Commercialisation

Commercialisation

Commercialisation is simply defined by Kotler and Armstrong (2012) as the process of actually bringing a new product to market. It is the concluding stage in the NPD process. Lamb, Hair & McDaniel (2009) state that commercialisation is the process putting several tasks in motion: ordering product materials and equipment, starting production, building inventories, shipping the product to field distribution points, plus announcing and advertising the product to the customers.

One main element of commercialisation is the marketing mix which consists of advertising, sales promotion, public relations, personal selling and direct marketing which helps organisations to promote their products and services (Hughes & Fill, 2007). This stage of the NPD process is the most expensive stage as it requires the mass manufacture of the product and a large marketing campaign to the get product into the public domain (Kotler and Keller, 2012).

Examples

One sporting example of the commercialisation stage being implemented is in the case of Slazenger (2012) who launched their new products, the V100 and the V12 bat at a popular and successful cricket store, Cricket Asylum, in Halifax. As part of the commercialisation process Slazenger have created a full product range based around the bats, they advertise them using YouTube videos and also by the sponsorship deals they have with major players such as Jacques Kalis of South Africa. Slazenger (2012) focus on the technology the claim to have implemented in both bats including shock reduction, grip technology, TAS inserts to increase shot stability, and taper toe to improve stance. This is part of their strategy to make their products seem more advanced than the products of competitors.

Another sporting example of the commercialisation stage is Adidas’ adipure 360 training shoe targeted at ‘top’ male and female athletes (Adidas, 2011). The benefits are unrestricted foot movement and flexibility as emphasised with the implementation of individual toe slots. The trainer is marketed within the ‘Performance Essential Collection’ and is manufactured and distributed through a fully integrated never-out-of-stock business model.

My Product – The Cone King

Aspects of the commercialisation of ‘The Cone King’ rely on the results of the test marketing and other market research. If the product launch was successful in the target cities of Leeds, Newcastle and Birmingham then a similar strategy of local advertisement and direct selling would be adopted. The website for the cone king would be fully operational for online purchasing and targeted online adverts would be used based on consumer searches on google and other websites. This would mean that only people with an interest in sports products and coaching would see the adverts for my product and therefore money would not be wasted from the limited marketing budget. The same design and colours would be kept and used throughout any future product range as it makes the product distinguishable and these colours and designs would also be used on any advertisement and packaging. 

Whilst this product is launching into a highly competitive market it will succeed due to the innovative nature of the product and the targeted marketing campaign aimed at grassroots coaches who wish to better their performance.

References

Adidas. (2011). Group Management Report. Available: http://www.adidas-group.com/en/investorrelations/assets/agm/2012/LB_2011.pdf. Last accessed 01/02/2013. (Accessed on: 05/02/2014)

Hughes, G & Fill, C. (2007) ‘Redefining the nature and format of the marketing communications mix’, The marketing review, 7(1), pp.45.

Kotler, P. and Armstrong, G. (2012). Principles of Marketing.14th ed. London: Pearson.

Kotler, P. Keller, K. (2012) A Framework for Marketing Management. 5th Ed. International Ed. Pearson Education Limited, Harlow.

Lamb, C., Hair, J. and McDaniel C (2009) Marketing. 11^th ed. Stamford: Cengage Learning.

Mu, J & Di Benedetto, A. (2011) ‘Strategic orientations and new product commercialization: mediator, moderator and interplay’,R&D Management, 41(4), pp.337-359.

Slazenger (2012) Slazenger 2013 Product Launch [online] Available at: https://www.youtube.com/watch?v=es7cZ0k_nL0 (Accessed on: 05/02/2014)

Test Marketing

Test Marketing 

Test marketing is the process of testing the proposed marketing program in a realistic setting before releasing the product to the full target market (Kotler and Armstrong, 2012). According to Silk and Urban (1978) this stage of the NPD cycle is used in order to expose problems in the marketing strategy that otherwise would be undetected. The product is introduced to a limited market of potential customers in order to establish the desire for the product in real terms using the proposed marketing strategy in a number of test cities for a designated period of time (McDaniel, Lamb & Hair, 2011). The factors that an organization must consider for test marketing are: how many test cities, which cities, how long to test, what information to collect and what action to take.

Decisions on the above factors will be based on how the organization feels it can best represent the larger market using smaller markets and how long the organisation feel they need to for. There are now organizations, such as the ‘Pretesting Group’, that carry out test marketing for other businesses and carry out the process of “Real world simulation” for them (Pretesting Group, 2013a).

Examples in the Industry

One example of Test Marketing can be seen by Adidas who launched a new interactive, electronic store front to it’s Nuremberg store in 2012 which allowed customers to link up their mobile device in order to select and display products on the front of the Adidas Store and allowed them to purchase products (Digital Signage, 2012). This idea was linked with social media and users were able to ‘like’ and ‘share’ the products they had selected and their location using the large screen. The idea was that if this screen was a success at their flagship store in Nuremberg then it would be rolled out across other Adidas stores.

The Pretesting Group (2013b) are a company dedicated to carrying out Test Marketing for other organisations, their website lists a number of large corporations who have used their services. The website has a number of case studies for the real life processes they have carried out including testing for a new version of skin cream, which resulted in a 14% increase in sales for the company, and a case study on their involvement in the market launch of a new cookie which was successfully launched due to their involvement; this shows the benefits of test marketing.

My Test Marketing Strategy

My product will be launched in 3 UK cities in order to determine demand for the product and the effectiveness of the marketing strategy. The Cone King will be marketed to coaches in Leeds, Newcastle and Birmingham as these are all large cities with a high demand for grassroots football and have a large football following professionally. I have chosen not to launch the product in London initially as it is very large and it would be hard to establish what I wanted to without a very large and expensive strategy. I will market the product directly to coaches through the Local FA’s and use online marketing through email and the products website. I will also use local newspapers and sporting magazines to directly target the local population.

References

Digital Signage, (2012) “Adidas Concept Store – Neurenbuerg” Available at: http://digitalsignageuniverse.typepad.com/digital_signage_universe/2012/10/adidas-neo-concept-store-testing-interactive-digital-signage-storefront-with-smartphones.html (Accessed: 29/01/14)

Kotler, P. and Armstrong, G. (2012). Principles of Marketing.14th ed. London: Pearson.

McDaniel, C. Lamb, C. and Hair, J. (2011). Introduction to Marketing. 11th ed. Cengage

Learning.

Pretesting Group. (2013a). Real World Simulation. [online]. Available at: http://www.pretesting.com/who-we-are/differences/real-world-simulation/ Accessed: (29/01/14)

Pretesting Group. (2013b). Who We Are. [online]. Available at: http://www.pretesting.com/who-we-are/clients/# Accessed: (29/01/14)

Silk, A. J., & Urban, G. L. (1978). Pre-test-market evaluation of new packaged goods: A model and measurement methodology. Journal of Marketing Research, 171-191.

Product Development Blog

What is it?

The product development stage helps convert a business idea, a product or a service, into a physical offering that can be manufactured and sold by the organisation (Beech & Chadwick, 2007). According to Mullin, Hardy and Sutton (2000) the product development stage made up of these sub stages:

·         Product Construction & Packaging Decisions: Decisions on materials, production options, plant capacity, alternative sizes & colours, functions performed.

·         Branding Decisions: Name of product, logo, exclusivity, trademark protection and image sought, which will be elaborated in market testing.

·         Product Positioning: Establish target market and relative position in the market compared to competitors.

·         Attitude & usage testing: Tests to establish consumers’ perceptions and satisfaction, and conducting rigorous functional and customer tests before products enter the market place.

Examples

Warrior Football - Warrior recently entered the football market having previously only been involved in Ice Hockey and a few other sports as described by Perkins (2012. P.65). They chose to position themselves as a direct competitor to Nike and Adidas by sponsoring Liverpool FC and high profile players like Vincent Kompany. Their branded boots have a distinctive style which makes them stand out on the field in comparison with other boots and this was likely part of their product development strategy. 

Adidas F50 -  Another example of product development is the Adidas F50 adiZero III football boots (Adidas 2013), which use a 'Sprint Skin' technology which makes them lighter and therefore more desireable to the user. These boots may costs Adidas slightly more to develop and manufacture but it allows Adidas to charge a higher retail price (£160) due to the perceptions of the customer being heightened when they read about this technology or see professionals wearing the boots.

My product- Cone King

Construction and packaging – I have gone for a strong bright orange, plastic product which can be easily mass-produced and stands out. The trigger system will drop the cones when pressed and will work using wires down the pole.

Branding- The name “Cone King” as the word king symbolises quality and power and suggests my product is the best. The logo is bright and catchy in order to attract attention in a crowded and competitive industry. It is orange, like the actual product, because this colour is often used for training products as it is easy to see and stands out.

Product Positioning – My product will initially be marketed as a relatively luxury item, compared to other basic training products. However due to its relative low cost it will be accessible to all and as stated in the business analysis it will be marketed at grassroots clubs, through sponsorship deals with professional teams. The perceptual map shows the products positioning relative to other training products in terms of luxury and target market. It has a similar positioning to agility poles.

Attitude and Usage testing -   In lab testing of the prototype on durability and functionality before passing it on to a tester team that will test the Cone King in everyday coaching conditions. The stand will be further refined before market testing for consumer perceptions on different designs and packaging options.

Reference list

Adidas, (2013) Adidas F50 Adizero. Available at: http://www.adidas.co.uk/mens-f50-adizero-trx-fg-boots/D67203_590.html

Beech, J.G. & Chadwick, S. (2007) The Marketing of Sport. Harlow: Prentice Hall

Mullin, B., Hardy, S., Sutton, W. (2000) Sport Marketing 3rd edition

Perkins, B.  (2012). Vincent Kompany Training in Warrior Sports Prototype Boot. Soccer Reviews. 12th July. Available at: http://soccerreviews.com/news/unreleased-warrior-sports-skreamer-klite/

Business Analysis

Business analysis

Business analysis is defined by Kotler and Armstrong (2012) as a review of potential sales, costs and estimated profit from a new sports product/service. If the product is judged to be financially viable it can then be moved on to the next stage of the cycle, product development.

Armstrong, Kotler, Harker & Brennan (2009) state that an organisation can estimate future sales by looking at previous sales of similar products and by conducting market research to determine potential demand. The organisation can then go on to estimate potential costs and profit for the product/service by considering the costs of development, marketing and distribution and by considering the price the product will be sold at compared to the level of demand.

The Golf Club (2010) by RA Concepts used a business analysis to consider the stages discussed above. The organisation goes into great detail as to the potential demand for their product, especially with females, the targets for sales of their product and the future profitability. They state that they aim to provide 1% of the US market for Golf Putters and they aim to increase net profit to a stable and healthy level by the end of year 2. They aim to do this by targeting the female market as they believe the product they provide will appeal to females as it is customisable, lightweight and can be manufactured and delivered in just 3 days. 

The image below shows a graph of how the organisation predicts it will be in profit by month 5 of operations. This is based on projections estimating that RA Concepts will be able to control 2% of the female market and 1% of the overall market within the first year.

With regards to my product, The Cone King a business analysis shows that the demand for my product will be limited at first as it is not considered a necessity, more a luxury, this would lead to a high initial price but limited sales and therefore the profitability in its first year would be low. As the product got more exposure, through the marketing strategies such as sponsorship with high profile teams, more grassroots coaches would take on board the product with the aim of attaining 10% of the overall market by the end of the 3^rd year of trading.

According to a recent survey (Sport England, 2013), there are 1.8million people participating weekly in football alone, this shows the size of the target market and suggests that to even secure a small percentage of this market would be potentially profitable. This is a realistic aim as the similar products that already exist do not have the functionality of mine and therefore this is superior, for only a slight increase in price. This means that coaches will be willing to pay the higher price in order to improve their coaching experience.  

Reference list
Armstrong, G. Kotler, P. Harker, M. & Brennan, R. (2009) Marketing an Introduction. 1^st Edn. Essex: Pearson Education Limited. 

Kotler, P. and Armstrong, G. (2012). Principles of Marketing. England: Pearson Education Limited.

Sport England. (2013). Who plays sport? Available at: http://www.sportengland.org/research/who-plays-sport/ 

The Golf Club. (2010) Golf club manufacturer. Available at: http://www.bplans.com/golf_club_manufacturer_business_plan/market_analysis_summary_fc.php#.Uqmo1vRdWSo

Marketing Strategy & Development

 Marketing strategy and Development is the fourth stage of the NPD process. Marketing strategy helps the company to attain its overall strategic objectives by establishing who the target market is and how best to reach them (Kotler & Armstrong, 2008). The marketing strategy is split into four sections:

·         Market dominance –organisations are judged based on their market share or dominance of an industry. In each industry there is generally a leader, challengers and followers.  

·         Innovation strategies - deals with the firm’s rate of the new product development and business model innovation. This determines whether the company has a cutting edge product, whether they are just behind the innovators or are late followers.

·         Generic strategy framework – This considers aspects of the strategy such as product differentiation, market segmentation, and the competitive advantage the organisation will have with this product.

·         Growth strategies – looks at “How should the business grow?” This can be through horizontal integration, vertical integration, diversification or intensification.

The development stage discusses how the product will be developed for the market: the production of a prototype, how feasible the product is to manufacture and gaining government approvals if they are necessary.

An example of this is the document BskyB produced when they were introducing the innovative new product in Sky+ (Phillips, 2007). This financial appraisal assesses whether Sky+ would be a financially viable venture. After this, BskyB spoke of the industry and the market itself, by then producing a marketing strategy, depicting the price and marketing budget for Sky+. It also used the Rodgers Adoption Curve, showing where people would be in relation to when they would purchase this new product and at what price. An example of the Rogers Adoption Curve can be seen below (Fig. 1). Sky chose to introduce the product at a high price which meant that it was slowly adopted at first but when they dropped the price and increased their high profile advertising campaign the sales went up as Predicted.

The main target market for the ‘Cone King’ cone collector is coaches and football clubs in the UK. This is because the product is specifically designed to aid them and because grassroots sports in the UK is a massive market with 7.3 million adults (16+) in England participating in moderate intensity level sport at least three times a week for 30 minutes or more (SRA, 2013). The product will be positioned in this market at a high price as there will be demand for the product from early adopters which will maximise potential profit. The product will be distributed through quality sports equipment websites such as ProDirect and ForSport which cater directly to the coaches at grass roots level as opposed to generic sports retailers like Sports Direct. This product will be a one-time purchase, however, due to the large target market in the UK and the potential to grow internationally the long term strategy would be expansion and potentially diversifying the product range if this product is successful.

497 Words

Reference List

Kotler, P. & Armstrong, G. (2008). Principles of Marketing. 12th edn. New Jersey: Pearson Prentice Hall

Phillips, C. (2007), ‘Innovation and new product development:  Sky+, a mini case study’, The Marketing Review, 7(4), pp. 313-323

Concept Development and Testing

Concept development and testing

What is it?

Concept development and testing follows idea generation and screening in the new product development cycle. A product concept is defined as a detailed version of a product idea that is stated in meaningful consumer terms (Kotler & Armstrong, 2012). After a product idea has been screened organisations look to test the concept with groups of their target market, they look to gather information on consumer reactions to a description of the product/service or to visual representations of the product (McDaniel, Lamb & Hair, 2011). Consumers are then asked questions on the product which help the organisation evaluate which concept has the biggest appeal in terms of potential sales (Kotler & Armstrong).

To the left is a product positioning map [See Fig.1]. This model shows where in the market a certain product would fall and this can lead on to show what the potential target market would be. This example provided is for cars. Showing the price of the car against the fuel economy provides us with which car would suit a different area of the market. 

Examples

One example of an organisation which has undertaken concept testing is Lycra, who undertook concept testing to evaluate customers wants with regard to new sport fibre clothing. Lycrca asked questions regarding interest in the product, how believable the organisations claims were, how different customers thought the product was and how much customers thought the product would cost, this allowed Lycra to evaluate possible consumer demand and purchase intention (Lycra 2008).

Another example of an organisation that developed a concept and tested it in research labs is Athletic Propulsion Labs, who claim to have made a basketball shoe that allows athletes to jump significantly higher (APL, 2011). This shoe was banned by the NBA, as it was judged to provide athletes with an ‘undue advantage’; the owners claim that this serves as proof that their products work. 

My Concept

Having established in the idea screening stage that my cone collecting idea was the one with the biggest potential I have chosen to take that forward to testing and concept development. The product name have been finalised as “Cone King”.

Concept A – Picks up cones and acts as a stand but does not distribute cones as this would cost more and be harder to develop.

Concept B – Picks up cones and distributes them, this costs more to develop but is a higher quality product with more uses.

Having tested both concept ideas with people in the industry, including teachers and coaches, it is apparent that nearly all people asked would prefer Concept B, even if it cost more money, as it has more uses and would improve the overall coaching experience vastly.

Reference List

APA, (2011) “About us” Available at: http://www.athleticpropulsionlabs.com/about.html (Accessed 24th November 2013)

Kotler, P.  & Armstrong, G. (2012) Principles of Marketing. 14th Edn. London: Pearson Education.

 Lycra (2008) “LYCRA SPORT Fabric”. Available at: http://www.lycra.com/g_en/webpage.aspx?id=963 (Accessed 24th November 2013)

Mcdaniel, C.D. Lamb, C.W. and Hair J.F. (2011) Introduction to Marketing. 11th Edn. Ohio: South-Western Cengage Learning.

Idea Screening

Stage Two: Idea Screening

What is idea screening?

Idea screening is the second stage of the NPD process which follows on from idea generation. (Kotler & Armstrong, 2008). According to Lamb, Hair & McDaniel (2009) screening is the first filter in the NPD process; they explain it as eliminating products/ ideas that aren’t consistent with the company’s new product strategy.  This is similar to Wafa, van Riel & Zuzuna’s (2011) thoughts; they say idea screening is the process of evaluating new ideas to select which ones are suitable for further development and to drop ideas that will probably not lead to successful products.

One of the most common methods used in the idea screening phase is a decision matrix (Akao, 1988).  The matrix helps organisations establish which product is the most efficient and whether or not it would fit into the current market. It uses an objective system weighting different criteria according to their perceived importance and then rating each product on how well it performs in that category; this allows most products to be dropped from the process (Akao, 1988).

Example of Idea Screening

One example of idea screening is by Adidas, the German Sports equipment manufacturer. They have created the lightest football boot in the world, the Adidas f50 (TechRadar, 2013). Adidas established through idea screening that there was both the technology and the market, to create a super light football boot. This market has come about because, according to them, players want an extra edge and if they can make lighter boots then it will make for faster players. They went about it by completely stripping down the boot to what is essential and leaving nothing else which resulted in a football boot weighing less than 100grams.

My Idea

In order to ensure my products are screened objectively I used the decision matrix to assess my three ideas against each other. I used 6 criteria and weighted them accordingly with the feasibility of the idea being the most important factor and the time taken to develop the least important.

 

I established from the matrix that my cone collector/distributor was the best idea as it scored the highest weighted score and did particularly well when judged against the level of competition and the benefits to the customer. This is because there is no product like it and it is a product that would help coaches a lot. A close second in the ranking was my idea for a boot cleaner; however, the low scores in cost to develop and level of competition mean that I will drop this idea and continue with the cone collector.

Reference list

Akao, Y. (1988) 'Integrating Customer Requirements into Product Design', Quality Function Deployment, 1.

Hammedi, W., van Riel, A. C. R. and Sasovova, Z. (2011), ‘Antecedents and Consequences of Reflexivity in New Product Idea Screening.’  Journal of Product Innovation Management, 28: 662–679.

Kotler, P & Armstrong, G. (2008) Principles of Marketing. 12^th edn. Upper Saddle River, N.J: Pearson/Prentice Hall.

Lamb, C. Hair, J. McDaniel, C. (2009) Essentials of Marketing. Cengage Learning, Mason, OH.

Tech Radar, (2013) ‘Uncovered: the technology behind the impossibly light football boot’ Available at: http://www.techradar.com/news/world-of-tech/uncovered-yhe-technology-behind-the-impossibly-light-football-boot-1153914 Accessed on: 20/11/2013