New Product Development and Basis for Interest - Smart Lightening - Case Study Example

NEW PRODUCT DEVELOPMENT AND BASIS FOR INTEREST s Executive summary Smart Lightening is going to be a newly launched product by the Intelligent Life Corp. It can adapt to people’s move and achieve desired light distribution. This report focuses on new product development and basis for interest of Smart Lightening. The product aims to differentiate itself from its major competitors with innovative and energy saving technology and targets at the green and premium lightening market. The premium communities, big enterprises and real estate companies are the potential customers for the new product. The business environment at both the macro level and the micro level are analyzed in this report. It is found the environment is generally supportive but the company still needs to prepare for the challenges in its business operation. Introduction Smart Lightening is a new lightening system developed by the Intelligent Life Corp. Its unique peanut lens form the floating lighting system which adapt to the way people move and ensure the desired distribution of lighting in streets of communities and workplace. Most of the people have suffered from increasing energy cost and the pursuit for a new lightening system is one thing that they will be happy to come across. Moreover, there has been constant appeal to shift to energy saving mechanisms as a way of sustainable development. The growing demand for more sustainable products in the market is a good indication of the amount of opportunities that is available especially in the UK market for the smart lightening products and services. This automatically means that the customers will be scrambling for new energy saving products from Intelligent Life Corporation. Smart Lightening aims to save energy and reform the traditional lightening system. This report focuses on new product development and basis for interest. The report also looks onto the need of the customers need regarding this product. Moreover, this report also defines the value attached to the customer regarding this new product. The plan contains five major parts: evaluation phase, concept development and testing, business analysis, development phase and launching of our new product. With the analysis in these five areas, the report hopes to reveal the key elements which determine whether the company can achieve its objectives of marketing and launching its new product. On this basis, the marketing activities of Smart Lightening can be planned and implemented in a thoughtful and efficient way. Evaluation phase 1 Mission, Objectives and strategies The mission statement of the Intelligent Life Corp says the company pursues “green and better life through innovative, energy saving and intelligent technology”. Corporate social responsibility is embedded in this mission statement emphasizing green and energy saving technologies and products. In addition, innovation and technological development is the core values of the Intelligent Life Corp. Smart Lightening is a typical representative of the values and mission. Before committing the resources for the launch of this product there will be need to consider the target market which has already been mentioned in the introduction. The size of the market is expected to grow while competition is expected from Philips Company which produces similar products. However, from the feasibility study it is evident that our product is going to shine in the market especially with the intensive research and development with new technology. A business model is the whole process involved in how a company is able to create deliver and capture socio economic values and cultural values within the business. From a recent case study it was established that company alpha engaged in seven business model innovations in which only 4 were successful. Amongst the remaining three, the company either succeeded or failed in their operations. From the case study it was evident that only the innovations which involved exploitation of existing technology and the development and exploitation of technology based products encouraged the success. The company’s failure was attributed to lack of desired quality and standards and that the market was small for the company’s turnover. As Intelligent Life Corp we have learnt from that research and that is why we aim to make this product with the latest technology while exploiting the existing based products. For this reason, acquisition of new technology and adaptation of recent technology in the energy industry is our target. To innovate in business model means that a company must be able to engage in mergers and acquisitions this reduces the company’s competitiveness. In addition to this, innovations in business model also require that companies are able to acquire or embrace new technology that exists within the business environment. From the research conducted between company alpha and beta it is evident that success only came when the companies involved in business models which involved acquisition of new technology and development. For example, company alpha engaged in seven business model innovations in which only 4 were successful. Only the innovations which involved exploitation of existing technology and the development and exploitation of technology based products encouraged the success. The case was similar to company beta which involved in only 3 business innovations and only two succeeded. From this study it was also conclude that with the use of new technology it will be technically to produce smart lightening products in the market. The industry trends and sales of similar products also indicate that this is a widely open market that any new entrant can penetrate easily and succeed. The target customers who are real estate engineers and premium customers are more than willing to embrace this new product while trying to avoid the traditional lighting system which is old and inefficient. Concept Generation and Business Analysis Phase 2 With our SMART objectives we intend to capture the rapidly increasing mortgage construction around Europe and in the world. The benefits of Smart Lightening products are that they are cost effective and also efficient in terms of customer’s service. Differentiation and positioning Smart Lightening differentiates itself from its competitors with advanced intelligent and green technology. Different from the traditional products, it can respond and adapt to people’s behavior and fundamentally reform the simple and conventional lightening. To compete with its major competitor GreenLine made by Phillips, Smart Lightening sells at 8% lower price than GreenLine because Phillips has a stronger brand image in the lightening market. Figure 1 shows the perceptual map of positioning strategy of Smart Lightening. It aims to implement the differentiation strategy with the unique positioning in the lightening market. Figure 1: Perceptual map SMART Objectives SMART objectives should be specific, measurable, achievable, relevant, and timed (Masterson and Pickton, 2010, p.397). According to the SMART criteria, the objectives of Smart Lightening are listed as follow. Sales volume. Sales volume plans to reach to $1 million in the first year since launch of the new product. In the second year and the third year, the sales volumes are expected to increase 5% and 8% respectively. This projection is bound to revision depending on the performance of this new product in the market. Net profits. The objective of net profit in the first year is $200000. In the next two years, it is expected to increase 6% and 10%. This is also expected to be evaluated within the next two years and a further projection established for the next 5 years Market share. The market share in the UK in the first is expected to be 5% and then increases 10% annually. We expect that by the end of the 5th year our products market share will be almost 50% hence giving us the monotony power to dictate the market in terms of prices and other economic factors. Customer satisfaction. Customer satisfaction aims to be higher than 90%. The company will begin its operations with $100 million as capital. This company is expecting to start its operations and achieve the break-even point within the first six months of its operation. The company then expects significant returns in terms of profits in the five to ten years. Hierarchy of Strategies Corporate level strategy. The following Figure 2 shows the corporate level strategies. The Intelligent Life Corp takes the diversification strategy. It enters into both the household energy equipment market and the business energy equipment market. It keeps developing new products on lightening, electronic equipment, and smart house systems. Business level strategy. The company implemented the differentiation strategy at the business level which aims to set up a unique position in the market. The intelligent lightening system which adapts to people’s move is the unique point differentiates it from the competitors. Functional strategy. The Intelligent Life Corp implements the new product development strategy and green technologic strategy focusing on improving green product structure continuously. Marketing strategy of the company is to set up the unique positioning and target exactly at potential consumers in different segments. Figure 2: Ansoff matrix Source: Meldrum, M., McDonald, M., 2007, p.126. Industrial five competitive forces Porter’s five forces model reveals the key points of shaping the industrial competitive environment. Treat of new entrants is medium. The intelligent lightening is a trend in future. It is expected that more companies may enter into this area. However, it is a high tech product which increases barrier of market entry. Treat of substitutes is low. There are many energy saving lightening solutions providing diversified alternatives for customers. But the intelligent lightening is still a newly emerging product which has few substitutes. Bargaining power of buyers is medium. On one side, the suppliers of smart lightening system are limited so that customers have only a few alternatives. On the other side, the customers can turn to traditional lightening if they are not satisfied with the transaction conditions. Bargaining power of suppliers is low. The Intelligent Life Corp purchases some electronic components. Since there are many suppliers in the market and the purchasing volume of the company is large, the bargaining power of suppliers is limited. Industrial rivals. The major competitor for the Intelligent Life Corp is Phillips which has launched its intelligent lightening product GreenLine (Phillips, 2013). In addition, some LED enterprises are also making efforts to develop the intelligent lightening product. Prospect Strategy The Intelligent Life Corp generally implements the prospector strategy which aims to be leader of change in the industry with little concern for the effects or impacts of organizations (Barnford and West, 2010, p.265). The company perceives the big potential of intelligent lightening system which saves energy and adapts to the trend of smart house and smart workplace. In this way, the company devotes to reform the traditional lightening products. In fact, the Intelligent Life Corp is one of a few enterprises which have made efforts in this area. It is an early explorer in the field. The prospector strategy is expected to help the company to set up the advantageous position in the intelligent lightening market. As well, it has to afford higher risk since the market is still immature and needs to be cultivated. Beta Testing and Marketing phase 3 Smart Lightening is at the start-up stage in its lifecycle. In this stage, the marketing research should focuses on estimation of the market volume, the early adopters of the new product, and the attitudes of stakeholders (Zegveld, 2006, p.215). In doing the marketing research, the Intelligent Life Corp can adopt the tools such as questionnaire survey and interviews to understand the attitudes of stakeholders (Simpson et al, 2006, p.371). For instance, the premium communities, the big companies, and the large real estate enterprises may be adopters of Smart Lightening. The company can contact them to understand their willingness to buy the new product and their affordability of prices. Questions should focus on influential factors of demand. At the same time, the company also needs to communicate with the shareholders. Their attitudes and evaluation of the new product can provide some reference for the company. In making the marketing research, statistical analysis can be used. For example, by setting up a large data sample, the principal component analysis helps to identify which factors are most important in determining sales and market volume of Smart Lightening. The company will go ahead and make a prototype according to the customers demand. Mock up tests will also be done amongst the first interested companies and if successful such customers will be allowed to enjoy our services free of charge. Similar products will be produced and sold in small scale to rate the customers feedback concerning the smart lightening products. Micro Level Analysis The Intelligent Life Corp has strong innovative competence and a high quality staff. In 2012, the company achieved revenue of $23.5 million and the market share in the energy saving lightening has kept increasing in the past three years. The company has invested heavily on R&D activities which may benefit its development and reinforce its competitive advantage in the long term. However, the R&D investments are of high risks (Park, 2010, p.43). In addition, the Intelligent Life Corp plans to launch a marketing campaign for the new product Smart Lightening. It aims to increase awareness of the potential consumers but the investment may also increase cost burden of the company. In addition, in recent years, the rising prices of materials and resources may also enhance difficulties of cost control. Macro level analysis The Intelligent Life Corp, located in the UK, is generally influenced by external environment in the domestic market. The country has generally peaceful political environment and the mature legal system. The national economy of the UK is on the track of recovery which provides more opportunities for the companies (Stewart, 2013, para.1). But there are also some economic uncertainties. The social and cultural environment is changing nowadays. Lifestyle of people has changed significantly and green and energy saving products are welcomed by consumers (Mollenkopf et al, 2010, p.25). The UK is a developed economy with advanced technology, good technological infrastructure, and encouragements for R&D. In particular, the EU and the UK have made some standards for environment protection and green products which support development of green and environment friendly techniques and products. Strategic challenges Seeing from the micro and macro environment of the Intelligent Life Corp, there are three strategic challenges for this company. Firstly, the enterprise should make preparation for the fluctuation of national economy. Demands and confidence of customer are significantly related to national economy (Dutta et al, 2007, p.354). Though the UK is on the trace of economic recovery, the uncertainties may impact the enterprises including the Intelligent Life corp. Secondly, the enterprise faces the challenge of cost control. It has to well plan the costs such as marketing costs and R&D costs. Thirdly, the enterprise has to deal with the financial risks. The new products usually need time to attract customers. In this process, the financial performance may be poor. Development phase 4 Marketing research and marketing mix Marketing mix policies Based on marketing research, the policies of marketing mix are listed as follow. Product policy. The Intelligent Life Corp focuses on development of high-tech products in particular green products. Smart Lightening is a product focuses on intelligent response to people’s move. In this way, the light will be distributed in the most efficient way. Price policy. Since Smart Lightening is a new high-tech product in the lightening market, it targets at the premium market with somewhat high price. Its price is about 20% higher than the traditional lightening. Place policy. Smart Lightening is sold through the delivery network of the Intelligent Life Corp. The marketing department will also directly contact the potential customers. In addition, the company introduces the new product on its official website and allows the potential customers to book for the product. Promotion policy. In the first 6 months after launch of Smart Lightening, the customers can get preferential prices. The new product will be sold at the same price of the traditional products so that the customers can be encouraged to adopt the new product. Significance of overall segmentation, targeting, differentiation and positioning strategies Smart Lightening targets at two types of customers. One group is the premium communities and the workplace of the big enterprises. The premium communities and big factories which want to upgrade their lightening system may be the early adopter of Smart Lightening. The other is the real estate enterprises. In building and constructing the communities and buildings, they may use Smart Lightening to improve their quality and image. To target at this group of people, the branding strategy is a core of marketing. The company needs to set up a responsible, high-tech, green and reliable brand image Phase 5 Launching Smart lightening company will then launch its products in the market. This will be followed by a strong advertisement strategy that aims at creating customer loyalty. In addition to this, we also intend to fill the distribution line with our products while creating a critical path analysis that aims at ensuring that our products and services reach the consumer with respect to utility. This will then be followed by the new product pricing which aims at ensuring that our product remains stable in the market now that it will be fully integrated into the market. Forecasts of unit volumes, revenues, and profit will also be calculated and projected to ensure that smart lightening products succeed. Conclusion This report focused on new product development and basis for interest for smart lightening product. The new product launched by the Intelligent Life Corp targets at the green and premium lightening market. The premium communities, big enterprises and real estate companies are the potential customers for the new product. The product aims to differentiate itself from its major competitors with advanced energy saving technology and the reasonable price. In summary, Smart Lightening is expected to have a promising prospect in the lightening market. References Barnford, C. E., West, C. P. (2010). Strategic Management, South-Western, Mason. Dutta, K., Venkatesh, U., Parsa, H.G. (2007). Service failure and recovery strategies in the restaurant sector: An Indo-US comparative study. International Journal of Contemporary Hospitality Management, 19(5), 351 – 363. Masterson, R., Pickton, D. (2010). Marketing: An Introduction. 2nd ed. SAGE, London. Meldrum, M., McDonald, M. (2007). Marketing in a Nutshell: Key Concepts for Non-Specialists. Butterworth-Heinernann, Burlington. Mollenkopf, D., Stolze, H., Tate, W. L. et al. (2010). Green, lean, and global supply chains. International Journal of Physical Distribution & Logistics Management, 40(1/2), 14 – 41. Park, Y. H. (2010). A study of risk management and performance measures on new product development. Asian Journal on Quality, 11(1), 39 – 48. Philips. (2013). GreenLine – High Efficiency LED Street Light Luminaire. Assessed on: http://www.lighting.philips.co.in/pwc_li/in_en/assets/docs/products/Product%20Catalogue-%20GreenLine.pdf [Retrieved on August 5, 2013]. Simpson, M., Padmore, J., Taylor, N. et al. (2006). Marketing in small and medium sized enterprises. International Journal of Entrepreneurial Behaviour & Research, 12(6), 361 – 387. Stewart, H. (2013). UK Economic Recovery Expected to Gather Pace in Official Figures. Assessed on: http://www.theguardian.com/business/2013/jul/24/uk-economic-recovery-official-gdp-figures [Retrieved on August 5, 2013]. Zegveld, M. A. (2006). 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