New Product Management: In Search of Better Ideas

Article excerpt

NEW PRODUCT MANAGEMENT: IN SEARCH OF BETTER IDEAS

An effective marketing decision model can be generated by extending the new product idea decay curve, the familiar model of how companies develop new products. Use of this decay curve usually has been limited to describing basic phases of new product selection, from the initial screening of new product ideas through the commercialization of products, but the curve can be used to formulate a more comprehensive decision model. The extended form can be applied by those who are attempting to develop general criteria and decision parameters for each phase of the idea decay process. The purpose of this article is to propose a quantitative extension of the traditional model which can be used to make such managerial decisions about new products.

The proposed model could be helpful to firms of all sizes, no matter what their place in distribution channels. It could be applied with equal effectiveness by large and small manufacturers in processing their new product ideas, and it could be used by both wholesalers and retailers in choosing their manufacturing suppliers.

LITERATURE REVIEW

Much has been written about new product selection, or new product idea decay. The topic continues to receive attention from practitioners and academicians alike. Some authors discuss a number of phases of the product selection process, while others focus on a single stage.

An early work by Booz, Allen, and Hamilton breaks the process down into five phases: screening, business analysis, development, testing, and commercialization. A recent adaptation of this sequence includes screening, idea evaluation, development, and commercialization. Other analyses delineate only three major phases: (1) idea conception, germination and evaluation, (2) development, and (3) commercialization.

Many writers have called for improved means of selecting and developing products. For example, Muncaster expresses concern over the effectiveness of screening and other phases of the idea decay process. Murphy suggests that additional planning, coordination, and communications are needed, and others suggest that a more rigorously quantitative approach is needed. All of these concerns have been considered in the development of quantitative extensions for the graphic selection model proposed herein.

TRADITIONAL SELECTION PROCESS

The concept of new product idea decay is used to describe the process by which new product ideas are sorted, selected, and transformed into tangible products which can be profitable in the marketplace. An early model shows this process as consisting of several phases. First, ideas for new products are gathered from suggestion boxes, new product groups, patent advertisements, and other sources. Then a screening phase is begun, during which ideas which do not appear compatible with a company's production facilities, marketing capabilities, or overall managerial philosophy are rejected.

Screening is followed by business analysis. Ideas which have not been rejected are evaluated according to two primary criteria: feasibility of production and marketability. Acceptable ideas generally represent products which can be produced with a company's existing physical plant and personnel skills. For example, an acceptable idea for an auto manufacturer might be associated with a new recreational vehicle or other utility vehicle which involves the design and assembly of engines, frames, and tires in a manner parallel to that employed in the production of its customary product lines. However, ideas for computers or other types of mechanical equipment requiring different materials, technology, or expertise would probably be rejected.

Products which are feasible to produce must also pass a marketability test in the business analysis phase. If a product is to be acceptable, it must have market and profit potential. …