WHAT’S GOING ON IN THE NEW PRODUCT

PROCESS?
THE CONCEPT EVALUATION SYSTEM
FERNANDEZ, RUDEE ANNE PAULEEN
GONZALES, RAYMOND
late expenditure

Ideas
FURTHER USES OF THE A-T-A-R MODEL

PLANNING THE EVALUATION SYSTEM

It’s easy to imagine that building a new product is like building a house-first the foundation, then the
frame, then the first floor, and so on. We usually assume everything is tentative, even up through
marketing. Form can usually be changed, and so can cost, packaging, positioning, and service contracts.
So can the marketing date and the reactions of government regulators. So can customer attitudes, as
companies with long development time have discovered.
* EVERYTHING IS TENTATIVE
* POTHOLES
* THE PEOPLE DIMENSION
* SURROGATES
THE PEOPLE DIMENSION
The chapter looked at the factors that aid in designing an evaluating system for the basic new products
process, designed to provide pieces of information that guide the project and its journey to the market.
First came the culminating expenditure curve, the risk/payoff matrix, and the decay curve. Then we look
at the several descriptors of most situations, the primary one being that almost everything about a
situation is tentative. t e product itself is still evolving, at least until it sells successful, the actual date of
marketing is increasingly unclear as firms adopt limited marketing approaches, evaluation actually begins
with the innovation chapter well before ideation, and a product is an assemblage of many parts, each
requiring its own evaluation. Lastly, we introduce the A-T-A-R model, which tells us some of the critical
steps, how our information about them can be used to forecast sales and profits, and how to design an
evaluating system accordingly. What are the specific tools, what can each do, and what are their
weaknesses? The ones we use in Phase III of the basic process, prior to entering the development
phase, are covered in the next two chapters. Others come later.
THE CUMULATIVE EXPENDITURES CURVE
Product developers also have to remember they are dealing with people, and people cause problems.
This means that an evaluation system should contain early testing that is supportive. In fact, concept
testing is sometimes called concept development to reinforce the idea of helping the item, not just killing it
off.
*Avoidance
*Mitigation
*Transfer
*Acceptance

THE A-T-A-R MODEL

Ideas
SUMMARY
PRODUCT LINE CONSIDERATIONS IN CONCEPT EVALUATIONS
One critical skill of product developers is the ability to anticipate major difficulties, the potholes of product
innovation.
We should carefully scan for the really damaging problems (the deep holes) and keep them in mind when
we decide what evaluating we will do. If the pothole is deep enough, the development team may have to
seriously consider the risk avoidance option: Drop the project!
EVERYTHING IS TENTATIVE

Ideas
In an industry like pharmaceuticals, a firm might bring two or more ideas through to development: With
more potential products, there is a greater chance that one will be a winner and the payoff for winning is
large enough to offset the extra costs incurred in developing more products.
* Goods that appear complex are just collections of metal shapes, packaging material, fluids, prices and
so on.
Percent of expenditures (cumulative)
POTHOLES

THE RISK/PAYOFF MATRIX

surrogate questions give us pieces of information that can substitute for what we want to learn but can’t.
CHAPTER 8: THE CONCEPT EVALUATION SYSTEM
CHAPTER OUTLINE:
WHAT’S GOING ON IN THE NEW PRODUCT PROCESS?
•THE EVALUATION SYSTEM FOR THE BASIC NEW PRODUCTS PROCESS
•PRODUCT LINE CONSIDERATIONS IN CONCEPT EVALUATIONS
THE CUMULATIVE EXPENDITURES CURVE
•THE RISK/PAYOFF MATRIX
•THE DECAY CURVE
PLANNING THE EVALUATION SYSTEM
•EVERYTHING IS TENTATIVE
•POTHOLES
•THE PEOPLE DIMENSION
•SURROGATES
THE A-T-A-R MODEL
FURTHER USES OF THE A-T-A-R MODEL
SUMMARY
CASE STUDY
•CASE: CONCEPT DEVELOPMENT CORPORATION
•CASE: THE G5 DOLL
average

In general, the new products team should consider four generic risk strategies:
Ideas become concepts, concepts get refined, evaluated and approved, development projects are
initiated, and products are launched. Throughout this process, different questions need to be asked, and
different evaluation techniques provide the required answers. For example, the very first evaluation
precedes the product concepts.

WHAT’S GOING ON IN THE NEW PRODUCT

PROCESS?
THE EVALUATION SYSTEM FOR THE BASIC NEW
PRODUCTS PROCESS
A-T-A-R concept (awareness-trial-availability-repeat). This is taken from what is called diffusion of
innovation, explained this way: for a person or a firm to become a regular buyer/user of an innovation,
there must first be awareness that exist, then there must be a decision to try that innovation, then the
person must find the item available to them, and finally there must be a type of happiness with it that
leads to adoption, or repetition of usage.
A-T-A-R is a term that came from consumer products marketing.
In this chapter, we outlined the use of A-T-A-R relatively early in the concept evaluation as a rough
forecasting tool. The A-T-A-R model is useful at this early stage, as it provides an early sales and profit
forecast based on estimates specific to the new product-it calls for numbers that usually can be
researched, and it uses them in a managerial way.
As we have seen, the new product evaluation system flows with the development of the product. What
evaluation occurs at any one point depends greatly on what happens next.
early expenditure

SURROGATES