Testing the Concept (New Product Development) – Part 4

This is the third in the series of articles helping you through the New Product Development process.

We will be focusing on this step:

Concept Testing Phase

Phase Objectives

Concept testing is carried out after the idea screening. The objective of this phase is to determine the following:

  • Gain an understanding of what potential buyers and customers think of the product concept
  • Determine if the market is ‘ready’ for the new product (i.e. can the product sell?)
  • Understand what changes are required from the initial feedback given by those customers that have reviewed the concepts

Concept testing is included within the process so that any organization can predict the success of a new product idea before that idea progresses through too many more stages which inevitably will begin to increase the required financial investment.

Another major part of this phase is to ensure you have completed all the relevant patent searches, carried out all the design due diligence, and covered all the other legalities involved with new product development.

Methods for getting feedback from customers

There are a number of different methods used to present product concepts to customers in order to obtain feedback; we cover just a few below.

Focus Groups

The Market Research Association defines a focus group as ‘the meeting of a small group of individuals who are guided through a discussion by a trained moderator (or consultant). The goal of the focus group is to get beyond superficial answers and uncover insights on consumer attitudes and behavior’.

From your business point of view, the focus group could be made up of a number of long standing and trustworthy customers, a number of staff at different levels within your organization, other like-minded business professionals, and potential investors.

All focus groups should have a moderator to manage and guide the group through the process of reviewing the concepts and Q&A sessions.

At the end of the focus group session you should have a better understanding of what the general feedback is, and on what areas you need to work before moving forward with development.

Survey and Questionnaires

You need to approach a significant sample of people who match the profile of your target audience when conducting surveys and sending out questionnaires. Unless people care about the product or service, you’ll find that response rates are generally low.

Market research questionnaires are a well-known way of generating market information. Questionnaires are typically used to produce numbers. For example, how many potential customers are there in the local area, whether they would find such a product or service useful, and the sort of price they would be willing to pay for it. The key is to ask the right people the right questions, and to ask enough people to get meaningful results. (Source: marketingdonut).

Feedback and what to do with it

From all the marketing research and concept idea testing, you should be able to determine the following attributes:

  • What product features must be incorporated into the design
  • What the benefits of each feature are
  • How the customer will react to the product when it reaches the market
  • Pricing points (this may differ depending upon feature list)
  • Areas of the design that need to be changed, modified or eliminated

With a more solid product specification you should be able to move forward into the next development phase with confidence.

Patents and Due Diligence

If you are asking yourself “do I need to worry about patents?”, the short answer is YES. It is important that you do not infringe any intellectual property rights (IP) that belongs to somebody else. The simplest way to find this out is to carry out patent searches to check whether your design or product is OK. This also allows you to consider the information before thinking of filling for your own patent and owning your own IP.

A quick method of searching for patents is www.google.com/patents.

If you are thinking of applying for your own patent, E. Blum & Co suggests the following:

1. What can be patented?

For an idea to be patentable, it has to fulfil various criteria, in particular:

  • An invention has to be new. In order to be new, it has to differ from everything known to the public. Note: It is often the inventor herself/himself who destroys the novelty of his idea by disclosing his ideas to a third party without secrecy agreement.
  • An invention must not be obvious in regard to the state of the art. “Obviousness” has to be judged from the point of view of an expert skilled in the relevant technical field. It must be determined what problem the putative invention solves in comparison to known solutions in the field. If the state of the art encourages or leads the expert to choose a certain solution to this problem, this solution is considered to be obvious — if not, the solution is considered to be inventive.
  • An invention must have technical character. A method for doing business is, in many countries, not patentable. However, as soon as for example a technical problem is solved or technical considerations are required, it may be patented.

Naturally, we must state that we are not providing any legal advice here. We suggest you discuss these matters with your lawyer.

2. Due Diligence

From a new product development point of view, carrying out due diligence is all about making sure all the legal aspects have been covered so that when your product gets to market there are no nasty surprises. Make sure everything is documented and recorded for future reference.

End of Phase 3

At the end of each phase there should be a review meeting that goes over all the key elements and information from that phase. We already touched on this in the last article.

There is a procedure to follow for each of the phase reviews that results in a decision for the project (does it STOP, GO, or REVISIT) before proceeding onto the next phase. This review meeting is commonly referred to as a Stage Gate Review with the stop/go being the gate for the next phase.

The Stage ‘Gate’ Review Meeting in the NPD Process – Part 3

In the previous article we mentioned that there should be a Stage Gate Review meeting between each of the development phases. Here we will look at the guidelines for these Stage Gate Reviews.

What is a Stage Gate Review Meeting

This review meeting is commonly referred to as the Gate which acts as stop/go virtual barrier between phases. These gates serve as quality control check points on all of the information and data generated throughout the preceding development phase.

There is a structure that should be followed during these gate reviews and it is important to follow a structure. Without a structure and the discipline to follow a structure, the gate part of the stage gate process becomes the weakest part of the process and inevitably poor decisions are made or projects are allowed to move onto the next phase that in truth should either be killed off or reverted back through the preceding phase for additional work.

It has been stated a number of times that this process should act as a funnel and not a tunnel and it is the gates that do the filtering and funnelling.

The Gate Structure

The structure of each of the Gates is similar throughout the whole process so we will just show a guideline to the basic structure.

Deliverables

The deliverables are a set of pre-determined criteria that need to be delivered for review during the gate review meeting; these deliverables should include documentation, data, in some cases physical samples and models. All deliverables regardless of what shape or form they are in should be relevant to the preceding phase and this is what is reviewed during the gate meetings.

Criteria

Criteria against which the project is judged, this includes different levels from the ‘must meet’ to the ‘should meet’ down to the ‘ideal to have at this stage’. Each gate should have its own checklist and this is where the process is unique as every product will have its own unique set of features and attributes that need to be met.

Output

The output is ultimately the stop or go decision for the project. This can obviously include ‘put on hold’ and the ‘revert back the preceding phase’ which allows further work to be carried out in order for the project to be resubmitted to the review gate.

If the project gets the ‘go’ the project can then move into the next development phase and part of the output would be a plan to shows company financial support and commitment, which include resources, timescales for the next phase and the set of deliverables that must be met during the next phase and which will be used at the next gate review to judge the project against.

The Gate in Graphical Form

Gate Process

Gate Decision Elements

Decision Elements

Who Should Attend the Gate Review Meeting

Gate Review Attendance

Gatekeepers

At each of the gate reviews there should be key personnel as shown above, but collectively they are known as the ‘gatekeepers’.

Gatekeeper RULES of ORDER need to be established and enforced (by review meeting chairman). These rules are shown below:

  1. Gatekeepers must attend in-person or virtually, or your vote defaults to “CONTINUE”. A proxy vote may be designated.
  2. Gatekeepers must review team presentation before the meeting.
  3. Serious concerns must be communicated to teams before the meeting. No “surprise attacks” allowed.
  4. No “cross-examination” allowed during team presentations.
  5. Gatekeepers cannot require and/or base decisions on information outside of the scope of the stage being reviewed.
  6. Decisions must be made in accordance with the criteria for the gate, not on the gatekeeper’s opinions.
  7. Final vote must be unanimous. Gatekeepers must be willing to negotiate with other gatekeepers.
  8. You can “HOLD” a stage or entire project but you can’t “HOLD” a decision.
  9. “CONTINUE” decision means that money and resources are committed for the next phase.

Screening Ideas for New Product Launch – Part 2

This is the second in the series of articles helping you through the New Product Development process. Part 1 (idea generation) was described here. We will be focusing on this process step:

Idea Screening

The goal is to identify one or two solid potential ideas that can move into Phase 3 and eventually made in China and sold on your target market.

Idea Screening

Once all the viable ideas are listed, they have to be further developed, evaluated, prioritized, and analyzed so that one or two ideas can be selected for further development into a product concept.

The next step involves screening all these ideas in order to select good ideas and drop poor ones as soon as possible. Product development costs rise dramatically the further into the process you get, so you want to make sure no bad idea gets too far in development.

There is a risk involved with the screening process, which is dropping the wrong idea which could turn into the ‘next big thing’. That said, it is always good practice to keep all the ideas recorded and filed for later use and analysis. And idea might have been dropped because the timing was just not right but may be perfect later on.

Screening Techniques

Decision Matrix

To ensure all new product ideas generated are screened against a level of objective measurement, a structured concept selection of screening and scoring should be adopted. A useful way of doing this is by setting up a matrix table. Below is an example of how this can be implemented, with the list of ideas being rated against key metrics that are weighted to allow for a feasibility score to be generated which can be ranked.

Ratings for the decision matrix can be ranked on a scale of 1 to 10, with ratings as follows:

  1. Size of Target Market: 1 (Smallest Size) – 10 (Largest Size)
  2. Level of Competition: 1 (Highest Level) – 10 (Lowest Level)
  3. Ease of Manufacture: 1 (Lowest Feasibility) – 10 (Highest Feasibility)
  4. Time to Market (Development Time): 1 (Longest Time) – 10 (Fastest Time)
  5. Profitability & Rate of Return: 1 (Lowest Profit) – 10 (Highest Profit)
  6. Tangible Benefits to User: 1 (Least Benefits) – 10 (Most Benefits)

Here is an example that you can download here (source: Velaction 2012):

Decision_Matrix_Example

For example, idea 1 and idea 5 both have a base score of 43, but idea 1 is more feasible than idea 5 so idea 1 gets the higher score.

Other techniques available

We have listed other interesting techniques below (source: Idea evaluation methods and techniques by Prof. Dr. Miroslav Rebernik). You can learn more by searching them on the internet.

ANONYMOUS VOTING: It is based on anonymity of participants’ choices. This is a group technique and is ideal for selecting from many initial ideas.

COST-BENEFIT ANALYSIS: It is a widely used and relatively simple tool for deciding whether to make a change or not. The quality of the decision depends on the depth of analysis of benefits and costs connected with the idea.

DECISION TREES: It is a decision support tool that uses a graph or model of decisions and their possible consequences, including chance event outcomes, resource costs, and utility. It is often appropriate for complex problems solving.

FORCE FIELD ANALYSIS: It is a group technique, and is very useful for checking the feasibility of idea implementation. It is simple to use. Its weakness is that it is subjective and opinion based. Force field analysis is a handy technique for looking at all the forces for and against a decision.

KANO MODEL ANALYSIS: It is the analysis of customers’ preferences. As such it is very focused and appropriate in the product development phase. However, it could be also be used in: identifying customer needs, determining functional requirements, concept development and analysing competitive products. It is not useful for general idea selection.

NAF ANALYSIS – Novelty, Attractiveness, and Feasibility Analysis: This method is a quick and easy way of assessing new ideas for three issues: novelty, appeal and practicality. Method is especially appropriate before further development of idea. The method is applicable individually or in group and in many different areas. As it is simple to use, is appropriate for early phases in idea selection process. Its main contribution is to rank ideas.

Go / No-Go

The outcome from this phase is to get one or two ideas that can be progressed in the next stage, but before moving onto the next stage you should answer the question, can this product or project physically move into the next phase?

Reducing the Costs of Poor Quality in China [Conference]

If you import products from China, have you calculated what poor quality costs you?

As the buyer, you probably have to pay for:

  • QC inspections (because you can’t trust your suppliers’ quality)
  • Unsellable products that you receive as part of the shipments
  • Penalties from your customers when they find quality issues

But it doesn’t stop there… You also have to pay for certain costs that are included in the manufacturer’s price:

  • Defects found before shipment and reworked
  • Scrapped material
  • ISO 9001 certifications (they feel the need a third party accreditation to conceal their quality system’s shortcomings)

This is why many people believe the costs of quality account for 30-40% of a product’s total landed cost. And the good news is, there are ways to reduce these costs!

If you are interested in this topic, join the upcoming conference PROFITABLE SOURCING IN CHINA – COST OF QUALITY to be held next week (March 5 in the afternoon) in Guangzhou.

Here is the presentation of the conference:

A major objective of sourcing organizations is to keep costs low, while complying with quality standards and safety requirements. Tracking and reducing costs of quality has become a key priority, both at the level of the buying organization and of the manufacturer.

How to account for these costs, and what is the impact on the total landed cost?

What solutions have companies in different industries applied with success?

Join us to learn from experts about the best sourcing practices and share your opinion with other professionals during our Forum.

You can see the great lineup of speakers on this page.

I hope to see you there!

Developing your own Product and Getting it to Market – Part 1

One popular method to follow when developing your new product is to apply a phased step process as developed by Robert G Cooper. The different phases are shown in the diagram below.

New Product Development Process

We are kicking off a series of articles that will take us though each phase and highlight the key aspects and what you should be doing to ensure your product successfully gets to market. We will be providing different examples throughout the series which we hope will help you in your product development and product launch. We will write primarily from the perspective of products manufactured in China.

This first article we will look at this phase:

Idea Generation

Before you have a product you have an idea. Ideas can come from a number of different sources, brainstorming, and direct response from market demand, or from a competitor’s product, and sometime by accident.

The important thing during the idea generation phase is to come up with as many ideas as possible with the rule that ‘no idea is bad’. Sometimes a combination of what might seem like crazy or bad ideas actually provides that spark of inspiration to come up with the winning formula.

Brainstorming

Brainstorming is the number one method for generating new ideas. For best results, brainstorming sessions should be held in a calm and relaxed environment where you will get no distractions and which encourages an informal approach and lateral thinking.  Some of the thoughts and ideas that you and the team come up with can, at first, seem a bit crazy — however some of these ideas can be worked on to generate original, creative solutions to a problem, while others can spark even more ideas (source: Mindtools).

One very important rule during brainstorming sessions is, ‘people should avoid criticizing or rewarding ideas’. You’re trying to open up possibilities and break down incorrect assumptions about the problem’s limits. Judgment and analysis at this stage stunts idea generation and limit creativity.

Brainstorming needs to be structured. The brainstorming process is described below, and you will need a flip-chart ora white board. (Source: businessballs.com.)

  1. Define and agree the objective
  2. Brainstorm ideas and suggestions having agreed a time limit
  3. Categorise/condense/combine/refine
  4. Assess/analyse effects or results
  5. Prioritise options/rank list as appropriate
  6. Agree action and timescale
  7. Control and monitor follow-up

SWOT Analysis

Another very useful tool to use during the idea generation phase is a SWOT analysis, which is a structured planning method used to evaluate any product idea. An example of a simple SWOT analysis is shown on the figure below. (Some elements of this SWOT analysis were referenced from Mindtools.)

SWOT Analysis

In part 2 we will look at the idea screening process (how to narrow your list down).