Factors Affecting the Adoption of New Financial Services - Essay Example

?Marketing - Essay Table of Contents Table of Contents 2 Reference 11 Bibliography 11 New Product Development Introduction The new product development is basically an iterative process by step by step implementing and analyzing the development process. The processes involved in the whole system starts from generation of ideas for new product and ends with the commercialization or launch of the product. New product development process Idea Generation Idea generates from different sources. It may be by the influence of the competitor or from the customer. Ideas can be either generated from the internal source like through research and development or from the outside sources like competitors or market research agencies. For example with technological development new types of DVD players are in idea generation process which will play high capacity Forward Versatile Disc or FVD of around 6 gigabyte capacity (Grewal, 2008, p. 308). Idea Screening Sometimes too many ideas are generated which needs to be evaluated and then screened which are not very promising one for the company. The Idea screening process of the foremost U.S motorcycle manufacturer, Harley-Davidson is known as “The Wall of Fire” who screens different ideas to choose the best out of the development opportunities called “The Swirl” (Karol, Nelson, 2007, p. 118). Concept Development and Testing The ideas which are screened in the idea screening process are forwarded for the concept development and testing of the screened idea. Ideas can be very beneficial for the company in many cases for which proper testing of the concept is required for its feasibility study. In automobile industry Tata Motors conducted a market research in order to find the gap in the market for its fall in the market share of truck during the year 1998 to 2000. It showed that consumers want a to have a car like vehicle but it can perform like a truck which can carry heavy weights for different purposes (Kumar, 2007, p.29). Marketing strategy development After concept testing the marketing strategies like the description of the target market, distribution channels, pricing policy, advertising, marketing mix strategies and profit in long run are evaluated and managed. For example Unisys identified the need of the customers then developed the project management process after analyzing the feasibility, development qualification etc (Lambert, 2008, p. 151). Business Analysis In the business analysis process the proposal for the development of the product is made along with the cost of development, marketing, manpower resources, technical needs, replacement cycle and the estimated sales forecast. Harley-Davidson eliminated the suppliers who only provide them with prototypes and improved their sales with the direct design technique after analyzing the business process (Lambert, 2008, p. 156). Product Development With the acceptance of the business analysis the next stage is the actual product development which translates the idea into real world entity from drawing. Prototypes are often made for different products in order to understand the feasibility through thorough testing process. Like in case of Ice cream maker Ben & Jerry’s they alpha tests their new flavors range amongst the employees of the firm for their feedback (Grewal, 2008, p. 311). Market Testing With successful testing process and feedback from the prototype the actual final product are made and research is done from the review of the customers. The disadvantage of market testing is that, the competitors came to know about the new product and they can act accordingly. As for example Coca-cola conducted a market testing by launching small eight ounce cans of soda for Coke, Sprite and various other products in Chicago regions. (Grewal, 2008, p. 313) Commercialization / Product launch Market testing process is very essential to decide whether to move for the product launch or commercialization. If any things need to be altered in the product it is done in this stage to suite the market demand (Boone & Kurtz, 2011, p.398). Conclusion For a successful product development all the stages in the process needs to be very well evaluated and analyzed to find whether there is any need for modification to meet the market demand. Types of new Products The product developed by a company can be broadly categorized into size different types- New-to-the-world product The products which are totally innovative and never seen before are new product to the world. New product line When a company introduces a new product in its line but not a totally new product then it is referred as new product line. Addition to existing product line When products are upgraded from an existing product line with new features or services then it is called addition to existing product line as there is no new product development but only advancement in the existing products of the company. Improvements to and revisions of existing products Improvements and revision are often done on most products to suite the changing market demands. Repositioning Reposition is the technique used to enter a new segment in the market with the existing product. Cost Reduction To force the customer to switch from the competitors brand, companies often reduce price of product to certain extent to attract new customers. Factors affecting the adoption of new financial services Adoption of any new financial service are mainly based on four factors i.e. overall quality of the product, differentiated product which fit in the market, internal marketing and the use of technology. With the difference in the quality of product the financial sectors attracts new customers but various other factors like technological development like ATM, Credit Cards often affects the growth of financial services. Internal marketing also is also very effective for growth in financial services. Promotional Mix Introduction In order to communicate with the customer and make them aware of the product the company uses a set of tools to promote product or services. These tools are referred as promotional mix which is a part of the wider marketing mix. Promotional Mix Tools The promotional mix tools can be categorized into five broad divisions. Advertising Advertisement is an impersonal way of communication for which a company pays in order to promote a product and service. It is the technique used to promote a new product or to make target audience aware about a product or persuade customers to buy the product. Advertisement can be in the form of newspaper, magazines, audio form as in radio or audio-visual form as on television. This helps the company to keep the brand name in the mind of the customer and it can reach a large number of customers at a very low cost. As an example, at US and UK, Pizza Hut mainly targets the busy families for their products and all their advertisement also depicts the bondage in a family whereas the same Pizza Hut at Poland serves dinner with techno-music for all group of customers thus advertisements are focused mainly towards families and young age group (Lascu, 2003, p.255). Advertisement can also be done through sponsorship of different events like renowned rock band, Rolling Stones in the year 2002 – 2003 was sponsored by E Trade Financial during their world tour to China and also in India for advertisement of their products in Asia (Belch, 2003, p. 691). One of the major drawbacks of advertisement are development of good computer graphics advertisements which can be very costly sometimes and it cannot be as forceful and flexible as the process of personal selling. Public Relations Public relation is the reputation in the eye of the customer. It can be bad or may be good, so company needs to interact with the customer in a very careful manner to maintain their reputation of goodwill. Sales Promotion Usually these short term promotions are used to move old stocks of the company. This helps the company to encourage the customer from repeated buying of their products. Sales Promotion can be directed towards the customer, sales staff or towards the distribution channel members. Direct Marketing Direct marketing is the practice of targeting a specific group of customers in a very accurate manner. Each massage is customized according to the need of the customers and thus the chances of response are improved greatly. Personal Selling The face to face selling process is called personal selling. It helps the sales person to come in direct contact with the customers and convince in their own way which leads to a very effecting marketing and improved sales figure (Trehan & Trehan, n.d., p.45). Conclusion In order to get hold of the market share the company needs to communicate with the customers otherwise if the customers are not aware of the product or services provided by the company then the company will not be able to survive in this competitive world. If the promotional techniques are carried out successfully according to the need of the customers its acts as a very effective technique to increase the market share. The promotional mix tools are often used mixing one with the other and don’t work very well if they are used in an isolated manner. The main challenge faced by any company is selecting the right promotional mix within budget and according to the target audience. Effect of advertisement on other promotional mix tool The different tools of the promotional mix are often influenced by other tools of the mix. With the help of advertisement the customers are aware of a product and then when direct marketing or personal selling technique is implemented it’s an easy task convincing the customer on a known product rather than a completely unknown product. Advertisement can generate new leads for personal selling by the salesmen and middlemen for being able to augment the buying psychology beforehand. Effective advertisements can create a positive image about the brand and improve the parameter of public relationship of the company. Advertisements are often used in a conjoint manner with the direct marketing to attract customers to the point-of-purchase display. Advertisements helps in disseminating large amount of potential information to large number of customers which in turn stimulate the process of promoting sales of the product in both existing and new markets. Reference Belch, (2003), Advertising And Promotion, 6/E. Tata McGraw-Hill Education. Boone, L., Kurtz, D., (2011), Contemporary Marketing. Cengage Learning. Grewal, (2008), Product Development. Tata McGraw-Hill Education. Karol, Nelson, (2007), Narrowing the field with an Idea Screen. For Dummies. Kumar, R., (2007), Marketing and branding: the Indian scenario. Pearson Education India. Lambert, D., (2008), Supply chain management: processes, partnerships, performance. Supply Chain Management Inst. Lascu, D., (2003), International Marketing(With Free Supplement)Bizta. Dreamtech Press. Trehan, M., Trehan, R., (No date), Advertising and Sales Management. FK Publications. Bibliography Harrison, T., (2000), Financial Services Marketing. Pearson Education. Read More