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Evaluation

15 January, 2016 - 09:18

Once an offering is launched, a firm’s executives carefully monitor its progress. You have probably heard about the “box office” sales for new movies the first weekend following their release. The first weekend is a good predictor of how much money a movie will make overall. If the ticket sales for it are high during the first weekend, a studio’s executives might decide to beef up the promotions for it. If the ticket sales for the movie are low, the studio might stop screening the movie in theaters altogether and release it on DVD instead. For other types of offerings, important milestones might be the first ninety days after the product is launched, followed by a second period of ninety days, and so forth. However, be aware that firms are constantly in the process of evaluating their offerings and modifying them by either adding or subtracting the features and services associated with them, changing their prices, or how they are marketed. The length of time for milestones used to evaluate products may vary depending on the organization and other products or services being developed.

KEY TAKEAWAY

Most companies put new offering ideas through a seven-step process, beginning with the idea generation stage. Ideas for new offerings can come from anywhere including one’s customers, employees, customers, suppliers, and competitors. The next step in the process is the idea screening stage, followed by the feature specifications, development, testing, and launching stages. After an offering is launched, it is evaluated. A company must balance an offering’s investment risk (the risk associated with losing the time and money put into developing the offering) against the offering’s opportunity risk (the risk associated with missing the opportunity to market the product and profit from it).

REVIEW QUESTIONS

  1. What are the seven steps in the offering development process? What are the key activities in each step?
  2. Who are lead users?
  3. How should a company evaluate new ideas? What are the criteria?
  4. How does quality function deployment work?