An Evaluation Model of New Product Launch Strategy - Example

Managing innovation Name of the Student: Name of the Instructor: Name of the course: Code of the course: Submission date: Executive summary The prominence of advertising in the social media has elevated in the recent decades. This has evolved into becoming a major source of revenue as many advertisers embrace advanced technology to advertise in the internet. The instigation of Facebook live and Facebook video which has enormous opportunities in the market will thus be integral in advancing this trend which will entail a synergy of inputs from diverse stakeholders like sponsors, Facebook users and the Facebook company itself. Nonetheless, it is imperative to be cognizant that there are different competitors, both direct and indirect to this venture. However, a comprehensive understanding of the consumer needs and the dynamics in the market will be critical in tailoring services which will be effective in meeting the consumer needs. In addition, a profound launch strategy and research program will be central in ensuring that the service provider meets the set objectives at the identified timeframe. On the other hand, there are different risks which are bound to be confronted by the service provider which include but not limited to financial, operational, IP and people risks among other risks. Table of Contents Executive summary 2 Table of Contents 3 A day in life; Consumer needs in context 6 Business concept 7 Business opportunity; the industry 8 Competitive analysis 10 Direct competitors 10 Indirect competitors 11 Strengths and weaknesses 11 Similarity of service 12 Benchmarking competitive products 12 Perceptual map 12 Conclusion 13 Consumer value 13 Research findings 13 Segments 14 Strategy canvas 14 Drivers of behavior 15 Value proposition 15 The Product 16 The IP and protection 16 Summary cost/price 16 Operations 17 Business model (Revenue generation) 17 High level view of process (make / buy) 17 End user operational issues 17 Channels (cost / control) 17 Sustainability / Environment / Ethics 18 Marketing 18 Launch strategy 18 Research program 19 Communications mix 19 Growth strategy 19 Milestones –Key Performance Indicators 20 Risk analysis 20 Types of risks 20 Limitations and exclusions of report 21 Conclusion 21 References 22 Introduction to the report It is an apparent fact that advertisement plays a central role in promoting any given company. Nonetheless, the ultimate choice of the channel of advertisement is integral in ensuring that the message is effectively and efficiently disseminated to the desired audience which is central in the company gaining both short-term and long-term competitive advantage in the market. The social media, for instance, Facebook has evolved into becoming a paramount platform for advertisement. This fact is supported by Mabry (2010, p. 3) who revealed that in 2009, advertisers used a cumulative total of $2 billion in the social media advertisement and this figure is projected to grow upto $3.5 billion by 2013. The current innovation of Facebook live and Facebook video is an ideal epitome of this undertaking. Towards this end, this will require intensive collaboration between the project innovator, Facebook, sponsors and the eventual advertisers. Nonetheless, it is imperative to be cognizant of the fact that there are other competitors towards the instigation of this venture, not forgetting some inherent risks. In addition, this venture is endowed with extensive complexity of its rudimentary undertakings as a result of the corporate interaction between the stakeholders aforementioned above. However, it is projected in this report that this venture will experience gradual growth and expansion based on several factors which will be explored in a subsequent section. Moreover, the key performance indicators (KPIs) of this venture will be analyzed in a latter section. Against this backdrop, this paper is a profound effort to explore the business opportunities of this innovative venture as well as performing a comprehensive competitive analysis. In addition, the consumer value, the product, operations, marketing, communication mix, growth strategy, milestones, risk analysis and types of risks will all be analyzed in this report. A day in life; Consumer needs in context The dynamics in consumer demands has seen a gradual paradigm shift from the traditional models of advertising, most predominantly in the print media towards more extensive and encompassing, technology oriented channels of advertising, for instance, the use of the internet. This is best exemplified in Canada whereby Schein, et. al (2010, p. 4) noted that Statistics Canada have cited that not only is an heightened percentage of the population utilizing the internet in their daily lives at home as epitomized by internet and social media usage trends but this people are getting involved in a more wider array of online undertakings. Thus, the general elevated usage of the internet reveals an increased preference of the consumers to be in the capacity of viewing the advertisements of various goods and services at the comfort of their home as opposed to being obliged to purchase periodic publications entailing advertisement of products from the print media. Therefore, the instigation of Facebook live and Facebook video will be a fundamental step towards satisfying this need among the consumers. In addition, it is worth noting that whereas the social media was initially perceived as being primarily utilized by the adolescents and young adults, recent trends have seen members of more advanced age cohorts embrace this channel of communication, networking and advertisement. This change of consumer demand will thus play a great role towards the popularization of Facebook live and Facebook video. Business concept The basic framework of Facebook live and Facebook video is founded on the need to solve the challenge of increased need of advertisement. This can be perceived as being as a result of globalization as well as elevated internationalization of various companies. Therefore, there is a need to establish an efficient mechanism of advertisement which will effectively reach an enormous audience beyond the borders of different states and at the shortest time possible. On the other hand, this channel ought to have the capacity of reaching the audience in various segments of the market, regardless of social class, age or gender. This is the main foundation on to which Facebook live and Facebook video is based upon. Thus, it will provide a solution that will save time and cost as well as reaching the consumers at a global level. This channel of advertisement can thus reach all these market segments in different countries, more effectively when juxtaposed with other channels of advertisement like business magazines and newspapers which are usually confined to specific regions. In addition, it will surpass the traditional use of the social media which was primarily used for networking to a more profound platform of corporate advancements. Business opportunity; the industry In regard to the size of this industry, figures from January, 2009 pointed to the fact that Facebook had slightly more than 175 million active users worldwide. Most commentators have juxtaposed this figure with national populations and inferred that this is over twice of the national population of Germany which stands at 80 million people and slightly below Brazil which harbors 180 million people (Kaplan & Haenlein, 2010, p. 49). By the start of 2012, Facebook had 900 million users in the start of 2012 and projected to hit the 1 billion mark of active users by the beginning of 2013. This depicts the enormous size of Facebook as a company and this number is projected to grow, with the overall global increase of internet use as well as its penetration into other segments of the population, for instance, those commonly referred to as generation X (aged between 35-44 years) who have increasing embraced this social network. The growth of this industry has assumed an upward trend since its instigation. This fact is supported by Forrester research who revealed that in the second quarter of 2008, 75% of the surfers using the internet used the social media, which was a considerable increase from 56% in 2006 (Kaplan & Haenlein, 2010, p. 49). The following figure shows the growth trends of social media between 2006 and 2010 Figure 1.0: Growth trends of social media industry, 2006-2010 Source: White (2010). There are several factors influencing market demand. Firstly, there is perceived enjoyment and entertainment in the use of Facebook, which is the social network under analysis. This is based on the fact that users can chat with their friends, update each other on current happenings among other activities. Secondly, this Facebook is perceived as an ideal platform of both informal and corporate networking whereby individuals can form groups based on similar characteristics and can keep each other up-to-date on what is transpiring in their various circles. Lastly, the recent upsurge of advertisements in Facebook have portrayed this social network as an ideal platform for popularizing different agendas, for instance, socio-political agendas as well as informing people about new products in particular places. The maturity of Facebook has reached a significant level after extensive innovations to seal the loopholes that were there before. Nonetheless, there is still some more to be done on emerging issues like security mechanisms which have come under intensive criticism in recent times. In regard to the barriers of entry, Clark, et. al (2008, p. 3) determined that Facebook has low entry barriers and is often perceived as being endowed with high capacity of profits. Facebook has its strengths, weaknesses, opportunities and threats, all of which are analyzed below. In terms of strengths, Facebook has a large number of users (when compared to other social networks) with each user having detailed information. Thus, it is possible to tailor its services to fit the needs of its users. In addition, this company has a robust relationship with other companies, for instance, Amazon and Microsoft, which is coupled with the ease to use this website. The weakness of Facebook is related to privacy which makes the users vulnerable to identity theft, potential stalkers and the general invasion of the users’ privacy. Moreover, the company is yet to deliver as much revenue as expected based on its strong user base and the information it has which can be used to deliver targeted advertisements. This is the particular weakness the Facebook live and Facebook video seeks to address. In regard to opportunities, the better use of the user information can result in more effective user service as well as targeted marketing. On the other hand, there is a great opportunity of user-created content. Lastly, the most prominent threat to Facebook has been perceived as the low entry barriers into social network industry where it only necessitates several good programmers and some robust servers, both of which have ready availability. This poses a great threat of new entrants into this industry. Competitive analysis Direct competitors The launching of Facebook live and Facebook video is confronted by some direct competitors in who have the capacity of alienating the competitive advantage of this innovative venture in the market. Firstly, there is the direct competition from other social media, for instance, Google+, which is owned by Google. This social media has video chatting capability which can facilitate communication and feedback between the marketer and the clients from different parts of the globe within the shortest time possible. According to The Marketing Zen Group (2011, p. 5), another interesting aspect about Google plus is the ‘Hangout’ feature. The rudimentary concept behind this feature is a virtual chat room where an individual can video chat with people in his/her circles. In addition, ‘Hangouts’ also permits an individual to watch YouTube videos collaboratively with other people who are in a particular group as well as text chatting alongside the video window. This social media is expected to reach 400 million users by 2013. Indirect competitors In regard to indirect competitors, Facebook live and Facebook video is confronted by indirect competition from online advertising companies, for instance, XLS technologies in Australia which have increased in the recent times. These companies are owned by different entities and their profitability has elevated in the recent decades as well as the expansion of the overall industry. However, their competition is significantly limited based on the fact that these companies are not endowed with video advertisement capabilities. Strengths and weaknesses The major strength of this venture is that Facebook has a wide array of users which will give Facebook live and Facebook video an ideal platform of getting prospective advertisers once it is launched. In addition, the popularity of Facebook and its proven profitability will attract sponsors who will be willing to invest in this venture based on projected returns. In regard to weaknesses, Facebook has in the past been faced by the challenge of low click-through-rates on their ads, despite their seemingly exemplary capacity of extremely targeted advertising. This is bound to affect the popularity of Facebook live and Facebook video in the initial parts of its instigation. Similarity of service There is no extensive similarity of services between those which will be provided by Facebook live and Facebook video with those from online advertising companies. However, these is slight resemblance of the service offered by some social networks like Google+ previously mentioned and Facebook live and Facebook video. Benchmarking competitive products The advertising services which will be offered by Facebook live and Facebook video are bound to have competitive advantage than those offered by the Online advertising companies based on the fact majority of them have limited capability in video advertisement, for instance, XLS technologies in Australia is primarily engaged in search engine marketing as well web designing and development. Thus, the products from Facebook live and Facebook video are bound to have a favorable niche in the market when compared to those from online advertising companies. Perceptual map High popularity Facebook live/video Google + Online advertising companies Low effectiveness high effectiveness Low popularity Conclusion From the above analysis, it is evident that Facebook live and Facebook video will be imperative in providing solutions in modern advertising. There is bound to be some competition in this venture but the extensive strengths as embedded in Facebook will be integral in overcoming this competition. Consumer value Research findings As previously mentioned, research has revealed that there has been an increased tendency of older members of the population being active users of social networks in the recent past. This is according to a recent research by Forrester research quoted by Kaplan and Haenlein (2010, p. 49). Majority of these users are in professional realms and in the wider corporate sector where they have been using the social media for various purposes. For instance, an article published by eMarketer after a research on the activities in social networking in the US companies (n=500) revealed that 31% of the CEOs in these companies were in Facebook while 29% of them used the tools in social networking to mold or manage their brand Mabry (2010, p. 4). This reveals the high potential of Facebook live and Facebook video in advertisements as well as getting sponsors to support this venture. Segments In terms of numbers, the recent figures reveal that close to half of the adults and three quarters of the teenagers in most developed countries are direct consumers of the social media. Facebook has been cited as being the most popular when juxtaposed with other social sites (Hampton et. al., 2012, p. 3). These segments of the population have high accessibility based on their regular presence in Facebook and their overall high utility of the internet. In regard to age, these adults are above 20 years of age when those below 20 years are the teenage users. Males have been cited as exhibiting a relatively higher usage of Facebook when comparedto females males in early years but this usage in terms of gender is fairly equal in the middle ages (for instance, at the university level). Nonetheless, females exhibit higher usage of Facebook than males at more advanced ages (Mazman & Usluel, 2011, p. 134). In addition, utility of Facebook has been cited to be more predominant in the urban areas when compared to the rural areas. Lastly, middle income members of the population have been cited as comprising the majority of Facebook users when compared to the low and high income members of the population. Strategy canvas High Facebook OACs Google + Mean Low Price Affordability Familiarity Accessibility Security Drivers of behavior There are various drivers of consumer behavior in the market. One of the drivers is the need for the Facebook users to get information regarding the current happenings in the socio-economic as well as the corporate world. Towards this end, the users tend to be prompted to sign up in Facebook. Secondly, the behavior of majority of the users in this social network is driven by peer pressure, mostly among the young users. This is whereby for them to be able to fit in certain social classes which are endowed with social connectivity, they feel obliged to sign up to Facebook in order to be at per with their peers. Lastly, majority of the users in the corporate sector are prompted sign up in the social media for the purposes of professional networking. Thus, the inherent need for networking which is integral in career development drives them to sign up in Facebook. Value proposition The advertisers are bound to derive extensive value from Facebook live and Facebook video based on the fact that they will be able to inform the consumers about their products which will eventually culminate to increased sales. Moreover, this value will be more profound to the new entrants in the market who will use this channel to notify the prospective consumers about their products. Facebook as a company as well as the sponsors will be able to get more value based on the revenue that they will derive from this venture. The Product The product in this venture is an advertising service which will be vital in exposing the advertising individuals or collectives to the consumers and thus culminate in sustained competitive advantage. This service has a global orientation in the sense that it surpasses the national borders and can reach out to advertisers and consumers from different parts of the globe. The IP and protection The intellectual property (IP) of this service is primarily under the Facebook’s IP rights in regard to social networking and any infringement of these rights, for instance, posting misleading, offensive or malicious advertisements will culminate in the advert being withdrawn from the adverts window and the advertiser be held accountable for any prospective litigations that can emanate from therein. In addition, the advertisers are prohibited from posting adverts that violate the IP rights of other parties. Summary cost/price Costs in this venture will primarily emanate from setting up the servers to host the advertisements as well as setting up the technical and software programming to support this service. Operations Business model (Revenue generation) This venture will use the subscription business model which will be key to its revenue generation objective. Thus, the advertisers will pay a particular amount of money for their adverts to be displayed for a specific period of time. High level view of process (make / buy) The process in this venture will entail setting up adverts in the yet to be launched advert window by Facebook. The sponsor will give their input in establishing the servers for hosting the adverts and after the initial technical and software programming processes mentioned above are done, the service will be launched. This will be followed by searching for advertisers who will be the main revenue generation group. End user operational issues The issues related to the operations of the end user include educating them on how to use the service as well as the advertisement merits of this service. Moreover, they will be informed on the channel to use while giving their opinion and feedback in regard to this service. Channels (cost / control) The control of this service will be primarily through signing contract of service with the advertisers when they subscribe for this service. This will ensure that each of the parties will keep its part of the bargain and any infringement of this contact from either side can result to court proceedings whereby the cost of such cases will be borne by the violator. Sustainability / Environment / Ethics The sustainability of this project will be maintained through the sponsors funding as well as the revenue gained from the advertisers. On the other hand, the feedback from the users will be critical in enhancing the services to suit the needs of the consumers. In addition, the confidentiality ethic will be upheld, which will bar the service provider from disclosing the advertisers’ personal information to the third parties. Marketing The marketing of this service will be through various channels based on the segmentation of the target consumers, for instance, corporate magazines and periodic business journals will take care of the prospective consumers from the corporate sector detailing the value that they are bound to get from using this service in their advertisement efforts. On the other hand, other adverts will be positioned in the website of various companies. Launch strategy According to Chiu et. al (2006, p. 1244), the strategy of launching a new product in to the market is a precondition of gaining competitive advantage. After all the logistics of setting up this service previously mentioned are taken care of, its launching will be due. In regard to timing, the launching will be when most companies are winding up their fiscal years so that they can incorporate the advertisement costs using this service in their subsequent budget. The launching process will be also entail the presence of as many corporate bodies as possible so that they can get the first hand information regarding the operations of this project. Research program The research program of this service will entail a database where all the feedback from the consumers will be gathered, critically analyzed and profound actions taken to address any concerns. This is important in the future undertakings in the service provision. Communications mix The advertisements will entail a message regarding the value that the consumers will gain from using this service as well as any discounts for the first consumers. In regards to sales management, the service providers will take initial orders even before the launch of the service which will ensure that it will kick-off immediately after the launch. Promotions will entail discounted advertising rates for the initial consumers to use this service as well as the consumers who will bring other advertisers on board who will get a form of commission on their subsequent adverts. In regard to public relations (PR), the service provider will have a strong PR department to take care of the issues raised by the advertisers as well as general user base of Facebook emanating from Facebook live and Facebook video. In regard to media mix, the service providers will use both the print media as well as the electronic media to popularize this service. The pricing of Facebook live and Facebook video will be based on the charges of advertising levied by other competitors as well as the inherent needs of different consumer segments. Growth strategy Facebook live and Facebook video service providers will in the future mold a strategic alliance with other companies like Apple to ensure that there is increased publicity of this service among the consumers of the computer hardware from this company. In addition, it will forge joint ventures with online advertisers in different regions of the globe to facilitate the penetration of Facebook live and Facebook video usage in these areas. Milestones –Key Performance Indicators Operational KPIs will include efficiency and effectiveness in service delivery as well as regular enhancement of the service provision process. On the other hand, the financial KPIs will be increased returns from advertisements while the personnel KPIs will be through the satisfaction, commitment and motivation of the human resource working with this advertisement service provider. Lastly, equity KPIs will be gauged through the minimization amount of debts from external sources. Risk analysis The major risk in this venture is the probability of advertisers posting misinforming adverts on the video window whereby the consumption of a certain product as depicted in the video can have detrimental effects on the consumers. The likelihood of this risk is high based on the increased amount of harmful products in the market which can find their way in the Facebook live and Facebook video adverts. The impact of this risk is that the conscious or unconscious display of these harmful products can result in widespread litigation processes if they harm the consumers. The key mitigation strategy is that robust mechanisms will be put in place to validate the authenticity of all the adverts and whether they meet the required standards by the quality regulation bodies. Types of risks The financial risk in this venture is the possibility sponsors withdrawing in case of slow returns from advertisements, mostly during the initial stages of this venture. The IP risk is the possibility of the advertisers violating the IP agreement in terms posting adverts that violate the IP rights of other parties. The operational risk entails probable inefficiency of some segments in service delivery, for instance, public relations which can jeopardize the operations of the service provider. People risk can emanate from public misconception about this service. Limitations and exclusions of report The financials of this venture were excluded from this report as well as the company profile. Conclusion From the above discourse, it is evident that advertising in the social media has heightened in the recent decades. The launching of Facebook live and Facebook video will be strategic in embracing the diverse opportunities in this field. Different marketing strategies analyzed in the preceding sections will be used to popularize this venture. However, it is important to recognize that there are different risks associated with providing this service; financial, operational, IP and people among other risks. References Chiu, Y. et. al., 2006, ‘An evaluation model of new product launch strategy’, Technovation, Vol. 26, pp. 1244–1252. Clark, W. et. al., 2008, ‘Facebook and the Emerging Social Networking Industry’, retrieved 12 October 2012, . Hampton, KN., et. al., 2012, Why most Facebook users get more than they give, Pew Research Center’s Internet & American Life Project, Washington D.C Kaplan, AM. & Haenlein, M., 2010, ‘Users of the world, unite! The challenges and opportunities of Social Media’, Business Horizons, Vol. 53, pp. 59—68. Mabry, EF., 2010, ‘Engaging audiences: An analysis of social media usage in advertising’, Masters Thesis, Louisiana State University. Mazman, G. & Usluel, YK., 2011, ‘Gender differences in using social networks’, The Turkish Online Journal of Educational Technology, Vol. 10 , No. 2, pp. 133-139. Schein, R., 2010, ‘Literature review oneffectiveness of the use of social media: A report for peel public health’, retrieved 12 October 2012, . The Marketing Zen Group, 2011, ‘Google Plus: A How-To Guide’, retrieved 12 October, 2012, . White, DS., 2010, ‘Social media growth from 2006-2010,’ retrieved 12 October 2012, < http://dstevenwhite.com/2010/08/08/social-media-growth-from-2006-to-2010/>. Read More