This report presents the literature on new product (or service) development models and factors for success in NPD. It also discusses the detailed analysis of the organization’s new product development practices and detail areas of strength and weakness. This report also recommended the areas in which the company could improve their new product development practice.A Literature on new product (or service) development models and factors for success in NPD
Literature on new product (or service) development models
The seven process of BAH model is new product strategy, idea generation, screening and evaluation, business analysis, development, testing, and commercialization.
The initial phase of new product development is a generation of the idea. The idea originated from everywhere, could be any sort and can be numerous. This phase entails origination of high amount of idea from different sources such as internal sources, SWOT analysis, market research, competition, and customers. In this way, it is identified that many corporations give incentives to their workforces to generate the product ideas. A corporation can review its strength, weakness, opportunity, and threats to arrive at the feasible idea. In addition, the company may constantly review the modified needs, trends, and wants in the market. Sometimes feedbacks and reviews from the customers and their idea could aid the corporation to generate the new product ideas (Wowak, Craighead, Ketchen, and Hult, 2016). Moreover, competitors SWOT assessment could also supportive for a corporation to generate the ideas.
The idea could be several, but good ideas are some. This second process of new product development entails addressing of good and feasible ideas and removal of infeasible data. There is certain factor considers within the idea screening such as weakness and strength of the company, need of customers, affordability, on-going trends and expected ROI (Gopalakrishnan, Libby, Samuels, and Swenson, 2015).
Concept Development & Testing
The next phase of new product development entails concept development and testing. A concept is a comprehensive approach and blueprint description of the notion. When an idea is created in each phase then it should be presentable. It is an alias as a concept. All the notions, which pass through the screening stages, are transformed into the concept for testing purpose. The concept is now conveyed to the target marketplace. Some identified customers from the targeted group are selected to investigate the concept (Marion, Eddleston, Friar, and Deeds, 2015). Information is offered to the customer to aid them to imagine the product.
Business Strategy Analysis & Development
The testing result aid the business to make the final concept to develop the products and services. Business has developed the concept by assessing and choosing the marketing and other business strategies, which would be implemented. Furthermore, estimated product productivity is predicted as well as branding strategies and marketing mix is decided for the products and services (Genç, and Di Benedetto, 2015). In this process, there are certain elements considered by an organization such as pricing strategy, the rivalry of the product, breakeven point, and cost.
The product concept is changed into actual substantial products and services. The outcome of new product development phase is to build the prototype and limited production replica. In this phase, all the branding and other strategies are tested earlier and then applied (Fung and Choi, 2018).
The actual prototype and feedback are developed for the investigation unlike the concept of testing. Customer feedback is gathered and makes an alteration, if necessary in order to develop the product. This procedure is significant because it validates the whole notions and develops the corporation for launching the products (De Massis, Kotlar, Frattini, Chrisman, and Nordqvist, 2016).
The product is ready for marketing. The marketing mix is used at this stage to launch the product. The final decision is made in this stage for developing the products and services. In this phase, marketers are decided to launch the product. This phase entails the briefing about distinct departments regarding the targets and duties. In this stage, each small and major judgment is developed before final introduction stage of the new product development (Fuller, 2016).
Factors for success in NPD
This factor is essential to research the market in order to identify the preferences and needs of customers. It contributes to build the profitable products and services solution that has high chances for growth. There are certain techniques to assess the wants and desires of customers such as test product, sample marketing, customer surveys and data pooling. This tool is also supportive to design the products (Chuang, Morgan, and Robson, 2015). It offers clear benefits to customers associated with entrants.
Analysis of customer’s need does not take assurance to get success. There is a gap in the functions of marketing as it could create complexity to develop the product. Marketing is significant to understand the wants of customers and ways to market the benefits. However, they do not design and build the products. A quality products and services are required by customers as it should be considered by the business during developing the products (Colombo, Dell'Era, and Frattini, 2015). It is also stated that when early adopter purchases bad products and services then they will dissatisfy with their needs and expectation and spread this information in around the world.
A quality product does not effective for success in new product development. The company should develop clear market position originated from differentiation and competitor’s assessment. When 10 competing brands demonstrate the exact same advantages then customer decision could be very illogical. In promoting and developing the products, business should emphasize on one or two benefits that separate the brand and that customer will appreciate (Du, Yalcinkaya, and Bstieler, 2016). For example, organic food marketers try to appeal to customers particularly associated with more natural and healthy food alternatives.
Promotion is a key factor in the success of product marketing, which is controlled by the marketing activities. It entails the public relations, paid advertising, sales efforts, and free media exposure. The company should choose the appropriate media to make a link with the target customers and generating the message that will appeal to customers in an appropriate manner. It is a significant factor to get success in new product development. Poor promotion could lead to marketing failure even with a quality product (Roper, Micheli, Love, and Vahter, 2016). Advertising investigation is beneficial to develop the influencing message, which promotes the desired benefits and arrive at the target market.
Detailed analysis of the organization’s new product development practices and detail areas of strength and weakness
Cole’s supermarket uses different new product development practices to develop the new product. The following practices are used by Coles Supermarket:
It is a primary phase in which Coles Supermarket sources the idea with regards to the new product. There are some sources by which Coles Supermarket generate the idea regarding new product ideas such as competitors, business customers, journals, employees, suppliers, and newspaper. It also uses technology based idea generation tools (Zhao, Cavusgil, and Cavusgil, 2014). This stage is significant because it creates the basis for all other stages, and the ideas generation shall direct the whole procedure for product development.
The gathered ideas have to go via screening procedure to filter out the feasible ones. Coles Supermarket gathers the beliefs of employees, other businesses, and customers in order to eliminate the chase of expensive unfeasible information. External industry factors may influence the Coles Supermarket like changes in technology, competition and persuades the decision criteria of enterprise (Appio, Achiche, Martini, and Beaudry, 2017). At the end of the screening procedure, a company remains with certain feasible ideas from the high amount of pooled data.
Coles Supermarket undertakes an investigation to assess the potential expenses, productivity, revenue generated from the product. It also conducts SWOT assessment to address the weakness, strength, threats, and opportunities in the marketplace. The market approaches are also used by the Coles Supermarket to assess the target group of product, which provides segmentation of product’s marketplace. Market segmentation is essential because it facilitates the firm to assess its niche (Rubera, Chandrasekaran, and Ordanini, 2016). The identified niche market can impact on the different marketing decision.
Product Development and Commercialization
Product development includes the actual design and development of the product. Development commences with the production of the prototype, which provides market testing. As per the outcomes of the tests, Cole’s supermarket chooses on whether to carry out large-scale manufacturing or not. There is a need for large-scale production and commercialization to get a positive outcome. Cole’s supermarket commences their promotion campaign for developing new products (Luzzini, Amann, Caniato, Essig, and Ronchi, 2015). The market investigation is also obtained at the time of conception phase to persuade the location and timing of the product launch.
New product development strategy
Cole’s supermarket uses new product development strategy to avoid wasting time, business resources and money. This strategy aids the company to organize the product planning and investigate, identify the views of customers and predictions and feasible plan and resource the new product development project. This new product development strategy aids to eliminate the misreading and overestimating the target market. It has launched a poorly intended product that does not attain the requirement of the specified customer. It also spends on the resources to decline the projected development costs (Fang, Lee, and Yang, 2015). Cole’s supermarket also exposes their business risk from the unexpected rivalry. Following are different steps to develop the new product strategy:
Cole’s supermarket makes the planning of accurate description of the product. It would aid them and their team to focus on avoiding NPD pitfalls and building too many products at once. It also makes optimum utilization of resources to build the product (Morgan, Anokhin, Kretinin, and Frishammar, 2015).
Identify market needs
Cole’s supermarket targets the market and its needs and wants to successfully develop the new products. A strategic, targeted and purposeful approach to NPD ensures that product fits into the market. For identifying the market needs, the company initially targets the market for the product I am proposing and then identify their needs. It also assesses the benefit of the proposed new product. Cole’s supermarket also addresses the annoyance of market towards existing product and its type (Chang, and Taylor, 2016). It also identifies that ways to fit the market into the existing market. It also demonstrates the uniqueness of products as compared to its competitors. Cole’s supermarket addresses their current market research. The company also undertakes the additional research to assess new product proposal with the customers. For instance, the company set up a focus group and conducts customer survey (Stark, 2015). It also finds out regarding customer research.
Establish time frames
The company provides adequate time to create and execute the new products. The objective of Coles Supermarket is to develop the new products and informs time frames and deadlines for execution (Tukker and Tischner, 2017). It should be realistic and thoughtful. In this way, the following objectives will be used:
- To race against the competition and build efficiency amid the team
- To attain particular launch date and influence the demand for seasonal products and calendar events
- To be responsive towards the need of the customer and increase demand by ensuring the right product at the right time
- To stick the business by maintaining the schedules for resources and NPD
Identify key issues and approaches
Coles Supermarket focuses on different task to develop the product, which is feasible for customers. The nature of the business and their idea will assess the phases of developing new products. The company develops the certain stage for the success of NPD (Kawakami, Barczak, and Durmu?o?lu, 2015). These stages are:
- Creating and screening the ideas
- Building and screening aspects
- Testing aspects
- Evaluating market and business strategy
- Establishing and market testing products
- Executing and commercialization of products
SWOT assessment of Coles Supermarket:
It commands the share of a lion in liquor market and domestic food because of a long history in Australia
Unmatched branding and advertising in the retail space of Australia. It also uses a patriotic slogan such as ‘proudly Australian since 1914’.
It has also initiated the TV sponsorship of 2008 in summer Olympics with slogan particularly structured for price-conscious purchasers.
Attractive pricing strategies and frequent price cuts and promotional benefits from time to time (Leclercq, Poncin, and Hammedi, 2017).
An enormously effective promotional campaign such as linked with Apple computers and 12 big suppliers and started the campaign with the title ‘apple for student’
The distinct extent of generic products, which intends to cater to the particular type of buyer
Lucrative online order and pickup/delivery facilities (Chaudhuri and Boer, 2016).
Unfavorable publicity in around the inflexible negotiation with Australian suppliers. It has moderately harmed the sentiments of people with regards to Coles Supermarket. It has also declined the potential return on investment.
Coles deals in lower margin as compared to a rivalry like Woolworths and Wesfarmers (Tuli, and Shankar, 2015).
To grab high control of the supply chain by focusing on producing and harvesting the profit at the higher point
The geographic extension could aid to reach out to the newer area at the international level
Marketing and sponsorship practices could aid to improve the business (Morgan, Anokhin, Kretinin, and Frishammar, 2015).
High rivalry in the supermarket market has led to reducing the food prices and margin.
Customers get confused amid different brands because of inadequate and unclear communication for each (Rahmani, Emamisaleh, and Yadegari, 2015).
The high amount of purchasers might opt for independents and smaller retailers like butchers and greengrocers due to convenience.
The Australian liquor and food market is a constant rivalry as market players enter into the game-changing business models and ideas (Sjoerdsma, and van Weele, 2015).
Detailed recommendations for areas in which the company could improve their new product development practice
A new product approach should be tested by Coles Supermarket via phone surveys, focus groups, and beta tests. In such way, it is stated that focus group is a technique in which managers of the corporation will perceive customer through the one-way channel. An interviewer will ask the questions with the consumers associated with product concept of a company such as their dislikes, likes, and suggestions towards the product. This data is determined later to develop the product concepts (Rahmani, Emamisaleh, and Yadegari, 2015). Cole’s supermarket can use the phone survey to develop more reliable sample regarding the reaction of the market towards the product. The high volume of surveys depicts the feelings of the general population regarding the products. If phone investigation is positive then the next phase will be a beta test to introduce the product into the market. Through the beta test, Coles Supermarket can distribute and advertise the products and services into the different market. Subsequent, it will turn over the products at regional and national level (Morgan, Anokhin, Kretinin, A., and Frishammar, 2015).
Cole’s supermarket should use price skimming strategy to improve their new product development practices. This strategy can aid to decline the high production expenses regarding the development of new product. The right time for using this strategy is that when the product demand is inelastic. An inelastic demand shows that customers do not price sensitive. For example, a customer may not focus on the price of the new product. Cole’s supermarket should also use penetration pricing for improving their new product development practices and charging low rate to build prompt customer foundation in the marketplace (Rahmani, Emamisaleh, and Yadegari, 2015). Once Cole’s supermarket acquires the customer then it could send them regular promotions to retain them. It could be also beneficial to build brand loyalty.
Product Life Cycle Management
Cole’s supermarket should manage the product lifecycle to improve the NPD practices. In this way, it can involve product managing via the different phase of product life cycle. A product has different phases such as introduction, growth, maturity, and decline. In the introduction and growth stages, the company can sell their new products. The barriers can arise when market players will enter into the market at the time of maturity phase. A corporation could differentiate its product with new features and lower prices to gain profits and revenues (Sjoerdsma, and van Weele, 2015). The primary objective of product lifecycle management is to get higher mileage out of product before the take over new technology.
Cole’s supermarket can develop product concept to improve the NPD practices. In this way, the company can organize a meeting for all departments to discuss regarding new product idea as it could be a compliment for existing product line of the company. During this procedure, the decision maker will construct the structure for the product such as dimension, characteristics and price range. Marketing research manager should focus on industry research data, which demonstrates the strength of key competitors and their products (Tuli, and Shankar, 2015).
Develop New Products in Teams
Cole’s supermarket can build the strategy by placing the team for developing a new product. Continue new product development requires stable team structure, whose member could modify as the required disciplines. A specific product may need special design and engineering expertise to transfer the corresponding workforces into the responsible team for that product. Subsequent, it may need marketing input and workforces who have marketing understanding to join the team. This team can get resources from the diverse geographical location of the business. It can also make the approaches that work for the whole organization (Kawakami, Barczak, and Durmu?o?lu, 2015).
Develop a New Product as a Project
The company should develop the product occasionally and set up project organization in order to develop new product and corresponding approach. The project manager should construct the whole goal for developing new product and assembles the workforces to perform the tasks. The project should consider fixed schedule and budget, and a representative from engineering, design, production, and marketing for developing an integrated strategy. A project framework can integrate the interdisciplinary expertise. This expertise will require the higher extent of control as compared to permanent team formation (Morgan, Anokhin, Kretinin, and Frishammar, 2015).
A business atmosphere is highly uncertain hence managers of Cole’s supermarket should be flexible and innovative to survive. They can improve the NPD practices by using strategic alternatives. It also enables the companies to keep a competitive edge over competitors. For example, managers can choose a safer small investment, and avoid costly changes (Luzzini, Amann, Caniato, Essig, and Ronchi, 2015).
Cole’s supermarket can use the diversification strategy to improve the NPD practices within an organization. This is a growth strategy in which corporation builds new products for current and new markets. This strategy could be beneficial because Cole’s supermarket could unable to take competitive benefits via product differentiation. Diversification could aid the corporation to effectively use the resources, minimize risk and gain sales regarding the market disturbance that could impact on specific products (Chuang, Morgan, and Robson, 2015).
Cole’s supermarket can use the differentiation strategy due to development of similar products in the market. It can also create features that differentiate their products from the key market participants. The differentiation features should add the value to customers and difficult for competitors to replicate as customers will ready to pay a premium for that product. Managers should make sure that the product is reasonable and meet the need of customers while introducing new feature as it would be effective to gain the sales (Marion, Eddleston, Friar, and Deeds, 2015).
From, the above discussion, it could be concluded that BAH model is used to develop the new product. This model contains several steps such as new product strategy, idea generation, screening and evaluation, business analysis, development, testing, and commercialization. It can be also evaluated that there are different factors for success in the new product development named Marketplace Need, Product Benefits, Clear Differentiation, and Effective Promotion. It could be also summarized that Cole’s supermarket uses different new product development practices. These practices are Idea Generation, Screening, Concept Development, Product Development and Commercialization, and New product development strategy. It can be also concluded that Cole’s supermarket uses attractive pricing strategies to develop the new product. But, at the same time, the high rivalry could create barriers in developing a new product. It can be also summarized that there are different areas in which the company could improve their new product development practice. These strategies are Marketing Research, Pricing Product, Product Life Cycle Management, and Product Concept, Develop a New Product as a Project, Diversification, Differentiation and Develop New Products in Teams.
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