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This chapter shows how the firm can choose new product designs and pricing strategies when primary data (i.e., intentions studies, conjoint experiments, auctions, simulated test markets, and test markets) are available. It shows how the firm can use the MCT methodology to quantify the effects of competitive reaction and measure cannibalization and market-growth effects when it introduces new products into the market. In particular, it shows how the firm can filter out response error in the data from conjoint and intentions studies to obtain unbiased demand and market share estimates for new products.

This chapter shows how the firm can coordinate its new product designs, production processes, and pricing strategies when only secondary (market-level) data are available. In particular, it examines the conditions under which firms should use price or other market signals (e.g., product warranties) when they introduce new products into the marketplace.

This chapter is the first of two taking a micro view encompassing three creative industries — publishing, music, and video games — to detail the pattern of invention/creation, embodiment and diffusion of soft innovations. At the micro level, industry-specific indicators relating to the numbers of new product variants introduced are used with certain advantages relating to the identification of the rate of significant innovation being claimed for a specific measure that tracks the share of the sales of bestsellers that were recently introduced onto the market. In the creative sector, the indicated rates of innovation are high, with very considerable numbers of new products or titles being launched and rates of market churn of the bestsellers in the studied markets being very fast. This reflects a pattern quite different to the usual suggestion that innovation occurs at a rate of about 2.5% per annum (a measure usually based upon indicators of labour productivity growth).

This chapter discusses market opportunities, outlining how to identify market opportunities and to create new products and services to respond to customer needs. Part A reviews the main factor that triggers this search, namely, the need to grow. It explores various possibilities for growth. Two key growth-related issues bedevil marketing managers. One is that growth often leads to a blurring of focus. The second issue is the organization's capability to create new products or services. Part B discusses new product development (NPD), a proven way to drive markets and respond to the increasing expectations of customers. Part C provides a brief review of how consumers adopt new products and services. This discussion provides the first detailed look at one of the foundation concepts of marketing — market segmentation.

This chapter describes how one such firm—Mars, Incorporated—has become a leader in innovating new product concepts. In fact, the chapter sees how teams inside the company synthesized many of the methods described in this book: segmenting markets for growth, diving deep into user needs, defining new product line architectures to incorporate modular platforms and flexible manufacturing processes, and combining all these factors into business models different from the company's standard fare. The chapter also suggests how new market applications can change the way a company thinks about itself as a business—not just what it makes, but how it sells and how it makes money. It then provides instructive examples for the business model before and the financial modeling and business process.

Segmenting markets for growth should provide one or more clear targets to which a company can extend its core technologies and other business assets. Those targets are some combination of new users or new product or service uses relative to the company's existing customers and applications. The next step is to define user needs within those target markets. This type of activity—often called ethnography—is the best way to truly understand the needs and frustrations of potential customers. Target users are often served by existing solutions that must be displaced by a superior offering. That superiority must be based on more than cost. Clayton Christensen argued in The Innovator's Dilemma that new product lines that have a disruptive impact on an established market typically provide better functionality in addition to cost advantages. User-centered design links the needs, goals, and aspirations of target users to the design of new products and services.

The next step in user-centered design is to translate observed user needs into product or service concepts. This chapter introduces methods for leveraging insights gained from user research into full-fledged, user-tested designs and prototypes. User case scenarios are a powerful method for uncovering the perceived and latent needs of target users. From this work, the innovation team can develop a list of potential features and benefits to build into its new product line or service. Most practitioners use that list to propose a product or service concept and illustrate it with sketches or diagrams. This act of creation produces a design concept. A number of the companies found “conjoint analysis” useful in validating their product designs for new market applications. Using this method, an innovation team can quickly identify the features or attributes that target users prefer most and the extent to which they are willing to pay for them.

Emanating from the knowledge-based theory of the firm, this chapter elaborates on different processes for engineering knowledge integration in new product development (NPD). A theoretically derived analytical model, following the prerequisites given by deadlines and product architectures, outlines different processes for knowledge integration and longitudinal case studies at four manufacturing firms explore the dynamics of these processes. The case study results show that the emerging understanding of the task throughout the course of an NPD project may induce changes to managers' perceptions of knowledge integration processes and their applicability. Such changes may eventually overturn the way knowledge integration is managed within the project. These case study findings suggest that in NPD, contingency theory needs to allow for consistent adaptation of knowledge integration processes throughout NPD projects.

Every process, to be effective, requires an owner. This chapter states that owners of the framework should be a few select executives who take personal responsibility and who are intellectually and emotionally committed to organic, enterprise growth. They comprise a special-purpose executive board. The new market applications development process and the projects flowing through it are their direct responsibility. This executive body should be thought as owning the corporation's new market applications for internal, organically grown ventures. The chapter refers to it simply as “the Board.” The Board defines strategic opportunities at the highest level, new product line or service opportunities that may exist in current or new market segments, launches teams and then responds to progress at key checkpoints in the development process, and provides the necessary funding to support the next phase of a team's growth.

This chapter discusses the business concept: the firm's view about how to deliver customer value, the specific organization of the firm's activities, and the choices it has to make in order to achieve such objectives. It springs from a vision that the firm and its managers have about the future needs of its customers, the evolution of rivalry, and the role of the firm in the industry. The notion of the business concept that is presented in this chapter shares some elements with other strategy concepts, although it has some unique features. Creating a new business concept often implies being able to offer new products or services. And creating a new business concept may have another important dimension: organizing the company's activities according to different patterns from those followed by other companies. This chapter presents different dimensions of the capability that a company and its people have to create a different, better business concept. It is also shown in this chapter that the development of a business concept requires reconsidering certain basic issues about the company.

This chapter discusses the involvement of consumers in innovation. It presents two case studies which detail a number of interesting issues regarding ways that consumers become involved in new product development or longer-term research and development in the information and communication technology sector. In some cases, consumers have been actively involved during new product development. Much more common was later involvement, in the form of product testing and evaluation of interfaces. In other cases, consumers are ‘represented’ through perceptions of consumer behaviour built up by designers and product managers. Given that many product ideas stem from awareness of technological possibilities, consumer feedback is more often in the form of reaction to product proposals rather than generating them. Even in more incremental new product development projects, the information that is collected about consumers can become marginalised relative to other considerations. This chapter concludes that there is evidence of firms attempting to learn about consumers as input to their innovation processes, but that such efforts have so far been rather underdeveloped.

The questions addressed in this volume are motivated by the recognition that engineers play an important role in generating innovation and economic growth. In this chapter, we seek to offer some description of engineering work by looking in detail at a specific manufacturing industry—firms that supply automakers—to gain insight into how engineers create innovation. Autos account for 5% of US GDP and in 2011, 70% of auto suppliers contributed design effort, a task typically performed by engineers, making the auto supply chain an important context in which to study engineering and innovation. Some highlights from our original survey data include a wide range in terms of size and strategies of supply chain companies; a majority was small- to medium-sized, often family-owned. We observed barriers to patenting for manufacturing firms' developing process rather than product innovations. And interviews revealed the importance of customers for the innovative efforts of supplier firms. Certain Japanese customers were preferred because they shared expertise and helped suppliers improve, while other, American, customers were viewed as having unreasonable demands for regular, incremental price reductions and did not offer technical or organizational support.

This chapter examines the issue of gender in a Maya fair trade coffee cooperative in Guatemala, with particular emphasis on women who are struggling to develop a market of their own in order to gain a modicum of financial independence through an increase in earnings. Drawing on ethnographic data gathered primarily through participant observation and qualitative interviews as part of research conducted in Guatemala between December 2001 and February 2003 and again in June 2006, the chapter considers the limitations that female cooperative members face in their attempts to develop new products, new markets, and new contacts. It first discusses the gender implications of fair trade and goes on to analyze why women want a market of their own. It then offers concrete suggestions for how fair trade could better accommodate the needs of women in agricultural communities and thus promote gender equity in certified cooperatives while improving the effectiveness of existing certification standards.

Many studies have reported astonishing statistics about the rate of introduction of new food products globally, with new products appearing probably at least every hour somewhere around the world, if not more frequently. If you could go into a food store anywhere in the world and somehow take a snapshot of the range of products on the shelf, then revisit it five years later and do a comparison of what you find, there would be a huge surprise in terms of the turnover. Many products will have disappeared, and many new ones will have appeared. For those that remain across this time span, there is a very high likelihood that they have changed in less visible ways, in terms of modifications to their formulation, package, or the process by which they are made. Even fresh foods like fruit, vegetables, meat, and fish are likely to have benefited from scientific advances in their production, quality, or transportation in an optimal state of quality and safety. Why is there such a high rate of change? There are two main drivers, one external to those who produce the food and that relates to the highly fluid and some­times unpredictable expectations and demand of consumers, and one more specific to the food producer that relates to new opportunities in technology, formulation, or scientific understanding. For any new product to be successful on the market requires two successful changes in behavior of consumers. The first is that, instead or as well as what they normally purchase, they need to buy to try a new product, and drop it into their basket or cart as a result of a planned or spontaneous decision to do so. To achieve this is primarily the responsibility of experts in marketing, who can divine what consumers want, develop a strategy accordingly, and then deploy the appropriate tools to bring the product to the attention of those who are most likely to buy the product, such as through promotions, advertisements, and probably, in today’s world, social media campaigns.