A METHODOLOGY FOR REDUCING THE RISK OF FAILURE FOR NEW INDUSTRIAL PRODUCTS

RICHARD CHARLES INSINGA, Pace University

Abstract

This study considers a key problem faced by managers responsible for developing new products: the decision of whether or not to introduce a new product to the market. Specifically, the study searches for a methodology for evaluating a new industrial product's potential for success in the market. It is desired that this methodology should be based upon measurable inputs and should be empirically verifiable.^ Many methods currently are in use for screening new products. Generally, these methods are of three types (which are not mutually exclusive): (1) personal judgment, (2) a checklist of factors, and (3) weighting-and-scoring of factors. In the latter, a list of key factors is created, each factor is graded, and a weighting system is used to arrive at a single number "figure of merit." The factors and weights are determined subjectively.^ A review of the literature indicated that several researchers had recommended the application of a discriminant function methodology to this problem. One of these, Cooper, had collected data on 195 new industrial products and had developed a discriminant function.^ This study builds upon Cooper's research. The potential for utilizing Cooper's discriminant function is evaluated. A group of thirteen respondents completed questionnaires for eight case studies that describe new industrial products which are about to be introduced to the market. (The respondents did not know the outcome of the market introduction, so the situation approximated the pre-introduction condition.) Because many people completed the questionnaire for the same products, an estimate is obtained of the consistency in responses among individuals.^ It was found that the scale utilized by Cooper did not result in normally distributed responses. A smaller, and more clearly defined, scale did produce a normal distribution. Furthermore, the standard deviation of responses revealed that a sample of about 10 to 15 people is required to get a reasonable measurement of the characteristics of a single product. This implies that studies which ask only one person to complete the questionnaire on a product are subject to a wide confidence interval, perhaps jeopardizing the ability to draw conclusions from the data. Finally, most respondents displayed a small, but significant, bias that would need to be taken into account when combining data from several people. ^

Subject Area

Business Administration, Marketing

Recommended Citation

RICHARD CHARLES INSINGA, "A METHODOLOGY FOR REDUCING THE RISK OF FAILURE FOR NEW INDUSTRIAL PRODUCTS" (January 1, 1986). ETD Collection for Pace University. Paper AAI8607372.
http://digitalcommons.pace.edu/dissertations/AAI8607372

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