by David W. Jimenez
Introducing a new product in the semiconductor industry is an extremely
painful experience for most organizations. First-generation products have
historically been the result of technologists discovering the solution to
problems they face on a daily basis. Since the technology is born out of the
need directly experienced in the market (by the inventor), the product has a
reasonable chance of meeting the market requirements.
But what happens in a company when it looks to introduce the next generation?
The technologist who leads the company's development of the first-generation
product has been out of the "customer" role for a few years and is tempted to
make assumptions about what the customer needs. This ultimately leads to the
great debate between sales and engineering philosophies: sell what we make or
make what we can sell.
This is where a systematic approach to new product introductions can bridge
the gap. By planning from the beginning where a product needs to be to meet
the market requirements, an organization will make what the customer wants to
buy and the sales force will be able to sell what the company makes.
Defining the Product Introduction Process
A systematic approach to new product introductions begins at the concept
phase, not the launch phase. No amount of marketing and sales can make up for
a product which is not what the customer wants. Successful organizations
build an infrastructure that is chartered to listen to, respond to, and
anticipate the market. Sales, marketing, applications, field service,
customer service, engineering . . . all must be coached to ask strategic
questions about where the customer is going and learn to listen objectively
to the answer.
It is typically Product Marketing's job to sift through all the ideas to
derive a sense of market direction. Since there is seldom a lack of ideas,
many of them one-off, a mechanism must be in place to filter out product
ideas that appear to have a low probability of meeting the financial goals of
the company. The product concepts that remain must be scrutinized by thorough
market research from both the features/benefits and financial perspectives.
External questions might include: what will the customers need, when will
they need it, how much would they be willing to pay for it? Internal
questions include: can we make it to specification, can we deliver within the
market window, can we make a profit given the market size, standard costs and
average selling price? If all of these questions can be answered in detail
and the financial analysis is positive, then a business plan detailing the
road to success should be presented to management for approval. Learning how
to gain management support is critical to the success of the product
With the business plan approved and senior management sending a strong
message of support throughout the organization, a detailed product definition
phase must be implemented. The bitter truth of an organization's cohesiveness
will be tested as Marketing and Engineering work toward a mutually acceptable
product specification. Marketing will be tempted to tell Engineering how to
do its job, and Engineering will look to change specifications it thinks it
knows better than the customer. Both groups must work together and focus on
being mutually successful. Marketing must define the end result, not the
path, and Engineering must put faith in the end target that will be delivered
to the customer.
At this point, Engineering will drive the project toward a workable and
manufacturable design, weighing alternative approaches to meet the technical,
time and financial constraints placed on it by the customer base. Marketing
must continue to monitor the market for any changes in direction or
Once the design has been approved, design verification must proceed quickly.
A variety of analysis tools and techniques can be employed by Engineering to
estimate the likelihood a design will meet specifications, but ultimately,
prototypes will need to be built to prove system performance. These
Engineering prototypes, or additional Engineering build units, will be
required for both alpha and beta testing.
During the prototype build phase, the rest of the organization must begin to
prepare itself for the impact of the new product on their departments.
Manufacturing must begin to examine the impact on projected build schedules,
Field Service must begin to look at training and spare parts requirements,
Marketing must begin to assemble the launch plan, including the obsolescence
or cannibalization of existing products, Purchasing must locate and contract
critical suppliers, Sales must develop sales forecasts. The new product
introduction process is in full swing.
As the prototyping phase moves toward completion, Engineering must develop
manufacturing procedures and methodologies. Many companies fail to achieve
the financial results they expect because not enough care is taken in making
sure the product is manufacturable. It is one thing for an engineer to
assemble one or two prototypes. It is quite another to have assembly
technicians build 20 a month. It's not their job to re-engineer the product
on the manufacturing floor. It is critical that each step of the process be
continuously reviewed by a cross-functional team acting as a surrogate for
As the product moves into the manufacturing environment, many tasks are
occurring simultaneously. Sales must be filling the pipeline with orders.
This will need to be managed carefully depending on unit availability and the
degree of secrecy to be maintained. Customer and internal training programs
must be in place. Marketing must be well into the media/roll-out plan using
every available method to enforce the key messages and total product
position. Brochures, ads, sales scripts, sales training and presentation
materials have been developed, and production of these collateral pieces must
be completed. Raw materials must be on order and matched to the sales and
If you are rigorous in your adherence to the new product introduction plan
and are bestowed with a little luck along the way, you may be tempted to
congratulate yourself on a job well done. Enjoy the moment, but remember that
our markets are well served and failure to meet your customer's requirements
on a continuous basis is mortal. No company in our industry has ever missed a
generational window and survived in its original form.
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The product introduction cycle is a multi-discipline, parallel process requiring expert coordination across the entire organization.
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By understanding the market expectations for pricing, a product development methodology can be employed to maximize the opportunity for success.
Note: This article first appeared in Channel Magazine, August 1995.
About the Author. . .
David W. Jimenez is President of Wright Williams & Kelly, Inc., Pleasanton, California, a firm specializing in productivity and cost management software products and consulting services.