The Pursuit of New Product Development - Case Study Example

Student’s Name: Instructor’s Name: Course Code & Name: Date of Submission: EXECUTIVE SUMMARY SportUNE was formed in 1938 with the aim of boosting sporting, fitness and health related programs. Over years, SportUNE has demonstrated greater effort in ensuring that sport, exercise and health related programs are accessed by the students and the community at large. This has played significant role in the educational requirements and objectives by enabling students to balance between education and physical activities in pursuit of their talents since some are best in fields while other are good in educational activities (Sportune.com.au, 2014). Therefore, giving students access to SportUNE facilities has enable many to realize their talents at early stage. SportUNE has contributed directly and indirectly in social, political and economic fabrics of the country. In addition, it has promoted healthy nation through provision of fitness facilities and health programs that ensures citizens are healthy thus keeping the nation healthy in all aspects both locally and internationally. SportUNE has also improved students leadership skills since within the management, students are given active role to play in decision making and discharge of duties and responsibilities as accorded to the position held in the management. Consequently, SportUNE is part of university arm of corporate social responsibility (CSR) since the facilities are open to the community living within the university at very affordable rates and part of those who work in the facility are locals who are employed within the same locality in which university is based on (Sportune.com.au, 2014). We therefore, as management of SportUNE introduce new product to the existing services provided by the facility in which we plan to launch a cultural center. Sporting activities resulted from culture of certain people in the world for example athletic was cultural event in Greece, thus incorporating cultural center within the facility of SportUNE will be more appropriate in promoting culture, celebrating heroes and diversity in the society. Cultural department will contain café with cultural food and beverages, Arts gallery and Curio shop for those interested to buy or view. This aims at boosting cultural aspects of community and providing revenue to run SportUNE effectively by keeping the pace of technology advancement since surplus from cultural department will be apportioned on other crucial departments that need technological advancement and financial resources (Sportune.com.au, 2014). Table of Contents EXECUTIVE SUMMARY 2 INTRODUCTION 4 PRODUCT IMPROVEMENT 5 PRODUCT LIFE CYCLE (PLC) 6 MARKET ENTRY 10 Ansoff’s matrix strategy 10 FOLLOWER STRATEGY 13 13 MARKET LEADER 14 SHAKE-OUT, MATURE AND DECLINING MARKET STRATEGIES 15 NEW ECONOMY MARKETS 18 ORGANIZATIONAL STRUCTURE 19 SWOT ANALYSIS 19 MARKETING METRIC AND MARKET AUDIT 20 CONCLUSION 21 INTRODUCTION SportUNE is non-profit organization formed and controlled by university of England. It was incorporated in 1938 with aim of blending in educational activities with physical activities such as sports and body fitness. The facility is built under the motto; ‘Find balance’ regarding education and sports with other physical activities (Sportune.com.au, 2014). The facility has boosted sporting, exercise and health related programs participation by students compared to any Australian university in the region. SportUNE facility was formed with the several core pillars which includes university reputation and profile enhancement through advancement on the sporting and wellbeing facilities, value addition to the students through students involvement in active roles of the facility thus enabling them to get life skills such as leadership and administrative skills, enabling students get facilities to use in their practical session such as those students on sports science and education programs, boosting regional objectives by liaising with community in sports and health related programs, increase participation of students, staff and community through provision of diversified sports, fitness and other recreational activities, educating members on healthy practices, motivation of the talented members to take their talents a notch higher by participation in large competition e.g. commonwealth games and world cup, linking junior athlete with strong elite and other renown sporting bodies, development and upgrading facilities and lastly, ensuring sober working and learning environment for the students and staffs (Sportune.com.au, 2014). The facility has 50 employees, where it comprises of students and members of the region within the region of SportUNE facility. They work harmoniously through exercise of their expertise and knowledge in giving their services to the students, staffs and community. The working culture is positively cultivated through harmonized goals and objectives of SportUNE facility (Sportune.com.au, 2014). PRODUCT IMPROVEMENT SportUNE is considering adding on the services provided by the facility with aim of increasing revenue base for the facility to for it to discharge most of their functions effectively and technological advancement. Cultural service will be provided within the SportUNE facility and delivered through the following service delivery. The major competitor is Aboriginal Cultural Centre and Keeping Place thus requires one to be cautious in launching the product. Operation manager of the facility will head the introduction of the service in the market and outdo other competitors in the market. It will be situated next to the Liaison office. The flow of service delivery us as follows; PRODUCT LIFE CYCLE (PLC) Fig1: Product life cycle The product has five cycles in which it is most likely to undergo from its inception to maturity but the last stage can be avoided through adoption of various strategies to keep the product at stage four. In relation to introduction of cultural services in SportUNE, it is important to note product life cycle is important in order to develop different strategies according to the stage in which the product is at (Deeds and Hill, 1996). This aspect is core in avoiding loses that might lead to collapse of the cultural department. The strategies to enhance SportUNE performance on cultural services is stated as follows according to the stage of product; Stage 1: Introduction This stage is also referred to inception stage where the product is introduced to the market for the consumer to consume and draw their conclusion on the level of satisfaction. Introduction stage is crucial for every product since proper entry into the market is always crucial on the success of the product in the market. It is characterized by the moderate growth rate, high technical design and few market segments. SportUNE should therefore, required to take into consideration the following strategies in launching cultural services to its existing consumers: development of marketing objective that stimulates primary demand of the service for example attracting community within the facility, students and staff of the university. Secondly, product is required to be actively designed in order to improve the quality delivered to its consumers. Thirdly, we recommend that the SportUNE should adopt penetration pricing strategy in order to attract customers from other players in the market on cultural services and products. Lastly, intense promotional strategies are crucial in order to create awareness and remind customers to use SportUNE cultural facilities (Deeds and Hill, 1996). Proper strategies on introduction will definitely lead to advancement on the product market share. Stage 2: Growth At this stage SportUNE cultural service and product demand will increase on an increasing rate and it will be characterized by high market growth rate, product will be acceptable to the consumers thus moderate product design change, increase of market segments due to the fact that different consumers need different satisfaction and attention. Increase in market growth will therefore, result to entry of new players into cultural product and service market thus it is important for SportUNE to device strategies to counter competition in order to maintain and increase its market share (Deeds and Hill, 1996). It is important also to keep on improving the product, provide a wide range of products, reduce prices and carry out intensive promotion for the customer to have more reason of consuming SportUNE services and product due to derivation of high utility giving them value for their money. Stage 3: Shake out This is the point where sales of the product/service increases at a decreasing rate due to strong competition and entry of new players due to the attractiveness of the industry. This stage is characterized by the facts that low profitability, stabilization of market growth and reduced competition since some were faced off due to failure to cope up with competition (Annacchino, 2007). It is important for SportUNE to device various strategies in order to avoid being faced out from the market by other strong players which includes high product promotion, reduced prices but with care in order to avoid price wars, reducing attention on low demand products/services and putting more attention on those with high demand and lastly, SportUNE will have to concentrate on building the market share through identification of market niches and new markets in order to boost their sales. Stage 4: Mature It is the trickiest stage in product life cycle since any irrational or lack of intensive research on the product and market will result to decline stage entry. This stage is characterized by very slow market growth rate, many market segments in order to increase utility of most of its customers, limited technical design on products/services and decrease in the number of competitors. SportUNE will be required to employ sound strategies in order to keep its product/services at mature stage (Annacchino, 2008). This strategies includes intensive market and product research, reduced promotion due to the fact that it yield no or low effect on demand, ensure maintenance of the current market share and concentrate on improving features of the service and product of the company in order to keep current customers satisfied and attract potential customers to try SportUNE products. SportUNE will be on a lucrative edge if it succeeds to be a market leader since they will be in control of the market as followers follow their moves. Stage 5: Decline It is the last stage in product life cycle where sales start to decrease due to reduction in the demand of the product either as a result of completion or failure of the company to keep its product up to date with the changes in the market trends. This stage is characterized by the following factors very low competition, limited change in the product design, low profitability and negative market growth as a result of decreasing demand for the product/service. Therefore, SportUNE needs to implement various strategies in order to avoid loses which will be incurred at some point in the declining stage (Annacchino, 2007). These strategies include divesture where SportUNE will be required to sell part of its products to competitors, harvesting through cost and product reduction, reduce prices to attract customers and carry out intensive research in order to maintain its relevance in the market. MARKET ENTRY Market entry is the tricky part for any company who wishes to introduce new product in the market. It gets even worse when the market is saturate. Therefore, one needs to adopt relevant strategies in entering into the market. SportUNE should consider following Ansoff’s; Ansoff’s matrix strategy Existing product New product Existing market New market Ansoff’s matrix gives in-depth strategies on how to grasp an opportunity and diversify risk in both existing and new market and for existing and new product. Ansoff’s matrix gives four strategies that is, market penetration, product development, market development, and diversification since risk vary depending on the strategy one chooses to adopt (Ginevi\vcius and Au\vskalnyt\.e, 1991). Ansoff’s matrix provides the following options depending on the nature of market and product, For existing product in an existing market, the option one can adopt is to deepen the market through convincing of the new potential customers to buy the product and the same time maintain existing customers in order to achieve high turnover. The strategy does not give provision to change anything about the product or market therefore, considered cost effective when company turnover stagnates or reduces (Ginevi\vcius and Au\vskalnyt\.e, 1991). Existing product introduced into a new market, for example, when company identifies a niche in certain market, alteration of product is not mandatory unless the segment has certain characteristics that require changes. The strategy requires the company to do continuous study and research of the surrounding in order to identify potential market (Ginevi\vcius and Au\vskalnyt\.e, 1991). The company can introduce a new product in existing market where it has fully exhausted all possibilities of expanding on existing product therefore, the only option is to modify the product or bring in a new product in order to increase company’s turnover but sell in existing market and through the same channel of distribution. The strategy requires the company to engage on intensive research and development in order to identify ways on how to improve product and develop new product (Ginevi\vcius and Au\vskalnyt\.e, 1991). Diversification involves introducing a new product in a new market and it entails several strategies that includes; horizontal, vertical, concentric diversification and conglomerate diversification. Horizontal diversification involves company developing a new product using the same mode of production and will be sold to the same client while vertical diversification is where the company engages in practices that its suppliers was doing for example, instead of purchasing they make. On the hand, concentric diversification entails company launching a new product with corresponding mode of production of existing product but the product attracts new customers to purchase the product. Lastly, conglomerate diversification involves launching a very new product in a new market where they have not entered before. Therefore, they bring in new technologies and new product for new customers (Ginevi\vcius and Au\vskalnyt\.e, 1991). In conclusion, company should carefully study in which position of market is in for its management to apply relevant strategy that it is relevant to increase level of efficiency in any given marketing plan implementation resulting to positive results. It will be appropriate for SportUNE to use product diversification, development and market development is the best strategy to adopt (Ginevi\vcius and Au\vskalnyt\.e, 1991). FOLLOWER STRATEGY Players in the cultural service and products are very few thus it characterized oligopoly market. Oligopoly dominance market has two players these are leader and follower. Leader always sets prices and quantity regarding follower’s decision or strategies in order to prevent follower gaining the leader market share. Therefore, Company entering market should always analyze the impact of the decision regarding pricing and quantity thus reduces the need of differentiation since it has low impact on influencing the market so reducing unnecessary cost incurred thus increase in profit margin (Forgang, 2004). Proper entry in oligopolistic market results leads to high profits with moderate market cover due to reduction of unnecessary cost and concentration on large market coverage since expansion of market coverage. SportUNE can have a great deal by adopting followers’ strategy through stepping on the steps of the leader in the market such as Aboriginal Cultural Centre and Keeping Place. MARKET LEADER Company has to study its position and influence in the market. For market leader profile, it has to adopt certain strategies to gain monopoly influence in the market without breaking the laws set by a given government concerning competition such laws include price wars where one company rules out other companies by quoting lower prices due to its advantageous position of things economies of scale or it has large market share (David, 2005). Therefore, it is advisable to adopt legally accepted strategies, which includes high product differentiation to enable customers distinguish your product from others considering cost incurred since it should be cost effective in order to avoid reduction profits. Differentiation can take form of packaging branding and taste, it should be different from others. Company with market leadership status has a lot of advantage in the market both in demand and supply position (Warren, 2002). In demand side, it will experience high turnover and independent in price setting but in consideration that they do not infringe on the right of consumer. In supply side, it has ability to influence suppliers by offering attractive prices and supplier confidence of the perpetuity of the relationship between suppliers and SportUNE (Block, Martin P and Tamara Brezen Block, 2005). Large procurement of cultural product i.e. café supplies saves SportUNE on cost since cost reduces with the economies of scale thus increases-recorded profits for the company. SHAKE-OUT, MATURE AND DECLINING MARKET STRATEGIES This is the most essential part in any product or service for every company. This is because proper strategies at this point always define the success of the product or service in the market. As mentioned earlier, shake-out stage is where most firm exit the industry due to high competition and leave few companies with proper strategies and economies of scale to continue in provision of services always market leaders are the one who survive on this stage since they have more control in the market (Annacchino, 2003). Mature stage on the other hand is a point where firms who survive shake-out try to maintain their market share by keeping their product relevant to the customers, in addition, company experience slow or no market growth due to saturation and each company is maintaining his/her market share (Reinertsen, 2009). Lastly, declining stage where market growth turns out to be negative due to failure of the company to diversify or cope with the market trend in product development and promotion thus losing their grip on their market share. We therefore, recommend to SportUNE to adopt the following strategies in order to survive and rise to the top of cultural product and service market; Shake-out strategies Price is a determinant for consumer at this point due to presence of many firms offering the same product. Therefore, we recommend to SportUNE to consider cutting on their production cost for example eliminating service that are not profitable to the business and use of advance technology to increase efficiency and cut cost. Success in cost reduction will give SportUNE competitive edge if other competitors use price wars in eliminating other companies from the market (Mital, 2008). Diversification of products offered is another step in curbing stiff competition in shake-out stage since company can decide o make loss in cultural service and product department since it is offset by profit from deferent department e.g. exercise gymnasium fee (Annacchino, 2007). These strategies will work well in surviving through shake-out stage if they are implemented well by the organization. Mature market strategies It is a tricky stage since a small flaw can cause serious losses on the business due to lose of their grip on market share. Therefore, we recommend that the company should carry out the following important strategies in order to ensure that the company maintains its position in the industry (Deeds and Hill, 1996). SportUNE should take close concern on major stakeholder that is customer by implementing sound business strategies that touches all the edges of company objectives in order to maintain its competitiveness in the market. Secondly, marketing strategies needs to be worked on in order to ensure that consumers are reminded on the presence of the product and any changes they have made in order to serve consumers better therefore, creative and flexible marketing strategies should be implemented and effectiveness measured in order to avoid unproductive marketing (Deeds and Hill, 1996). Other factors need to be considered on development of strategies for this stage includes market increasing market penetration through establishment of numerous distribution points in order to increase reliability and convenience to the customer in accessing company product and services. Declining market strategies It is a crucial stage to a company in a market since failure to take certain precaution will lead to loses and closure of the business due to inability to stop and reverse negative market growth rate (Sethi, Smith and Park, 2001). Therefore, SportUNE should concentrate on the following strategies in ensuring that the company does not go under at this stage; harvesting strategy can assist company greatly due to creation of short-term cash inflows which can be channeled to sales and marketing department in order to carry out promotion and enter into new markets with few competitors (Leonard-Barton, 1992). The funds injected from harvesting can also be used in product development in order to give a new face to company product and stimulate demand. Maintenance option is another strategy, where company tries to maintain their grip in market share for example running at a loss in order to maintain the customers as they are thinking of other strategies. SportUNE can concentrate on identifying niches in the market and capitalizing on them thus increasing the profitability and market share (Leonard-Barton, 1992). Lastly, profitability survivor strategy where we recommend to SportUNE to device means of luring or colluding with weak competitors to exit the industry in order to give it a better opportunity to maintain its profits. NEW ECONOMY MARKETS Every firm is running to new economy market mostly on sales and marketing this is so because of increase in the use of internet which has led to globalization of the world into a small village where people can trade despite their geographical differences. Most companies have online stores where they can advertise and make sales without customer visiting company premises (Wymbs, 2011). In addition, social media advertising plays a role on globalization since most companies are active for example on twitter or facebook where they do their product promotion, respond to queries and disseminate information on their operations to the customers. Though, social media doesn’t have quantifiable influence so far according to a number of researches carried by Harvard school of business (Wymbs, 2011). We strongly recommend that SportUNE should impress the digital age by developing affiliate website from the previous displaying attractive features of their products and add-on where customer can place of buy goods for example goods on arts gallery. Thus saving cost and time for the customer making it preferred cultural shopping centre. Digital age has its own disadvantages which include cyber crimes such as hacking of customer’s credit cards or company website thus compromising on customer and company information security (Parsons, Zeisser and Waitman, 1998). Therefore, SportUNE should engage IT expert to overcome these challenges and improve on confidentiality of both the company and customer. Another challenge is technology failure which can cause inconvenience to customer thus forcing him/her to move to competitors’ product thus SportUNE should consider carrying out continuous system check and upgrade to avoid such issues (Chester and Montgomery, 2008). ORGANIZATIONAL STRUCTURE Organizational structure is important for every firm in order to avoid confusion, misallocation of resources and disrupt accountability in the organization since a clear organization structure ensures smooth flow of information, orders and responsibilities (Heinrich and Lynn Jr, 2002). We therefore, recommend SportUNE to develop a product management organization structure with two major reasons that is; Introduction of a new product to the market requires close attention therefore, organization structure on product management will ensure that it gets attention of improvement and responding to what customers needs in the market (Heinrich and Lynn Jr, 2002). Lastly, cultural department will be able to develop and train its personnel on their department in order to increase their expertise unlike using matrix organizational structure which links unrelated departments thus compromising with service delivery (Heinrich and Lynn Jr, 2002). SWOT ANALYSIS SWOT analysis is important for SportUNE in order to determine the way forward for the launching and running cultural product and service line in Australian market. The table below summarizes the strengths, weakness, threats and opportunities (Beirman and others, 2003). Strengths 1. Quality service provision 2. Readily accessible and reliable services 3. Price friendly product ranges 4. Convenience to the consumer since they are able to get access of a wide range of services. 5. Community acceptability of SportUNE in local market thus able to get enough demand. Weakness 1. Saturation of domestic market 2. Incurring High operation cost due to rise in cost of factors such as labor rate. 3. Inflation rates affecting esteemed customers spending on holidays. Opportunities 1. Population growth 2. Urbanization and economic growth 3. Modernization of facilities and cost cutting in operation 4. Technology evolution Threats 1. Rivals economies of scale 2. Market saturation 3. Competitor product range and diversification MARKETING METRIC AND MARKET AUDIT Marketing metrics involves measuring of the performance of the company in respect to marketing technique or strategies it employs. This process should be comprehensive in order to ensure that they are productive (Cooper, 2000). Therefore it should contain the following crucial steps; setting performance standards to be achieved by the SportUNE in delivering cultural products and service, specifying what kind of feedback it should receive from the consumers of their products and services, obtaining data on their reaction given in accordance to the feedback from interviews or forms, evaluation is also essential where SportUNE should weigh if they have achieved their objective or not and if not what are the corrective measures it should take in order to achieve the set standards for example customer satisfaction and loyalty maintenance (Lovelock, 1983). Lastly, we recommend to the management to carry out market audit where it assesses the situation of the new product line introduced in order to gauge its performance and research on future strategies to adopt in order to make their products more competitive. It is always recommendable for SportUNE to engage independent body to carry out market audit in order to bring the objective opinion which is true and fair position of the cultural products and services (Lovelock, 1983). The market audit should be comprehensive by covering both quantifiable and unquantifiable aspects of the SportUNE market. CONCLUSION In conclusion, we could like to advice SportUNE facility to take the opportunity in venturing into cultural products and service business since it is lucrative, have few players and it goes hand in hand with the current product line of the facility. Taking into consideration above recommendation will definitely yield positive results that will enable SportUNE to expand and advance its services. REFERENCE Annacchino, M. (2003). New product development. 1st ed. Amsterdam: Butterworth-Heinemann. Annacchino, M. (2007). The pursuit of new product development. 1st ed. Amsterdam: Butterworth-Heinemann. Beirman, D. and others, (2003). 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