Making of New Product - Article Example

of the Number: Paper: Table of Contents Functional Organization 3 2.Failure in development of new product 4 3.Idea Screening 4 4.Early adopters and the early majority 5 5.Advertising objectives to elicit product purchase 5 6.Product Placement 6 7.Media Selection Process 7 8.Selected Marketing Communications Mix: Direct Marketing 8 9.Personal Communications Channel and a Non Personal Communications Channel 8 10.Promotion Budget Methods 9 References 10 1. Functional Organization The functional organization focuses on various specialized areas of business. For instance, in such organizational structure, activities related to marketing will be taken care by only the concerned marketing department. Similarly, the development and design of products will be done by engineering department. Activities related to sales would be carried by the sales department. So in this form, various departments are concerned only with their respective fields of operation. In this organizational form, the decision making body is positioned at the top level and this method involves standardization of processes within an organization. Large companies generally follow functional organization structure. This is because such organizational form supports efficient functioning of large scale operations. Functional organization is particularly effective in handling various specified operations. Standardized products of huge volume can be managed efficiently in such an organizational form. The organizations generally have a base of fixed asset which is large in value. Changes within the industry can be imbibed by the functional organization easily. Completely new product or innovations generally do not take place within this organizational form. Comparative advantage of the organizations that follow functional organizational structure depends on cost. Functional form is most conducive for a stable and steady environment. With the expansion in business operations, functions will be even more specific defined within the sub divisions. Functional form offers various advantages. Employees are delegated with appropriate tasks which ensure that their skills are utilized properly. This enhances their performance and helps them to grow in the professional field. Employees cater to the department in which they have specialized in. This helps in innovation of products and services. Each employee is accountable for his or her own work and this enhances the employee’s commitment to work. The employees understand the organization’s goals. This in turn ensures performance growth for the organization in the long run (Kotler & Keller, 2012). 2. Failure in development of new product While developing a new product, an organization must evaluate various risks associated with its development. The design of the product has to be thoroughly monitored. Risk has to be then identified and analyzed. If the product faces complexities in its development process, strategies have to be designed to mitigate risks. There are generic risks & product specific risks associated with the development of a new product. Factors like technology, employee skills, customer feedback, and support within the business plays a vital role in the successful development of the product. The failure in development of a product will aggravate business operations and affect the profitability scenario of the organization. The organization would lose its market share and the competitor will capitalize on this opportunity. The organization would also lose customers if it fails to upgrade and modify its product line with respect to changing customer needs (Ottum & Moore, 1997). 3. Idea Screening Idea screening is an important step that has to be considered while making decisions regarding new product development. Idea screening is vital because of many reasons. It helps to evaluate ideas associated with innovative products. The main objective in this stage is to formulate strategies that help in successful development of the product (Toubia & Florès, 2007). The marketing trends have to be properly scrutinized before the development of the new product. Idea screening also helps the organization to identify the business objectives and whether the development process of the new product is in sync with these objectives. In this stage, the main focus is to see whether the new product will be viable in the long run and also whether investment in such product design would be profitable for the company. The company also monitors the plan to see its feasibility. The plans which turn out to be unfeasible are immediately eliminated and modifications are implemented to ensure that risks associated with such plans are mitigated (Kamp & Koen, 2009). 4. Early adopters and the early majority The Adoption method consists of five adopter groups consisting of innovators, early adopters, early majority, late majority, and laggards. Early adopters and early majority is discussed in details to identify the major differences between them. A person who encourages and promotes new technology or process before its acceptance by other individuals is commonly known as an early adopter. They constantly keep on trying out programs associated with new technology or new adaptation of existing system. Early adopters face huge amount of risk as they deal with completely new products which are not yet tested and verified by customers. This product may not be compatible with consumer needs and therefore early adopters have to be very careful while designing a new product. Early Majority, on the other hand, work on different perspective. Early majority group makes a lot of research and then comes to a conclusion regarding a new idea or product. They try to see whether a new venture or product will prove to be noteworthy in the long run and add to company’s profit. The group closely follows the early adopters and then makes strategies based on them. They lack sufficient knowledge that is required for developing a new product or technology (Ram & Jung, 1994). 5. Advertising objectives to elicit product purchase Organizations adopt various strategies to advertise their products. Adoption of such strategies is imperative for an organization as advertising serves as one of the main mediums of reaching the customers. The objectives are set with respect to the industries, networking and distribution channels and strategies related to marketing. The main motive of advertising is to attract potential customers. Among the various objectives of advertising followed by the organizations, convincing the customers can be very vital for obtaining product purchase. This objective is followed by the organizations those are in their opening stage. New products available in the market can be showcased convincingly to the customers through this objective. Attractive schemes and advertisements are used to attract the customers. Customers are offered with trial version of the products. This enhances the chance of product usage and then more purchase of products in the long run. Information regarding the product and its availability is communicated to the customers through this mode of advertising. First time customers are also provided with incentives which are related to product purchase (Sirisagul, 2000). 6. Product Placement An alternative form of advertising is known as the method of product placement. Product placement is an embedded form of marketing. This form of marketing is generally done using the mode of entertainment media. Most product placements are done through movies, plays and television shows. For instance, movies may showcase clothing by a particular brand to attract customers. Large audiences can be reached via this method of advertising. An optimistic feeling is encouraged among customers as they can relate with their needs through this form more efficiently. Brand loyalty can be easily established through product placement as customers can make justified decisions related to their purchase. Product Placement is a latest trend in the field of advertising and is working immensely well by helping the organizations to reach their targeted customers. Product placement of a certain product can be evaluated by monitoring the stock price of the company. The company which follows product placement in a movie has often experienced a rise in their stock price 10 days before the release of the movie where the product is placed and this price rise in of the stock continues for about three weeks. However, this price rise is temporary and eventually the effect dies down (Karrh, McKee, & Pardun, 2003). 7. Media Selection Process An appropriate Media Selection process for advertising is vital for effective marketing. Advertisement is done through selected media outlets. Awareness is created among the potential and targeted consumers of a product by promoting the product through advertising. Advertising is not a personal promotional form. Selected media outlets are used for the purpose of advertising. The whole process involves a specific cost that has to be borne by the company whose product is being marketed. Every form of media has a different cost structure. So the advertising media has to be chosen on the basis of the associated costs. There are various factors on which the selection process depends. The product nature has to be kept in mind. Broadly, the product may fall under either consumer goods or industrial goods. Newspapers, television, radio can be used to advertise consumer goods and specialized technical magazines can be used to advertise industrial goods. The nature of the market also has a role to play in the selection process. Product may have a local as well as national market. Media for advertising has to be selected on that basis. Objective of advertising also determines the form of media that has to be selected for the promotion of the product. The form of media selected should provide with efficient circulation. The company’s product will reach to a larger audience through an effective circulation. The company should design a cost-benefit analysis before the selection of the form of media. Competitor’s selection criteria should also be looked into while selecting the media for advertising the product (Koopmans, 2004). 8. Selected Marketing Communications Mix: Direct Marketing A product manager can follow direct marketing for quick response from consumers or buyers. This form of marketing communications mix includes the characteristics of personal selling and promotions through sales. The process is very interactive and ensures proper communication between the seller and the targeted buyer. The common medium of communications is through direct mail and e-mail. The customers receive mail from the sellers and the mail comes with special discount offers, promotional schemes or offers on new product launches. Direct marketing thus helps a seller to reach its potential customers easily as the customers are now technically advanced and prefer communication through the web (Chiang, Chhajed & Hess, 2003). 9. Personal Communications Channel and a Non Personal Communications Channel Marketing communications can be carried through personal communications channel and non personal communication channels. Both the channels are different from each other. Personal communication channels provide the facility of face-to-face communication between the seller and the buyer or may be communication over phone or e-mail is established. Customer reviews are collected through various independent sites and social networking sites. Service through instant messaging is also encouraged. Individual feedback is guaranteed through this form of communication channel. This ensures better understanding of consumer requirements. One example of personal communications channel can be personal selling which helps to interact with consumers on a one to one basis. Non Personal Communications channel, on the other hand, caters to more than one individual at a time. Individual attention is not guaranteed. Communication is mainly done through media, events, publicity and promotions through sales. One example of non personal communications channel is promotion through events. Brand image of a company can be enhanced if the company takes the initiative of sponsoring events (Kotler & Keller, 2012). 10. Promotion Budget Methods The product of an organization is promoted and advertised with the help of a specific budget. The promotion of a product involves a cost and that cost has to be identified before the promotion of a product. Maintenance of brand name also involves a cost. This cost needs to be determined before any modifications associated with an existing product. The funds for promotion budget are generated by using the profit or sales revenue of a company. A proper funding helps to achieve the perceived growth rate associated with a new product development. Organizational strategies often have an influence on the promotional budgets. The common methods of promotion budget are categorized into various methods. The Objective and Task Method is found to be most rational to follow. In this method, the promotion budget is set according to the objectives that the company wants to achieve. This method ensures that concentration is given on achievement of explicit promotional goals and thus it becomes easier for the company to identify the target customers. Promotional budget set with the help of this method is thus transparent and the organization has a clear idea of the undertakings related to this method (Berger & Bechwati, 2001). References Berger, P. D. & Bechwati, N. N. (2001). The allocation of promotion budget to maximize customer equity. Omega, 29(1), 49-61. Chiang, W. Y. K., Chhajed, D. & Hess, J. D. (2003). Direct marketing, indirect profits: A strategic analysis of dual-channel supply-chain design. Management science, 49(1), 1-20. Kamp, G. & Koen, P. (2009). Improving the idea screening process within organizations using prediction markets: A theoretical perspective. Journal of Prediction Markets, 3(2), 39-64. Karrh, J. A., McKee, K. B., & Pardun, C. J. (2003). Practitioners evolving views on product placement effectiveness. Journal of Advertising Research, 43(02), 138-149. Koopmans, R. (2004). Movements and media: Selection processes and evolutionary dynamics in the public sphere. Theory and Society, 33(3-4), 367-391. Kotler, P. & Keller, K. (2012). Marketing Management (14th ed.). New York: Pearson Education. Ottum, B. D. & Moore, W. L. (1997). The role of market information in new product success/failure. Journal of Product Innovation Management, 14(4), 258-273. Ram, S. & Jung, H. S. (1994). Innovativeness in product usage: a comparison of early adopters and early majority. Psychology & Marketing, 11(1), 57-67. Sirisagul, K. (2000). Global advertising practices: a comparative study. Journal of Global Marketing, 14(3), 77-97. Toubia, O. & Florès, L. (2007). Adaptive idea screening using consumers. Marketing Science, 26(3), 342-360. Read More