Importance of a Product Strategy - Coursework Example

Name: Tutor: Course: Date: New product strategy A new product strategy links the new product development process with the objectives of the company or organisation. A new product strategy must be compatible with the objectives of the organisation. A new product strategy is part of the organisations overall marketing strategy. It sharpens the focus and provides general guidelines for generating, screening and evaluating new product ideas. The new product strategy specifies the role the new product will play in the organisation’s overall plan and describes the characteristics of products the organization wants to offer and the markets it wants to serve(Lamb et al., 2008) an example is Apple flagship product, the IPhone; the product strategy clearly defines the role, the market it targets and overall objectives. Importance of a product strategy A new product strategy enables a company to avoid launching a poorly designed product or a product that does not meet the needs of the consumer(Haig, 2011) A new product strategy enables the company to determine and set the goal and objectives of the company. This is important because every company must have a reason as to why it exists. These are its main goal and objectives(Higham, 2009). A new product strategy determines and charts the new product team’s direction. This determines the technologies to be used in production and marketing. This is also crucial to determining the kind of market that the new product is intended for(Wheelwright, 2010). The new product strategy also determines how the team involved in the product development stage will chart the way forward. This is considers the constraints of the new products, the rules that it should abide and also the rules the team need to abide by. The new product strategy also determines and sets in place the budget that should be used(Stonehouse & Houston, 2012) Idea generation and management Idea generation is a continuous, systematic search for new product opportunities. It entails delineating sources of new ideas and methods for generating them. Idea generation aims at creating, developing, and communicating ideas which are abstract, concrete, or visual. The process includes the process of constructing through the idea, innovating the concept, developing the process, and bringing the concept to reality(Lager, 2010). The idea generation stage is the conscious identification of a product idea that logically addresses an opportunity. This idea may be born of entrepreneurial insight, creative mind- mapping (a method of brain storming in which a general idea is refined into components that represent market need and from those components, product ideas are evaluated for their value to a particular customer) or accidentally stumbling upon an idea through a corridor of related activity. Idea management focusses on capturing an idea from many sources or sides. This can be from within the organisation or outside. It also focuses on prioritizing and selecting ideas that need further elaboration and development. Idea management also looks at the idea generated on feasibility (Lager, 2010). Importance of idea generation and management Ideas form the base from where new products emerge. It is therefore imperative that the process be managed to ensure efficient and effective generation of better ideas. Idea management identifies the ideas that can possibly be developed further and turn into feasible products that can maximise profit generation and enable the organisation meet its goals and objectives(Christiansen, 1999) Idea generation and management are important in that it enables further enrichment and elaboration of ideas that can be developed into a product concept. The organisation uses available knowledge about customers and markets to determine this(Govindarajan, 2007). Concept evaluation Concept evaluation is a stage in new product development where the pool of new product concepts are evaluated on technical, marketing, and financial basis – concept test (what do potential consumers think of the idea) and/or full screen (where the views of potential consumers and expert e.g. engineers comment on the idea).New product ideas are ranked and the best ideas are selected - is this a concept that firm can capitalise on? Can the product be made and can the product meet market requirements. Concept evaluation also looks at the final benefits of the products(Starfield, 1992) Importance of concept evaluation Concept evaluation is able to compare each concept on whether it meets customer requirements and their needs. This is important because concepts which do not meet customer requirements are dropped and those that meet the requirements are developed further(Gruenwald, 1992). Concept evaluation is able to compare the concept with the available technologies. There is a great incentive in using technology in concept development and product development. The concept is evaluated on whether available technology is able to handle production and marketing(Kachru, 2009) Business failure Despite all the benefits that have accrued to new product development with the advent of information and systems technologies, the probability of success at launch is still about 60 percent(Allen, 2011). A significant body of research has revealed that the principal reason for new product failure is lack of good market analysis. Entrepreneurs with a "build it and they will come" attitude fail to consider that the only way to know what customers really want is to talk with them through market analysis(Nwankwo & Gbadamosi, 2010) The second biggest cause of new product failure is technical problems. The path from laboratory to production is fraught with challenges and obstacles, often because the company has moved too rapidly through the design and early prototyping phase(Allen, 2011) Competitive markets.This plays a huge part in the success and failure of any product. Often times, organisations fail to better price the product as compared to their competitors. This therefore means customers can find cheaper alternatives to the product developed. Furthermore, there are ways for entrepreneurial firms to compete effectively in the area of product development. In fact, the new environment for product development is uniquely suited to smaller companies, which are often better able to adapt to change and move quickly in new directions. Disharmony between the research and development team and the marketing department. This can be caused by poor communication and failure to understand market needs, the needs of individual customers and the competitive market.(Medina, 1988) Incorrect placement and marketing of a product.Despite the new product having better features and being better than other products from competitors. This can be incorrectly advertised or marketed to the market and therefore customers may never have the right information(Storey, 1994). In 2000, Heinz introduced EZ Squirt ketchup, a purple and green ketchup into the US market. The product failed within a few months of introduction. Poor marketing and market research are cited as the cause(Hoyer & MacInnis, 2008) Poor product quality; the development of a product that does not meet the market needs of customers can have adverse effects on the final outcome of the product. Customers may shun the new product for other products from other organisations which meet their needs and demands(Hitachi, 2012). Some recent research suggests that one overlooked cause of new product failure is the human factor. The very early stages of the NPD process typically involve one person with an idea(Low & MacMillan, 2013). If that person's level of creative thought, tolerance for risk, and commitment to doing thorough market research is not sufficient, a viable project may be doomed to failure.It is only in the later stages of development that teams typically form around new product projects that seem feasible. References Allen, K.R., 2011. Launching New Ventures: An Entrepreneurial Approach. 6th ed. New York: Cengage Learning. 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Revolutionizing product development: quantum leaps in speed, efficiency, and quality. London: Free Press. Wheelwright, C., 2010. A new product strategy determines and charts the new product team’s direction. This determines the technologies to be used in production and marketing. This is also crucial to determining the kind of market that the new product is. New York: Simon and Schuster. Read More