Product and Innovation Management - Case Study Example

PRODUCT INNOVATION AND LAUNCH STRATEGY By (Name) Name of Class (Course) Professor (Tutor) Name of Institution (University) City and State The Date Introduction Sonic 3D+ Secure Phone will be a unique multifunctional multimedia phone introduced by Sonic, a startup company. This product has been developed but has not yet been marketed most especially in the United Kingdom. The product is supposed to enter the U.K. market that is already filled with advanced smartphone technologies from well-known companies like Nokia, Samsung and Apple among others. However, Sonic has seen the potential for significant profits particularly for products that are able to deliver the particular benefits that are valued by the targeted market segments. Such features include security, durability, 3D View and most importantly long battery life (Bhowmik, Li & Bos, 2008). The new product is a slim handset of very high quality that combines various useful and innovative features which customers demand for. Sonic is targeting a specific market segment by marching the features of the new smartphone with the benefits these customers are seeking. If this product is a success in the UK we will then launch in the neighboring countries and eventually globally. Our company’s marketing priorities include creating new relationships with telecommunication companies, breaking even by the second year of operations, generating brand awareness among customers, operating in an environmentally friendly way and finally generating sales. The company’s fundamental competences of design skills, efficient assembly procedures and technical expertise is expected to aid in cost control and enable quick reactions to technological advancements and market trends (Mobile Marketing Association, 2006). We will combine both push and pull strategies to introduce the product into the market aimed at channeling members and customer segments respectively. Opportunity Identification and Selection Company background and product Sonic started two years ago by two highly experienced entrepreneurs in high-tech products. They had an original design for a new tough smartphone known as the Sonic 3D+ Secure Phone. The new innovation has a special biometric security system which stops any access if lost or stolen and a 3 dimensional multimedia viewing ability. The smartphone also has an environmentally friendly compact battery known as the Super Solar battery. This battery is expected to run the smartphone for up to 15 hours talk time before recharging. The product also comes with a 2 year warranty intended to enhance the company’s reputation as it is offers state-of-the-art, customer friendly services. Any telecommunication carrier network will work with the smartphone with prepaid plans and online free calling services due to Sonic’s special Wireless Communication Commander Application. This smartphone is slender, very light with a durable and large touch screen, water and drop proof with no-slip grip and very user friendly. It also has a standard 16 megapixel camera with storage, recording, play, uploads and downloads of files abilities. This phone has combined all the benefits and features of all the gadgets of all the competing companies into one cost and environmentally friendly product. These special features and the company strengths give our company the competitive edge differentiating the products produced by Sonic from those of the competitors. This product launch will be based on new technology, selective distribution, penetration pricing, favorable market trends, tight marketing control and broad information about the target market, competitors and most importantly customers (MinisterråDet, 2008). Market Trends and Needs This smartphone will meet a wide range of business and consumer needs. Our proprietary research showed that the main needs that have not yet been met in the smartphone market are: Security where smartphone theft is on the rise since the current smartphones are extremely expensive. Consumers want to be able to reduce the possibility of theft and secure their data. This is even more important for customers that use the phones for business purposes. The biometric identity recognition makes sure only authorized users can access and use the smartphone without using passwords which are sometimes forgotten or can be hacked. The distinct features of the phone will ensure it is recognized and its well-known security functions will discourage theft. There is currently no smartphone in the market with the same biometric security system. The second need is cost efficiency, our product has the ability to automatically select the lowest price and best quality phone and wireless methods for different locations through preset user preferences. The users can set this application to access office or home networks when needed. Users can also set the application to select the best quality and cost option when visiting different locations. This eliminates the process of manually searching for wireless or phone access. It also automatically turns of data when using Wi-Fi hotspot. The cost efficiency problem was brought about by telecommunication companies increasing the prices for voice and data usage. The last one is durability of the handset where consumers have complained about how the existing smartphones are easily damaged if dropped or just through the normal wear and tear. Our product will have special handset case materials and ultra-tough screen. The two year warranty will give protect customers against breaking, chipping or even scratching making our product exceptionally unique. Three dimensional entertainment programming has gradually become popular especially with the younger generation. Very few competing smartphones have 3 dimensional viewing capability. The size of the screen is however superior just like the resolution. These two trends work in our favor and the traits will be included in the initial campaign. There is another trend where there is an ever increasing trend in interest in sustainability, our smartphone will have the Super-Solar battery with 15 hours talk time before charging. This innovation will also be used to promote the first launch. Targeted Segments We are targeting consumers in the middle and upper income level that are very busy with little time to recharge their devices but need a long battery life for continuous communication and entertainment. They wish to get access to wireless connections from different locations while many commute and travel regularly making security a major issue. These consumers are well educated with at least a college or graduate school degree or diploma with annual incomes of more than 75,000 Euros. The other targeted market segment is young adults between ages 18 and 30 that can afford to buy new electronics and easily adopt to the new technologies. Our product’s three dimensional entertainment feature will attract this segment, whether they are viewing programming or playing games. This market segment also has awareness of the generally supportive products which use alternative sources of energy and other sustainability issues. Some may be attracted by the non-slip grip and roughness since they use their smartphones on the go. When it comes to the business people, the targeted segment includes entrepreneurs, small business owners and executives that travel regularly and would like to have devices with long battery life in addition to our special cost efficiency app that makes smart choices on networks. This market segment is also interested in more secure smartphones since they store sensitive information in their devices. The biometric security system reduces the threat of loss without having to inconvenience the users. Buyers here do not have style and design as a priority but want to have the latest technology in handsets that will endure heavy and prolonged use. The warranty would be also appealing to this market segment. Market Projections The sales of smartphones is on the steady increase according to industry analysis (Andersen et al., 2008). The U.S market growth reflects this shift from the normal cell phones to smartphones. There is very high competition among the top brands has aided in educating consumers about the vital features and functions that is also increasing the demand for smartphones. The security features of our product will ensure credibility among business customers that have to take into account the corporate policies for protection of data and devices. Competition Nokia, Apple, Samsung, HTC, Motorola and other smartphone production companies have sufficient corporate resources, long solid relationships with telecommunication carriers and high brand recognition in the United Kingdom (Chatain & World Bank, 2008). They also have extensive knowledge in product management and development. Most of them lead the UK market and introducing their products usually receives a lot of retail support and attention from the media. There is however no competing product with the exact benefits and features offered by the Sonic 3D+ Smartphone. Our handset and technology has been carefully planned to meet the vast amounts of needs that have not been met by the existing companies. Instead of competing in the general smartphone market, Sonic decided to target segments that place high value on the features and benefits offered by our products. The company expects to attract a segment of the existing customers from all the existing smartphone companies through special initial deals. Marketing Mix Product Strategy The Sonic 3D+ Smartphone will have functions and features of which some will be only exclusive to sonic that will deliver various highly valued benefits to the targeted market segments. The proprietary patented solar battery is one example that will be better and more efficient than the competing models. The product offers more than one benefit of prolonged use and less impact on the environment. The battery itself will have a three year warranty which has not been seen in the smartphone industry before. The company is also partnering with accessories companies to manufacture a complete line of Sonic-branded accessories including cases and headsets, wired and Bluetooth. All our brand products have to meet high technical and quality standards verified by independent testing laboratories (Reed Electronics Research, 2002). The smartphones will also be packaged and labelled with graphics that advertise security and technological advancement. The packaging will have image vignettes with key features in use and we will also cobrand models sold through our phone service providers to show support and strengthen customer recognition. All Sonic brand elements will be coordinated carefully to contribute to the reinforcement, image and distinctiveness of our company’s positioning. Pricing Strategy Sonic’s financial pricing objectives are to achieve profitability within the first year of launching the product and achieve a return on investment of 15% by the fourth year. We hope to have our first year losses at 5 million Euros or less including production and development expenses in addition to channel and communication costs in relation to the introduction. The variable unit costs are expected to go down and profit margins improve as the manufacturing volume and capacity increases during the initial two years of operations. Sonic will use a market penetration pricing strategy to establish the company brand in the highly competitive market. On its launch, The Sonic 3D+ Smartphone will have a wholesale price of 13o Euros and an average retail price of 200 Euros. The revenues for the first year are therefore expected to be approximately 30 million Euros after selling 240,000 Smartphones. The three C’s of pricing are used for the pricing of Sonic smartphone. Promotion Strategy The marketing objectives of our communication strategy are to create a brand awareness of 40% in the target market segments and generate a further 50 % brand awareness in the business target market by the end of the second year of operations. This will be achieved by creating a multimedia brand-building campaign which will differentiate the product from those of its competitors and engage customers in continuous dialogues. High priority will be put on social media marketing to help create a buzz about the product (Van & Van, 2001). Trade sales promotions will also be used to support Sonic’s distribution strategy and hold launch events to bring about media coverage and publicity. By partnering with retailers, we will deliver customized product information packages through email to potential consumers with specific behavioral and demographic profiles. There will also be magazine adverts to reach business segments and high-income consumers. The company will also use cooperative advertising to have the Sonic 3D+ Smartphone featured in high traffic store areas and the front pages of the printed materials and websites of the retailers. Our marketing plan is being fine-tuned to handle clutter, audience fragmentation and competitive advertising (Giachetti, 2014). Place Strategy The Sonic 3D+ SecurePhone will carry a two year warranty to on its parts and labor as part of our customer service strategy and reinforce the drop proof feature. This will be promoted in stores and retailer websites). Any needed repairs will be done by a national service firm with trained technicians. There will be weekly service reports to help note the problems to be addressed through changes in design or manufacturing (Kanopy, 2014). Consumers will receive 24 hour online technical support by pressing the service button on The Sonic smartphone or on a toll-free hotline. The customers will also be able to exchange their views about the new phone, post their reviews, discuss problems and suggest improvements on social media moderated forums. We will have monthly staff meetings, beta-testing by staff and channel members, customer-satisfaction objectives, daily blog posts and recognition rewards for meeting sales in order to build internal support and improve product and consumer knowledge (Georgia State University, 1999). The Sonic Company plans rigorous activities to help monitor customer service satisfaction and quality. These are the two main performance indicators (Richter, 2002). By doing this, we will be able to respond to any problems that may arise. We will also monitor customer service communications and product reviews to see any signs of confusion or customer concerns. We will also be using control to achieve breakeven which is another major performance indicator (Richter, 2002). Weekly and monthly sales, sales by channel and costs, quarterly awareness levels and the amount of non-profit organizations making special purchases are the metrics that will be monitored during implementation. There has been a contingency plan put in place to handle extreme pressure to reduce prices which could occur if any major competitor starts a price war or comes up with a cheaper technology. This plan calls for the introduction of a short term price promotion such as a rebate to remain competitive and at the same time determine the sensitivity of prices at different parts (Richter, 2002). The results of this short term promotion will be the basis of our marketing plan revision to defend our market share and at the same time maintain the lowest acceptable profitability level. In conclusion, the new product concept developed by The Sonic Company is expected to be a success in the United Kingdom after which it will be launched internationally. As experts in information technology, we are confident that our products will satisfy the various unmet needs of different groups of people. As much as there is serious competition in the smartphone industry, our product’s unique features will set it apart from the competitors and attract customers who value efficiency, quality and durability. Academic Theories/Concepts used One of the academic concepts used in the product innovation and launch of The Sonic 3D+ Smartphone is the 3 C’s of pricing. The 3 Cs is a business framework that was developed by Kenichi Ohmae, a strategist and the head of McKinsey Japan for a number of years (Day, 2004). This framework outlines the factors that have to be considered for successful pricing. While developing a pricing strategy, three aspects are taken into account and these are the internal factors of a Corporation, its Customers and the existing Competition. It is only when these three elements are used that a successful pricing strategy can evolve. Corporation In this concept, when a new product is developed, the desires and needs of the customer should be driving force (Maxwell & Estelami, 2005). When it is time to put a price on the new product, the entrepreneur has to examine the cost of production per unit. Most companies set the price above the cost of production per unit which is a very important calculation to make as it decides the profit margin. Generating profits is much harder than generating revenue since customer expectations are continuously changing. The business has to therefore continuously calculate its internal costs to make sure the price set for each product is above the cost of production, distribution and selling (Estelami & Maxwell, 2006). This is one aspect of an efficient pricing strategy. Customers When determining the price of a product, companies have to consider the customers views. If it is highly desired or needed, it can be set at a higher price when released to the market and when it is less desired, it will need to be priced low enough to entice the customers (Schindler, 2012). Price discrimination can also be used here where it is found that there is a segment of the target customers that value the product more than another; here the company can make two versions of the same product where one targets the higher value segment by adding specific features that cater to the needs of that segment. These features could be excluded from the other version which would be targeted to the other segment. This would allow the product version with additional features to be sold at a higher price to the segment that values the product more. This strategy would help the company generate more profits by having different prices for similar product. The Sonic 3D+ Smartphone Company has however not produced the lesser featured phone yet as the prices set are average but will be reviewed when the need arises. Competitors There are very few or even no monopolies still existing today and therefore almost every product in the market has competition. Observing the prices of competing products is very important for a business with a new product. If the product has more features or has better quality features than the competitors, it can set higher prices, while less or lower quality features would call for lower prices (Day, 2004). These three Cs pricing strategies combined would ensure a business establishes an upper and lower boundary for what the ideal price for their product should be. By putting into consideration the customer’s perceptions of a product, the competition and the corporations internal factors, business can minimize the amount of money by setting intelligent prices an adjusting them as market and internal factors change. Reference List Andersen, J., Braun, C., Dirckinck-Holmfeld, K., Kræmer, T. P., & Remmen, A., 2008. Environmental Innovations in the Nordic Mobile Phone Industry: Green Markets and Greener Technologies (GMCT). Copenhagen K: Nordic Council of Ministers. Bhowmik, A. K., Li, Z., & Bos, P. J., 2008. Mobile displays: technology and applications. (3rd Edn). London: J. Wiley & Sons. Chatain, P. L., & World Bank, 2008. Integrity in mobile phone financial services: Measures for mitigating risks from money laundering and terrorist financing. Washington DC: World Bank. Day, J. M., 2004. Investigating profitability in product line composition, product pricing, and bundling strategies. Journal of marketing strategies, 16(7), pp231-256. 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