New Product Management (10)

Chapter 10: The Full Screen

Purposes: after the original idea emerged, we put it concept format, then gave it a brief initial exposure for reaction by key players. Concept testing then enables us to add thoughts of potential users to the set of market and other data collected since the time of the PIC. We have been compiling inputs of key functional people in the firm. We now have as much info as we are going to get before undertaking technical work on the product. It involves the use of scoring model – an arrangement of checklist factors with weights (importance) on them.

Full screen has three objectives:

1) It helps the firm decide whether it should go forward with the concept or quit decide whether these financial/ human resources should be devoted to the project – whether we can do (feasibility) the job or we want to do it (what will we get out of the project – profits and market share).

2) It helps manage the process by sorting the concepts and identifying the best ones (rank order/ prioritize, and record is kept of rejected concepts to prevent reinvention).

3) It encourages cross-functional communication (it is a learning process which makes manager more sensitive to how other functions think).

The scoring model

What social activity to undertake in the weekend – Four criteria are listed out: fun (much, some, little, none), involve more than 2 people (over 5, 4-5, 2-3, and under 2), affordable (easily, probably, maybe, no), and something capable of doing (very, good, some, little) - 4 point scale was chosen, and three activities are skiing, boating, and hiking. Then the person proceeds to evaluate each option and total the score for each. Boating is the final answer 3+4+4+4 = 15 points in total. However, some protesting could be made (a special person will be present at skiing, hiking enable more exercise, and etc). A scoring process is what we actually use in making decisions. The person’s objections contain the basic problems of new product scoring model.

What is being evaluated?

There is a financial term called net present value of the discounted stream of earnings from the product concept, considering all direct and indirect costs and benefits. It is the bottom line on an income statement for the product, where we have included all costs and then discounted back the profits into what their value is today. We use surrogates for it. Profit/ net present value comes from chances of technical accomplishment and commercial accomplishment (sales, margins, and expenses). Sales would depend on the newness of the wholesalers, familiarity with the market, and product advantages.

Analytic Hierarchy Process (AHP) – a technique that systematically gathers expert judgment and uses it to make optimal decisions. It can be applied in full screening as a way to prioritize and select new product projects. AHP gathers managerial judgment and expertise to identify the key criteria in the screening decision and obtain scores under consideration relative to these criteria and rank the projects in order of desirability. AHP converts the comparison data into a set of relative weights, which are then aggregated to obtain composite priorities of each element at each level. The available choices are rank ordered in terms of their prefer-ability to the manager.

If an idea progresses through early concept testing (much more productive when it is in prototype form) and development to the point where it is a full-blown concept ready for technical workup, it must then be screened. Screening is commonly done with scoring models, whereby the firm’s ability to bring off the required development and marketing is estimated.