New Product Development

Answer

New Product Development
1. 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 current business environment is marked by fierce competition with rivals offering low price generic products. This has increased competition for 2XL Company and necessitated a change of strategy through new product development. The company has the option of two strategies that it can adopt to address the change in responding to the change in its market category. The first option is for the company to develop a new product for their existing customers to form part of their B-to-B category for new markets beyond gyms. The second option is for 2Xl to use their expertise in the wipes to develop new products targeting direct consumer sales. It would be best that 2XL adopts the first strategy by focusing on their core business and grow their customer base in the gym business and to enable them first reclaim their positioning in the market. This would lay ground for the second strategy to diversify and expand their business as a long-term strategy.

2. Product Development
The company has a variety of choices in terms of the new products it might introduce into the market. The first product is the facial wipe, which can take off a woman’s makeup including eye shadow and mascara easily and without a trace left. The second product is the wipe for hospitals, which can clean surfaces, disinfect and is biodegradable. Gym members will wipe their bodies, as they work out, which complements the 2XL’s current wipes product would also use the towels. 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.
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.
3. Organization, Process, and Resource Allocation
Organization and Process
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. Technology companies such as Apple and Microsoft to ensure that their product launches are successful have utilized these methods successfully. 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.
Resource Allocation
Resource allocation for 2XL is constrained by limited availability of resources. This will be partly overcome by first focusing on one product line at a time before embarking on the other. The investment will be determined through marginal benefit logic whereby resource allocation will be directed towards the product with the highest overall marginal benefit. The marginal benefit is the benefit in the current and subsequent periods. The best approach for funding for the new product development will be the variable funding. It is imperative to note that variable funding has the capacity to drive higher effort towards developing new products.
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.

4. Evaluating and Differentiating the Products
There a number of factors, that should be considered before introducing the new product to the market. First, it is important to evaluate whether consumers in the target market need the product. This should be undertaken through a market survey to identify need for the product. The need for the product should be high enough for 2XL to market it and earn profits. Secondly, evaluation should be done to identify any existing competition. This involves calculating the time competition would use to catch up on 2XL’s game plan and copy it. Thirdly, 2Xl should estimate the volume of expected sales and profits to see if it is feasible. Fourthly, the company should have a pricing strategy for the new product. The fifth consideration should be whether the new product can evolve with changing times or it presents the risk of becoming obsolete after a short time. This product evaluation process for the new product will increase the chances of it succeeding in the market.
The evaluation should also consider the suitability of the new wipe for use in hospitals in terms of safety and health. The new product should be evaluated under the OSHA requirements to identify the accepted standards and features. The evaluation should be done to identify and interpret the OSHA regulations concerning wipe and disinfectant products. For instance, it is imperative that the wipe meets the set standards including efficiency in disinfecting, compliance with regulation, types of medical equipment and surfaces, instrument compatibility, persistence of the microorganisms, and user acceptability. The wipe must be safe, effective against a range of pathogenic microorganisms, easy to use, and should not leave toxic residues. Additionally, the efficiency of the wipe is dependent on a number of factors including surface characteristics, the amount of organic and inorganic matter, PH, temperature, and the chemical structure of the biocidal agent. In order to ensure acceptability of the wipe for use in hospitals, 2XL must factor these considerations.
The new facial wipe, which can take off a woman’s makeup including eye shadow and mascara easily and without a trace left also, needs to be evaluated. The wipe testing is complex and requires expert interpretation. The wipe should be tested against microbes in suspension or on a surface. Simulation of clean and dirty conditions can be used to tests suspensions of microbes exposed to a disinfectant for about 60 minutes. Poxy tests such as non-standard wipe tests are used to test for efficacy of the wipes. The wipe must be safe, effective against a range of pathogenic microorganisms, easy to use, and should not leave toxic residues.
It is critical for 2XL to differentiate its new wipe product along key features and minor details to defend its price from leveling down. 2XL can create a differentiation for their new product, which is a wipe for hospitals that can clean surfaces, disinfect and is biodegradable, by creating a unique value proposition for customers. The company should make the above features of the product unique in order to stand out from competition. For instance, the company can capitalize of the unique feature that the new wipe is biodegradable meaning that it is easy to handle after use and is not problematic in terms of pollution. This is a good aspect of the product that the company can capitalize on to differentiate from competitors.

5. Introducing the New Product
The introduction of the new product to the market can be achieved through a six-step process.
Study the competition: This can be conducted through a SWOT analysis of the business environment. The analysis should also evaluate the competitors and reviewing their marketing strategies. This will enable the company evaluate how its new product stands against what is already being offered in the market.
Target the ideal customer: successful launching of the new product within a minimum financial cost requires that focus be on the prospects that are most likely to buy from the company. Likely, this group is currently buying existing products in this case the B-to-B category. This category of prospects has a perceived need for what the company offers and have demonstrated a willingness to buy from it. The main target should be the gyms with others being the hospitals and barbershops.
Create a unique value proposition: This involves identifying and optimizing on the benefits and features that the new product will provide to the prospective customers. The product should offer unique or new features and value to the customers for it to appeal.
Define the marketing strategy: the selection of the sales and marketing channels such as the online, catalogs, etc is important. Multichannel marketing is more preferable because it has capacity for better outcomes. In this case, the use of a combination of magazines and internet is the most preferable.
Testing of the concept and marketing strategy: this involves testing the product using a few samples in the market. It also involves testing the marketing approach before the actual launching of the new product. Some of the approaches to use include focus groups with members of the target market. The actual marketing and launching of the actual product should then be done following success of the testing.
Rolling out the campaign: The company’s public relations will play a vital role in launching the product. This can be achieved using the media tactics to pace articles and win interviews. This can also be coupled with a lunching event and grassroots marketing.

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.