PDMA Product Development Professional (NPDP) Certification Exam NPDP Question # 38 Topic 4 Discussion
NPDP Exam Topic 4 Question 38 Discussion:
Question #: 38
Topic #: 4
Which of the following is the best answer regarding the use of financial analysis to evaluate new products?
A.
Financial analysis is easy and straightforward for new products - just generate a forecast and calculate an ROI
B.
Forecasts and financial analysis should be viewed as a living thing - it evolves and is revised as we learn more about the new product/concept
C.
The same type of forecasts and financial analyses should be used for all project types: new to the world, new to the company, product improvements, platforms, etc. because this consistency results in more accurate analysis
D.
You can and should generate a sales history for forecasting and financial analysis for a new product
Financial analysis for evaluating new products is inherently complex and should be approached as an iterative and evolving process. Forecasts and financial analyses are based on assumptions that can change as more information about the product and market becomes available. Treating these analyses as "living" documents allows companies to refine their projections and make more informed decisions throughout the development process. In contrast, viewing financial analysis as straightforward or applying a one-size-fits-all approach to different types of projects can lead to inaccurate and potentially misleading conclusions.
Thus, the correct answer is B: Forecasts and financial analysis should be viewed as a living thing - it evolves and is revised as we learn more about the new product/concept.
References:
Cooper, R. G. (2011). Winning at New Products: Creating Value Through Innovation. Basic Books.
Wheelwright, S. C., & Clark, K. B. (1992). Revolutionizing Product Development: Quantum Leaps in Speed, Efficiency, and Quality. Free Press.
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