Businesses Pursuing New Product Development

With the aftermath of globalization, companies are carefully thinking about the best ways to extend their product and service offering. Thus, product development strategy is critical for their success. Yet, many companies are in defensive mode and merely want to maintain the position in the market place.

However, staying in a holding position is a definite way for companies to be left behind. Innovative thinking that allows for product/service growth is a too sure way for sustainable success. In today’s discussion, we will explore the importance of product development for the growth of businesses, especially in a competitive market.

Launching into new product offerings is not easy. According to one market research, approximately 75% of consumer-packaged goods and retail products fail to earn even $7.5 million during their first year. Harvard Business School Professor, Clayton Christensen, who is the world’s foremost authority on disruptive innovation, suggests that the failure rate of new products may actually be as high as 95%. Product failure rates relate to the number of products that are launched commercially but fail.

Geoffrey A. Moore, the author of Crossing the Chasm, maintains the challenges of product deployment: “… the less successful product is often arguably superior. No content to slink off the stage without some revenge, this sullen and resentful crew casts about among themselves to find a scapegoat, and whom do they light upon? With unfailing consistency and unerring accuracy, all fingers point to-the vice president of marketing. It is marketing’s fault!” Thus, new product development is a risky proposition to senior executives making these critical positions as well as the organization as a whole.

Businesses that want sustainable growth must develop new product and services often and consistently. Philip Kotler and Kevin Keller, authors of Marketing Management, “In an economy of rapid change, continuous innovation is a necessity. Highly innovative firms are able to identify and quickly seize new market opportunities.”

In taking any actions on new product development, businesses should think strategically about their product development. Alexander Chernev, the author of Strategic Marketing Management, further argues that managing growth is the most preferred route to profitability compared to just cutting cost.

He outlines four key issues in managing growth, which include: (a) gaining and defending a market position, (b) managing sales growth, (c) new product development, and (d) product-line management. Chernev maintains, “New products and services are the keys to sustainable growth; they enable companies to gain and sustain their market position by taking advantage of the changes in the market to create superior customer value.”

With that said, new product development meaning having the ability to take a product or service idea and convert it into a tangible offering that customers want. The following are the steps that more products undergo for market consumption: (a) idea generation, (b) concept development, (c) business analysis, (d) product development, (e) market testing, and (f) business deployment.

The Ansoff Matrix is a strategic tool for product development, consisting of market penetration, market development, product development, and diversification. In market penetration strategy, organizations seek to grow using its existing product offerings in existing markets. With this strategy in mind, organizations try to increase market share. In a market development strategy, companies try to expand into new markets like new buyers using their existing offerings. In product development strategy, businesses seek to create new products and services targeted at its existing buyers.

In a diversification strategy, an organization tries to grow its market share by introducing new product offerings while at the same time entering a new market. Diversification is the most-risky approach due to simultaneous making new changes (new product, new market). Kotler and Keller further maintain the difficulty of sustainable product success: “It is increasingly difficult to identify blockbuster products that will transform a market, but continuous innovation can force competitors to play catch-up.” The concept sounds easy. However, it is riddled with problems.

Without a doubt, many companies know that product development is a risky business. Although many consumers will proudly proclaim the success of many innovative products like Apple and Google, these same buyers are not aware of the numerous product launch failures in this country. In our discussion, I demonstrated the importance of product development for the growth of businesses, especially in a competitive market. Failures often lead to innovation.

American great inventor, Thomas Edison, had his own share of failures, but learned how to innovate because of them: “I have not failed. I’ve just found 10,000 ways that won’t work.” Likewise, today’s businesses can also achieve success if they understand how to deploy their products and services to the marketplace strategically. Although there is enormous danger in failure, there is also the opportunity of unforeseen growth. Don’t wait until it’s too late.

 

Business Intelligence

1. Companies are aggressively moving to computerized support of their organizations. Can you list at least 2 of the factors driving this move?

• Speed and efficiency.
• Legibility and accuracy.
• Self-sufficiency.
• Cheaper research and development.

2. The definition of Business Intelligence (BI) is:

BI is an umbrella term that combines architecture, tools, databases, analytical tools, applications and methodologies.

What does “umbrella” term mean?

The definition of Business Intelligence (BI) encompasses various software applications used to analyze an organization’s raw data. The discipline entails many related activities, including data mining, online analytical processing, querying and reporting

3. Sometime we say that the term Business Intelligence (BI) is “context free”. What does this mean?

The term business intelligence is “context free” in the sense that the expression means different things to different people. For this reason, we have seen researchers advancing different definitions for business intelligence.

4. Describe what a data warehouse is and how it might differ from a traditional database used for transaction processing.

A data warehouse is a central repository for corporate data and information that an organization derives transaction data, operational systems and external data sources. Although these two may look like they are similar, they exhibit several differences with regard to usage pattern, architecture as well as technology. A traditional database is based on operational processing while a data warehouse is based on informational processing.

A data warehouse focuses on storage, filtering, retrieval and analysis of voluminous information.

A traditional database is used for day to day operations while a data warehouse is used for long-term informational requirements.

5. What is the difference between a data warehouse and a data mart?

A data mart is a subset of a data warehouse that relates to specific business line. Data marts are managed by a specific department within an organization. On the other hand, a data warehouse involves multiple subject areas and assembles detailed information from multiple source systems.

6. What is meant by “Big Data”?

Big data refers to a huge volume of structured, semi-structured and unstructured data from which viable information can be extracted. This kind of data is so voluminous that it cannot be processed using outmoded database and software techniques. Big data helps organizations to improve their operations and be in a position to make quick and smart decisions.

7. Data mining methods are divided into supervised and unsupervised methods. What are these and how are they different?

Supervised data mining method has to do with the presentation of fully labeled data to a machine learning algorithm. On the other hand, unsupervised data mining methods conduct clustering. Data instances are divided into a number of groups.

Unsupervised data mining methods do not put emphasis on predetermined attributes. Moreover, it does not predict a target value. Instead, unsupervised data mining finds hidden structure and relation among data.

Supervised data mining methods are appropriate when there is a specific target value that I to be used to predict about data. The targets can have two or more possible outcomes, or even be a continuous numeric value.

Supervised data mining methods the classes are known in advance while in the other the groups or classes are not known in advance. In supervised data mining methods, data is assigned to be known before computation but in unsupervised learning Datasets are assigned to segments, without the clusters being known.

8. When we consider KPI’s (key performance indicators) we distinguish between driver KPI’s and outcome KPI’s. What is the difference between the two (give a couple of examples of each)

Key performance indicators provide a framework on which organizations can value their progress. Outcome KPIs which are also referred to as lagging indicators measure the output of previous activities. On the other hand, driver KPIs/leading indicators measure the activities that have a significant on outcome KPIs. Driver KPIs have a significant effect on outcome KPIs, but the reverse is not necessarily true.

9. A BSC (balanced scorecard) approach for BPM (business process management) is well-know and widely-used. Describe the strengths of a BSC approach.

BPM entails activities

BPM involves activities like automation, remodeling, monitoring, and analyzing and improving business processes.

Cost efficiency

This is one of the most palpable benefits of BPM approach. It cuts down on costs and increases revenue. BPM adds crucial value in the long run by allowing businesses to compete globally. BPM technology equips a business to switch gears and respond to changing business environment appropriately.

Agility

Change is inevitable in business and a business must be ready to undergo sudden changes at any time. BPM accords a business the flexibility of making changes at minimal costs.

Improved productivity

BPM automates several elements within regular workflows. Process improvements such as eliminations of drawbacks, elimination of redundant steps, and introduction of parallel processing are achieved through BPM. These process improvements allow employees to focus on other important activities of their business since the core support functions would have been handled.

Better visibility

Basically, BPM uses advanced software programs to facilitate the automation process. These programs enable process owners to keep abreast of their performance. Apart from guaranteeing transparency, BPM keep track of how processes work without the need of monitoring techniques and extensive labor.