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0:00
Hello, welcome back.
This is session three
of managing new
product launches.
I'm Ed Addison with
NC State University.
0:10
Today we're going to
talk about feasibility.
The feasibility of launching
the product that
you have selected.
This will be broken down into
technical feasibility and
financial feasibility.
0:24
For technical feasibility,
we're addressing the
engineering issues, can
the product be built
and will it function?
Often we conceive of new
products that are based on
technology but the technology
is still raw and not ready.
In order to determine
if a product
that you have
selected is feasible,
you would want to review
the product concept
and the needed features.
Ask yourself what technologies
are required to build it.
Can we build it with
existing technologies
that do not require basic
research to break through to
the level to perform
as you need it to?
It may require a
subject matter expert
to make this
feasibility assessment
and it's a trade-off
in reaching for
the horizon versus using
proven technology.
1:10
I'm going to talk about
sales forecasting.
In order to make the
financial feasibility,
we have to at least do a quick
and dirty sales forecast.
There are a lot of methods
for sales forecasting,
and if you're using
a mature product,
you can use regression over
sales data from the past.
But if you're doing it
as most people are,
a new-to-the-world product,
you will need to use
some other method for
sales forecasting.
1:38
The method that I
recommend using is called
A-T-A-R and A-T-A-R is a model
of innovation diffusion.
What you do is you start
with the conclusion that
profits are the units sold
times the profit per unit.
The units sold or the number
of buying units that you're
selling times the percentage of
the market that's even
aware of the product,
times the percentage
of the market who
would even try the product
if they could get it,
times the percentage
of the market to whom
the product is available
and a factor for
repeat purchases if
the user or customer
buys more than once in a
period such as a year,
so times the number of
units repeaters buy
in that year and
that will give you
the total profit equals
the revenue per unit
minus the cost per unit.
That sounds like a mouthful,
but it is a bottoms-up analysis.
So I'll give you some definitions
of what we're talking
