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How To Make Sure New Products Don’t Fail
Rick Steinbrenner
Chief Marketing Officer

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Basics - The 4 P’s of Marketing
Product
Place or Distribution
Promotions or Marketing Communications
Pricing or Profitability
 Arguably, product & promotions/marketing communications are the most
important elements in the marketing mix.
 Question is: How do we ensure commercial success/speed to market?
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Step #1 – Having The Right Product
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Most New Products Fail
~22,000 new products are launched each year
75% of new products fail to make $7.5MM in sales in year one of launch
Less than 3% of new products fail to make $50MM in sales in year one of
launch – long considered to be benchmark for success.
Most consumers tend to buy the same 150 items – 85% of household needs
Source: Schneider Associates, Jack Trout and other leading marketing professionals

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Why? – Some Companies Overstate Their Brand Strengths

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Examples of New Product Failures
Consumers didn‟t
want Coke to “mess”
with their old Coke.
Premier
smokeless
cigarettes from
R.J. Reynolds:
tasted awful.
Is Underwear
Really Disposable?
Like Pens & Lighters?
Somehow consumers
couldn‟t believe
Colgate frozen entrees
wouldn‟t taste like
toothpaste – ugh!
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Why Do Most New Products Fail?
No competitive point of differentiation – “me too”
Unanticipated competitive response
Poor positioning and/or overextended brand equity
Product fails to deliver promised claims/benefits
Too little/no marketing support – advertising/promo $‟s
Bad estimates of market potential/market share penetration
Marketing research mistakes
Launched into wrong channels and/or channel conflicts
Unanticipated market changes after launch
Source: Allen Weiss
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How Does One Increase Their Chances Of Success?
Make sure your new product idea is truly innovative and differentiated
Make sure your new product performs as promised
Don‟t overextend your brand into adjacent categories that don‟t make sense
Properly resource the new product activity
Have straight talk about the issues/opportunities as you go through development
Follow a structured process to facilitate cross-functional communication
Staged Tollgate New Product Development Process
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What Is A New Product Development Process?
It‟s a structured framework that helps keep the initiative “on-track” and helps
minimize “scope creep” and launches as promised.
Facilitates cross-functional communication & Sr. Mgmt. buy-in (e.g. Tollgates)
Insures good work flow, productivity, good quality designs and product
performance as specified.
Goals:
 Speed to Market - don’t keep designing forever
 Commercial Success – both distribution and sales velocities meet expectations
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New Product Types
Not all new products are the same. Some are simpler to develop/launch than others.
Type 1: New product technologies and/or new categories – “disruptive” innovation
Type 2: Existing technology/new designs – product restages or re-launches
Type 3: Existing products with simple performance and/or appearance changes
– line extensions
Generally, the type of new product will determine the number of steps and program
rigor required to bring an idea to market.
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Phase I: Opportunity Identification/Discovery
Consumer Trends Competitive Trends
Consumer &
Technology/Trends
Product Category Identification Process
Brand Equity Filter
Product Concept Identification Process
Branded Product
Concept Checks
Alternative Basis of Interest/Business Proposition (s)
Final New Product Design Guide(s)
New
Category
Core
Category
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Defining the “Fuzzy Front End”
The Role of Marketing Research in Product Development
“Who I
Am”
“What I
Say”
“How I
Act”
“What I
Feel”
“How I
Think”
High
HighLow
PotentialMarketShare/Volume
Consumer Behavior Understanding
Demographics and other traditional segmentation methods
Product usage via informal surveys and other qualitative methods
Observing actual usage behaviors
Quantitative in-depth discussions
on emotions/attitudes
Identifying consumer
values via quantitative
cluster analysis
There is a huge difference between what consumers say what they are going to do and how they
think throughout the buying process.
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Example: Iron Product Positioning by Attitudinal Segments
Source: 1995 ISS
I Want
To Iron
I Have
To Iron
Appearance Driven Ironers
Professional Pressing Results
ProFinish
Committed Ironers
Powerful Wrinkle Removal
SurgeXpress
Ironing enhances my appearance
Uninvolved Ironers
Performance Made Simple
Quick „N Easy
Ironing is just a task
Only 5 attitudinal attributes (out of 80) helped to define iron consumer purchase behaviors
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Uninvolved Ironers
Working couples on the go
Time pressed
Hate ironing
Appearance Driven Ironers
Family’s appearance is key
“One Pass” ironing
Like to iron
ATTITUDINAL FACTORS NEED GAPS FEATURES
Performance
Made Simple
Professional
Pressing
Results
Lightweight
Sure steam system
Auto-clean valve
Maximum steam performance
Superior glidability
In-use comfort
The study was able to consistently link attitudinal behaviors/thoughts to purchase drivers
Source: 1995 B&D A&U Study14
Committed Ironers
Mostly single
Personal appearance
Ironing is just a task
Powerful
Wrinkle
Removal
Sleek, lightweight design
Maximum steam performance
Adjustable steam control
Iron Attitude & Usage Consumer Segmentation

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Consumer Segment
% of Total Iron
Population
% of Ironing
“Tonnage”*
Usage
Index
Appearance Driven
Ironers
19% 40% 211
Committed Ironers 20% 13% 65
Uninvolved Ironers 61% 47% 78
* Ironing tonnage is mean frequency of ironing times # of garments ironed/occasion
Source: 1995 ISS
Iron Consumer Segment Usage Analysis
Appearance driven and committed ironers combined account for 39% of the users, but iron 53% of the
tonnage - an usage index of 136!!! These are the heavy users of the category.
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Basis of Interest Example – ProFinish Premium Irons
Opportunity: Re-invent Black & Decker household premium irons
Competitive Frame of Reference:
 Total 1996 Iron Category – 10.5MM units/$240MM in Retail $‟s. One of the largest appliance categories.
 >$30 price point segment – 2.2MM units/$86.4MM in Retails $‟s. Higher than average retail prices.
 Iron alternative: Dry Cleaners - $10B industry.
Basis of Interest:
 >$30 segment was fastest growing segment. B&D was #1 brand with almost 50% market share.
 Black & Decker premium irons had 2X the share of nearest competitor – but losing momentum & distribution.
 Correctly identified heavy user premium iron consumer segment – “appearance drive ironers”.
 ProFinish Concept: Top two box purchase intent score of 62% among target consumers - upper 1/3 ranking.
Barriers to Entry:
 Black & Decker premium irons had been losing distribution to Rowenta, Sunbeam, Norelco – especially in
higher price points in department stores with better performing products.
 Black & Decker failed on 4 previous occasions to develop a successful premium iron.
 CAPEX for developing new tooling was $2MM+ - high risk.
This is an example of what senior management needs to move to phase II16

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Phase II: Design/Development
Develop capital authorization request:
 Make vs. Sourcing decisions
 Launch timelines
 Profitability/capital/payout projections
Pre-Production Builds/Intellectual Property Protection:
 Industrial designs/Engineering builds - Prototypes
 Off-tool prototype confirmation of design
 Manufacturing equipment/production design
 Patent protection – Utility/Design
Consumer in-home use test concept verification:
Does the product deliver on product promises with consumers/users?
Develop Marketing Plans:
 Pricing strategy
 Distribution strategy/channel management
 Communications strategy: Advertising/Promotion/Digital
 Public Relations strategy
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14%
12%
12%
40%
22%
B&D "ProFinish" Sunbeam Proctor Rowenta Norelco
ProFinish Premium Irons had stronger purchase interest vs. competition (40%).
Source: 1996 BASES Product Designer Study
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Premium Iron Brands Most Likely To Purchase

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Q4 Q3Q2Q1Q4Q3Q2Q1
1995 1996 1997
Qual. Home
Use Test:
Eng. Build
Models
$10M
Quant. Home Use Test:
Pilot Run Samples
$20M
Pro’s Con’s
Retain shelf space
7 month advantage over sequential
Address sales oppty. - $22M/day
Launch before Rowenta/Norelco
We can react to poor results
Product not optimized, but would
beat competition - parity or better
Research costs still exceeds
budget by $50M
Recommended New Product Launch Critical Path
ID Research U.S./Europe
Part II Conjoint Study
$11M $55M
Positioning Competitive
Screener Benchmark
$42M Study - $60M
Branding
Study - $25M
Start 1/96 Ship 7/97
Announce at Housewares
show in 1/97
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Phase III: Commercialization/Launch
Develop packaging:
 Packaging structure
 Graphics
Develop/pitch customer presentations/samples:
Production start-up/warehouse builds:
Sales/Customer Service
 Product feature/benefit briefings
 Pricing implementation
 Warehouse availability
Implement Communications Plans:
 Develop advertising creative – TV/print/videos
 Communications planning – offline and/or online
 Public relations – press releases/media events
 Trade collateral materials – including merchandising/displays
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Maximum Steam Performance:
No other premium iron steams more
Professional Pressing Results at Home - just like a dry cleaner!!
Superior Non-Stick Glide:
New space age soleplate coatings
Comfortably Designed:
Comfort grips & unique control design
(new feature for the category)
ProFinish had 21 utility and design patents, the first iron to launch “comfort grips” into the market
Voted a Consumer Digest “best buy”, achieved 100% distribution; $30MM business from zero
Final Premium Iron Product Concept - ProFinish
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“Best Practice” Stage Tollgate New Product Development Process Summary
Phase 1
BusinessTeamScreen/Resourcing
Phase 2
BusinessTeamReview/Go-NoGo
Phase 3
????? ????? ?????
Major Activities:
Identify new product concepts (sources):
 Consumer/customer ideas
 New functional technologies
 Consumer research
 Competitive product reviews
Brainstorm/develop new concepts
Refine & screen new concepts:
 Informal customer reviews
 Qualitative research (focus groups)
 Quantitative concept screen ranking
Business Proposition Development:
 New product design guide
 Technical/engineering feasibility
 Develop rough prototypes
 Pricing/volume/profitability analysis
 Intellectual property reviews
 Launch timeline - first pass
Major Activities:
Develop capital authorization request:
 Production make vs. sourcing plan
 Production tooling plan
 Finalize launch timeline
 Profitability/capital financial plan
Pre-production/pilot builds/protection:
 Off-tool prototype confirmation
 Manufacturing equipment/prod. design
 Intellectual property legal filings
Consumer/In -home use testing
 Changes to product/positioning as needed
Develop marketing plan/budgets:
 Communications plans (TV/Print/Online)
 Distribution strategy
 Pricing/profitability plans & budgets
 Final launch timeline – start ship
Major Activities:
Final sales/customer presentations:
 Customer planogram approvals
 Confirm year one volumes
Production start/warehouse builds:
 First piece inspections
Year one production requirements
Implement pricing – customer service
Implement communication plans:
 Media placement
 Press releases/events
 Packaging structure/graphics
 Trade marketing collateral
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Name the staged tollgate new product development process phase steps

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“Best Practice” Stage Tollgate New Product Development Process Summary
Phase 1
BusinessTeamScreen/Resourcing
Phase 2
BusinessTeamReview/Go-NoGo
Phase 3
Opportunity Identification Design/Development Commercialization/Launch
Major Activities:
Identify new product concepts (sources):
 Consumer/customer ideas
 New functional technologies
 Consumer research
 Competitive product reviews
Brainstorm/develop new concepts
Refine & screen new concepts:
 Informal customer reviews
 Qualitative research (focus groups)
 Quantitative concept screen ranking
Business Proposition Development:
 New product design guide
 Technical/engineering feasibility
 Develop rough prototypes
 Pricing/volume/profitability analysis
 Intellectual property reviews
 Launch timeline - first pass
Major Activities:
Develop capital authorization request:
 Production make vs. sourcing plan
 Production tooling plan
 Finalize launch timeline
 Profitability/capital financial plan
Pre-production/pilot builds/protection:
 Off-tool prototype confirmation
 Manufacturing equipment/prod. design
 Intellectual property legal filings
Consumer/In -home use testing
 Changes to product/positioning as needed
Develop marketing plan/budgets:
 Communications plans (TV/Print/Online)
 Distribution strategy
 Pricing/profitability plans & budgets
 Final launch timeline – start ship
Major Activities:
Final sales/customer presentations:
 Customer planogram approvals
 Confirm year one volumes
Production start/warehouse builds:
 First piece inspections
Year one production requirements
Implement pricing – customer service
Implement communication plans:
 Media placement
 Press releases/events
 Packaging structure/graphics
 Trade marketing collateral
Tollgates
While these steps might look “discrete”; there can be some activity overlaps
Moreover, every company will have their own custom process that fits their business
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Step #2 – Having The “Right” Brand On The Product
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Product Branding Process
Analytical Framework
Define
Core
Brand
Positioning
Identify
Brand
Extension
Potential
Develop
Brand
Equity
Bridges
Marketplace
Analysis
Hunting Grounds/New
Categories
Who are we? What can we be? Where can we go? How do we get there?
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Key Branding Considerations
All products should have a “sustainable competitive advantage” An “SCA” is something:
 You exclusively have
 Your competition doesn‟t (or don‟t realize they have it)
 Your consumers/customers want it
However, this is not enough. One needs to make the new product memorable in consumer minds.
Therefore, all products should have a clear marketplace positioning which helps to create an emotional
bond with consumers/customers.
A positioning statement is based on analysis of the competition, consumer problems, product
features solving those problems - tying all of this either into a new or existing brand.
Source: Trout & Ries
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How Do World Class Brands Really Work?
It all starts with their positioning…..
What the consumers REALLY Buy
The Benefit of What They Sell
What They Sell
The Company
What
Defines the
Business - DNA
What the Products
Provide
The Products/Services
The Brand/Sub-Brand Name
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It defines the business(es) the company is in…..it’s what the customer really buys

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What is A Positioning Statement?
To target market, X is the brand of
frame of reference that benefit/point
of difference.
Support/Reasons Why:
 #1
 #2
 #3 etc.
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Positioning Elements Definition
1. Target Market: Consumers/customer group(s) having the highest pre-deposition to buy your
product. Can be demographic, behavioral, psychographic and attitudinal in nature.
2. Frame of Reference: either the product category or consumer/customer based solution to “THEIR”
problems, not yours. (can be direct competitors or non-category substitutes).
3. Benefit/Point of Difference: Single-minded, ownable category benefit relevant to the target market.
It‟s your product claim or promise to the marketplace – either attribute based or emotional.
4. Support/Reason’s Why: The product based reason to believe and/or claim substantiation.
Remember, the clearer and simpler the positioning, the easier it will be to break through the
clutter and become memorable.
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Actual Positioning Statement
To women and men with busy lives, the Black
& Decker line of small household products
offers a better way of doing things because it
provides smart, innovative solutions for your
home.
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A new brand will be harder to establish awareness since there is no prior marketplace
equity (and expensive too).
Using an existing brand on a new product is more cost effective, but one must be careful of
not over-extending the brand.
Good news: developing a solid positioning can be VERY easy assuming you did your
brand filtering homework correctly during the NPD process.
Positioning Things To Remember
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Successful Examples
of Branding Applications
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What the consumers REALLY Buy
The Benefit of What They Sell
What They Sell
The Company
Happiness
Refreshment
Soft Drinks
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Happiness Machine

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Eliminates
Speed Bumps of
Daily Living
Better Way of Doing Things
(Innovation Solutions)
Power Tools & Home Products Solutions
What the consumers REALLY Buy
The Benefit of What They Sell
What They Sell
The Company
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Scumbuster Cordless Wet Scrubber – “Splish Splash”

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What the consumers REALLY Buy
The Benefit of What They Sell
What They Sell
The Company
Miracles
of Science
Better Way Of Doing
Things (Innovation
Solutions)
Residential, Agricultural & Automotive
Products
4-Time NASCAR Champion
Jeff Gordon
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“Trunk Crew” – Featuring 4-Time NASCAR Champion – Jeff Gordon

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Summary
 New product development helps to define fundamental consumer “need gaps” and then
marry those needs with innovative functional technologies resulting in new innovations and
marketplace uniqueness.
 The “staged tollgate” new product development process aids cross-functional communication
due to it‟s discipline and structure.
 Branding helps distinguish your new product vs. competition and allows you potentially to
create a psychological bond with the consumer.
 Branding is the cornerstone of ALL marketing strategies and needs to proceed all other
strategies.
 However, there are limits to brand equity. Not all brands can readily move to new &
different categories. Understanding where your brand equity can go is fundamental.
 Branding/positioning dovetails new product development and vice-versa.
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