Goodyear Tire & Rubber Company New Product Development Process - Essay Example

? GOODYEAR NEW PRODUCT DEVELOPMENT PROCESS Executive Summary Goodyear Tire & Rubber Company is one of the leading tire manufacturing companies in theworld and the number one company in its native continent of North America. The purpose of the project has been to analyze the importance of new product development and its strategy in context to Goodyear. The scope of the project lies in gathering and analyzing the data for the product development. Methodology of the project involves the stages required for new product development. The stages range from the idea generation through internal and external sources to the commercialization of the product. The project also discusses the assumptions regarding the financial strength, technological advancement of the company to provide an insight of the company’s capability in developing a new product. Limitations of the company in developing new product have been analyzed. The project further critically evaluates the new product development where both problems and opportunities have been discussed. The recommendation emphasizes on the strategies and ways which needs to be adopted by the company to overcome the limitation problem. Lastly, the project discusses new product development as the need of the hour for the companies around and their quest for superior technology in the competitive market. Table of Content Introduction 6 Purpose 6 Background 7 Scope 8 Methodology 9 1.Idea generation 9 2.Idea Screening 10 3.Concept Development 10 4.Concept Testing 10 5.Marketing Strategy Development 11 6.Business Analysis 12 7.Commercialization 12 Assumptions 12 A.Company being financially strong 13 B.Technologically upgraded 13 C.Company’s market value 13 Limitation 14 a.Brand limitation 14 b.Same innovation 14 c.Line extension ambush 15 d.Thinking beyond the target market 15 e.Extending immoderately 15 Description and Evaluation of New Product Development 16 Recommendations 17 Conclusion 19 Reference 21 Introduction Goodyear is amongst the leading tire manufacturing company in the world. It has made its presence felt in every corner of the world. The company started its journey with 13 employees at its manufacturing plant in Ohio, USA and since then has grown into a company which is home to more than 70,000 employees across the world. The company with its continuous hard work has risen from scratch to become a billion dollar company. Goodyear with net sales of $22.8 billion (as of 2011) is surely leading the way to not only be the top tire manufacturing company in North America but also in the world (Goodyear, n.d). This project report on Goodyear will identify the prospects related to new product development. New product development is a critical aspect for the company in the cut throat competitive market. Product development is always based on certain criteria’s which otherwise can benefit Goodyear as a company in terms of market share and revenue generation. Purpose The purpose of this project is to analyze Goodyear’s strategy and methodology in developing new product. This project emphasizes on the need of new product development and its importance. Goodyear has been in the business for a long time and the project will evaluate the company’s future prospects in context to new product development. Tire market is a huge market with many competitors around which makes the new product development even more important for Goodyear. The project will answer certain questions such as why new product development is the need of the hour and how can it change the fortune of a company? Tire market is no more confined to the developed nations as the emerging economies of the world are leading the way in terms of tire consumption with the rise in number of vehicles plying on the roads. It comes as an opportunity for the company and the project analyzes what are the ways Goodyear can cope with the rise in demand by offering cutting edge technology to its customers. Background Goodyear Tire & Rubber Company was founded in the year 1898 by Frank A. Seiberling in Ohio, USA. Since company’s days of making bicycle and carriage tires, it has been reckoned as a force in the tire manufacturing industry with its technologies. The company started as a small business entity but over the years has grown into a multinational company. Goodyear’s products have seen a lot of change since the advent of the company. Manufacturing tires for bicycles to today’s racing cars; the company surely has proved itself on the global platform and still going strong with its aim to serve better through better and more efficient products for its consumers. Scope New product development brings a lot of hope for the company and can be termed as the lifeline for the company in today’s competitive market. Future prospect for the company lies in developing products as per the demand and preference of the consumers. The scope of this project is to define the new product development, the pros and cons related to new product development, the strategy needed by the organization. Apart from this the scope is to emphasize on the implementation of new product development planning considering the use of latest technology and management practices (Ifip, 2004). The scope of the project is to collect data and required information based on market evaluation which can be used to analyze the importance of new product development. The scope of the project in context to new product development for a company is to measure the needs and wants of the customers and accordingly design a methodology which will involve certain aspects of product development like the cost, quality of the product, price, customer acceptance and different features related to the new product (Kumar & Phrommathed, 2005, p. 129). Methodology New product development involves ideas, opportunities related to the new product. New product development takes place when the existing product is lacking certain aspects and the customer is not willing to opt for the existing product (Rainey, 2005, p. 149). The methodology of developing new product involves certain stages which are important as part of this project in analyzing the whole process and can be discussed as follows: 1. Idea generation Idea generation is the first step in the methodology of new product development. Idea generation has been processed taking both external source and internal source. Internal source involves interviews of focus group. Focus group interview is one of the research techniques which use group interviews to gather data from the respondents whose views are taken into consideration to study a topic related to research. These target persons are selected due to purposeful and focused reasons (Vaughn, Schumm & Sinagub, 1996, p. 5). External source opted for the methodology were the consumers whose views, demands and preferences were used as data and these data were further analyzed to reach to a decision regarding the new product development. 2. Idea Screening Idea screening is the process used to discard the weaker ideas as the new product development costs keeps increasing after every product development stage. The research methodology screened and reviewed the ideas related to cost of product development, return on invest, target market, market size, product size, etc.. (Kazmi, 2009, p. 264). 3. Concept Development Concept development is related to the product concept which can be termed as an extended version of the product idea. The product concept development involves certain actions: Customer needs identification Instituting target stipulation Selection of concept (Ulrich, 2003, p. 16). 4. Concept Testing Concept testing involves the following activities: Getting preliminary view of the concept and its future prospects in terms of commercialization Specifying the product development and in what direction it needs to proceed (Lehmann & Winer, 2005, p. 264). 5. Marketing Strategy Development Marketing strategy involves three stages: The first stage describes the size of target market, product positioning, market share, goals set in the context of profit and sales share. The second stage sketches the strategy related to distribution, price and the budget of marketing for the initial year. The third stage emphasizes on sales in the long run, strategy involving marketing mix and the profit goals (Kotler & Keller, 2007, p. 208-209). 6. Business Analysis The next step involves business analysis which is used as part of the methodology to evaluate the magnetism of new product by projecting profit, sales and cost to analyze if these gratify the objectives of the company. 7. Commercialization Commercialization involves the company’s decision of finally launching the product which may lead to rise in manufacturing cost depending on the demand of the new product in the market. Assumptions Assumption is an important step in the process of new product development. It is believed that the forecasting of new product involves assumption supervision, which requires conversion, tracking and generation related to assumption (Kahn, 2006, p. 32). New product development for the Goodyear Tire & Rubber Company can be based on the following assumptions: A. Company being financially strong It has been assumed that Goodyear is a financially strong business entity and will face no financial problem in terms of new product development. The process of developing new product which otherwise is a costly affair cannot be undertaken by the companies lacking financial competencies. B. Technologically upgraded Assumptions have also been made in considering the company having latest technology which will enable it to proceed ahead with the objective of developing new product for the large customer base. Goodyear being amongst the top tire manufacturing company has well been assumed to possess the technology required for the process of new product development. C. Company’s market value The project has also taken the company’s market value to be prime factor behind the process of new product development. It has been assumed that Goodyear has a good market value and its products are preferred by large number of consumers. This assumption further realizes the importance of company’s objective for developing new product. Based on these assumptions the project has initiated on the importance of new product development which will help the company to grab a larger share of the market and also have an edge over the competitors. Limitation The purpose behind discussing limitations is to highlight the areas of concern for the company in the process of new product development. Goodyear Tire & Rubber Company also has some limitations which can affect its objective of new product development. These limitations can be discussed below: a. Brand limitation In some cases it becomes difficult for the company to sell new product under the same brand name due to products high price or low price and subsequently requires a new brand name. This can be one of the key limitations for the Goodyear Company. b. Same innovation Another limitation for the company can occur in terms of developing new product on the line of same innovation which has already being adopted by other competing companies. c. Line extension ambush Line extension of the existing product line can be another limitation for the company. Line extension in terms of new product development can be an option but it has its limitation as extending product line beyond its potential can lead the company towards failure and lose out on its large market share. d. Thinking beyond the target market Goodyear’s plan to develop a new product can take a backstage if it tries to please everyone. New product development methodology has its limitation in catering to everyone’s needs and wants. It is rather recommended that the company develops products based on the desired target market. e. Extending immoderately Goodyear can develop new product and can eventually go on adding new features to the product over a period of time. But, there is limitations and this certainly has to stop before the product becomes too expensive due to its added features is and no more sellable in the market and the company eventually fails to recover the cost incurred. Description and Evaluation of New Product Development New product development can be described as the process of developing new product either through the extension of product line or by developing a new product which has no resemblance to the existing products of a company. Goodyear Company’s new product development is based on its product line extension of tires. The company already an established name in the tire market further adds new product to its existing product line. The new product developed by the company is the nitrogen tires. These tires have been critically acclaimed by many due to its features which makes it a better replacement for the age old oxygen tires. With many advantages intact to the nitrogen tires the company is surely on the move to gain maximum access to the market. Nitrogen tires and Goodyear’s brand name can do wonders for both the consumers and the company. Goodyear may have opted for the nitrogen tires as a new product and has also forecasted the future of this product. But there are limitations for the company in this process. The problem with the new product for the company lies in the availability of machines across every gas station to fill the tires with nitrogen. Secondly, the company assuming that the new product will increase the sales and market share of the company can also prove to be a wrong assumption. The company has opted for this technology in revamping the whole structure of the tire because of features like its longevity in sustaining the pressure, less change of pressure as the temperature changes, cost-efficient for the consumers which can prove to be a great deal for the company. It can be the next big thing in the tire industry with not only the product being preferred by a certain group of people but by a large consumer base. New product development also brings in opportunity for the company. Firstly, the company differentiates itself from the competitors by developing new technology. Then with proper strategy application the company can move ahead with its product launch. Goodyear can opt for advertisements to spread awareness of their product and create eagerness amongst the consumers to use the product. The company has a reputation in the market and a product launch under the brand name will make a promise to the customers for better performance. Recommendations The process of new product development is an important factor for the company. A proper process in the development of new product can change the fortune of the company. The few recommendations which can help the company achieve its objectives are: i. The new development process should follow a proper methodology which will enhance the understanding of the company in a better way regarding the new product. ii. It is recommended that company should collect and analyze the data gathered from the customers. This will enable the company to design the product as per customer preference. iii. The problem may arise for the company in terms of keeping the cost of the tire low or at reasonable price. To overcome this problem the company needs to keep a check on cost incurred in the product development. iv. The company should launch the product at a time when the customers are most eager to adopt to the new technology. v. The marketing strategy adopted by the company should be in accordance to the new product to gain an edge over the competitors. vi. Since the company is opting for product line extension as part of its new product development process, it should make sure that the customers relate the product with the company’s brand name. vii. The product should provide the customers with extra features and benefits with the best service quality intact with the product. The company’s innovation factor will be measured to a great deal and to be at its best it should deliver the product with the features no other competitor has delivered and also at a reasonable price. viii. The product development is one factor but its promotion is another utmost important factor in today’s market scenario. The company can opt for many promotional strategies such as press release, advertisement through both electronic and print media, direct marketing and finally the interactive marketing to reach out to the maximum number of consumers around the globe. Conclusion The process of new product development has gained much interest of the companies around the globe. More and more companies are vying to develop new technology which can be used to create products that stand out in the crowd. New product development has moreover become the need of the hour for the competitive market. Companies want to lead the race of innovation and market share and this has made them strive for the cutting edge technology. The present project would help analyze the problems and gaps in the process of new product development in context to the Goodyear Tires & Rubber Company. The analysis will further help the company to develop a strategy which will be best suited for new product development. The project also emphasizes on the flaws related to new product development so that the company is able to develop the product with no flaws or minimal flaws. While doing so the company will be able to gain an edge over its competitors. The opportunities has also been analyzed which will help the company to position itself as a trusted brand in the minds of the consumers and simultaneously achieving its objectives of large market share and revenue generation. Reference Goodyear. (No Date). Our Company. Retrieved from http://www.goodyear.com/corporate/about/glance.html. Ifip. (2004). Information Technology Applications- Aims and Scopes. Retrieved from http://www.ifip.org/bulletin/bulltcs/tc5_aim.htm. Kahn, K. B. (2006). New product forecasting: an applied approach. USA: M. E. Sharpe. Kazmi, S. H. H. (2009). Marketing Management. New Delhi: Excel Books India. Kotler, P & Keller, K. L. (2007). Framework for Marketing Management. (Ed.3).New Delhi: Pearson Education India. Kumar, S & Phrommathed, P. (2005). New product development: an empirical study of the effects of innovation strategy, organization learning, and market conditions. USA: Springer. Lehmann, D. R & Winer, R. S. (2005). Product Management. (Ed.4). New Delhi: Tata McGraw-Hill Education. Rainey, D. L. (2005). Product Innovation: Leading Change Through Integrated Product Development. USA: Cambridge University Press. Ulrich. (2003). Product Design and Development. (Ed.3).New Delhi: Tata McGraw-Hill Education. Vaughn, S, Schumm, J. S & Sinagub, J. (1996). Focus group interviews in education and psychology. USA: SAGE. Read More