《Contemporary Management》chpt19 The Management of New Product

19 The Management of New Product Development, and Entrepreneurship CThe McGraw-Hill Companies, Inc, 2000

19-1 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 The Management of New Product Development, and Entrepreneurship 19

Innovation, Technological Change an(5-2 三 Competition Technology refers to the skills, knowledge, experience, body of scientific knowledge, tools, computers, machines used in the design and production of goods and services. Ouantum technological change: fundamental shift in technology that results in innovation. o The Internet and genetic engineering are examples Incremental technological change. refinements of current technology over time o Most firms seek incremental product innovations which allows constant, but small, improvements win/MeGraw-Hill CThe McGraw-Hill Companies, Inc, 2000

19-2 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Innovation, Technological Change and Competition Technology refers to the skills, knowledge, experience, body of scientific knowledge, tools, computers, machines used in the design and production of goods and services. Quantum technological change: fundamental shift in technology that results in innovation. ◆The Internet and genetic engineering are examples. ◼ Incremental technological change: refinements of current technology over time. ◆Most firms seek incremental product innovations which allows constant, but small, improvements

19-3 Effect of Technological Change o Many products undergo constant change and improvement Electronic products provide a great example This change can be a threat to firms that are slow to improve but provides benefits to firms that adjust o Technological change is both a threat and an opportunity a Smith Corona typewriter company missed out on word processing and is now out of business a Microsoft was quick to embrace graphic user interface programs and now is dominant in the software business " win/MeGraw-HHill CThe McGraw-Hill Companies, Inc, 2000

19-3 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Effect of Technological Change ⚫ Many products undergo constant change and improvement. ◆Electronic products provide a great example. ◼ This change can be a threat to firms that are slow to improve but provides benefits to firms that adjust. ◆Technological change is both a threat and an opportunity. ◼ Smith Corona typewriter company missed out on word processing and is now out of business. ◼ Microsoft was quick to embrace graphic user interface programs and now is dominant in the software business

19-4 Product Life Cycles Refers to demand changes for a product over time o Embryonic stage: product is not widely accepted and has minimal demand o Growth stage: many consumers seek out the product and buy it for the first time Mature stage: demand peaks since most buyers already have the product and only buy replacements o Decline stage: demand falls off perhaps since the product Is obsolete " win/MeGraw-HHill CThe McGraw-Hill Companies, Inc, 2000

19-4 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Product Life Cycles ◼ Refers to demand changes for a product over time. ◆Embryonic stage: product is not widely accepted and has minimal demand. ◆Growth stage: many consumers seek out the product and buy it for the first time. ◆Mature stage: demand peaks since most buyers already have the product and only buy replacements. ◆Decline stage: demand falls off perhaps since the product is obsolete

19-5 Product Life Cycles Figure 19.1 Demand Embryonic Growth Mature D ecline Stage Stage Stage Stage T Ime " win/MeGraw-HHill CThe McGraw-Hill Companies, Inc, 2000

19-5 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Product Life Cycles Embryonic Stage Growth Stage Mature Stage Decline Stage Time Demand Figure 19.1

三 Relationship between Technological Change and Life cycle duration Figure 19.2 Rate of Technological Change Length of Product Life cycles " win/MeGraw-HHill CThe McGraw-Hill Companies, Inc, 2000

19-6 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Relationship Between Technological Change and Life Cycle Duration Length of Product Life Cycles Rate of Technological Change Figure 19.2

19-7 Rate of Technological Change The rate of change determines the length of the product life cycle demand curve o The computer industry life cycle is about 1 8 months: in the steel industry it is many years Fads and fashions also impact the life cycle duration Style changes alter the demand for goods Usually, goods subject to fads and fashion changes will experience shorter life cycles In general, life cycles are getting shorter, forcing managers to be more responsive to customers " win/MeGraw-HHill CThe McGraw-Hill Companies, Inc, 2000

19-7 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Rate of Technological Change ◼ The rate of change determines the length of the product life cycle demand curve. ◆The computer industry, life cycle is about 18 months; in the steel industry, it is many years. ◼ Fads and fashions also impact the life cycle duration. ◆Style changes alter the demand for goods. ◆Usually, goods subject to fads and fashion changes will experience shorter life cycles. ◼ In general, life cycles are getting shorter, forcing managers to be more responsive to customers

三 19-8 The Four goals of New product Development Figure 19. 3 Reduce product ycle lime New Product Maximize Development Maximize Fit with Product Quality Customer needs Goals Maximize Manufacturability " win/MeGraw-HHill CThe McGraw-Hill Companies, Inc, 2000

19-8 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 The Four Goals of New Product Development Reduce Product Cycle Time Maximize Fit with Customer needs Maximize Manufacturability Maximize Product Quality New Product Development Goals Figure 19.3

三 19-9 The Four Goals of New Product Development 1)Reduce product Cycle Time: reduce time needed to develop a product from conception to market introduction early to market products can command premium prices and will have a longer life cycle a Can add new features before competitors 2)Maximize fit with Customer Needs: most products fail because they were not designed to fit customer needs Ensure customers want the product features before adding them to the product " win/MeGraw-HHill CThe McGraw-Hill Companies, Inc, 2000

19-9 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 The Four Goals of New Product Development 1) Reduce Product Cycle Time: reduce time needed to develop a product from conception to market introduction. ◼ Early to market products can command premium prices and will have a longer life cycle. ◼ Can add new features before competitors 2) Maximize fit with Customer Needs: most products fail because they were not designed to fit customer needs. ◼ Ensure customers want the product features before adding them to the product

三 19-10 The four goals of New product Development 3)Maximize product Quality: be sure new products are of superior quality Poor quality in a new product can doom its acceptance even if quality is fixed later on a Quality problems usually result from rushing product to market 4)Maximize Manufacturability: the efficiency with which the product is built impacts its time to market Ease of production can shorten development time Efficient production can also avoid production problems and improve quality " win/MeGraw-HHill CThe McGraw-Hill Companies, Inc, 2000

19-10 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 The Four Goals of New Product Development 3) Maximize Product Quality: be sure new products are of superior quality. ◼ Poor quality in a new product can doom its acceptance even if quality is fixed later on. ◼ Quality problems usually result from rushing product to market. 4) Maximize Manufacturability: the efficiency with which the product is built impacts its time to market. ◼ Ease of production can shorten development time. ◼ Efficient production can also avoid production problems and improve quality