Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e- Product Management
and New−Product
Development
Text © The McGraw−Hill
Companies, 2002294 Chapter 10
by interviewing well-informed people, they can determine the range of product
requirements and decide whether there is an opportunity.
For example, you’ve probably noticed that most new car designs have switched
to low-profile headlights. They allow sleeker styling and better gas mileage. Yet these
lights were initially only used on high-priced cars. That’s because the GE develop-
ment team worked with engineers at Ford when they were first developing the bulbs
for these headlights. Together they determined that the switch to the new bulb and
headlight assembly would add about $200 to the price of a car. That meant that the
bulb was initially limited to luxury cars—until economies of scale brought down
the costs.^26
Whatever research methods are used, the idea evaluation step should gather enough
information to help decide whether there is an opportunity, whether it fits with the
firm’s resources, andwhether there is a basis for developing a competitive advantage.
With such information, the firm can estimate likely ROI in the various market seg-
ments and decide whether to continue the new-product development process.^27Product ideas that survive the screening and idea evaluation steps must now be
analyzed further. Usually, this involves some research and development (R&D) and
engineering to design and develop the physical part of the product. In the case of
a new service offering, the firm will work out the details of what training, equip-
ment, staff, and so on will be needed to deliver on the idea. Input from the earlier
efforts helps guide this technical work.
New computer-aided design (CAD) sys-
tems are sparking a revolution in design
work. Designers can develop lifelike 3-D
color drawings of packages and products.
Then the computer allows the manager to
look at the product from different angles
and views, just as with a real product.
Changes can be made almost instantly.
They can be sent by e-mail to managers all
over the world for immediate review. They
can even be put on a website for market-
ing research with remote customers. Then once the designs are finalized, they feed
directly into computer-controlled manufacturing systems. Companies like Motorola
and Timex have found that these systems cut their new-product development time
in half—giving them a leg up on many competitors. Most firms are now using vari-
ations on these systems.GE developed a software system
so that its new product design
engineers in different parts of the
world could collaborate over the
Internet in real time—which helps
GE bring concepts to market
more quickly.
Step 4: Development