Product Development. David V. Tennant

       Strategic planning is important as it charts a company’s path to future profitability.

       Marketing and Sales are different disciplines. Marketing is concerned with the four Ps; sales is concerned with obtaining new customers and contracts.

       The four Ps include Product, Promotion, Pricing, and Profits.

       Product development includes four stages: Introduction, Growth, Maturity, Decline.

       It is common for companies to use spreadsheet models to determine costs, pricing, profitability, using sensitivity analysis.

       Breakeven point is where all development costs have been recovered and profitability of the new product starts.

       A business case analyses a new product’s feasibility, potential in the marketplace, SWOT review, and other factors. This can also be called a business plan or feasibility study. Its results are used by senior management to make a decision (go or no-go).

       Marketing and Engineering sometimes have different goals and accountabilities. This can lead to organizational conflict.

       The role of Product Manager is a leadership position.

      1 The project leader has an important role. While all of the below are important, which is the most important and why:CommunicationsIntegrity and trustConflict resolution

      2 Some companies believe that a Product Development Manager must have strong technical skills. Is this true? Why or why not?

      3 What value does the Marketing Group bring to the product development effort?

      4 If the cost of each new product is $40, and our company expects margins of 25%, should we price our product at $50? Why or why not?

      5 One of the costs that may be in our product’s development is legal costs. What kind of legal activities would be incurred?

      6 Why is it important to know the break-even point?

      7 What are methods to anticipate customer demand and pricing?

      8 Projects should always exist to support the corporation’s strategy. Why?

      9 Once products have reached the decline stage in the product lifecycle, they become a commodity. Is this true? What is a commodity?

      10 All costs in a product’s development should be recovered in the first year of a product’s sale in the marketplace. Is this a good strategy? Why or why not?

      1 As a large, successful US company, Kodak was once a “dogs of the Dow” firm listed on this stock exchange. It could be argued that Kodak’s management was unwilling to change or consider new ideas to displace or augment its line of film products. What does this tell us about the role of innovation in a company?This case should reinforce the need for companies to continuously develop new products. This could also be an effort to update existing products.

      2 With the advantage of twenty-twenty hindsight, it is easy to criticize Kodak’s lack of foresight or imagination. However, it is likely that past success blinded Kodak to the future of film. This might be categorized as a resistance to change, which is found in most large corporations; it becomes part of the corporate culture.If you are in a senior level position – at any company – how would you work to change the corporate culture? Changing the corporate culture is extremely difficult from middle or even senior management levels within a company. Corporate culture describes “Who we are” as a company. Generally, when the Board of Directors recognize a company is stagnating, they usually bring in a new CEO to turn things around or go in a different direction. Even with new leadership, it will still be difficult to move change through the company’s ranks. This is why new CEOs will many times clean house at the senior levels and bring in people they can trust to implement change.It is unlikely anyone below the CEO can implement change; and most executives with any powers of observation will see deterioration of a company’s position, and several will probably leave long before a new CEO takes over.

      3 What role should the marketing department have played in this long-term decline?The role of marketing is to be aware of industry trends, provide input to the corporations strategic planning, and generate new ideas and products to keep the company in front of its competitors.

      4 From a managerial standpoint, what are the challenges when a company is in decline?Once a company is on a downward spiral, it presents serious managerial issues:There is a rush to maintain revenues, which means more pressure on salespeople.R&D is pressured to devise new products for the market – and quickly. This leads to mistakes or the wrong products at the wrong time.Once the decline is noticed by employees, the best people – those who have the skills to land a new job fast – are the first ones out the door. The firm is then left with the “B Team” to perform a company turnaround.A publicly held company, such as Kodak, will face mounting pressure from analysts and shareholders to “do something.”Publications like the Wall Street Journal and others will start to cover the firm’s issues, putting more pressure on management.If the senior leadership of the team cannot think more creatively, the Board of Directors may replace the CEO (and other executives) with new leadership.From a marketing perspective, customer needs and wants should be determined quickly and action taken. It should have been noticed by the marketing team much earlier that film was going to become obsolete with digital cameras. Would senior management have listened?