2. Idea Generation - new product strategy
New-product ideas come from many sources, including customers, employees, distributors, competitors, vendors, research and development (R&D), and consultants.
The marketing concept suggests that customers' wants and needs should be the springboard for developing new products
. Companies can derive insight from listening to Internet chatter or reading blogs, which often indicate early trends or areas consumers are interested in seeing develop or change. Another approach for generating new-product ideas is using what some companies are calling “customer innovation centers
.” The idea is to provide a forum for meeting with customers and directly involving them in the innovation process. Dr. John Horn, vice president for research and development in a 3M division, says that the goal is to understand what customers are trying to accomplish instead of what they say they need
.11 Customers might be better at designing products than elite teams of product designers
Marketing personnel—advertising and marketing research employees, as well as salespeople—of-ten create new-product ideas because they analyze and are involved in the marketplace. Encouraging employees from different divisions to exchange ideas is also a useful strategy
. When the R&D team at West Paw Design had writer's block, the team held a contest for the company's 36 employees to design and produce a prototype for a new product. Now it's an annual contest, and the prototype with the most votes enters the development process. Many don't make it to stores, but some do, like the Eco Nap, a dog bed made out of recycled materials, created by a team in the shipping department. The result is an influx of ideas and encouragement across disciplines.12 Some firms reward employees for coming up with creative new ideas. In Bloomberg Businessweek's annual ranking of the most innovative companies, 15 of the top 50 are Asian, up from only 5 in 2006. The increase isn't surprising when you look at the importance upper-level executives place on innovation
. In China, 95 percent said that innovation was key to economic growth
. Only 72 percent of U.S. upper-level executives agreed. There is a similar trend in spending on innovation—88 percent of Chinese executives plan to increase their innovation budgets, but only 48 percent of U.S. executives said the same thing.13
Distributors: A well-trained sales force routinely asks distributors about needs that are not being met
. Because they are closer to end users, distributors are often more aware of customer needs than are manufacturers.
The inspiration for Rubbermaid's Sidekick, a litter-free lunch box, came from a distributor who suggested that the company place some of its plastic containers inside a lunch box and sell the box as an alternative to plastic wrap and paper bags.
: 7-Eleven, Inc. regularly forges partnerships with vendors to create proprietary products. Coca-Cola invented the flavor blue vanilla for a 7-Eleven Slurpee drink, and the matching Laffy Taffy Blue Vanilla Rope candy was developed by Nestlé's Wonka division exclusively for 7-Eleven..
No firms rely solely on internally generated ideas for new products. A big part of any organization's marketing intelligence system should be monitoring the performance of competitors' products
. One purpose of competitive monitoring is to determine which, if any, of the competitors' products should be copied
. There is plenty of information about competitors on the Internet. For example, AltaVista (www.altavista.com ) is a powerful index tool that can be used to locate information about products and companies. Fuld & Company's competitive intelligence guide provides links to a variety of market intelligence sites.
- Research and development: R&D is carried out in four distinct ways. You learned about basic research and applied research in Chapter 4. The other two ways are product development and product modification.
- Product development goes beyond applied research by converting applications into marketable products.
- Product modification makes cosmetic or functional changes in existing products. Many new-product breakthroughs come from R&D activities IBM has research and innovation labs all over the world, and in 2010 the company announced plans to open a new one in São Paulo, Brazil. The goal is to increase sales in rapidly emerging markets like Brazil, and to help Brazil find ways to manage and encourage growth. IBM will help Brazil extract natural resources with new technology developed for the area. IBM then hopes to export those new advances to China and India. By having innovation centers located all over the world, IBM is able to increase its network and generate new ideas based on how different countries operate.14
Outside consultants are always available to examine a business and recommend product ideas
. Examples include the Weston Group, Booz Allen Hamilton, and Management Decisions. Traditionally, consultants determine whether a company has a balanced portfolio of products and, if not, what new-product ideas are needed to offset the imbalance. General Mills' Web site at https://openinnovation.generalmills.com includes interactive features that let independent inventors and food scientists know what topics the company is interested in pursuing. If General Mills likes an idea it receives, it may pursue a licensing or joint venture arrangement.15 Creativity is the wellspring of new-product ideas
, regardless of who comes up with them. A variety of approaches and techniques have been developed to stimulate creative thinking. The two considered most useful for generating new-product ideas are brainstorming and focus-group exercises. The goal of brainstorming is to get a group to think of unlimited ways to vary a product or solve a problem.
Group members avoid criticism of an idea, no matter how ridiculous it may seem. Objective evaluation is postponed.
The sheer quantity of ideas is what matters. As noted in Chapter 9, an objective of focus-group interviews is to stimulate insightful comments through group interaction. In the industrial market, machine tools, keyboard designs, aircraft interiors, and backhoe accessories have evolved from focus groups.