BADM 7200 LECTURE SLIDES STUDY GUIDE 2025
Why New Products Fail?
• External environment
• Internal environment
• Consumer
Why Study New Products?
• Big business
- Billions of dollars annually on technical
development alone
• Critical for future growth
Initiating Factors of New Products
• Financial goals/Sales and market share growth
• Competition
• Product lifecycle
• Technology
• Globalization
• Regulations
• Demographic and lifestyle changes
Innovation is Important
,• PDMA best practices survey
• Products launched in last five years
- Top innovative firms: 47% sales and 49% profits
- Other firms: 21% sales and profits
• Data from Reckitt Benckiser:
- 40% of revenues generated by products < 3 years
old
- 25% of line extensions fail to produce incremental
sales
- Cost of "dud" concepts killed before launch =
$2million/ea.
- Cost of failed launches can reach $50M
Innovation is Risky
• For every 100 ideas,
- Fewer than 70 make it through initial screening
- Fewer than 50 pass concept evaluation and
testing
- A little more than 30 make it through development
- About 30 make it through testing
- About 25 are commercialized
- 15 of these 25 (about 60%) are successful.
• Success rate is lower in consumer goods (51%)
and as high as 65% in healthcare
New Product Development Cost
,• To produce a movie: $125 M
• To develop a drug: $800 M
The value
• To learn new products management: Priceless
What is an Innovative Concept?
Something that is new and is of value to customers
Innovation Dimensions
• Originality
- Novelty, Innovativeness
• Usefulness
- Appropriateness, Practicality
New-to-the-world Products
- Really-new products
- 10% of new products
• Inventions that create a whole new market
• Examples
- Polaroid camera
- Sony Walkman
- Palm Pilot
New-to-the-firm Products
- Products that take a firm into a category new to it
- 20% of new products
, • Examples
- P&G brand shampoo or coffee
- Canon laser printer
Additions to existing product lines
- Line extensions
- 26% of new products
• Examples
- Tide Liquid
- Bud Light
- HP LaserJet 7P
Improvements and revisions to existing products
- Current products made better
- 26% of new products
• Examples
- P&G's continuing improvements to Tide detergent,
Ivory soap
Repositionings
- New use or application, new users or new target
markets
- 7% of new products
• Examples
- Arm & Hammer baking soda sold as a refrigerator
deodorant
Why New Products Fail?
• External environment
• Internal environment
• Consumer
Why Study New Products?
• Big business
- Billions of dollars annually on technical
development alone
• Critical for future growth
Initiating Factors of New Products
• Financial goals/Sales and market share growth
• Competition
• Product lifecycle
• Technology
• Globalization
• Regulations
• Demographic and lifestyle changes
Innovation is Important
,• PDMA best practices survey
• Products launched in last five years
- Top innovative firms: 47% sales and 49% profits
- Other firms: 21% sales and profits
• Data from Reckitt Benckiser:
- 40% of revenues generated by products < 3 years
old
- 25% of line extensions fail to produce incremental
sales
- Cost of "dud" concepts killed before launch =
$2million/ea.
- Cost of failed launches can reach $50M
Innovation is Risky
• For every 100 ideas,
- Fewer than 70 make it through initial screening
- Fewer than 50 pass concept evaluation and
testing
- A little more than 30 make it through development
- About 30 make it through testing
- About 25 are commercialized
- 15 of these 25 (about 60%) are successful.
• Success rate is lower in consumer goods (51%)
and as high as 65% in healthcare
New Product Development Cost
,• To produce a movie: $125 M
• To develop a drug: $800 M
The value
• To learn new products management: Priceless
What is an Innovative Concept?
Something that is new and is of value to customers
Innovation Dimensions
• Originality
- Novelty, Innovativeness
• Usefulness
- Appropriateness, Practicality
New-to-the-world Products
- Really-new products
- 10% of new products
• Inventions that create a whole new market
• Examples
- Polaroid camera
- Sony Walkman
- Palm Pilot
New-to-the-firm Products
- Products that take a firm into a category new to it
- 20% of new products
, • Examples
- P&G brand shampoo or coffee
- Canon laser printer
Additions to existing product lines
- Line extensions
- 26% of new products
• Examples
- Tide Liquid
- Bud Light
- HP LaserJet 7P
Improvements and revisions to existing products
- Current products made better
- 26% of new products
• Examples
- P&G's continuing improvements to Tide detergent,
Ivory soap
Repositionings
- New use or application, new users or new target
markets
- 7% of new products
• Examples
- Arm & Hammer baking soda sold as a refrigerator
deodorant
