Techsonic Industries Inc. Humminbird New Products

1a. Risks and limitations of listening to customers during the NPD process:

* Using existing organizational systems often means completely missing the boat on the real customer and his real needs. This is the customer who values the products as a breakthrough. Products are frequently under-appreciated by firms when the new product is based on an existing platform. This leads to a wait and see attitude and the product is not given adequate support and often under-priced.

* The positioning strategy should be driven by the market, rather than by the ambitions of the product champions. The source of the problem is failure to understand how consumers' value product attributes. In all, over-appreciating a breakthrough or new technology that cannot be appreciated by consumers. This accounts for a high percentage of product failures.

* Listening to customers can mask long-run opportunities since customers rarely imagine these technologies.

* When customers are asked to make new product recommendations they tend to run into at least two kinds of blocks. The first is functional fixedness, the human tendency to fixate on the way products or services are normally used, making people unable to imagine alternative functions. People may not be able to conceive of a solution because they have apparently contradictory needs. The voice of the customer is very important, but discerning the difference between what customers are able to say and what they want demands that companies learn to go well beyond listening.

* Disruptive technologies suggest that some ideas should be developed despite current lack of fit with the market.

1b. Techsonic was not particularly vulnerable to all these risks and limitations. They always started with focus groups to find out what their next move would be. In many cases these focus groups were the steps to success. The findings from these studies were complete opposite from what Techsonic had always assumed their customers wanted in a product. These success products made listening to the customer the foundation of the company's culture. The customer was placed at the top of the organizational chart and management started to believe that their lack of fishing experience was an advantage. Others in the industry thought they knew what the customer wanted, but Techsonic was the only one who actually asked and listened. They continued with focus groups to find the answers to the next product generation. Techsonic was soon to be shocked that their customers wanted simpler products with less buttons and features. Listening to customers can mask long-run opportunities because customers rarely imagine new technologies. Although Techsonic had pioneered many of the innovations in the industry, many of its dealers perceived MorPal as the technological leader. They considered the Humminbird brand to be a good value with high customer acceptance. Techsonic had many products that did not fit exactly what the market wanted and they soon realized that the solution to these customers' needs lay in a new technology. They were able to use what they learned in the focus groups to improve on the technology of their products and take them back to the customer. It is not necessary for the customers to always imagine the new technologies; they give Techsonic the vision to create.

1c. Techsonic's success comes from their loyal customer interest with market studies. The company's founder Yank Dean IV believed in the company's potential to develop better products for the customers. Jim Balkcom, vice president, had a vision focused on growth through new products and customer loyalty through outstanding service from the beginning. The deliberate effort to research their customer base was the beginning of Techsonic's success. They always went to the customer with a prototype or specific product questions. The results were used to develop a new technological product focused on what the customer desired. Before the use of these focus groups, Techsonic had no success with new products. The products were not what customers needed or wanted. Techsonic spent the highest in the industry on print advertising. Humminbird products were advertised regularly in fishing and outdoor magazines. Boat shows and industry trade shows also played an important role in promoting Humminbird products. Techsonic used them to demonstrate its products to dealers and customers, as well as to introduce new products, assess the competition, and get feedback from the market. These means of communication allowed Techsonic to get more input from the customer and further its success.

2. Criteria used to evaluate the three new products:

* Customer Interest: Review what the market research concluded, Do the results compare favorably with those of past new products from Techsonic?

The new product needs to be something that the customer is interested in and sees a need or want for. The results must be favorable to past new products to ensure success.

* Market and Sales Potential: Review the projections for sales over three years, Do sales potential from first, second and third years exceed or compare to previous new products from Techsonic?

With each new product Techsonic wants to grab more market share and increase the overall market with higher sales volume. Comparing the sales potential to past new products allows Techsonic to get a forecast of the market's actions.

* Product Features: Does the product include features that are essential for purchase? Are customers interested in what this product offers? What makes this product better than competitors?

The product must include every feature that is essential for purchase behavior. Customers must be interested in what the product is offering compared to competitors.

* Margins: Are dealers' margins at least 15% in all channels?

Dealers want to make money on selling Techsonic's products. The projected margin for dealers needs to be 15% to ensure profits.

* Profit and Loss Forecast: Is the EBI&T substantially larger than the total capital expenditures?

This forecast needs to show that Techsonic will make money from introducing this new product to the market. If there is a substantial positive difference in the EBI&T and total capital expenditures, Techsonic will show profits.

3. Project 901, VHF Marine Radio, Navigation Products:

* Customer Interest:

-The market research concluded that the 901 was a clear winner because it scored high on