The next section looks more deeply at the phases of the new products process, first introduced in
Chapter 1.
The Phases in the New Products Process
Figure 2.1 shows a more detailed version of the new products process. Letàexamine each of the phases
individually to understand the basics.
FIGURE 2.1 The Phases of the New Products Process
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Phase 1: Opportunity Identification and Selection
The first phase is strategic in nature; successful completion of this phase yields strategic guidance to the
new products team, which guides idea generation and all remaining phases in the new products process.
At least three main streams of activity feed strategic planning for new products. They are as follows.
îgoing marketing planning. Example: The annual marketing plan for a CD-ROM line calls for a line
extension to meet encroachment of a new competitor selling primarily on price.
îgoing corporate planning. Example: Top management adopts a strategy that says either own a
market (meaning get either a first- or second-place share) or get out of it. This will require new product
activity in all desirable markets where the firm holds a minor position.
ðecial opportunity analysis. One or more persons (in the firm or a consulting firm) are assigned to take
an inventory of the firmàresources (people, facilities, reputations, whatever). Example: A firm in the
auto parts business called for an audit of its manufacturing operation. It turned out that manufacturing
process engineering had been overlooked or just not appreciated; that skill could serve as the base for a
new products program.
From these activities, the opportunities identified can be sorted into four categories. Here are
illustrations:
n underutilized resource: A bottling operation, a strong franchise with dealers, or that manufacturing
process engineering department.
`new resource: DuPontàdiscovery of Surlyn, a material with hundreds of potential uses.
n external mandate: The market may be stagnant, the competition may be threatening, or customer
needs may be evolving. Challenges like this will cause the firm to search for new opportunities, as did
the Tasty Baking Company in the case at the end of this chapter.
n internal mandate: Long-range planning often establishes a five-year-out dollar sales target, and new
products people often must fill part of the gap between current sales and that target. That assignment is
called the product innovation (and/or acquisition) gap. Other common internal mandates are simply
upper management desires, such as Steve Jobsàstated goal to ¥invent the phone7ith the iPhone
project.2
The process of creatively recognizing such opportunities is called opportunity identification. The
opportunities are carefully and thoroughly described, then analyzed to confirm that a sales potential
does, indeed, exist. Recall that one of the first things P&G Cosmetics did was recognize that the new
products process for

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