Methods for New Product Development - Report Example

Samsung Table of Contents Introduction: 3 2. Methods for New Product Development 3 3. Marketing Mix 5 a. Pricing 5 b. Logistics 5 c. Integrated Marketing Communication 6 4. Measuring Marketing Performance 6 5. Ethics in Marketing 7 5.1 Ethics in goal-setting: 8 5.2 Ethics in planning: 8 5.3 Ethics in dealing with employees 8 5.4 Ethics in Price: 8 5.5 Ethics in Logistics: 8 5.6 Ethics in Integrated Marketing Communication 9 6. Conclusion 9 7. References: 11 1. Introduction: Samsung started its journey from Taegu, Korea as a small export firm and has travelled a long way to become one of the largest electronic companies of the world with a focus on digital appliances and media, memory, system integration and semiconductors. Its business ranges from stylish and innovative phones to digital TV’s. Samsung is dedicated towards developing innovative products through efficient processes (Samsung-a, n.d.). Innovation comes from the Latin word innovare which means “to make something new”. The importance of innovation can be understood from Peter Drucker’s statement on innovation which is "Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or service. It is capable of being presented as a discipline, capable of being learned, capable of being practiced." (WestFocus Knowledge exchange, n.d.). Industries and products are maturing. Innovation helps a business not only to survive but also to stay ahead of competition. The report deals with creating a marketing plan for Samsung. It tries to find out methods for new product development, marketing mix and the integrated marketing communications required for increasing the awareness of the product among the target customers. A set of performance measures has also been proposed to measure the marketing performance. Finally the report ends with an emphasis on the importance of ethics in marketing. 2. Methods for New Product Development New product development starts with understanding the functional requirements that a product is supposed to satisfy and then developing the specifications required to meet the functional requirements. Product development is a cyclic process. It starts with developing a new product which is not derived from any existing product that the company produces. This product is called the basic product and consists of unique assemblies and original architecture. This is then followed by creating a derived product which involves adding extra features and benefits as desired by the customers. This ends the cycle of new product development and is followed by developing new products of the next generation and lasts for several years (Bower, 2003, p.4). New Products can be classified under the following heads. They are: Products which are new for the company but already in the market Products which are significantly different from the current products and act as good replacements. In case of Samsung the basic product is a mobile phone whose basic function is to facilitate communication. This takes care of the functional aspects that the basic product is supposed to take care of. The extended product consists of adding extra features which are in the form of camera, music player, touch screen and 4G network technologies like Mobile WiMAX and LTE developed by Samsung. Finally Samsung also developed next generation products like mp3 players, televisions, music systems, refrigerators and turnkey telecommunication network. The strategy that Samsung is following is to develop products which are already in the market but new to the company. 3. Marketing Mix a. Pricing The prices of the mobile phones depend on the type of target segment for which a particular handset is designed. Every company produces handsets to cater to various price segments. In case of mobile market, customers are highly price sensitive. Especially in India Samsung should try to target the rural customer which is turning to be a highly attractive segment. Hence Samsung should follow a penetration pricing strategy whereby it should try to maximize the quantity sold by charging a low price. In order to target the urban segment, it should have different price for different segments like students, customers at the lower level, midlevel and top level management positions and the business class. b. Logistics Samsung mobile has a manufacturing unit at Noida, India and also imports handsets from the parent company. Samsung has also signed contracts with 40 distributors who were involved with Nokia before. Samsung has four regional operators for the 4 zones in India who are Telemart, United Telelinks, SSK and Link. It has increased its retailers enrolled as Samsung Mobile Privilege Partners (SMPPs) from 100 in 2007 to 400 in 2009. In India, rural markets are fast emerging as a very attractive segment. Samsung should try to improve its logistics to tap this segment. It needs to identify new distributors in the rural segment and woe them with attractive incentives to compete with its competitors. c. Integrated Marketing Communication Advertising: Samsung uses Amir Khan as its brand ambassador since the brand personality of Amir Khan matches Samsung’s qualities as a brand. It launched the pay-off line “Next is What?” which was a very successful campaign. Samsung should also use magazines, radios and local newspapers, print advertisement and Out of Home media to increase its reach. Promotions: Samsung should frequently give discounts and free gifts on purchase of new handsets. It can offer free SIM card with a talk time of 6 months, music cd’s and DVD’s, free holiday trips, headphones and so on. Relationship Marketing: Samsung should try to increase customer loyalty by starting a loyalty program. The loyalty program must be attractive enough for customers to stick to Samsung. Samsung should also focus on the quality of after sales service which is a crucial component of sustaining relationships. It should also use social media like Face Book, Twitter, Orkut, YouTube, Flickr and so on to communicate with its customers. 4. Measuring Marketing Performance Marketing performance of Samsung can be measured from the diagram given below. It is clear from the figure that the success of a marketing campaign is directly correlated to the revenue generated. An increase in the revenue means that the campaign is successful and vice versa. The effect of an advertising campaign is directly reflected through brand awareness, trial purchase and increase in customer loyalty. Cross selling refers to selling more than one product or service. For Samsung the effectiveness of the marketing campaign can be understood from the number of mp3 players, television sets, music players and so on sold before and after the campaign. Another way of measuring the effectiveness of the marketing campaign is to calculate the cost per lead. Cost per lead refers to the amount of money spent by Samsung for converting prospective clients into customers. If the campaign is successful then this cost would reduce considerably and vice versa. [Source: The Marketing Directors Handbook] 5. Ethics in Marketing The biggest competitor of Samsung in India is Nokia which is a market leader. Both Nokia and Samsung have policies which aim at conducting their businesses in a responsible way. The corporate responsibility agenda of both the companies aim towards increasing customer satisfaction. Both the employees have great concern towards developing eco friendly products and increasing stakeholder’s satisfaction. 5.1 Ethics in goal-setting: Samsung’s management philosophy is based on “Devoting its talent and technology to creating superior products and services that contribute to a better global society” (Samsung-b, n.d.). 5.2 Ethics in planning: Samsung wants to be ranked among the most ethical companies of the world. Samsung follows a management principle which ensures that its products are environmental friendly and all its plans are done keeping health and safety of society in mind. 5.3 Ethics in dealing with employees Samsung adheres to strict ethical guidelines for its employees. It is strictly against discrimination based on gender or nationality. Samsung strives hard in order to improve the quality of life of its employees. 5.4 Ethics in Price: In a market characterized by high competition, prices are relatively stable. Samsung does not indulge in price discrimination and its prices are the same globally. 5.5 Ethics in Logistics: Ethics in logistics refer to the way Samsung deals with its business partners. Samsung tries to maintain transparency in its business processes and protects information of its business partners. 5.6 Ethics in Integrated Marketing Communication Samsung maintains the dignity of the organization in all forms of external communications. Customer satisfaction is one of the prime goals of Samsung. Its new campaign “Next is What?” has been communicating the innovative products that Samsung has developed. The advertisements did not misguide the customers and was a true reflection of what the brand stands for which is innovation. It launched a cyber audit program for educating its employees worldwide regarding the corporate culture of Samsung. Anyone can lodge a complaint against Samsung if they find Samsung violating ethical issues. (Samsung-b, n.d.). 6. Conclusion The report tries to develop a marketing plan for Samsung especially for its operations in India. It has been found that new product development is a cyclic process and starts with a basic product, an extended product and development of next generation products. Samsung’s basic product is a mobile phone followed by additional features which acts as an extended product and finally its foray into mp3 players, television sets etc which act as next generation products. Samsung needs to follow a penetration pricing strategy and also develop its logistics to target the rural segment of India which is an extremely attractive segment for every corporate. Samsung needs to increase its presence in the social networking sites like Face Book, YouTube, and Twitter. For marketing in India, Orkut cannot be ignored. The marketing performance can be measured by calculating the increase in revenues and vice versa. Finally Samsung is a highly ethical company which is clear from the goals it has set for itself. 7. References: Arnold,T. 2008. The marketing directors handbook. The Marketing Directors. Bower, E.K. 2003. Specification-Driven Product Development. iUniverse. Samsung-a. No Date. Samsung’s history. History. [Online]. Available at: http://www.samsung.com/in/aboutsamsung/corporateprofile/history.html [Accessed on May 27, 2010]. Samsung-b. No Date. Corporate Ethics. [pdf]. Available at: http://www.samsung.com/us/aboutsamsung/sustainability/sustainablemanagement/download/SamsungValueCode_ofConduct.pdf [Accessed on May 27, 2010]. WestFocus Knowledge exchange. No Date. The need for innovation. BB3: From Enterprise Idea to Business Opportunity. [Online] Available at: http://www.westfocus.org.uk/SiteManager/userFiles/programmeElearning/26_CG_Building_Block_3_a_HTML/page_06.htm [Accessed on May 27, 2010]. Read More