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Presentation to PDMA-LA. Creating New Product Portfolio Strategies and Screening New Products. Telephone: 858-404-0200: email: [email protected] Background Robert Hale – President. 13+ years as a marketing consultant and marketing executive related to strategy and branding

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Presentation to pdma la

Presentation to PDMA-LA

Creating New Product Portfolio Strategies and Screening New Products

Telephone: 858-404-0200: email: [email protected]


Background robert hale president

BackgroundRobert Hale – President

  • 13+ years as a marketing consultant and marketing executive related to strategy and branding

  • Five years experience with one of the firms that started business-to-business marketing consulting in the 70’s

  • Director of marketing for a high tech computer manufacturer and marketing company (Dauphin Technology). Achieved second largest market share.

  • MBA (Finance/Marketing) - University of Wisconsin, Madison

  • Masters in Electrical Engineering, University of Illinois

  • Post graduate in marketing and statistics, University of Texas

  • President, PDMA chapter of San Diego

  • Former FBI Special Agent


A portfolio strategy for new products

A Portfolio Strategy for New Products


New product process

New Product Process

Marketing

Strategy

Business

Analysis

Concept

Development

and Testing

Product

Development

Idea Generation and

Screening

Test

Marketing

New Product Strategy

Commercialization

Source: Kotler

Areas in red are topic of presentation


Product portfolio strategy key questions

Product Portfolio Strategy – Key Questions

  • Questions to help you develop a product portfolio strategy:

    • Do you have sufficient products within each cycle of the product lifecycle to maximize profits and sales

    • Do you have a good mix of new products: new to world products; product extensions; etc.

    • Do you have sufficient new product development efforts set aside for high value opportunities


Products can be developed to enhance revenue reduce costs and or improve positioning

Products Can be Developed to Enhance Revenue, Reduce Costs and/or Improve Positioning

PRODUCT DEVELOPMENT

GROWTH

PRODUCTIVITY

QUALTITY

BRAND

IMPROVEMENT

MAINTENANCE

  • Conformance

  • Special Situations

  • Regulatory

  • Environmental

  • Specifications

  • Quality of Design

    • Leveragble

    • Competitive

    • Advantage

  • Line Extensions

  • New Products

  • New Packages

  • Reduce Cost

    • Formulas

    • Packages

    • Manufacturing

    • Procedures


Presentation to pdma la

To Maintain Strong Profitability Need a high percent of New Products in Growth and Maintenance

Sales and

Profits ($)

Sales

Profits

Time

Product

Develop-

ment

Introduction

Growth

Maturity

Decline

Losses/

Investments ($)


Presentation to pdma la

A firm that is a market leader needs a higher percent of “new to market” products than other firms (at least 15%)

Product Introductions

from

HIGH

Product Extensions

700 Firms

11%

20%

“New to World Products”

Newness

to

26%

26%

Company

Adding Features

7%

11%

LOW

LOW

Newness to Market

HIGH

Source: Booz Allen


Extending life cycle new product development

Extending Life Cycle – New Product Development

Sales

Importance of maintaining a balance of products in the portfolio at different stages of the PLC –

The product portfolio – four products in the portfolio

(1)

(3)

Add new features

Improve value

(2)

Product Extensions; Reduce Costs

D

B

C

A

Time


Recent example medsystems otc products

Recent Example – Medsystems (OTC Products)

  • Phase I: Refine and Improve New Product

    • Added a way to prevent back wash for squeeze

    • Improved tip for comfort

    • Improve the formulation of the mix to be ingested

    • Other

  • Phase II: Identify new products to leverage brand

    • Logically related in customer’s mind (symptom, application, or formula)

    • Has synergies (for retail: distribution and shelf space are key)

    • Enables better target marketing to specifiers (e.g. ENTs)

  • Phase III: Improve Value (don’t lower price)

    • Add number of refill packets


Presentation to pdma la

Business Strength/Competitive Position

Strong Average Weak

High

Medium

Low

Long-Term Industry

Attractiveness

Identify Potential Areas to Invest for New Product Development (Ensure your R&D efforts are properly focused)

Before you invest in new products, you need to identify high value “areas” to focus for

new products, product extensions or modifications.

The GE Matrix: Example of High Value Products Identified

Investment Growth

Selective Investment

Divestment


Product screening

Product Screening


Product screening1

Product Screening

  • Screen in two phases, because the cost and time of in-depth analysis is significant.

    • Go or No Go (First Screening)

    • In-depth Analysis (Second Screening)

  • Develop Prototype and Test New Product (Third Screening (customer perspective), but not discussed here)


First new product screening

First New Product Screening

Global Strategic Fit Assessment

  • Strategic Objectives

    • Is it consistent with company’s strategic objectives

    • Is it consistent with Product Portfolio Strategy

      • If it is new to market, is it different enough

      • Need to be clear on why this initiative

  • Key Financial Objectives

    • Is the market opportunity large enough

      • Market Potential

      • Addressable Market (preferred Measurement)

      • Actual Market Size (mature product category)

  • Fit with Internal Capabilities

  • Technology Feasibility

  • Other Key Factors (to be discussed later)


A matrix to help classify product development initiatives

A matrix to help classify Product Development Initiatives

HIGH

(Gain Strategic

Advantage)

NET

PRESENT

VALUE

GIVEN

SUCCESS

LOW

(Maintain

Competitiveness)

HIGH

LOW

Terminology from Strategic

Decisions Group, Stanford Univ.

PROBABILITY OF SUCCESS


Second new product screening market analysis

Second New Product Screening (Market Analysis)

  • What are the financial returns of the product

  • What are the risk factors (use Porter Model):

    • Competitive Intensity

    • Vendors

    • Regulatory Issues

    • Suppliers

    • Other

  • Other potential Strengths, Weaknesses, Obstacles and Threats (e.g., competitors, technology, etc.)

    • Develop business cases of similar products/industries

  • Clearly define your value proposition (by target segment) otherwise you will not accurately define your competition or the competitive technologies.


Value propositions example for high ghz modulator

Value Propositions: Example for High GHz Modulator

  • Telecommunications: High GHz (40 GHz) capability, low power consumption and low system costs as compared to current and pipeline technology.

  • RF applications - Military: Only single output modulator technology that meets critical requirements of Military. Excellent gain and linearity with low noise as compared to current and pipeline technology.

  • Sensor Networks: Low cost, low power and good linearity.


Porter model basis for risk evaluation 2d screening

Porter Model: Basis for Risk Evaluation (2d Screening)

Need an in-depth SWOT analysis which takes the following into account:

  • Entrants/Barriers

  • Suppliers/Channels

  • Customers

  • Competitors

  • Substitutes

  • Trends


Examples of evaluation criteria that can be used

Examples of Evaluation Criteria that Can be Used

Source: Fuzzy Front End: Effective Methods, Tools and Techniques


Examples of evaluation criteria that can be used con t

Examples of Evaluation Criteria that Can be Used Con’t

Source: Fuzzy Front End: Effective Methods, Tools and Techniques


Financial analysis

Financial Analysis

A financial projection should be made with a sensitivity analysis based on the risks as identified in the porter model

  • Bass Diffusion Model is one of the best models

  • Price, margins and profitability and sustainability need to be identified (need to maintain a premium price for new products for period of time)

  • Develop forecasts of revenue and use ROI evaluations

    • Prefer NPV (since companies are evaluated on hitting specific target returns).

    • Look at incremental cash flows and identify impact from potential synergies (business potential)

    • Identify early and late adopters


  • Presentation to pdma la

    Identify Early and Late Adopters (Key Drivers of Adoption and Competition) Software Example: Command and Control Software for First Responders

    Source: Robert hale and Associates


    Background robert hale associates

    Background Robert Hale & Associates

    • We offer a variety of strategic marketing consulting and marketing research services that reflect the diversity of the marketplace, with a strong focus on B to B.

    • Some of the specialized products include:

      • Marketing Strategy and Planning

      • Market Assessment (e.g. sizing)

      • Channel Strategies

      • New Product Development

    • Established in 1999 (10+ employees)


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