Critical path method for introducing an industrial product

New product development continues to be a vital evil for most organizations. Considerable attention has been directed toward this function in the consumer goods field but relatively little research has been directed toward this critical task for producers of industrial goods. Industrial goods marketing managers seem to agree that error at the announcement/ introduction phase of the new product development process is responsible for the greatest number of new product failures. This article suggests use of the critical path method to ensure success at this crucial stage.     

Industrial product concept testing

Concept tests are widely used for consumer packaged goods products; however, their use has not been widely described for industrial products. Concept tests can be particularly useful in situations where creation of working prototype products is expensive, as with many industrial products. We report a concept testing procedure that incorporates many features unique to industrial marketing problems. The results of a limited pilot test of the method are given.     

The Effect of Concept Formulation on Concept Test Scores

While concept testing is a mainstay of the new product development process, there is little empirical evidence on the variation in consumer responses due to alternative concept formulations, particularly for those tests undertaken early in the product development process. The present study addressed this gap in the literature by using a split sample mail survey to compare stripped, embellished, and visual concept formulations for five heterogeneous product concepts. It was found that respondents' answers to attitude and purchase intention questions showed only minor variation with different formulations of the concept test statement. It also was found that the ranking of the concepts showed no substantial changes across the different formulations. Therefore, the type of concept statement formulation may not be that important, at least for early ranking tasks performed before experiential prototypes are available. Early concept tests therefore may be carried out using stripped concept statements. This may reduce costs, allowing organizations to undertake early concept testing more frequently across a wider range of products.     

Product Development for the BoP: Insights on Concept and Prototype Development from University‐Based Student Projects in India

In recent years, market‐based approaches have been proposed for the base of the pyramid (BoP). However, the literature offers little theoretical or practical guidelines for innovative product development for what are radically new market contexts for most businesses in advanced economies. Considering that product development is a fundamental activity in a market economy, and that much BoP consumer welfare potentially arises from innovative and affordable goods and services that can solve critical life needs, this is a substantial gap in knowledge. This paper attempts to address this gap by using an analysis of 13 year‐long university projects on BoP‐focused concept and prototype development conducted between 2006 and 2010. An inventory of research propositions is developed that identifies factors necessary for effective product development for BoP markets. Implications for new product development research and practice are discussed.     

Retailers' Adoption Decision of New Consumer Durables

In today's competitive environment, members of the market chain, such as retailers and suppliers, are becoming increasingly powerful. It has been established in the packaged goods area that the ability to get new products on the shelves' is an essential factor in the success of a new product. However, no research exists to date that relates variables investigated in packaged goods contexts to retailers' adoption decision of new consumer durables. The present study focused on the dimensions that influenced the new product adoption decision by 291 retailers of consumer durables by exploring the relative importance of 26 adoption criteria across seven product categories. The results largely supported previous findings but simultaneously extended that body of knowledge. For example, six dimensions characterized the new product adoption decision in our sample of Dutch retailers. We discuss implications of this study and provide directions for future research in this area.     

Key Factors Affecting Customer Evaluation of Discontinuous New Products

Common sense, as well as plenty of research, tells us that customer feedback can play an important role in successful product development efforts. By understanding the key factors that affect customers' evaluations of a new product, a project team improves its chances of making the right decisions throughout the design and development effort. However, customers typically lack a useful frame of reference for evaluating discontinuous, or really new products. In all likelihood, the key factors that affect customers' evaluations of radically new products differ from those for incremental innovations. Robert Veryzer describes the results of a study that examines the customer research efforts and findings of seven firms involved in the development of discontinuous new products. This study has the following objectives: gaining insight into the customer research inputs such companies use during the development of discontinuous new products, and exploring the critical factors that influence customers' evaluations of these really new products. The subjects in this study conducted relatively little formal customer research during the early stages of the NPD projects. The methods used for obtaining customer input during the concept generation and exploration stages were primarily qualitative. Although the companies in the study still did not focus consistently on customer issues during the technical development and design stage, the less discontinuous projects did use such traditional quantitative techniques as concept tests, clinics, and experiments during this phase of NPD. Throughout the projects in this study, the real opportunities for obtaining customer input came during the prototype testing and commercialization phases of the NPD projects. Several key factors appeared to influence customer evaluations of the products that were being developed by the NPD teams in this study. Lack of familiarity was manifested in customers' resistance to the new products in the study. Similarly, unfamiliarity with these new products often seemed to lead customers to focus on product attributes that development team members viewed as relatively unimportant. Other factors that affected customer evaluation of the products in this study included customer uncertainty about the benefits and risks associated with the product, customers' ability to understand how the product operates, perceptions of the product's safety, and product aesthetics.     

A Conjoint-based Product Designing Procedure Incorporating Price Competition

Conjoint analysis has become a major tool in the process of designing and concept testing consumer packaged goods and industrial products. In most applications, however, product concepts are tested against existing sets of competing brands without considering potential competitive reactions. Although many researchers have recognized the need for models to incorporate competitive reactions, few methodological developments have been published thus far. Instead of what-if analysis, which depends heavily on the managers' intuition about the competitors' reactions, S. Chan Choi and Wayne DeSarbo propose a game theoretic approach that models competing firms' reactions in price. This price reaction model is incorporated in the conjoint simulator for evaluating product concepts against competing brands. They illustrate the methodology using a commercial data set previously collected.     

Leveraging on systemic learning to manage the early phases of product innovation projects

A number of studies have pointed out the importance of the early phases of new product development projects. In fact, these phases (addressed in the literature with different names, such as pre-project activities, concept generation, product planning, idea generation, investigation, product definition) are concerned with a number of critical decisions that have great impact on the performance of product development. Any fault occurring in these early phases in understanding the market needs, in choosing the product architecture and technology and in defining the product specifications would eventually deteriorate the innovation process, since adjustments in later stages imply reworks that are costly and time consuming. Although the relevance of early project phases has been empirically verified in the literature, the mechanisms that allow these phases to be properly managed are still largely unexplored. This paper investigates the articulated and coherent set of methods, organizational mechanisms and behavioural patterns that successful companies adopt to manage concept generation and product planning. Inferences are based on a field research concerning 19 in-depth case studies of Italian and Swedish companies in the vehicles, helicopters and white goods industries. The paper supports findings of other studies concerning the importance of teamworking and communication. However, teamworking emerges as a necessary, but not a sufficient mechanism. Systemic learning from past experiences is the real keystone toward an effective management of the early phases of product development processes.     

Information Use in New Product Development: An Initial Exploratory Empirical Investigation in the Chemical Industry*

In‐depth interviews with product developers and product development software providers in a previous qualitative phase of research uncovered eight general types of information that are used across the new product development process (strategic, project management, financial, market and customer, wants and needs, technical, competitor, and regulatory information) and three general approaches to managing information in the process (project‐centric, functionally oriented, and fully distributed). This paper presents a second phase of research trying to understand the role that managing knowledge and information plays in developing new products and achieving NPD success. This research phase empirically investigates use of the eight types of information across three general phases of the NPD process in the chemical industry using 81 mail survey responses from marketing and new product development professionals. Respondents were asked to indicate the degree to which each of the eight information types was used in each of the following general phases of new product development: the fuzzy front end, development, and testing and launch. The respondents also provided information on new product development success, information management system sophistication, and innovation strategy. This research makes several contributions to new knowledge. First, this research suggests that information management in product development is even more complex than initially posited in Zahay et al. (2004) , with each of the eight types of information identified being used in each of the three phases of development. Unexpectedly, for all but one type of information use is higher in later stages of the NPD process, even though use of several kinds of information early in the project is associated with increased success. Thus, managers may need to encourage teams to start gathering information from outside the firm earlier than is currently the norm. Second, the results suggest that more sophisticated information management systems are indeed associated with increased use of various different types of information, as expected. Third, more sophisticated information management systems are more highly associated with success than less sophisticated information management systems. These results are important, as most new product development information management systems are limited in their ability to handle complex and non‐quantitative information such as customer wants and needs, as well as strategic, competitor, and regulatory information. However, being able to transmit information on these issues is associated with increased firm performance and project success from these data. Thus, firms need to figure out how to improve their ability to manage and use non‐quantitative information more effectively.     

Breakeven Time on New Product Launches: An Investigation of the Drivers and Impact on Firm Performance

The ability to break even faster on new product projects is becoming increasingly critical for firms in fast‐moving industries where continually reinvesting in research and development efforts matters greatly for survival. However, most research to date has focused on studying the impact of two primary innovation outcomes: sales and profits. The exclusive emphasis on sales and profit may be warranted for certain types of goods such as durable goods, but when examining the effects of new products in fast‐moving consumer goods or in the entrepreneurial sphere, where cash to cash matters greatly for survival, it is critical for both researchers and practitioners to not only consider the profits and sales generated by the new product but also the time to breakeven. This paper develops a theoretical framework using the competency‐based literature to examine the effects of innovation drivers (customer idea source, speed to market, product quality, and product newness) on breakeven time (BET) and project profits, and their subsequent impact on firm performance. A three‐stage least square estimation method was employed using longitudinal data on 945 new product development projects and launches in the morning (breakfast) foods category. The results clearly pinpoint that for successful product innovation, managers need to consider the time taken to breakeven on new product development. Specifically, the results demonstrate that speed to market and product quality shorten BET, but customer idea source extends BET. Second, the analysis also empirically demonstrates that BET is an equally effective predictor of firm performance as project profits in the short run, but significantly a stronger predictor of firm performance in the long run (t + four years), suggesting that BET should be regarded as a superior leading indicator of firm performance versus product profitability for fast‐moving consumer goods segment. This is an important finding that suggests firms that recoup their cash investments more quickly experience greater short‐term and significantly more long‐term success.     

Whose Crystal Ball to Choose? Individual Difference in the Generalizability of Concept Testing

The product development literature has identified several individual characteristics that could influence how subjects respond to new products in concept tests. Few of these characteristics have been thoroughly investigated. The purpose of this research is to examine whether a number of personality traits (1) do influence concept evaluation scores and (2) can be used to identify respondents who provide substantially higher‐quality data in concept testing and whether the answers to these questions change for major versus minor innovations. The data quality of the concept testing data is defined using the generalizability theory, which provides a decision‐specific G‐coefficient. Higher quality means a G‐coefficient closer to 1 for a particular managerial decision. A Web‐based study to concept test 10 appliance innovations on multiple occasions was conducted among 105 panelists from the Institute for Online Consumer Studies (IOCS). During the concept testing, respondents' innovativeness, change‐seeking tendency, and propensity to exert cognitive effort were also measured. The results showed that the respondent characteristics influence the mean evaluation of the concepts and the psychometric quality of the concept testing data: (1) there is a significant linear relationship between concept scores and all of the innovativeness scales and change‐seeking measures; (2) the effect of innovativeness on concept testing outcomes is even more substantial for major innovations than for minor innovations; (3) the study provides evidence that the quality of concept testing data provided by respondents varies substantially with their innovativeness, whereas the differences are more modest when scaling just minor innovations; (5) there are also strong effects on data quality for the Need to Evaluate scale used to capture cognitive effort characteristics; and (6) there is little effect of segmenting on social desirability on data quality. Managerially, the current results indicate that a product manager wanting to concept test a pool of appliance concepts can benefit from screening for the respondents who will provide higher‐quality concept testing data. For example, respondents who are high on domain‐specific innovativeness provide the highest‐quality concept testing data for both minor and major innovations. The effects of traits are stronger for major innovations, supporting the claim that subject selection is a more critical issue in concept testing of major innovations. Product managers can improve the quality of their concept testing data without an increase in cost by screening the subjects they use in concept testing.     

The Moderating Roles of Prior Experience and Behavioral Importance in the Predictive Validity of New Product Concept Testing

Concept testing has long been recognized as an important new product development (NPD) activity. As one of the widely used concept testing techniques, the method of intentions surveys relies on the purchase intentions of the potential buyers of new products and helps firms assess the viabilities of their new products before making major financial and nonfinancial commitments to their development. Despite the importance of intentions‐based new product concept testing and its widespread use by firms, the correspondence between initial behavioral intentions and subsequent purchase behaviors has been relatively low and heterogeneous, making it very difficult for firms to draw any useful conclusions from intentions surveys. Focusing on the predictive validity of intentions‐based new product concept testing and addressing several calls for future research to identify specific conditions making it more effective, this paper tests the moderating roles of prior experience and behavioral importance in the predictive validity of intentions‐based new product concept testing. It also tests whether people who state a positive intention and people who state a negative intention are equally accurate in their intentions. Finally, it tests the relative moderating roles of prior experience and behavioral importance in the intentions–behavior relationship. The results based on two longitudinal surveys first suggested that people's prior experience moderates the relationship between behavioral intentions and actual behaviors in a way that the relationship is stronger when prior experience is high as opposed to when it is low. Second, they showed that the level of importance that people attach to a behavior also moderates the relationship between behavioral intentions and actual behaviors such that the relationship is stronger when behavioral importance is high as opposed to when it is low. Third, they indicated that the behavioral intentions of people who state that they will not perform a behavior are more accurate than are those of people who state that they will perform it. Finally, the results suggested that the impact of behavioral importance is greater than that of prior experience. This study offers several implications. Most notably, the results can help firms better understand different factors affecting the predictive validity of intentions‐based new product concept testing and hence make more accurate new product decisions.     

The use of information technology tools in new product development phases: Analysis of effects on new product innovativeness, quality, and market performance

Extant research has largely ignored empirically examining how information technology (IT) affects new product effectiveness. Using the knowledge-based theory as a foundation, this study examines if, and how, particular IT tools used in the discovery, development, and commercialization phases of the new product development (NPD) process influence NPD effectiveness dimensions, namely, market performance, innovativeness, and quality of a new product. Based on data collected from NPD managers in the US and Canada, the findings indicate that specific IT tools contribute to various measures of new product effectiveness differently. Moreover, the results show the positive effect of these IT tools in different phases of the NPD process. This suggests that with regard to NPD, a decompositional approach that examines the role of IT within each phase of the NPD process is best. Based on these findings, the authors discuss theoretical and managerial implications of the study and suggest paths for future research. Managerially, some interesting results of our study are that decision support systems, file transfer protocols, and concept testing tools would significantly improve NPD effectiveness regardless of the phase they are used.     

Focus Groups and the Development of New Products by Technologically Driven Companies: Some Guidelines

Manufacturers of consumer goods frequently have used focus group discussions to learn about consumers' reactions to both new and existing products. Typically, results of these discussions have led to the exploration of new concepts and the identification of new opportunities. Edward McQuarrie and Shelby McIntyre have developed a series of practical guidelines to help industrial and technological companies use focus groups during the process of concept development and refinement. The group's discussion provides insight into how the product may be received by buyers in the marketplace.     

Configuring the after-sales service supply chain: A multiple case study

After-sales service in firms manufacturing and selling durable goods has a strategic relevance in its potential contribution to company profitability, customer retention and product development. This paper addresses the configuration of the after-sales supply chain. Three configuration choices are analysed: The degree of vertical integration, the degree of centralisation, and the decoupling of activities (i.e. how activities are decomposed and separated organisationally). Exploratory case study research was performed over seven companies belonging to durable consumer goods industries. The empirical findings show that configuration choices vary, suggesting that no “one best way” exists. Moreover, many firms develop multiple configurations. Choices are influenced by drivers, including the attractiveness of the after-sales business, the strategic priorities, the characteristics of the physical product and the services offered, and the configuration of the manufacturing and distribution supply chain. The paper discusses how these drivers may lead to consistent configuration choices, and how choices are related.     

Price and quality discrimination in durable goods monopoly with resale trading

We examine a durable goods monopolist’s optimal dynamic price and product quality strategy when buyers are rational and can trade used durables among themselves. In contrast to the usual credibility problem of the durable goods monopolist, intertemporal quality discrimination introduces a time-inconsistency problem of not raising prices against high-valuation consumers who delay purchase for quality upgrades. Resale trading ameliorates this time-inconsistency problem and allows the monopolist to effectively price discriminate, especially when the buyers are patient. The monopolist’s optimal price and quality offers in the new good market exhibit complex dynamic patterns, and new good prices can fall as product quality improves even in the absence of entry threats or learning economies. Initial quality distortions are followed by steady-state quality allocations that are always efficient for the high-valuation buyers, but sometimes also for the marginal consumer-types. Both the resale trading frequency and the price discount for secondhand goods are driven by the pace of strategic quality obsolescence in the new good market.     

Process implications of the use of the Internet in new product development: a conceptual analysis

New product development requires a long and detailed process with numerous activities such as product line planning, strategy development, concept generation and screening, business analysis, development, testing and validation, manufacturing development and commercialization. Furthermore, each of these activities has its own unique requirements, some requiring information collection from the market, whereas others requiring the collaboration of different people who are involved in the new product development activities. This paper investigates the Internet's role in these activities and develops research propositions. In addition, it discusses how the impact of the Internet might change based on different products and different organizational conditions.     

Research Opportunities Related to Consumer Response to Product Design*

This essay identifies five research opportunities that concern consumer response to product design. The first opportunity involves the need for more research on the interaction between form and function in consumer product evaluations. To this end, more knowledge about how product appearance characteristics influence consumer evaluation of both product form and function, and how this differs between countries and in time, is needed. The second research opportunity concerns the influence of consumer input in the front end of new product development on product success. Although the positive effect of market information use on product success is known, more actionable insight into which consumer information or input is beneficial in which circumstances is largely missing. The third opportunity for research concerns how to include subjective product attributes in concept testing. Getting valid feedback from consumers, which includes functional as well as emotional and experiential aspects, can improve proficiency in the early stages of product development. In this essay, several ways of approaching this research endeavor are highlighted. Next to enhancing market receipt and the assessment of product design, two topics that concern consumer response to product design from a more managerial viewpoint are identified. The first of these is strategic management of product styling. The importance and opportunities of visual design for brand management has gained more attention in the literature; different strategies and the cases in which they are beneficial are issues for further research. And finally, the design of product service systems (PSSs) provides opportunities for future research. Here, engendering perceptual unity between products and services and an explicit managing of meanings and feelings that PSSs should communicate are issues at play.     

Nature of the R&D/Marketing co-operation in the design of technologically advanced new industrial products

Many studies have consistently reported that success in industrial new product innovation is linked with the degree of interfacing between R&D and Marketing in the early stages of the product development process. However, very little evidence of such an interface has been reported in advanced technology firms and the relevant literature provides little empirical material on the matter.
Based on a pilot study of 23 new product projects in ten firms in the U.K. it is argued that, in many instances, firms are missing a fundamental issue in the R&D/Marketing cooperation. Too often, the interface is limited to the identification of general market need for a particular new product idea.
The paper emphasises the fact that the interface should provide the means for an efficient product design procedure between R&D and Marketing. This design link should, in turn, profit both the engineering design of the product and its future marketability. The paper also outlines the advantages and the problems inherent in the exercise and proposes a framework for implementation.