New Product Development Presented by Precast Consulting Services

1
New Product DevelopmentPresented by Precast
Consulting Services

• Agenda
• Whats Precast Consulting ?
• New Product Development
• New product development 7-Step Process
• Example product lines
• Checklist for success
• Summary

Left click to advance - Right click for
controls The back arrow will return you to the
website
2
New Product Development Margin Improvement

• The starting point Whats your sales margin?
• Analysis compute sales margin by product line
• - Sales and cost of production by product line
• - Allocate fixed costs to product lines
• - Get involved to keep the effort focused and
  efficient
• Results
• - Product lines losing money need immediate
  attention
• - High margin product lines need emphasis
• - Product lines with margins 0-5 need to be
  replaced

3
New Product Development Margin Improvement

• Commodity Pricing Low Margin
• Products undifferentiated - interchangeable
• Standard specifications
• Technology is mature
• Buyers market excess capacity
• Low cost producer sets the price
• Product sales margin less than 5
• Many products fit this description
• Quality and ethical challenges
• They remain the financial backbone of many
  producers

4
New Product Development Margin Improvement

• Commodity Pricing Whats the answer?
• 1. New production technology
• Margin improvements are typically short lived

5
New Product Development Margin Improvement

• Commodity Pricing Whats the answer?
• 1. New production technology
• 2. Differentiate your products services
  improve margin
• Focus on markets - Be market driven rather
  than product driven
• Create value - Provide solutions, not
  products
• Segment customers - Better focus on market
  needs
• New services - Focus on selected markets
  customers

6
New Product Development Margin Improvement
Commodity Pricing Whats the answer
1. New production technology 2.
Differentiate your products services

• 3. Develop new products - improve margin
• Focused product - Displace another building
  system
• Focused service - Solve a specific problem or
  reduce costs
• Market strength - Successful new products build
  on what you are already doing
• Replace your least profitable commodity business
• New Product Development is todays topic

7
New Product Development Margin Improvement
Commodity pricing What's the answer 1.
New production technology stay current 2.
Differentiate your products services from
commodities 3. Develop new products - improve
margin Every commodity was once a new product
with high margin competing with and displacing
another building system
Precast
manholes once were a
new product
competing with brick
8
New Product Lines Action PlanPrecast
Competitive Advantages

• Owners
• - Strength (5000 PSI)
• Plant Quality
• Durability
• Fire resistance
• Project specific (appearance, maintenance, etc)
• Architects Specifiers
• - Design engineering services
• Engineering envelope design objectives
• Job cost savings
• Speed of construction
• Contractors
• - Turn key contract risk reduction
• All weather construction
• Shortage of masons
• Reduction of trades on the job
• Precast relative advantages differ from market to
  market

9
New Product Lines Action PlanBill Rays
Principles

• 1. High margin new products compete with other
  building systems, not other precast.
• 2. Successful new products build upon what you
  are doing now.
• 3. Find your new products with your partner
  architects specifiers
• 4. It takes time. New products take two years
  to develop.

10
New Product Lines Todays AgendaA 7-Step Action
Plan

• 1. Find the product
• 2. Evaluate the product
• 3. Design the product
• 4. Pricing guidelines
• 5. Patent protection
• 6. It takes time
• 7. It takes commitment

11
New Product Lines Action PlanSuccessful new
products compete with other building systems, not
other precast

• 1. Find the product
• . Survey your jobs
• . Survey your architects
• . Survey your customers
• . Ask questions big and small

12
New Product Lines Action PlanSuccessful new
products compete with other building systems, not
other precast

• 1. Find the product
• . Survey your jobs
• . Survey your architects
  Structural
  Producers
• . Survey your customers
• Look for new products . . .
• And you will find you have been walking
  right by them without noticing.
• 
  Precast Producers

13
New Product Lines Action PlanSuccessful new
products compete with other building systems, not
other precast 1. Find the product
. Survey your jobs . Survey your
architects . Survey your customers

• 2. Evaluate potential products
• Perform a structured features
  benefits evaluation
• Benefits to the owner
• Benefits to the architect
• Benefits to the contractor

14
New Product Lines Action PlanSuccessful new
products compete with other building systems, not
other precast 1. Find the product
. Survey your jobs . Survey your
architects . Survey your customers

• 2. Evaluate potential products
• . Structured Features benefits evaluation
• . Identify specifiers required to reach
  target markets
• Architects
• Engineering firms
• Code authorities

15
New Product Lines Action PlanSuccessful new
products compete with other building systems, not
other precast 1. Find the product
. Survey your jobs . Survey your
architects . Survey your customers

• 2. Evaluate potential products
• . Structured Features benefits evaluation
• . Specifiers required to reach target
  markets
• . Identify market size by product
• Ask specifiers
• Dodge Reports
• Market Research Firms

16
New Product Lines Action PlanSuccessful new
products compete with other building systems, not
other precast 1. Find the product
2. Evaluate potential products

• 3. Design the product
• . Come to the specifier with a specific
  product
• . Drawings
• . Specific price point

17
New Product Lines Action PlanSuccessful new
products compete with other building systems, not
other precast 1. Find the product
2. Evaluate the product

• 3. Design the product
• . Come to the specifier with a specific
  product
• . Drawings or illustrations
• . Specific price point
• Be competitive with full cost of competitive
  product
• Price the features
• Show the included benefits
• Charge what the market will bear

18
New Product Lines Action PlanSuccessful new
products compete with other building systems, not
other precast

• 4. Pricing guidelines Dont use formula pricing
• . Product enhancements - premium pricing
• . Product innovations - partner without
  introductory pricing
• . New products - initial pricing should
  never be at breakeven
• 5. Patent Protection Protect unique designs
  materials
• . Examples Special designs connx
  details
• . Pat. Pending Protection during the
  application - about 2 years
• . Protection Draw the patents broadly to
  cover variations

19
New Product Lines Stairtower ExampleSuccessful
new products build upon what you are doing
now WTC was much worse because
of failed stairtower walls

• Refuge Egress
• Changes in code typically originate in disasters
• BOCA is evaluating proposals for more robust
  stairtowers
• Considerable local interest
• Structural Producers Think about stair towers

20
New Product Lines Lightpole Base Example

• Precast Producers, think about this light pole
  base
• Product Advantages to the customer
• . Rapid construction reduced project
  scheduling risks
• . Product quality bolt hole elec connx
• . Appearance Steel form finish vs.
  Sonotube
• . Cost - Reduced GC overhead supervision
  costs
• Market Advantages to the producer
• . Competes with other building systems
  good margin
• . Product line extension from current
  known req.
• . Builds relationships with existing
  specifiers customers

21
New Product Lines Action PlanProduct
development must be a way of life

• 6. It takes time There are many excuses for
  inaction
• . Persistence is the most important trait
• . Go for a small early success
• . It takes two years
• 7. Its ongoing New products turn into
  commodities
• . Specifiers write specifications, margins
  are reduce
• . New product development must be a way of
  life
• . You need to have one or two new products
  in each stage of development

22
New Product Lines Checklist for failure

• 1. Did not commit to a sustained effort
• 2. What I wanted to produce was not what the
  customer wanted
• 3. Did not learn to do business with the new
  customer type
• 4. The new product competes with other precast at
  low margin
• 5. Unsolved production problems

23
New Product Lines Checklist for success

• 1. Find the product
• 2. Evaluate the product
• 3. Design the product
• 4. Price it correctly
• 5. Patent protection may help
• 6. It takes time
• 7. Its ongoing
• 8. Its up to you

24
New Product Lines Action Plan

• Find the product
• Evaluate the product
• Design the product
• Pricing guidelines
• Patent protection
• It takes time, its ongoing
• What can Precast Consulting do?
• Facilitate the process
• Whats worked elsewhere
• Market studies
• Product requirements - cost studies

25
New Product DevelopmentPresented by Precast
Consulting Services

• Whos Precast Consulting
• We are a general management consulting firm
• Focused only on the precast industry
• Finance
• Acquisitions / dispositions
• Financial benchmark analysis
• Sales marketing
• New product development
• Margin improvement
• Profitable sales growth
• Operations
• Work group productivity improvement
• Project management
• Quality programs rework reduction
• Manufacturing improvements