By Rick Steinbrenner
Assessing New Product Concept Attractiveness
It’s a common dilemma for most food 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:
Ÿ
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.
Ÿ
You can’t do everything. You have limited time, people and development
dollar resources.
Ÿ
While you might have a great new product idea, new
functional technologies might not be developed enough yet to have it work.
Ÿ
You want to be “first to market” vs.
competitors. Studies have consistently
shown leading the market with new products is more preferable than following.
Ÿ
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:
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. You can download the new product ranking assessment tool at this link.
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.
About Rick Steinbrenner, Principal of Brand Marketing Advisors –
is the "global brand guy" and friend; a consumer brand and product
marketer. He’s led and managed leading
global brands like General Mills, Kraft, Remington Products and Black &
Decker. His website
is www.globalbrandguy.com.
© Tim Forrest 2013. All rights reserved
