probably
purchase
the scooter.
“top
box”
“second
box”

80
Survey Format
> PART 4, Comments
What would you expect the price of the scooter to be?
What concerns do you have about the product concept?
Can you make any suggestions for improving the product
concept?
> Thank you.

81
Interpreting the Results:
Forecasting Sales
Q = N x A x P
> Q = sales (annual)
> N = number of (annual) purchases
> A = awareness x availability (fractions)
> P = probability of purchase (surveyed)
= Cdef x Fdef + Cprob x Fprob
“second
box”
“top box”

85
Summary of Concept Testing
> Advantages
relatively easy to get customer input
can be used as an early screen for new product ideas
> Limitations
not that helpful for the design and development of specific
product forms
not as reliable for discontinuous
innovations

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