Post first published 1/16/13 in the “MENG Blend” on the Marketing Executives Networking Group website – www.mengonline.com. The destination site for leading marketing executives looking to stay ahead of the curve. We have more than 1800 of the leading marketing minds in the world eager to meet, communicate, help and share our expertise.
Assessing New Products Concepts Attractiveness
It’s a common dilemma for most companies. You have multiple new product ideas, but how do you know which ones are the most attractive in terms of consumer/customer interest, market size and growth and where you and your customers can make the most money? In addition, how long would it take to bring the idea(s) to market and does the company have the right design and build capabilities to make it happen? The key is to figure out an objective way to assess the attractiveness of alternative new product concepts so you can prioritize those first. In this article we will discuss the different types of new products and the process you should use to prioritize your new product portfolio.
Many reasons exist on why you need to prioritize your new product portfolio. Some are:
- Not all new product programs are the same. There is a big difference in developing simple model derivatives vs. “disruptive” new product ideas. You need to tailor your new product process to match the types of new products being developed.
- You can’t do everything. You have limited time, people and development dollar resources.
- While you might have a great new product idea, new functional technologies might not be developed enough yet to have it work.
- You want to be “first to market” vs. competitors. Studies have consistently shown leading the market with new products is more preferable than following.
- You need to make sure your new product development portfolio is aligned with business strategy and goals as well as being sufficient to meet new revenue growth expectations.
The first thing you should do is assess the strategic and technical difficulties in developing your new product ideas. There are four major new product types groups:
Type 1: Derivatives/new models of current product lines. They are just additional product features, color, flavor, scent or size products etc. Easiest to do and low risk. Examples include: 10 vs. 12 cup coffee-makers, diet sodas or different cake mix flavors.
Type 2: Line extensions: These are current product lines moving into an adjacent category based on the same branding or product platform(s). Examples include: Clorox disinfectant wipes, Velvetta’s cheese skillet dinners, or Kellogg’s pop-tarts.
Type 3: New products in company’s core category: These include new platforms or delivery systems offering new innovations in the company’s core business. Examples include: Tide detergent pods, DeWalt cordless power tools and General Electric’s compact fluorescent light bulbs (cfl).
Type 4: New platform in a new category (to the company): These concepts have the highest risk, but have the most business impact – i.e. game changers and/or market category creators. Examples include: Swiffer quick cleaners, iphones/tablets and Keurig K-cup single serve coffeemakers.
These new product types have very different risk vs. reward profiles as conceptualized below:
Click On Image To Enlarge
Thus, it’s important to know the new product type you’re considering so you can more accurately assess its attractiveness to the company. Then you need an objective way to assess the attractiveness of alternative concepts since people, time and dollar resources aren’t unlimited. Fortunately, this step doesn’t need to be 100% accurate or highly complex. A consistent qualitative ranking assessment will do just fine at this stage.
There are at least five major attractiveness criteria measures you should consider:
- Consumer Interest: Is the concept unique? Can consumers easily see demonstrable results?
- Design & Build Capabilities: How easy is it to design/build? Is engineering/R&D familiar with the technologies involved? Should you make the product or source it elsewhere?
- Market Size/Growth & Competitive Offerings: How big is the market? Is it growing and sustainable? How many major competitors are out there already?
- Financial: What is the net margin $ potential? Does the concept require substantial development dollars? Will it require substantial marketing communication dollars beyond the launch?
- Risk: Is your concept patentable? How long will it take to develop? Will either qualitative and/or quantitative market research be required to help reduce business risk?
You should weight these measures and combine them into a new product ranking assessment tool similar to the one below.
Click on Image To Enlarge
Then you grade each one of your initiatives and rank them high to low based on these concept attractiveness scores. While you could use the above example, you should design your own new product ranking assessment tool consistent with your overall business model since attractiveness criteria can vary from industry to industry.
In sum, it’s not enough just to have great new product ideas. You need to know what type of product it is and then objectively assess its appeal relative to multiple ideas. You then need to prioritize your ideas so you can make sure your product portfolio is diversified similar to any financial investment. This tool can help you and your company manage the “fuzzy front end” vs. it managing you.
Chief Marketing Officer/Principal, Brand Marketing Advisors
A Consumer Brand & Product Marketer