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Concept Evaluation and Testing

Stage 3 of NPD

Concept Evaluation

Evaluation is a process which is

continued throughout the NPD

project.

Through out the NPD project, we

evaluate NPD stages with tools such

as The Risk/Payoff Matrix, etc.

ATAR Model

• ATAR is an forcasting tool helps in finding the

answers to qustions like :

1. What is potential profit contribution of this

new product? Is it satisfactory?

2. How can we improve its profit potential?

• ATAR provides the early sales and profit

forcasts.

The A-T-A-R Model

A-T-A-R Model Application

10 million Number of owners of Walkman-like CD players

x 40% Percent awareness after one year

x 20% Percent of "aware" owners who will try product

x 70% Percent availability at electronics retailers

x 20% Percent of triers who will buy a second unit

x $50 Price per unit minus trade margins and discounts ($100) minus unit cost at the intended volume ($50)

= $5,600,000 Profits

Points to Note About A-T-A-R

Model

1. Each factor is subject to estimation.

Estimates improve with each step in the

development phase.

2. Inadequate profit forecast can be improved by

changing factors.

If profit forecast is inadequate, look at each factor

and see which can be improved, and at what cost.

Forecasters Can Be Very Wrong

They also said we would have:

• Permanent base on moon by 1987.
• Manned planetary landings by 1980.
• Most urbanites living in high-rises by 1986.
• Private cars barred from city cores by 1986.
• Primitive life forms created in laboratory by 1989.
• Full color 3D TV globally available.

Source: a 1967 forecast by The Futurist journal.

Sales Forcast