Full citation

Veldhuizen, E., Hultink, E.J., & Griffin, A. (2006). Modeling Market Information Processing in New Product Development: An Empirical Analysis. Journal of Engineering and Technology Management, 23(4), 353-373.

Format: Peer-reviewed article

Type: Research — Non-experimental

Experience level of reader: Advanced

Annotation: The article considers the antecedents and consequences of market information processing for new hi-tech products, in the three general phases of NPD activity — 1) Pre-development (research phase); 2) Development (development phase); 3) Commercialization (production phase). The article finds that information processing is different in each stage, with radical innovations requiring more intuitive and integrative processing than incremental changes.

Setting(s) to which the reported activities/findings are relevant: Large business, Small business (less than 500 employees), University

Knowledge user(s) to whom the piece of literature may be relevant: Manufacturers, Researchers

Knowledge user level addressed by the literature: Organization

This article uses the Commercial Devices and Services version of the NtK Model

Primary Findings

Model: The NPD process is characterized as having three general phases: 1) Pre-Development (research phase); 2) Development (development phase); 3) Commercialization (production phase). The processing of market information is shown to be different in each phase of activity, particularly for radical innovations with higher levels of uncertainly.
Survey of 166 NPD firms.

Methods:

  • Market research in the pre-development stage (research phase), can reveal useful information about customer requirements that later drives NPD parameters and results in financial success.
    Survey of 166 firms.
    Occurrence of finding within the model: Step 3.2, Step 2.2
  • Market Information Processing — incremental changes in new products generate low demand for market information processing, since the market is fairly well defined and known based on prior analysis. Market information processing demand is highest for moderately innovative new products where teams require customer needs information to guide development and to validate their concepts. Radically new projects lack a frame of reference for customers, so there is now demand for market information processing and instead NPD relies on intuition and exploratory integration of available information.
    Survey of 166 firms.
    Occurrence of finding within the model: Stage 2, Stage 3, Stage 4, Stage 5
  • Market information applied during the commercialization (production) phase of NPD, is shown to be related to product success, when it is used to position the product in the customer's minds within the right market segment.
    Survey of 166 firms.
    Occurrence of finding within the model: Step 7.10

Tips:

  • Interdepartmental conflict is negatively related to the acquisition of market information and time/cost efficiency. Companies should therefore focus on reducing interdepartmental conflict.
    Survey of 166 NPD firms.
    Occurrence of finding within the model: Stage 4, Stage 5, Stage 6
  • By acquiring market information through direct interaction with customers, developers obtain an understanding of what customers want and are better able to integrate this information into new products intuitively.
    Survey of 166 NPD firms.
    Occurrence of finding within the model: Step 4.11, Step 6.3, Step 5.3

Secondary Findings

Model: The adoption of a new product by the market is positively influenced by the product's advantages over competing products. A meta-study identified product advantage as the factor with the strongest impact on new product performance of all those studied. (Montoya-Weiss & Calantone [1994])