Systematic development of new product strategies in a machine tool company

Abstract

Towards the end of the 1970's, a successful international machine tool company was facing increasing worldwide competition and a radical technological revolution away from conventional machine tools and towards Numerically Controlled machines. This thesis describes the development of new product strategies in response to this rapidly changing environment. Conventional new product development methodologies are shown to take insufficient account of corporate factors and so a modified methodology has been developed which incorporates Strategic Market Planning. This is shown to offer some important benefits. In this particular implementation, the methodology involved the selection and development of procedures for Strategic Market Planning, Forecasting and Marketing Research. The Strategic Market Planning which is described uses the Boston Group's growth/share matrix combined with Product Life Cycle analysis. These two techniques are found to be highly complementary and most suitable for introduction in a multi-product company which is not marketing orientated. It is shown how three types of Forecasting (Economic, Sales and Technological) can all make an important contribution to the development of a new machine tool. Particular use is made of the Fisher-Pry substitution model which is used to give some valuable forecasts at the rate of substitution of N .C. for conventional machine tools. Competition and desk research methods are shown to partially overcome the problems which arise from performing Marketing Research in a company which has little confidence in questionnaire techniques. This project has contributed to the development of a complete portfolio of new high technology machine tools. Two of these new machines have already been launched and these are both successful new products. From the experience gained in this particular application, it has been concluded that conventional new product development procedures can be improved by adopting the modified methodology.