Implementation of New or Improved Product in the Services Industry - Essay Example

Implementation of New or Improved Product in Services Industry 0 Introduction: Financial service products companies operating in today’s competitive environment are increasingly challenged to keep pace with the changing customer preferences, to achieve new product innovation, and to implement them in a proper way. To succeed, companies must conceive, develop and quickly implement sophisticated strategies for development of a new product or improving existing product. The firms should understand the business implications of the implementation process across the entire product development and marketing lifecycle. This is especially true in the case of financial service products which affect the private investment decisions of the customers. The customers’ interests on the safety as well as the return on the investments in the case of investment products or the risk coverage in the case of insurance products have to be thoroughly analysed and the implementation plan drawn in such a way that there will be a smooth transition in the case of an improvement over the existing product. In the case of new products adequate review process about the suitability of the product to the customer should be undertaken to ensure that the new product is accepted well by the customers and the implementation process is carried out in efficient and effective ways beneficial to the organization and the customers alike. Implementation in the organization means how the new or improved product will be correlated to the existing operations of the organization in compliance with the policy and the procedures of the organization. This process is of paramount importance, as the success of the introduction of the new product or improvement over the existing product lies in the way how it is integrated in the organisational hierarchy. This paper attempts to discuss in detail the steps involved in the implementation of a new or improved product in the service industry and the associated issues and problems that need to be addressed to make the implementation effective. 2.0 What is Implementation? As stated earlier, implementation is the process by which the new or improved financial service product is brought in to the stream of the current operational systems and procedures of the organization. First of all the adaptability of the product to suit the customer needs should be explained and people at all levels of the organization should be made to understand the saleability of the product. This process should start from the time the very idea of the product is conceived. Just as a proper designing of an engineering product is important for marketing it at the earliest, the financial service product should be put to thorough testing with all available parameters. For an effective implementation, all the concerned should be made a part of the development process so that they understand the significance and the novelty of the product even before the implementation process starts. The channels of communication to be used, process of training for the staff on the new product or improvement over the existing product and deployment of additional personnel are some of the areas which need attention and planning from the organisational point of view. Some resistance form within the organization to the acceptance of the new or improved product is to be expected and adequate explanations or other forces to contain the resistance should be thought of in advance so that the implementation process is not hindered. Even fixing a new hierarchy arrangement may be necessitated while implementation takes place. Just the same the way the new or improved product is introduced to the organization internally it has to be put forth to the customers in the environment external to the organization. This may be referred to as implementation of the product in the external marketing channel of the organization. External marketing environment includes existing as well as new customers. The organization may find it difficult to introduce a new product to the new customers unless the features of the product are appealing and well thought of to fit the needs of substantial strata of customers. Similarly persuading the existing customers to switch their preferences to the new product from the old ones also need a lot of convincing on the part of the organization. These processes form part of the implementation a new product in the service sector. 3.0 Implementation Process: Having decided on the characteristics of the new product or improvements over the existing product the organization should start looking at the steps involved in implementing the product both internally within the organization and externally with the existing and new customers. 3.1 Internal Implementation Process within the Organisation: The steps involved in implementing the product within the organization may vary from each organization and also will depend on the product which is intended to be introduced. Even the changes contemplated in the existing products may demand a thorough change in the outlook of the organization with respect to the steps involved in the implementation process internally. In general the following steps may be thought of considering worthwhile to support the implementation process within an organization: 3.1.1 Envisioning: As a starting point of the implementation process of the new or improved product across the operations of the business in financial services, the ‘envisioning’ of the employees about the new products may be undertaken by the top managers to prepare them towards the actual implementation. Envision means how one conceives about something or how anything gets form as mental images in someone’s mined (Dictionary). D.E. Hussey writes Envisioning in his book “The Implementation Challenge” as “This is the process of developing a coherent view of the future in order to form an overarching objective for the organization. The vision may cover such things as size, scope of activities, economics strengths, the relationships with customers, and the internal culture, including the values of the organization.” Envisioning the employees about implementation has two aspects. First envisioning means that how this implementation of new or improved product can make positive contribution to their respective jobs. How they are going to take the leverage from this implementation i.e. what they can learn from this implementation? How this implementation can enhance their skills at work place? How this implementation can give them monetary increments in their earnings by creating financial value for the organization they are working for. Second aspect is to enlighten them on the likely changes that the new product may bring about in the organisational working. The process of envisioning the organisational people internally also covers the scope of the implementation, outlining the various activities involved in the actual implementation process. It also specifies the objectives of the implementation and defines the limits of the implementation identifying the activities that are within the scope of the implementation and those outside the scope. It is possible to effectively envision the employees by designing and imparting a proper training of the employees involved in the implementation of the new or improved product. Such envisioning of the employees internally, can give them broader sense to understand the need of the implementation of new or improved product in the organization and probably can help the top managers to face less resistance from within the organisation internally on the implementation. 3.1.2 Internal Channels of communication: A strategic and tactical approach to establish and maintain the internal channels of effective employee communication is at the base of the organisational success to implement any new product in the service industry. The following steps to enhance the strength of the internal communication channels may be attempted: By a process of executive interviews, group discussions, surveys and audit of existing communication materials, an assessment of the existing situation may be made to be used as a base for implementation. To serve as a platform for future communications, a core communication document encompassing the key messages with the inputs from the top management may be developed as a second step. Since an efficient leadership is important for the successful implementation, the organisation should assign a senior management executive to be in charge of the entire implementation process. Similarly to ensure that the implementation is carried through to lower echelons of the organisation, the firm should engage suitable middle level managers and supervisors. The next logical step to be followed in the implementation process is to start dialogues with the employees. A dialogue is a two way communication. While the management should emphasise and drive their points to the employees it should also be receptive to the employees’ complaints and suggestions for improvements. It is another important issue for the management to determine the right mix of communication channels in that the right balance of traditional and non-traditional vehicles of communication should be arrived at. Unless the results of the communications are measured and corrective action taken wherever necessary, the effectiveness of communication cannot be attained. Hence the management should take steps and find out ways of measuring and reporting on the effectiveness of the communications. Suitable rewards in recognition of suggesting apt solutions for effective implementation may be instituted to encourage better employee participation. Maintaining a regular flow of sustained communication along the course of implementation is a must to ensure the success of the implementation. Breaking of or on and off communications will slower the pace of the implementation. (Source: Fleishman Hillard) 3.1.3. Employee Training: As a part of the overall implementation programme, the organization should take steps to impart the necessary training to the employees so that they become aware of the technicalities of the new products and other features covering their introduction to the new and existing customers. Such training will facilitate: improvements in the communication skills improved and better product knowledge identifying and improving customer service points diversity training which includes explanation about how people have different perspectives and views and techniques to value diversity defining the ethical values concerning the expectations about corporate and social responsibility improving upon the human relation skills to get along well in the work place training on the quality requirement including total quality management, benchmarking etc improving on the skill sets including training on the advanced systems of information technology to aid the implementation process (Carter McNamara 1997) Such training, apart from helping implement the new product may also result in increased job satisfaction, high employee morale and motivation, increased efficiencies, increased capacity to adapt new technologies, reduced employee turnover and enhanced company image. 3.1.4. Organisational Hierarchy: Having set the internal implementation process in motion by deciding on the effective communication channels and training of the employees, the company next should look in to the effectiveness or otherwise of the organizational hierarchy to decide on the success of the implementation process. Hierarchies are common structures in an organization and they reflect a natural and common technique for human beings to deal with complexity. Organisational hierarchy describes the formal reporting structure of regular positions at the grass root of any organization. For purposes of hierarchy each position formally reports exactly to one other position and this reporting relationship needs to be well defined for the organization to take advantage of the hierarchical positions. Sometimes the implementation process may necessitate a review of the existing organizational hierarchy and changes are to be brought in the organization to maintain the pace of the implementation process. This review might be undertaken at the start of the implementation process or at any time during the process. Elevation of insiders to higher positions, hiring outsiders to different positions, elimination of some existing positions and inclusion of some new positions are some of the processes that the organization may have to undertake for ensuring a proper working environment. There is no doubt that such changes will face the resistance of the existing employees which needs to be tackled by the organization tactfully to prevent the delay in the implementation process. 3.1.5. Paradigm Changes: “Think of a Paradigm Shift as a change from one way of thinking to another. Its a revolution, a transformation, a sort of metamorphosis. It just does not happen, but rather it is driven by agents of change.” (Thomas Kunn 1962) One clear point that the organization should have in mind is that there may be some assumptions which were common to many of the forecasts that turned out to be wrong. “Shocks and paradigm changes can change the validity of these assumptions overnight and so knock plans sideways in the short or medium term” (Article) The pace of changes in some industries is so fast that the organizations may not even find time to assess such changes, leave alone the corrective action required to be taken based on the changed circumstances. Hence it becomes important for the organization to have a superior strategy to elicit a clearer view of the future than its competitors. Thus the organisaiton should evolve strategic planning to make swift alterations in the internal organizational structure and goals to combat the unexpected changes in the external environments. However in this world of growing complexities, to adopt to swift changes though not impossible, is not an easy task. Some firms use the approach of working with scenarios which are diverging but plausible views of the future. The working out of different scenarios may come handy in the implementation process where the firm is confronted with unexpected changes. 3.1.6. Piloting: The piloting approach can be organized in a number of ways. But the underlying principle is that the new or improved product is tested within a subset of the organization and trailed over a period of time. The pilot implementation usually requires one or more departments or other grouping of people concerned with the new product. The selected department or group may deal with the product for some time to arrive at the basic parameters governing the introduction of the product in the market to the new and existing customers. It is advisable to extend the use of the product and the related information once the performance of the new product or the improvement to the existing product has been proven and the pilot users are confident about the product’s abilities and performance. Piloting an implementation in a single department is perhaps favoured more often because the gradual approach can be useful in gaining champions of the features and adaptability of the new products. Quite interestingly the pilot implementation is probably the most common approach taken when implementing a new product in the service sector. 3.2. External Implementation process: In contrast to the internal implementation process, the external implementation of a new product is more complex and involves a schematic approach to gain the advantages of marketing the product. In order that the firm is able to assess the time and methods of introducing the new product, a marketing strategy defining the marketing structure should be evolved. This strategy need to be arrived at after a careful analysis of the existing conditions of the market vis-à-vis the available products and their strengths and weaknesses in comparison to the company’s products. Marketing strategy is most effective when it is made an integral part of the overall corporate strategy detailing how the organization will engage customers, prospects and the competition in the market arena for success. Achieving a sustainable competitive advantage is quite possible by suitably evolving a marketing strategy. The firm may decide on either a direct market concept or it may decide to engage an indirect marketing technique depending on the product capabilities. 3.2.1 Direct Marketing: Direct marketing is a communication between seller and buyer directly. No intermediary media is used. The Direct Marketing Association defines direct marketing as ‘communications where data are used systematically to achieve quantifiable marketing objectives and where direct contact is made or invited between a company and its customers and prospective customers.’ “Direct marketing involves identifying the customer, establishing a customer profile, completely understanding the way the customer thinks, localizing the customer preferences as to what the customer is influenced by, how , when, what and from whom they are prepared to buy- is really important to grasp as without customers you make no sales.” (Roddy Mullin 2002) The firm has to decide on whether direct marketing concept is adaptable to the kind of products which the firm is dealing in. Direct marketing would be advantageous for the insurance products and the like. 3.2.2 Indirect Marketing: “Indirect marketing is a way to get your prospects to contact you without you having to tell them to. Indirect marketing works because it touches the prospect and elicits an association, response or interest.” (Jack D. Deal 2001) Indirect Marketing can be attempted by any of the following ways: Website: By creating an informative and detailed website about the products offered and the relative merits as compared to that of the competitors E-Zine: By suitably drafting a E-Zine news letter and circulating through emails Articles: By adding articles of value to the website Radio/TV: This is one of the powerful media through which indirect marketing can be attempted. Network: Network marketing is a simple and effective indirect marketing source which boosts up the sales once the network is well established. Thus the implementation process for the new product should adopt either of the marketing paths in direct or indirect marketing depending on the products and the policies of the company. In arriving at such decisions the market positioning and the pilot marketing are of immense use. 3.2.3 Market Positioning: A product’s position is how potential buyers see the product. Positioning is always expressed relative to the position of the competitors “In marketing, positioning has come to mean the process by which marketers try to create an image or identity in the minds of their target market for its product, brand, or organization. It is the relative competitive comparison their product occupies in a given market as perceived by the target market.” (Article on Positioning) Product positioning involves a detailed process of defining the market in which the product will compete or in other words determining who are the potential customers of the organization. A good position is what makes the product unique and the uniqueness should be considered as a benefit by the target market. It is very important that the organization understands its product from the customer point of view relative to the competition. Assessing the marketing environment and the identifying the competitive advantage of the product are the two essential elements in positioning the product, especially in the case of a product in the service sector. The competitive edge of the product is of vital importance in the financial services market, as the firm has to compete with numerous others available in the market. It is more so in the case of insurance products. Under any circumstances it may not be necessary to change the product but by suitably positioning the product with a proper identification of the suitable customer and the medium of selling the shortcomings in the marketing plan can be mitigated. 3.2.4 Role of Service Providers: Many companies are moving to the format that has been espoused by the service providers for decades. The idea is to simply provide value through good information which establishes the firm as an expert in the field, without actually promoting the product. This way the service providers render invaluable service to the business. To compete in a rapidly growing financial services market place, investment service providers are accelerating adoption of new technologies. Having an experienced service provider with proven financial industry expertise, integrated development and localization capabilities would greatly assist the firm in improving the marketability of the products. Without taking the hassles of direct marketing the firm may entrust the job of selling the service products through the service providers, who will take the risk and responsibility of selling the products in different market environment s according to the customer requirements. With more number of customers for the products, creating the database, maintaining the record of the transactions of all the customers may pose a problem for the company. Under such situations, the service providers will be of greater help. 3.2.5. Pilot Marketing: “Market opportunities have to be identified quickly and exploited before customers move on to the next competitive proposition as they relentlessly contrast vendors in terms of price, product/service and innovation.” (Editorial) Pilot marketing is essential to identify the reception of a company’s products in the market, with a relative comparison of the competitor’s products. For arriving at some concrete decisions about the continuance of the new product as it is or to decide on the changes that may be needed to be made in the new product or in the existing product, it is important for the company to collect valuable information about the customers’ reaction as to the acceptability of the product by the customer. This is possible only by test marketing or doing a pilot marketing. Even in the pilot marketing it is of utmost importance that a proper customer selection is made so that the results and information collected represents the correct picture about the product. This decision area is fundamentally strategic and long-term since it provides the basic information on how the company should proceed on the marketing plan for different products. 4.0 Conclusion: The marketing function needs to advise the organization on the valuable feedback it collects from the customers on the basis of which several important decisions could be taken for the overall improvement in the profitability of the company. With the foregoing discussions on the implementation process of the new product in the service industry, it is understood that any organization has to undertake the process of internal and external implementation of a new product or an improved existing product. In the internal implementation process, establishing effective channels of communication, employee training and piloting are the important steps involved. Similarly with respect to the external implementation process, direct and indirect marketing, pilot marketing and the role of service providers are of importance. With a proper analysis of the information gathered on the customer preferences, the organization would be able to meet the competition effectively by bringing about the changes that is required in the attributes of the products and their marketability. References: 1. Article Why Are We Surprised? The Challenge Network [Online] Available from http://www.chforum.org/methods/xc414.html Accessed on 20th February 2007 2. Article on Positioning Positioning (marketing) Wikipedia [Online] Available from http://en.wikipedia.org/wiki/Positioning_(marketing) Accessed on 20th February 2007 3. Carter McNamara (1997) Employee Training and Development: Reasons and Benefits Authenticity Consulting LLC [Online] Available from http://www.managementhelp.org/trng_dev/basics/reasons.htm Accessed on 20th February 2007 4. Editorial Marketing: Investment Advisor to the Business Cognos Performance Perspectives Business Intelligence Enterprise Planning, Performance Management [Online] Available from http://www.cognos.com/newsletter/uk/business/st_061129_01.html Accessed on 20th February 2007 5. Fleishman Hillard Internal Communications: Nine Steps to an Effective Employee Communication Programme Fleisherman-Hillard Intenational [Online] Available from http://www.eu.fleishmaneurope.com/downloads_a/9_steps_en.pdf Accessed on 20th February 2007 6. Jack D. Deal (2001) How to Use Indirect Marketing to Get Clients Networking Magazine Online [Online] Available from http://www.doorway.com/netmag/99JULY/july_deal.html 7. Roddy Mullin (2002) Direct Marketing: A Step by Step Guide to Effective Planning and Targeting Kogan Page publishing 8. Thomas Kunn (1962) The Structure of Scientific Revolutions Second Edition, Enlarged, The University of Chicago Press, Chicago, 1970 Read More