New Product Development Practices of Industrial Marketers*

William L. Moore personally interviewed a number of senior managers employed in 25 large industrial marketing companies about new product development practices. These managers are familiar with all phases of the development of typical new products, from the time ideas are generated until market introduction. Most respondents were either division heads or those directly responsible for a division's new product development program. In agreement with a previous study, the use of formal new product strategies and sophisticated quantitative marketing research techniques was found to be lacking in most companies. However, many other elements of the new product development process were carried out more completely than previously reported. For example, respondents reflected sensitivity to informal understanding of new product strategies. A number of the less sophisticated, small scale qualitative research methods actually used may be more appropriate than more sophisticated methods. While several research areas are suggested, the general assessment of the new product practices of these firms is more positive than that of Feldman and Page.     

Marketing–Industrial Design Integration in New Product Development: The Case of China*

Despite the acknowledgement of functional integration as an important driver of new product development (NPD) success and the growing recognition of the significance of industrial design (ID), the integration between industrial design and other functional units in NPD has been rarely researched. In this article, we examine the marketing and ID integration in NPD in the context of China. Mainly based on Cooper's (1994) stage‐gate phases of NPD process and Gupta, Raj, and Wilemon's (1985) categorization of NPD activities, we develop a conceptual framework that identifies 29 areas that might require integration or where integration might occur between marketing and ID. Specifically, we investigate and compare the current and the ideal integration between marketing and ID perceived by the two functions. An analysis of data from 113 companies reveals that the current level of integration fell short of the ideal level of integration in all the phases of NPD. Both managers believed in the descending trend of integration along the stage‐gate NPD phases and were dissatisfied with the current level of integration in all the NPD phases. Except for a few areas of agreement, marketing and ID managers showed significant differences with each other in their perceptions of the current and the ideal integration in most of the 29 areas. Despite the disagreements however, the two functions agreed with each other on the most important areas that require integration and achieved the highest level of marketing–ID integration. These findings suggest that firms should improve the marketing–ID integration in all the NPD phases and that management could improve the effectiveness of marketing–ID integration by prioritizing and focusing on the most important areas. Research and managerial implications, limitations, and future research directions are presented in the paper.     

Industrial New Product Launch Strategies and Product Development Performance

Just as reporters must answer a few fundamental questions in every story they write, decision-makers in the new product development (NPD) process must address five key issues: what to launch, where to launch, when to launch, why to launch, and how to launch. These decisions involve significant commitments of time, money, and resources. They also go a long way toward determining the success or failure of any new product. Deeper insight into the tradeoffs these decisions involve may help to increase the likelihood of success for product launch efforts. Erik Jan Hultink, Abbie Griffin, Susan Hart, and Henry Robben present the results of a study that examines the interplay between these product launch decisions and NPD performance. Noting that previous launch studies focus primarily on the tactical decisions (that is, how to launch) rather than on the strategic decisions (what, where, when, and why to launch), they explore not only which decisions are important to success, but also the associations between the two sets of decisions. Because the strategic launch decisions made early in the NPD process affect the tactical decisions made later in the process, their study emphasizes the importance of launch consistency—that is, the alignment of the strategic and tactical decisions made throughout the process. The survey respondents—managers from marketing, product development, or general management in U.K. firms—provided information about 221 industrial new products launched during the previous five years. The responses identify associations between various sets of strategic and tactical decisions. That is, the responses suggest that the strategic decisions managers make regarding product innovativeness, market targeting, the number of competitors, and whether the product is marketing- or technology-driven are associated with subsequent tactical decisions regarding branding, distribution expenditure and intensity, and pricing. The study also suggests that different sets of launch decisions have differing effects on performance of industrial new products. In this study, the greatest success was enjoyed by a small group of respondents categorized as Niche Innovators. Their launch strategy involves a niche focus, targeting innovative products into markets with few competitors. Tactical decisions made by this group include exclusive distribution, a skimming pricing strategy, and a broad product assortment.     

Customer Empowerment in New Product Development*

The traditional new product development (NPD) model, in which companies are exclusively responsible for coming up with new product ideas and for deciding which products should ultimately be marketed, is increasingly being challenged by innovation management academics and practitioners alike. In particular, many have advocated the idea of democratizing innovation by empowering customers to take a much more active stake in corporate NPD. This has become feasible because the Internet now allows companies to build strong online communities through which they can listen to and integrate thousands of customers from all over the world. Extant research has provided strong arguments that indicate that customer empowerment in NPD enables firms to develop better products and at the same time to reduce costs and risks if customers in a given domain are willing and able to deliver valuable input. Customer empowerment, however, not only affects the firm's internal NPD processes as reflected in the products that are ultimately marketed. Instead, it might also affect the way companies are perceived in the marketplace (by customers who observe that companies foster customer empowerment in NPD). This paper provides the first empirical study to explore how customers from the “periphery” (i.e., the mass that does not participate) perceive customer empowerment strategies. Customer empowerment in NPD is conceptualized along two basic dimensions: (1) customer empowerment to create (ideas for) new product designs; and (2) customer empowerment to select the product designs to be produced. Therefore, customers may be empowered to submit (ideas for) new products (empowerment to create) or (2) to “vote” on which products should ultimately be marketed (empowerment to select). In the course of two experimental studies using three different product categories (T‐shirts, furniture, and bicycles) both customer empowerment dimensions (as well as its interaction) are found to lead to (1) increased levels of perceived customer orientation, (2) more favorable corporate attitudes, (3) and stronger behavioral intentions. These findings will be very useful to researchers and managers interested in understanding the enduring consequences of customer empowerment in NPD. Most importantly, the results suggest that empowerment strategies might be used to improve a firm's corporate associations as perceived by the broad mass of (potential) customers. In particular, marketers might foster customer empowerment as an effective means of enhancing perceived customer orientation. Customers will in turn provide rewards, as they will form more favorable corporate attitudes and will be more likely to choose the products of empowering as opposed to nonempowering companies, ceteris paribus. Customer empowerment thus constitutes a promising positioning strategy that managers can pursue to create a competitive advantage in the marketplace.     

The Different Roles of Product Appearance in Consumer Choice*

Product design has been recognized as an opportunity for differential advantage in the market place. The appearance of a product influences consumer product choice in several ways. To help product development managers in optimizing the appearance of products, the present study identified the different ways in which the appearance of a product plays a role in consumer product evaluation and, hence, choice. In addition, the implications for product design of each role are listed, and managerial recommendations for optimizing the appearance of products are given. Based on a literature review, six different roles of product appearance for consumers are identified: (1) communication of aesthetic, (2) symbolic, (3) functional, and (4) ergonomic information; (5) attention drawing; and (6) categorization. A product's appearance can have aesthetic and symbolic value for consumers, can communicate functional characteristics and give a quality impression (functional value), and can communicate ease of use (ergonomic value). In addition, it can draw attention and can influence the ease of categorization of the product. In a large qualitative study (N=142) it was tested whether these roles indeed exist in consumers' process of product choice and whether they are sufficient to describe the way in which product appearance plays a role for consumers. In addition, qualitative insight into these roles was gained. After making a choice between two answering machines, subjects were interviewed about the reasons for their choice and the product information they used to form the judgments underlying their choice reasons. The six appearance roles indeed proved relevant for consumers and were sufficient to describe the influence of product appearance on product choice. The number of ways in which appearance played a role for consumers differed between 0 and 5; most subjects mentioned two different ways in which appearance influenced their product choice. The aesthetic and symbolic roles were mentioned most often. The preferred shape (e.g., rounded or angular), color, or size were found to differ depending on the way in which product appearance played a role for subjects. For example, bright colors may be valued from an aesthetic point of view but may diminish the impression of quality (i.e., functional value). This makes it difficult to optimize all roles and illustrates that the product value that is most important for consumers when purchasing a specific kind of product should be the starting point in the design of the product appearance. Furthermore, the influence of shape, color, or size on a certain kind of product value—aesthetic, symbolic, ergonomic, or functional—differed between subjects. One person may like a rounded shape, while another may prefer a rectangular shape. This means that the value of guidelines indicating how the perception of a specific kind of product value can be engendered by means of shape, color, and size is limited. This is especially the case for aesthetic and symbolic product value, which are very personal. Therefore it is recommended to test the performance of the appearance of a newly developed product on these six roles with the target group of consumers. Insight into the different ways in which appearance characteristics, such as form and color, may influence consumer choice will increase managers' awareness about how to use product appearance as a marketing tool. In addition, distinguishing these six appearance roles will help product development managers to optimize the product appearance better to market needs, as the roles have different and sometimes even conflicting implications for the design of the product appearance.     

Perspective: The Emergence of Product Design as a Field of Marketing Inquiry*

The authors present findings from an analysis of articles related to product design published in eight leading journals important to marketing thought. Based on this analysis, which covers the fourteen‐year period 1995–2008, the authors propose a conceptual model of product design and offer definitions for (a) product design and (b) the product design process. In addition, the authors provide insights into the nature of product design research during this time period, including analyses of publication trends and the relationship of product design research to related marketing topics. The essay concludes with suggestions for future research on product design.     

Trust Formation in Collaborative New Product Development*

This research examines antecedents of trust formation in new product development partnerships and the effect of trust on performance. Trust is modeled as an outcome of communication behavior, shared problem‐solving, perceived fairness, the existence of conflicts during the development project, and partner egoism. The hypotheses are tested with data on 44 product development partnerships representing the perspective of the manufacturer. The findings suggest that communication behavior and fairness are positive contributors to trust. In contrast, conflicts during product development and perceived egoism of the partner appear to have a detrimental effect. High levels of trust were found to create the conditions for successful outcomes. A higher level of trust clearly differentiates between high‐ and low‐performing collaborative relationships in new product development. Trust also was found to be a powerful mediator, particularly as it relates to mitigating conflicts during such partnerships.     

The Roles of Sustainability Orientation and Market Knowledge Competence in New Product Development Success

Firms’ sustainability orientation (SO) is widely understood as a strategic resource, which can lead to competitive advantage and superior (financial) performance. While recent empirical evidence suggests a moderate and positive relationship between SO and financial performance on a corporate level, little is understood about the influence of SO on new product development (NPD) success. Building on the natural‐resource‐based view (NRBV) of the firm, we hypothesize that firms’ SO positively influences NPD success, because of efficiency gains and differentiation advantages. However, scholars have also argued that the win–win paradigm postulated by NRBV might not always hold because NPD managers might find it difficult to balance sustainability objectives with the needs of their customer and the competitive dynamics in their markets. It is, therefore, proposed that market knowledge competence (MKC) is an important capability, which helps firms to balance social and ecological objectives with economic goals such as profitability and market share. Using data from 343 international firms from 24 countries that was collected by the Product Development and Management Association, structural equation modeling results suggest that (1) SO positively influences NPD and that (2) this relationship is partially mediated by firms’ market knowledge capabilities. The findings suggest that strategic‐level SO and MKC are complementary in that they help in balancing trade‐offs between sustainaility objectives and profitability goals. In this way, the study contributes to a better understanding of how critical NPD practices can help managers to translate firms’ SO into NPD success. The article concludes by highlighting implications for product innovation managers.     

Linking Marketing and Engineering Product Design Decisions via Analytical Target Cascading*

Firms design products that appeal to consumers and are feasible to produce. The resulting marketing and engineering design goals are driven by consumer preferences and engineering capabilities, two issues that conveniently are addressed in isolation from one another. This convenient isolation, however, typically will not result in optimal product decisions when the two problems are interrelated. A method new to the marketing community, analytical target cascading (ATC), is adopted here to explore such interrelationships and to formalize the process of coordinating marketing and engineering design problems in a way that is proven to yield the joint optimal solution. The ATC model is built atop well‐established marketing methodologies, such as conjoint, discrete choice modeling and demand forecasting. The method is demonstrated in the design of dial‐readout household scales, using real conjoint choice data and a parametric engineering product design model. Results indicate that the most profitable achievable product can fall short of predictions based on marketing alone but well ahead of what engineering may produce based on original marketing target specifications. A number of extensions can be accomplished readily using techniques from the extant marketing and design optimization literature.     

Industrial Companies' Evaluation Criteria in New Product Development Gates

This article presents the results of a study on the evaluation criteria that companies use at several gates in the NPD process. The findings from 166 managers suggest that companies use different criteria at different NPD evaluation gates. While such criteria as technical feasibility, intuition and market potential are stressed in the early‐screening gates of the NPD process, a focus on product performance, quality, and staying within the development budget are considered of paramount importance after the product has been developed. During and after commercialization, customer acceptance and satisfaction and unit sales are primary considerations. In addition, based on the performance dimensions developed by Griffin and Page (1993), we derive patterns of use of various evaluative dimensions at the NPD gates. Our results show that while the market acceptance dimension permeates evaluation at all the gates in the NPD process, the financial dimension is especially important during the business analysis gate and after‐market launch. The product performance dimension figures strongly in the product and market testing gates. The importance of our additional set of criteria (i.e., product uniqueness, market potential, market chance, technical feasibility, and intuition) decreases as the NPD process unfolds. Overall the above pattern of dimensions' usage holds true for both countries in which we collected our data, and across firms of different sizes, holding different market share positions, with different NPD drivers, following different innovation strategies, and developing different types of new products. The results also are stable for respondents that differ in terms of expertise and functional background. The results of this study provide useful guidelines for project selection and evaluation purposes and therefore can be helpful for effective investment decision‐making at gate‐meetings and for project portfolio management. We elaborate on these guidelines for product developers and marketers wishing to employ evaluation criteria in their NPD gates, and we discuss directions for further research.     

The Fuzzy Front End of New Product Development for Discontinuous Innovations: A Theoretical Model

The fuzzy front end of the new product development (NPD) process, the time and activity prior to an organization's first screen of a new product idea, is the root of success for firms involved with discontinuous new product innovation. Yet understanding the fuzzy front‐end process has been a challenge for academics and organizations alike. While approaches to handling the fuzzy front end have been suggested in the literature, these tend to be relevant largely for incremental new product situations where organizations are aware of and are involved in the NPD process from the project's beginning. For incremental new products, structured problems or opportunities typically are laid out at the organizational level and are directed to individuals for information gathering. In the case of discontinuous innovations, however, we propose that the process works in the opposite direction—that is, that the timing and likelihood of organizational‐level involvement is more likely to be at the discretion of individuals. Such individuals perform a boundary‐spanning function by identifying and by understanding emerging patterns in the environment, with little or no direction from the organization. Often, these same individuals also act as gatekeepers by deciding on the value to the organization of externally derived information, as well as whether such information will be shared. Consequently for discontinuous innovations, information search and related problems/opportunities are unstructured and are at the individual level during the fuzzy front end. As such, the direction of initial decisions about new environmental information tends to be inward, toward the corporate decision‐making level, rather than the other way around. In order to cope with the special and complex nature of decisions made at the fuzzy front end of NPD for discontinuous innovations, this process is detailed as a series of decisions occurring over three proposed interfaces: boundary, gatekeeping, and project. The difference between each interface lies in the nature of the decisions made: At the boundary and gatekeeping interfaces, the primary impetus is individual‐level decision‐making; at the project interface, decisions occur at the organizational level. By articulating these processes in the form of a model, we achieve two objectives: (1) We outline a more detailed and comprehensive approach to understanding the nature of the front‐end decision making process for discontinuous innovations; and (2) we detail specific propositions for future research on each stage of the process.     

Exploring New Product Development Project Review Practices*

Most organizations use new product development (NPD) processes that consist of activities and review points. Activities basically solve problems and gather and produce information about the viability of successfully completing the project. Interspersed between the development activities are review points where project information is reviewed and a decision is made to either go on to the next stage of the process, stop it prior to completion, or hold it until more information is gathered and a better decision can be made. The review points are for controlling risk, prioritizing projects, and allocating resources, and the review team typically is cross‐disciplinary, comprising senior managers from marketing, finance, research and development (R&D), or manufacturing. Over the past four decades, research has greatly advanced knowledge with respect to NPD activities; however, much less is known about review practices. For this reason, the present paper reports findings of a study on NPD project review practices from 425 Product Development & Management Association (PDMA) members. The focus is on three decision points in the NPD process common across organizations (i.e., initial screen, prior to development and testing, and prior to commercialization). In this paper, the number of (1) review points used, (2) review criteria, (3) decision makers on review committees and the proficiency with which various evaluation criteria are used are compared across incremental and radical projects and across functional areas (i.e., marketing, technical, financial). Furthermore, the associations between these NPD review practices and new product performance are examined. Selected results show that more review points are used for radical NPD projects than incremental ones, and this is related to a relatively lower rate of survival for radical projects. The findings also show that the number of criteria used to evaluate NPD projects increases as NPD projects progress and that the number of review team members grows over the stages, too. Surprisingly, the results reveal that more criteria are used to evaluate incremental NPD projects than radical ones. As expected, managers appear to more proficiently use evaluation criteria when making project continuation/termination decisions for incremental projects; they use these criteria less proficiently during the development of radical projects, precisely when proficiency is most critical. At each review point, technical criteria were found to be the most frequently used type for incremental projects, and financial criteria were the most commonly used type for radical ones. Importantly, only review proficiency is significantly associated with performance; the number of review points, review team size, and number of review criteria are not associated with new product performance. Furthermore, only the coefficient for proficiently using marketing criteria was significantly related to new product program performance; the proficiency of using financial and technical information has no association with performance. Finally, across the three focal review points of the NPD process in this study, only the coefficient for proficiency at the first review point, (i.e., the initial screen) is significantly greater than zero. The results are discussed with respect to research and managerial practice, and future research directions are offered.     

The Impact of Product Innovativeness on the Link between Development Speed and New Product Profitability*

A review of the literature reveals that the relationship between development speed and new product profitability is not as strong and straightforward as conventional wisdom suggests. A number of studies show positive results, others show mixed results, and some present no evidence of a relationship. In other words, the valence of the link between development speed and new product profitability is unclear at this time. Therefore, this study investigates whether or not speeding new products to market has positive or negative effects on new product profitability. Prior research shows that product innovativeness influences both development speed and new product profitability. This raises the question of whether increasing speed is equally successful in improving profitability across new products that differ in their degree of innovativeness. Therefore, this study also investigates the moderating effect of product innovativeness on the relationship between development speed and new product profitability. The results from a survey‐based study of 233 manufacturers of industrial products in the Netherlands reveal an inverted U‐shaped relationship between development speed and new product profitability. The findings also show that the optimal point is different for two new product types—product improvements and line additions—that vary in their innovativeness. These results provide an onset for the development of a decision tool that helps managers to determine how much to spend on accelerating the development of individual new products and how they should allocate that spending across products in their new product portfolio.     

Characterizing the Role of Design in New Product Development: An Empirically Derived Taxonomy*

This article empirically explores the nature of the role of design in the new product development process. The investigation adopts a multiple case study methodology. Data were collected through a six‐month interview program carried out with mid‐size to large U.K. manufacturing companies. The researchers articulate the scope and detailed nature of actions undertaken by design across all phases of the new product development process. Design functional, integration, and leadership actions are unraveled from the data. A taxonomy characterizing three roles for design in new product development is developed and explained. In the first role, design is explored as a functional specialism. The second categorization develops the role of design as part of a multifunctional team. The third role depicts the designer as process leader. Detailed actions and skills associated with each role are discussed and illustrated. Contextual factors explaining and influencing each design role are unraveled. These are articulated as speed of development process, innovativeness of the product development effort, and use of external design agencies. The implications of these findings for the development of design skills and capabilities are discussed in terms of recruitment, training, and educational policies.     

Marketing/R&D Interaction in New Product Development: Implications for New Product Success Rates

A growing body of literature has evolved which deals with the interaction between marketing and R&D in new product development. Much of this research, unfortunately, fails to associate various variables with new product success levels. Thus, it cannot suggest consensus guidelines for marketing's involvement to increase the performance levels of new products in the market place. Richard Hise, Larry O'Neal, A. Parasuraman and James McNeal report results of their analysis of the new product development procedures of 252 large manufacturing companies. The authors conclude that collaborative efforts between marketing and R&D during the actual designing of new products appear to be a key factor in explaining the success levels of new products, that management effort should focus on the design stage of the new product development process rather than on the earlier and later stages and that R&D's contributions cannot be ignored while decisions are made about marketing's role in developing new consumer and industrial products.     

Applying Industrial Design and Cost Engineering to New Product Development in Early‐Stage Firms

For early‐stage firms, successful commercialization of each new product is critically important, given the shortage of financial resources, the limited product portfolio, and small staffs typical of such firms. This paper investigates two key contributing factors for new product success in entrepreneurial firms: designing products that are appealing to target users in both form and function and designing products that can be manufactured at an attractive margin so that the new enterprise can generate much needed positive cash flow. These two practices—industrial design and cost engineering—are well studied in the context of larger, established corporations but have not been explored in the context of new ventures. This study focuses on the intensity of individual and combined adoption of design and cost engineering as measured by product development efficiency and effectiveness. The study was conducted on a homogeneous sample of early‐stage firms that develop physical, assembled products where design plays a role. The data collection focused only on the first product developed by each firm respectively. The results show that when implemented together, industrial design and cost engineering enhance both the effectiveness and efficiency of new product development in early‐stage firms, to greater effect than each does individually. Intensive individual adoption of practices had a negative impact on development efficiency measures such as development cost and duration. Only cost engineering individually had a beneficial impact on development effectiveness as measured by product margins. When combined, these two practices had a beneficial impact on both development duration and cost for the company's first commercial product, thereby reducing time‐to‐market and precious cash expenditures while maximizing project breakeven timing. The most successful firms in the study achieved a balance between creative innovation and cost discipline in the NPD process with third‐party design and manufacturing resources. It was found that integrating third‐party design firms into the development process can challenge, simplify, and add additional creative resources to the core entrepreneurial team, maximizing the ability to catalyze beneficial tension between creativity and cost discipline.     

Design of Robust New Products under Variability: Marketing Meets Design*

In designing consumer durables such as appliances and power tools, it is important to account for variations in product performance across different usage situations and conditions. Since the specific usage of the product and the usage conditions can vary, the resultant variations in product performance also can impact consumer preferences for the product. Therefore, any new product that is designed should be robust to these variations—both in product performances and consumer preferences. This article refers to a robust product design as a design that has (1) the best possible (engineering and market) performance under the worst‐case variations and (2) the least possible sensitivity in its performance under the variations. Achieving these robustness criteria, however, implies consideration of a large number of design factors across multiple functions. This article's objectives are (1) to provide a tutorial on how variations in product performance and consumer preferences can be incorporated in the generation and comparison of design alternatives and (2) to apply a multi‐objective genetic algorithm (MOGA) that incorporates multifunction criteria in order to identify better designs while incorporating the robustness criteria in the selection process. Since the robustness criteria is based on variations in engineering performance as well as consumer preferences, the identified designs are robust and optimal from different functional perspectives, a significant advantage over extant approaches that do not consider robustness issues from multifunction perspectives. This study's approach is particularly useful for product managers and product development teams, who are charged with developing prototypes. They may find the approach helpful for obtaining customers' buy‐in as well as internal buy‐in early on in the product development cycle and thereby for reducing the cost and time involved in developing prototypes. This study's approach and its usefulness are illustrated using a case‐study application of prototype development for a handheld power tool.     

New Industrial Product Design and Evaluation Using Multiattribute Value Analysis

Increasingly, the design of successful new industrial products is related to careful market assessment. Traditionally, managers and researchers have studied their markets by examining a small number of product attributes that are common across a range of informed respondents. In many ways, these techniques fail to meet the challenges posed by today's often heterogeneous, highly competitive, fast moving industrial markets. Ralph Keeney and Gary Lilien introduce us to a technique they call multiattribute value analysis, both describing the procedure and describing a comprehensive example. Their approach introduces considerable flexibility to the process of market assessment. Technically, it permits the evaluation of many more attributes, value tradeoffs, and synergies among attributes than do more traditional methods. In addition, it permits nonlinear evaluation functions that may be idiosyncratic to the individual. Practically, their approach, illustrated with a detailed case application, is shown to have significant potential for aiding product design decisions.