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Case Study - New Product Development for Global Transportation Company
A global transportation company was in the early stages of developing a new suite of electronic commerce and customer automation products. While they were excited about several new potential concepts, the company was not sure how to prioritize the various efforts, and was interested in better understanding the potential opportunities. The joint consultant/client team determined for each product the market potential, probability of success, and expected financial returns to the client.

Approach
The team first assessed the fit between the potential new products and the strategic goals of the client. This required developing detailed product descriptions and codifying the client's strategy for these products. Through this process, the team agreed with top management that the new products would have to be accretive to profits, and not simply revenue-generating.

In the second phase, the team built an activity-based cash flow model to better evaluate the financial benefits of the products to both the client and its customers. Internal and external research was conducted to quantify customer up-take and to identify development and implementation costs. Work steps included:
  • Sizing the potential market for each product
  • Assessing customer needs and values
  • Segmenting potential customers based on needs and expected buying behavior
  • Analyzing competitive products
  • Quantifying the expected development cost for each product
  • Determining the resource requirements to implement each product, including technology, manpower, and marketing costs
  • All of these elements were combined in the financial model, and various scenarios were assessed to measure the sensitivity of the financial projections to the assumptions.
In the third phase, the products were prioritized based on strategic fit, financial benefits, and speed to market.

Value Added
The project brought much needed focus to the client's potential new product portfolio. Resources were reassigned from low priority products to high priority products and the high priority products were quickly brought to market.

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