Solectrica car as a New Product Development - Essay Example

 NEW PRODUCT DEVELOPMENT EXECUTIVE SUMMARY Solectrica car is a new product that is being introduced by the Pessan Motors Company Ltd. The company has an expanded objective that would oversee that the operations are in line with the realized objectives. A business analysis shows that the company has an upper hand in terms of the technology and a basis for new entry into the market. SMART objectives define the company plan to outdo the other companies in the market dealing in the automobile industry with specific focus on Toyota and General Motors Company. These companies are the greatest competitors as well as well-established in the company. The market industry is indicated by a well-documented five forces analysis that well states the position of the company. The marketing development is described by the marketing mix policies that define the segmentation of the car. This leads to the required launch of the car in the effective UK and EU market. INTRODUCTION Solectrica car is a new brand of cars from Pessan Motors Ltd. This is a car that develops sufficient use of energy as different governments strive to reduce the rates of pollution to the environment. Industrialized countries have increasingly polluted the environment and with time, there is bound to be less sustainability to the environmental issues that are coming up (Fırat, 2013). There has therefore been a constant call to shift to energy saving machines especially the machines that are continuously done. Factual information shows that a single car generates half a ton of carbon dioxide within a very short time span. It is also estimated that there are 500 million cars in the world. The number is bound to double to more than a billion by 2030. This also means double pollution. There is rampant knowledge about use of environmentally friendly cars in the UK and therefore sensitization about the need to generate this type of car to capture this rapidly growing market. Solectrica cars are supposed to aim for this high reduction and there is even hope that some governments will effectively create regulations that will reduce manufacture of cars that are either using solar power or electric energy. This is the prime concept behind development of the Solectrica car that will utilize use of electricity and solar charging and avoid use of fuel that pollutes the environment. This paper seeks to develop a comprehensive review of this product development in the UK market. In view of the same, the paper will cover a collection of issues. It will generate a recommendation for the need to have such a car in the market introduced as an independent company product. It will then develop a strategic fit in the market where a strategic fit will be assessed. This will be followed by a forecast and then a project plan to create the requirement for the company existence in the market. These five major parts of the paper will therefore oversee the viability of launching the car into the market. PHASE 1: EVALUATION Mission, Objectives and Strategies The mission statement of Pessan Motors Ltd is ‘Making the Most Energy Efficient Cars in the World for Environmental Conservation, Market Adaptation and Customer Satisfaction’. The corporate social responsibility of the company lies in the mission statement, putting more emphasis on more technologies that save energy in the environment (Ingenhoff & Fuhrer, 2010). Therefore, innovation and technological development are the key and core values of Pessan Motors Company. Planning of the way forward in terms of the development agenda is very important. This refers to the fact that before resources are assigned to any of the projects by the company, there has to be consideration of the effective market. The target market, as stated in the introduction will be the UK (primary market) and an eventual expansion to other subsequent markets such as countries along the equatorial parts of the world that receive sunshine throughout the year so that the solar charging can be effected. This means that the size of the market is supposed to grow with competition from other companies that deal in motoring such as General Motors (GM) and Toyota which is considering opening up similar motor-line (Lennart & Bertil, 2009). Research and development has however shown that Solectrica cars are going to perform better as opposed to the subsidiary brands from the other companies. This is because Pessam Motors is going to have this car as the center of concentration and therefore there is a possibility of better production and market acceptance as opposed to the other companies. A reference back to the aspect of the business model as a strategy in the market reveals a collection of issues. A business model is a design that would oversee identification of business resources, the customer bases and the products. A company may have different business models and according to Osterwalder and Pigneur (2013), not all business models deliver success in the company. For instance, a company having well over seven models may have just two or three succeeding implementation in the market. However, case studies have indicated that products that are launched by use of the current technological innovations highly succeed in the market. This is because companies that have failed to meet the desired quality either because of lack of sensitivity to the market needs or lack of resources to invest heavily in R & D. as Pessan Motors Ltd, there are plans to harmonize the right resources as per the right objectives, invest heavily in R & D and keep using the latest research in the market so that there is success in the product introduction in the market. Therefore, the biggest target strategy is use of the most current technology to enhance operability of the company. From the company business model, innovation entails the company having the ability to expand through mergers and acquisitions which reduces its competiveness in the market (Nicolas, 2012). It also includes the company being able to embrace new technology. From the research information indicating that a company having different business models may only have one or two being successful, there is also a provision that there is almost no failure at instances when there are emphasis on research and development. It has also been established that the customers are willing to embrace the new technology and use it not to mention different government regulation across the world on the need to embrace technology that is energy saving. PHASE 2: CONCEPT GENERATION AND BUSINESS ANALYSIS With the use of SMART objectives of the company, the company plans to capture the highly promoted use of the environmentally friendly energy. The benefits of these cars are that they only depend on charging for energy to move it, will be made in a collection of choices; low speed, city speed and raceway. Moreover, the cost is expected to be lower due to absence of the energy utilizing compartments found in cars that use fuel. Differentiation and Positioning There is open product differentiation as far as the products from Pessan Motors Ltd are concerned. With the deep set R & D, the company capitalizes on production of the best cars in that sector (Osterwalder & Pigneur, 2013). It also develops cars that are green and therefore appealing to the environment and all that is in it. Adapting from the normal and traditional car models that have destroyed the environment, there will be a good reception from the customer base. To be able to effectively compete with the major competitors; Dynasty IT in the low speed category, Citroen from the city speed, BMW i3 from the highway category and VW Dragster from the Raceway category, the company plans to make sales that are 10% less than the initial prices of each unit of these cars. Most of the cars come from General Motors and Toyota, the major competitors who apparently have a very strong brand name. The company therefore will implement the differentiation strategy with the unique positioning that is strategic in technology and progressive R & D. the same can also be illustrated in the perceptual map below: Figure 1 High Price Low Low Technology High The SMART Objectives SMART stands for Specific, Measurable, Achievable, Relevant and Time bound. According to the connotations of SMART, the objectives of Pessan Motors Ltd are: Utilization of market economies in sales. According to the specialization criteria of the company, there is planned to be a sales volume of $500 million in the British market in the first year of operations. Due to good operations, the sales are expected to increase by 10% and 15% in the first and second year respectively. The rates of increment stated are expected to be the least and there are supposed to be positive projections as time goes. The net profits in the first year of operations are supposed to be in excess of $200 million because of the costs that the company will incur in developing the product in the market. The same is supposed to increase by 12% in the second and subsequently increase by 16% in the years that follow that. Market share: the company is supposed to increase its market share in the UK market but the initial share is supposed to be 10% with subsequent increases. Satisfaction of the customers: the customer satisfaction rate is supposed to be 85% and more at the initial stage. The starting capital is will be $250 million. Once the operations start, there is supposed to be a break-even point just after the first year of operations. Strategy Hierarchy This section would cover business, corporate strategies and functional strategy. The figure below will strategically develop an understanding of the corporate strategies. Pessan Motors chose diversification. This is a very important take because the product that is being made is different from the others. It is a product that has been diversified to be a car that will use electricity and solar energy instead of fuel. At the business strategy level, the company has the people in mind (Spyros & Marius, 2013). The people at this level are the customers and they are aiming to establish the company products to be as unique in the market as possible to avert stiff competition from already established markets. At the functional strategy level, the company seeks to develop latest green technology where there will be use of the solar energy and electricity. Moreover, the management of the company will be made to be departmental where there is delegation of the duties as per the specialization of the respective department. Figure 2 Source: Osterwalder and Pigneur, 2013 The Five Forces Analysis of the Industry The British automobile industry is a developed one. Therefore, the operations of all companies are under such influences as the developed market. Rivalry among Firms Given the number of firms in the industry, there is a high rivalry which is also very complicated (Spyros & Marius, 2013). It is therefore necessary that the Pessan Motors Ltd maximize on the diversification of the products so that the technology it will put in place gives it the edge over the other firms. The major competing firms in the market such as Toyota would therefore have to follow this trend to match this company. The suppliers’ bargaining power is very low. There are very many suppliers in the industry and this causes their power to go low. In the same sense, Pessan Ltd would also benefit from this sense and lead to it having a better position to have its products selling better in the market. The bargaining power of the buyers is medium. This means that the company has a possibility of finding a position in the market. This position is created by the fact that both the company and the buyers have a position in the way the market will be run. The threat of substitutes is very high. There is always an automobile that will make sure that there is locomotion. Talk of other means of transport that would substitute the development of Solectra car and there are very many choices. Threat of new entrants is a risk that is at a high development stage. This is because the industry is very developed and would therefore pose a challenge to the development of the company. It is also a positive issue because the company has to keep planning and re-inventing its R & D in all aspects. PHASE 3: BETA TESTING AND MARKETING Pessan Motors Ltd is operating at the start up stage in its life. The marketing research that is done by the company should therefore focus on the volume of the market, adaptation of the products in the market and the operations of the stakeholders associated with it in the market (Nicolas & T, 2012). In market research therefore, the company can adapt research tools such as observations, questionnaires and interviews to be able to understand the feelings of the different stakeholders associated with it. Some of the stakeholders in the market include the customers, experienced and larger companies in the automobile industry and the government authorities. The company will get information from them on whether they have the willingness to adapt the new cars in the market as well as purchasing these for their use. The research will also take to account the affordability prices of these companies. In the case of using questions to get the required information, there should be a great focus on the factors that affect the demand of similar products in the market. Communication with the shareholders is very vital. The level of willingness to assist and their mood on the same issues will determine the steps to be taken in generating the required steps ahead. In the marketing research therefore, statistical analysis will be the most effective method of generating the required information. The use of this analysis is very important especially when there is need to understand the quantitative and qualitative information for the required information. Due to the customer demands, the company will make prototypes among the customers as per their demand. For the companies that may be willing to try and purchase these cars for trial in their day to day activities, there will be mock up tests to determine the rationality behind their demand for these cars. When a company is able to access the requirement for this use, they would be provided with a few vehicles free of charge in anticipation for large purchases in the near future. Analysis at the Micro Level Pessan Motors Ltd has demonstrated a very powerful leadership and competence in the fields associated with research and development. In recent years, the company has seen large amounts of revenues being realized due to the involvement in extensive R & D. This is its major source of strength and is likely to remain the same way for a much longer time given the magnitude. This brings up a competitive advantage in the long term. It should also be considered that R &D has got its own risks and therefore risk management factors at a cost must also be considered. Pessan Motors Ltd plans to launch a marketing awareness on the new car in the market. This will be done through strategizing on specified customers who have the capability to purchase and slowly venture into other significant customer zones for effective. Therefore, apart from the normal market risks, there is also the issue of changing prices of the costs of the raw materials which makes it relatively hard to manage a future the company is not sure about. Macro Level Analysis The company is highly influenced by the external environment. The political environment of the UK is relatively peaceful and the legal system is very mature. With the many established companies, there are well laid guidelines on the quality and quantity of vehicles in the industry. However, there are some economic uncertainties that do exist in the market. The country has not fully recovered from the 2002 world financial meltdown and though the effects are not currently averse, they cannot be ignored. The socio-cultural environment of the nation is undergoing rapid changes in that there are changes in customer tastes and preferences. The nation is having the people who love the Great Britain and still are conservative about conserving its heritage. They would do all they can to conserve the environment through use of these cars. In terms of the technological environment, the country is well developed and the technology well spread. The infrastructure is great and good and the roads are well maintained. Therefore, the fear of having an infrastructure that will negatively affect the company such as poor states of roads is non-existent. There are also laws that govern the environmental degradation and therefore there is a high possibility that the company will get a sound backing of the countries under the umbrella of the EU. Strategic Challenges The company seems to be headed for effects of the economic challenges that affected the whole economy in 2008. Such fluctuations in the national economy affect all the companies in the economy and Pessan Motors Ltd is no exception. The second challenge is that the company may not have a high capability to control some sections of the company especially where there are the other companies involved. Thirdly, it is obvious that the company has had challenges with introducing new products just like any other. Therefore, there is a high possibility that the cars will first gain low acceptance levels in the market before the actual generation of the ideal operations is established. PHASE 4: DEVELOPMENT Marketing Mix Policies A research in the field of marketing indicates a collection of policies as listed below: Policy of the Product The policy of the product is that it will be based on a high level cars produced with the highest technological advances and updated to the latest dynamic trend in the market. Price policy Its price has been set at a relatively lower level than the other brands in the market for the reason indicated above. The car targets all members of the British community as well as all members of the EU when the company spreads to these new markets. Place policy Solectrica car will be sold through the company automobile stores that will be established all over the country. The company will also seek to establish sales through the internet where the current market usually gets its information. Promotional policy Companies that purchase on high levels have been guaranteed after sale services in terms of additional car to the company. The new cars will be valued against the old fuel-propelled cars so that the customers may see the difference between the two. On overall basis, the company will operate under a well-structured segmentation base and this will create a connection between the company, the cars and the customers. PHASE 5 LAUNCHING After considering all the factors above, Pessan Motors Ltd will be ready to launch the Solectrica cars in the market. The launch will be followed by a very aggressive advertisement and promotion so that it gains enough acceptance and marketability. The customers will then be launched so that the utility of the customers is established so that the car brand remains stable in the market. The pricing will follow this introduction and forecasts of the volumes per unit will enable the brand to be acceptable. Conclusion This product has focused on new product development. The new product is Solectrica car and the company will be Pessan Motors Ltd. The senior communities that create the largest market will be the entire UK market as well as the EU before spread to the other international market. Though there will be problems in introducing the new products, there is bound to be success brought about by a cling on technology and diversification. References Fırat, A. F. (2013). Marketing. Journal of macromarketing, 78. Ingenhoff, D., & Fuhrer, T. (2010). Positioning and differentiation. Corporate Communications, 83. Lennart, B., & Bertil, F. (2009). Traffic Exhaust. Environmental health, 17. Nicolas, K., & T, F. S. (2012). Brands as intentional agents framework. Journal of consumer psychology, 166. Osterwalder, A., & Pigneur, ‎. (2013). Business Model Generation: A Handbook for Visionaries Game Changers, and Challengers. New Jersey: John Wiley & Sons. Spyros, A., & Marius, L. (2013). Energy-Saving T echnologies. Environmental and Resource Economics,, 389. Read More