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Building The Business Case and Plan in New Product Development

The document discusses the importance of performing a thorough analysis before developing a new product. It outlines a 4-step process: 1) defining the product and analyzing user needs, the market, and competition; 2) building a business case; 3) creating a project plan; and 4) conducting a feasibility review. The first step involves research like customer interviews and a competitive analysis to inform the product concept. It also determines costs. The business case and project plan lay out the rationale, timeline, resources, and milestones. Management then reviews these deliverables and the financial analysis to decide if development should proceed.

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Mario Vellandi
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529 views

Building The Business Case and Plan in New Product Development

The document discusses the importance of performing a thorough analysis before developing a new product. It outlines a 4-step process: 1) defining the product and analyzing user needs, the market, and competition; 2) building a business case; 3) creating a project plan; and 4) conducting a feasibility review. The first step involves research like customer interviews and a competitive analysis to inform the product concept. It also determines costs. The business case and project plan lay out the rationale, timeline, resources, and milestones. Management then reviews these deliverables and the financial analysis to decide if development should proceed.

Uploaded by

Mario Vellandi
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PDF, TXT or read online on Scribd
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Sellion

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brand development specialists

The Business Case & Plan for New Products


A new product is a venture. It may represent the initial reason for a companys existence, or it may be part of its plans to grow. Whether were building a breakthrough, platform, or incremental product...developers and companies still need to perform a solid analysis before they start developing. This phase is difcult, complex, and resource-intensive. The amount of effort a rm places into this stage, at least into the breadth of its activities, is directly relational to the success of the product. Both commercially and in terms of development time.

This phase is made up of 4 steps: 1. 2. 3. 4. Product Denition and Analysis Building the Business Case Building the Project Plan Feasibility Review

Product Denition and Analysis


The rst step is composed of a series of activities that will give you the inputs to effectively dene your product and justify your reasoning to develop and commercialize it. Some activities are run concurrently to others; well attempt to explain it to you as follows: User Needs & Wants Study - Here we try to understand what creates value for the customer. What benets does the product give? What features and attributes should it have? You should try and conduct interviews and surveys with existing and potential customers, in addition to sales channel partners. Dont forget your staffs opinion. Market Analysis - How large is the market and how is it segmented? What is its rate of growth? What trends are affecting the competitive offerings and buyer behavior? Who are the buyers and through what channels can they be reached? Competitive Analysis - Knowing how your competitors operate and their relative strengths and weaknesses is key to not only building a great product, but also in how and where you will launch it.

The results of these activities will help build your product denition and provide the foundation for your marketing strategy. Next, well have to do two things: Build a Technically Feasible Product Concept - This includes the substance (materials, form, packaging) and the various methods and activities needed to produce the product. Production & Operations Costs Analysis - Here we want to fully explore the cost of sourcing the raw materials and the underlying manufacturing and processing costs to arrive at a Bill-of-Materials gure. The goal is to reach a unit cost that will allow us to achieve a reasonable prot margin at various

Sellion

brand development specialists

production volumes. Additionally, youll want to determine costs for product testing and acquiring intellectual property protection. Marketing and Expected Launch Costs Analysis - Now well explore the costs of marketing campaigns in terms of advertising, trade shows, sales training, building collateral, and any sales commissions that may be involved.

Next well want to: Test the Concept - Develop drawings, models and early prototypes which you can gauge reactions to through presentations to your staff, existing and potential customers, and channel partners. This should give you feedback on what changes may need to be made, in addition to an idea of what sales potential the product may have, which youll need for your nancial analysis. Build a Solid Product Denition based on the cumulative activities performed and additional feedback received.

Lastly well perform three analyses based on the information gathered so far: Business Analysis - Here we undertake a full examination of why this product makes business sense. Well want to look at the competitive and strategic rationale, the competencies of the rm, and determine the capabilities and roles of partners and suppliers. Letters of intent will be required from any 3rd parties. Risk Analysis - What are the variables that will affect the development and commercial success of this project? How might they be mitigated? Which will seriously affect the viability of this product venture? Common risks include missed deadlines, sudden lack of resources, product performance fallthroughs, and heightened production/distribution costs. Financial Analysis - This involves taking combining data from your market and operational analyses to determine what kind of return on investment is possible. Methods include Net Present Value (NPV), Internal Rate of Return (IRR), Payback Period, Expected Commercial Value (ECV), Earnings before interest and taxes (EBIT), and Shareholder Value Added (SVA).

These are the activities that make up the rst step. Information gathered in the Discovery and Scoping phases are used as a foundation for further exploration here. Even if your product is just a line extension or an incremental change, we advise you to participate in as many activities that are reasonable for your unique strategy and business reasoning for developing the product.

Building the Business Case


The Business Case is a living document that defines the product and provides the rationale for developing it. It will be referred to throughout the development process, and will be revised as necessary. Although the exact format of this document will vary by company, these are its primary components: Results of the activities of Product Definition and Analysis Legal and regulatory requirements Safety, health, and environmental considerations Assumptions made to draw the conclusions you have, and why you believe they are valid and reasonable. Out-of-bounds criteria that indicate certain changes/events which will mandate an emergency business case review.

Sellion

brand development specialists

Building the Project Plan


This includes: A scheduled list of events, tasks, and actions for the development phase. Timelines are included in the form of Gantt charts or critical-path plans. The human, time, and nancial resources that will be required for the development phase. Dened and measurable milestones to be completed within the development phase. Tentative action and resource plans for the marketing, sales, production, and related channel readiness activities. An expected product launch date

Feasibility Review
This is the final review session where management, marketing, and technical staff meet to discuss and review the rationale for pursuing the project, the risks involved, a financial analysis, the resources required, and the project plan. If everything looks good, give yourself a round of applause! Now go ahead and proceed to the Product Development phase.

About Us
Sellion is a brand development company specializing in bringing health, beauty, nutritional, and homeopathic products to market. Our multi-disciplinary team can help you in the ideation process, and investigate the merits of your concepts, build a business case, development strategy, and launch plan for marketing and distribution across the US retail landscape.

For more information, give us a call at: (401) 294-2660

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