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- QUESTION
All-This is a real company, although the numbers have been disguised for confidentiality and a real consulting engagement. This is open book, open notes, and open source. Feel free to use the internet and other sources as needed. You can collaborate on this assignment with one or more people BUT make absolutely sure that your final submission is your own work. There is no rubric for this assignment because there are no rubrics in real life. After 10 weeks and 7 NPD assignments with me, I hope you know what I am looking for by now. To do well on this assignment, you should use the learning's, the models and the power points from our classes, all of which are posted. I really learned a lot from you this summer and added those learnings to the power points. BTW, this case contains a bunch of information that is pretty much irrelevant to the new products part of the engagement but I left in anyway for context. Don't feel like you need to use all of the numbers or any of them in fact. In every engagement there is always more information that we need. The trick is to sort out the important pieces. This assignment is a little different from some of the NPD ones in that this company is starting their new product efforts virtually from scratch. They need to understand how to set up and run a new product process and they need a concrete example of what a final marketing proposition would like like.
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| Subject | Business | Pages | 6 | Style | APA |
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Answer
New Product Development
Background/concept ideas
2XL is an established company producing gym wipes that are used to clean and disinfect gym surfaces. The company is looking to grow and expand its current product portfolio by entering into new markets and attracting different consumer markets. The company has a variety of choices in terms of the new products it might introduce into the market, but I prefer re-usable mini-towels. The towels would be used by gym members to wipe their bodies as they work out, which complements the 2XL’s current wipes product. As a complementary product, the mini-towels would come disinfected and would be stored in a disinfectant container in order to remain usable. As a complementary product, gym owners would buy both the wipes and the re-usable mini towels as a package. This taps into the current fitness market, but also expands to other markets such as barbershops, which also utilize reusable towels. The reusable towels can also be used at salons among other establishments. The company can also venture into the supplements market as part of its long-term growth strategy. This proposal is limited to the discussion of the expansion into re-usable mini-towels to avoid over-extension of the 2XL brand, which might have negative consequences.
Formal structure and senior leadership team/dedicated new product innovation team
Given that the company does not have a specific team of employees dedicated to new product innovation, the company should hire a senior manager in charge of product innovation. This manager shall be responsible for a team of two researchers who shall be responsible for the development of new products. The team of three employees shall be responsible for the development of new product lines starting with the re-usable mini-towels that can be used in different environments. To ensure the appropriate management of new product sales, the company shall also hire a sales manager who shall be responsible for hiring and training new salespeople. The new sales team shall be responsible for selling the company’s products in new markets as well as expanding the current market. The sales managers shall also be tasked with minimizing customer attrition rates. The current sales personnel shall be responsible for selling the new products to the existing clients while, the additional sales staff shall be responsible for the new markets. The new product innovation team shall be responsible for developing new products starting with the re-usable mini-towels, which is still at the idea stage. The feasibility and practicality of the product idea is yet to be proven, but it is based on the current wipes product.
Gap and new category
The mini-towels idea utilizes those concepts of identifying a market gap as well as creating a new category of product. The market gap is identified by the fact that most gyms and households use re-usable large towels. However, these towels must be washed every time someone uses them before being used by another person. However, the reusable mini-towels shall not require washing, as they shall be kept in disinfected containers that keep them clean and ready for use throughout the day. However, this product idea should be developed further through the creation of a product prototype that can be tested. To ensure the products success, the company must engage the target consumers for feedback on the usability of the product. Some of the crucial questions that must be answered include questions on whether the market needs the product and how much the target customers would pay for the product. These crucial questions are part of the market research for the company and are crucial to the success of the new product. The product innovation team should incorporate feedback from the target consumers into the final design for the product in order to ensure that the product finds a ready market.
Business analysis
Once the final design of the product has been agreed upon, the company has to conduct a business analysis of the product. This step involves calculating the full potential of the new product including the return on investment. The new product must allow for a reasonable margin at a price that the target consumers can afford. The company should also have an estimate of the production and marketing costs as they factor into the final price of the product. 2XL should also ensure that it has dedicated adequate resources to the production of its new product in order to prevent product shortages once the company launches the new product. The company must also conduct an analysis of the expected demand in relation to its production capabilities in order to save on costs and ensure a regular supply of its new product.
According to the available data, a large percentage of 2XL’s sales came from its best customers who are the top 20% of customers. Therefore, the company might find it advantageous to target its best customers in the initial product launch. Altura recommends that the company embrace a high profile launch for its new product, which is highly applicable in this case. However, the launch must be followed with adequate supply of the product to ensure that the company retains its customers.
Marketing and product launch
The company should engage in strategic marketing activities leading up to the initial product launch. 2XL could engage in test marketing, which involves testing the entire marketing channel with the prototype product. This is usually a good move, as it allows the company to test the entire concept to determine its validity. After the test marketing has proven successful, the company can now launch the product officially. Prior to the launch, it is important for the company to liaise with key market influencers who would market the product to their audiences who are the target consumers. These methods have been utilized successfully by technology companies such as Apple and Microsoft to ensure that their product launches are successful. Utilizing key influencers and creating a positive buzz about a product in the media is crucial to the success of a product launch. The buzz should also spread to social media as the prominence of social media in marketing has grown over the years.
Product positioning
The product (mini-towels) would be positioned as a complementary product to 2XL’s main product wipes. The company seeks to leverage the popularity of its main product to launch its new product. Although this is a risky proposition given that, the new product might fail and tarnish the reputation of the established product. After the launch of its new product, the company should be ready to meet the market demand for the product. To avoid a shortage of product, the company should ensure that it has adequate production capacity to meet the expected demand according to the forecasts generated in the testing phase. The allocation of adequate financial resources for production and marketing would increase the chances of a successful product launch, which should be the climax of a successful marketing campaign. The company should utilize its leadership position within the fitness industry to position the new product at the top of its target niche market. This marketing approach clearly places 2XL on the path to accelerated growth as opposed to growing organically. However, this approach involves greater risk as the company has to invest significant capital to develop and market new products. The profit potential involved in this approach is bigger as compared to the organic approach.
Conclusion
In summary, this proposal makes a case for an aggressive approach in the development and marketing of new products by 2XL with the expected outcome of greater profitability and growth. The proposal is focused on the development of an innovative product that shall serve multiple markets with a keen focus on the fitness market where the company continues to enjoy phenomenal success. The proposal emphasizes the testing of eth new products as well as the chosen marketing process in order to increase the chances of success when the company officially launches its new product. The components of a successful launch as well as the successful development of an innovative product are covered within this proposal as the company starts developing its mini-towels from the idea stage. Adequate research is conducted to ensure the feasibility of the idea within the target market. Different marketing channels are also covered as a way of marketing the new products before the official launch. The company will have to commit a significant amount of financial and labor resources to implement everything within the report.
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References
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