Cultural Analysis and Economic Analysis, New Product Development Process - Essay Example

? Proffesor Global Marketing Cultural Analysis and Economic Analysis Introduction The introduction of new innovative products bears high financial risks. Indeed, according to one major American company 1 out of 100 product ideas in the market succeed. Nevertheless chances of the new product failing also vary enormously; such variations should not be of concern in this case. The centre of interest is that the number of new products in the market fail than the number of new that succeed. It is the possibility of success that makes an organization go ahead and invest in the new product. In addition as will soon be explained, a given amount of innovation is deemed important in all companies operating within competitive markets. While planning to introduce new product in the market, factors such as culture should be put into consideration. For instance Vimto in the Middle East has taken its roots deeper than the founding place. It has gone to an extent of operating independently. At the time of introducing the product they discovered that in Arab, they like sweeter thing and so the sugar content was raised to be higher than that of UK. Also before introducing a product in the market, check the availability of similar products in the market and their packaging design, sugar levels, available flavours, price and stocks movement rates. The Momentum to Innovation In 1960's, the BCG growth share matrix came into existence as a tool of analysis to be used in assessing organizational performance. Portfolio analysis concentrates upon the growth rate of a market where an organization participates and the commanding power of that organization in that particular market, as measured by its share of the total sales volume of the market. Therefore, the Analysis of Boston Portfolio takes the shape of a growth share matrix where market share is plotted against the growth rate of the market where it is invested. The point of cut off where a low market growth turns to a high growth is in totality arbitrary, but conservatively is placed at 10%. Organisation market share is measured comparatively to that of the biggest competitor. Ratio that appears between the two is the determinant as to whether an organization gets placed high or low. The dimension of shares is measured based logarithmic scale whereby the cut off level is 1.0. It’s at this point, that the market share of an organization equals that of the leading competitor. Index number bigger than 1.0 shows leadership, while where the index is low, it’s an indication that the company remains behind competitors. Discussion The New Product Development Process This brings out a picture of new product growth process. The aim of these ladders is to evade expensive failures through continuously reviewing the possible prospects for the new product idea or product, and allow company get some options as whether to drop the product or develop tactic on how to cut loss. The biggest yet most expensive blunder is launching a product which already proves unsuccessful (Zilinski 179). Before a product launch, it means all the development costs have been met and spending on production equipment has already been done too. High costs of marketing have also been made in setting up of the promotional expenditure and distribution system. Idea Generation The aim of generating an idea is to put together many ideas as possible from any possible sources. This includes: Internal External Top executives Non-competitive firms Public Production staff Entire members of staff Market or supplier intermediaries Patent applications Competition Freelance inventors Consultants   When an organization or a group planning to introduce a new product in the market seeks to try new ideas on top of what they have there are marketing research techniques that may be applied i.e. morphological analysis synetics Delphi forecasting, brainstorming and scenario writing. The emphasis at this level is dependent on the number of ideas without source, though no idea flatly gets rejected. Evaluation of new ideas just after being evaluated should be discouraged. The issues of evaluating ideas should be totally different. This is because some people may see some ideas as non applicable immediately but with time see the sense in them; this reduces the number of ideas being rejected. It quite often happens that an idea which may not be used directly may be made to work, if not it can be used in a different context. It is extraordinary e.g. that Alexander Fleming who discovered penicillin did not realise that it can also be used as an antibiotic practically. This development was left to other scientists who did not even discover it within a decade after Fleming observed it killing bacteria on a plate. The same way, when ICI developed polystyrene nobody knew what to do with it. Idea Screening After generating a number of ideas, usually a huge number of ideas, filtration process should then commence. The aim is to identify the weak ideas, in the sense of their chances of being successful in market or their capability on return on investment. The crucial point is that the ideas on the product should be evaluated against the objectives of the company. It only then that product ideas can be compared with company resources and objectives. Put to consideration a manufacturer of processed beverage products i.e. vimto, energy drinks etc who has got fruit syrup imported rather than juice itself. Wanting to make use fully of the development, some colleagues within the company will propose selling some of the syrup as it is to other juice manufacturers as well as using it to make their own products. Looking at this logically, it makes sense but gets rejected on grounds that it did not match company resources or objectives. Significant resources would be dedicated to market the product which now emerges. Secondly the company could be having expertise in consumer goods marketing but lacks industrial expertise. Thirdly, the company’s profit was tied in exploiting voluminous markets via mass marketing. In distinction, the syrup could only appeal to niche market. Product development policy covers such points as compatibility, market potential and financial objectives. These can be put into check-list format for screening purposes. Figure 4.5 illustrates the point by providing a partial check-list. Product development plan covers point such as compatibility, financial objectives and market potential. Figure 4.5 Checklist formulated to screen new product ideas   Very desirable Very undesirable In terms of effectively using our R & D know how, the product is...... In conditions of efficiently using marketing knowledge the product is...... In condition of efficiently using our production knowledge the product is...... Qualified personnel are : Available Unavailable R & D...... Marketing...... Production......   Significant advantage Significant disadvantage Our raw material position will create a...... Our ability to handle physical distribution will create a...... The manufacturing facilities which will be used will yield a...... Checklist in figure above not even near completion but at least it serves to illustrate the type of resources and objectives with which t match fresh product ideas. In addition, product policy keeps changing it does not always remain the same. When established, it should be done carefully and not for a good reason only. For instance, a company in definite business of production of juices can later divert to beer market because the traditional markets are saturated and also the almost identical match between distribution arrangement profitability, service levels etc. If it is conducted well, the screening process will enable the organisation to determine which new product ideas are right for it. The question remaining, at this point, is which products would be right for the customer. Where well conducted, screening process will allow the organization to conclude which ideas are viable. At this point the question remaining is only which product is right for the customer. Concept Testing According to (Cateora, P.R., M.C. & J.L. 243) (there are many factors that contribute to failure of most products but the main cause is the inability to foresee the response of the customer to the new services and products. Systematic tests may be applied to minimise expensive failures. These include; market positioning tests, market testing, concept/idea testing and product testing. The word concept means idea. Therefore, the main purpose of concept test is to approximate customer reaction to product idea before engaging substantial funds. Product idea must be converted to product concept. It is common and possible to come up with several product concepts from just a single idea. Check this product idea. A powdered product which adds nutrition ones mixed with milk. Nevertheless, their statements only give basic information about the product and market positioning. It is likely to give totally different ideas e.g. Cross section of general public could be asked to make comments on this product idea and give comments on; A beverage that boast energy e.g. Vimto for people who go fasting for the whole day without taking even a single glass of water. The statement may be more elaborated to stipulate whether it’s intended as an energy boast or appetizer. It is also a source food rich in energy, minerals and protein capable of carrying out a rapid recovery in emaciated children as part of a health intervention programme. It can be revealed from the examples that product idea statement will often reveal the right place to position a product in the market. Every product concept should engage a different team of competitors. If just single concept statement is used, they may not or may position the product within a market possessing the greatest chances of success or where huge profits are potential and great.There could be variance in concept testing form (Blauvelt, Euan, and Jennifer 136) . New product concept could be presented just as a simple sample to potential users. It could be an advertisement in disguise to draw a line or respond to the proposed product. In addition concept tests do not test concepts. Because ideas are concepts, they are in peoples minds. Ideas are interpreted into statements models or visual aids and now the reaction from the people/response is what is measured. The difference is crucial. The work of interpreting ideas concept statement physical model or visual medium that sufficiently expresses characteristics where some are sensory and advantages of the product are not easy ones. Quite often, researchers make use of single or many focus members or sequence of personalised interviews to assist in making the transitions. At the time of interviews the respondents could be shown intermediate concept statement, visual or representation and may be asked to respond to it. In this case the researcher is trying to find the response to help determine whether or not the concept statement, visual model or visual medium the spirit of the new product idea with potency and no ambiguity. It is crucial to be open regarding what is exactly being measured. This may be a response to concept test, the suggested use and target population or to the physical features and the depiction of the test results. If clarity lacks on the intended objective of the test, it becomes unachievable to make conclusions from the test.Negative reaction leaves the question as to why the sample has rejected the main idea, the specific status in the market presented to some, or all of the physical features of the sampled product thereby making it hard to make a corrective action. Likewise, good result has got limited value because it cannot be recognized whether or not the best formula in relation to the concept, product and positioning has been well achieved. According to (Bird 77) Typical questions addressed through a concept test are: do they comprehend the concept, believe it, what could be done to have the product even more acceptable, are they likely to try it, does the concept define the product as more different than other products in a crucial way, would they like or dislike the product, in what pattern or purpose would they use the product i.e. frequency etc, what other products in the market are they likely to compare it with. If the possible product positioning has been determined upon, this becomes a clear component of the item concept and queries requiring respondent to make comparison between this product and the existing ones can then be added because the marketing managers should have a clue as to where the competition should come from. Nonetheless, caution should be taken while interpreting information. In any case the product proposed will continue being conceptual to respondents, unless in situation where they have managed to give it a try it, which means they have had a chance to compare it with competing brands. Even though the respondents have a chance to try the product, it does not mean that the product is successfully into the market compared to the extended use of the product. There is a popularly voiced complaint regarding the concept tests, is that it is difficult to forecast market success. This is partially due to; the product not giving the expected benefits as indicated in the concept statement. There is also alteration of the concept, physical or positioning the product between introduction of the product and concept test. Finally, changes in social or legal environment between the moment that the concept was formulated and the time of product launch at the market. Conclusion While new product innovation bear a significant height of risk, due to high rate of new product failure, business ventures which contentedly go on with their existing product portfolio, in the long run they are likely to fight to sustain growth and profitability. This becomes apparent when it is recognised that products have a life cycle with an of early days in market, a season of fast growth, just before entering the mature phase, but in the end falling into depression and eventual collapse. This becomes eminent after identifying the products has a lifecycle. At every level, as advancement shift from an idea to a product being marketed, the innovation costs for organisation significantly rise. So innovators should be informed about implementing a procedure for the new product development which provides them with the chance to abandon other potential innovators at every stage of that process where available information gives a green light indicating that probability of success is higher than failure. Also dig deep into the kind of products society are more interested in, a case in point, Vimto drink is very popular in Middle East and it is considered as energy boast during Ramadan after a long day of fasting. The sales are usually so high actually 50% of sales are realised during this 8 to 10 weeks of Ramadan. Therefore, while thinking about introducing new product to a new market, target population should be put on forefront. In USA, Vimto should probably take the direction of marketing the product the same way it is done in the UK where the product is lower in sugar than in the Middle East. On the other hand, it is to my opinion that there by lower sugar Vimto brand in the American market so that sales may be optimised since people will have a choice to make from. Work Cited Bird, Christiane. The Sultan's Shadow: One Family's Rule at the Crossroads of East and West. NewYork: Random House, 2010. Internet resource. Blauvelt, Euan, and Jennifer Durlacher. Sources of African and Middle-Eastern Economic Information. Westport, Conn: Greenwood Press, 1981. Print. Cateora, P.R., M.C. Gilly and J.L. Graham (2013), International Marketing (16th edition), Pride, William M, and O C. Ferrell. Marketing Express. Boston, Mass: Houghton Mifflin Company, 2009. Print. Zirinski, Roni. Ad Hoc Arabism: Advertising, Culture, and Technology in Saudi Arabia. New York, NY [u.a.: Lang, 2005. Print. Read More