The first step of new product development requires gathering ideas to be evaluated as potential product options. Idea generation is an ongoing process with contributions from inside and outside the organization. Early morning foods may use research techniques such as surveys to get an idea of types of cereal that they would enjoy, encouraging customer comments and suggestions via toll-free telephone numbers and website forms. It is very important that the marketing manger gets a lot of information from the customers because they are the ones who will be buying the product, and gaining insight on competitive product developments through secondary data sources. One important research technique used to generate ideas is brainstorming where open-minded, creative thinkers from inside and outside the company gather and share ideas. The dynamic nature of group members floating ideas, where one idea often sparks another idea, can yield a wide range of possible products that can be further pursued. Idea generation stage is very important for early morning food to ensure that this new product is a success. When it comes on to cereal, needs differs especially for breakfast.
The purpose of idea generation is to create a large number of ideas. The purpose of succeeding stages is to reduce that number. The first idea reducing is idea screening the company personnel helps spot good ideas and drop poor ones, for example, the idea of developing a cereal that the entire family will enjoy but also low in calories or as some would say light on the waist or a cereal bar that one can grab on the way out to school or work. These ideas would be considered a good one because we all want to enjoy our cereal and not worry about gaining too much weight. Product development costs rise in later stages, so the company wants to go ahead only when the product ideas will turn into profitable products. The new product idea, is written on a standard form; detailing description of product, target market, and competition. It also includes estimate of market size, product price, development time and cost, manufacturing costs and rate of return. This information has to be reviewed and evaluated against a set of generated criteria. Acceptable ideas move on to the next step.
CONCEPT DEVELOPMENT AND TESTING
With a few ideas in hand the marketer now attempts to obtain initial feedback from customers, distributors and its own employees. Generally, focus groups are convened where the ideas are presented to a group, often in the form of concept board presentations. For instance, the idea of a cereal bar that the entire family will enjoy but low in calories was chosen, customers may be shown a concept board displaying drawings of the product idea or even an advertisement featuring the product. In some cases focus groups are exposed to a mock-up of the ideas, which is a physical but generally non-functional version of product idea. During focus groups with customers the marketer seeks information that may include: likes and dislike of the concept; level of interest in purchasing the product; frequency of purchase (used to help forecast demand); and price points to determine how much customers are willing to spend to acquire the product.
At this point in the new product development process the marketer has reduced a potentially large number of ideas down to one or two options. Now in Step 4 the process becomes very dependent on market research as efforts are made to analyze the viability of the product ideas. (Note, in many cases the product has not been produced and still remains only an idea.) The key objective at this stage is to obtain useful forecasts of market size (e.g., overall demand), operational costs (e.g., production costs) and financial projections (e.g., sales and profits). Additionally, the organization must determine if the product will fit within the company’s overall mission and strategy. Much effort is directed at both internal research, such as discussions with production and purchasing personnel, and external marketing research, such as customer and distributor surveys, secondary research, and competitor analysis.
PRODUCT AND MARKETING MIX DEVELOPMENT
If the product concept for example the new cereal bar passes the business test, it moves into product development as the concept may only have existed as a word, description or drawing or maybe a mock. Ideas passing through business analysis are given serious consideration for development. Research and development will help develop the concept into a physical product. The marketers will also begin to construct a marketing plan for the product. Once the prototype is ready the marketer seeks customer input. However, unlike the concept testing stage where customers were only exposed to the idea, in this step the customer gets to experience the real product as well as other aspects of the marketing mix, such as advertising, pricing, and distribution options. Reaction that is less favorable may suggest the need for adjustments to elements of the marketing mix. Once these are made the marketer may again have the customer test the product. In addition to gaining customer feedback, this step is used to gauge the feasibility of large-scale, cost effective production for manufactured products.
The new cereal bar is now ready to be tested as real products. In some cases the marketer accepts what was learned from concept testing and skips over market testing to launch the idea as a fully marketed product. But other companies may seek more input from a larger group before moving to commercialization. The most common type of market testing makes the product available to a selective small segment of the target market (e.g., one city), which is exposed to the full marketing effort as they would be to any product they could purchase
If market testing displays promising results then the cereal bar is ready to be introduced to a wider market. Early Morning Foods may introduce or roll-out the product in waves with parts of the market receiving the product on different schedules. This will allows the company to ramp up production in a more controlled way and to fine tune the marketing mix as the product is distributed to new areas.
CREATIVITY AND INNOVATION
Creativity refers to the invention or origination of any new thing (a product, solution, artwork, literary work, joke, etc.) that has value.
Creativity is the essential first step in innovation, which is vital to long term organizational success. Each of us has the capacity to be creative. Creative people are often known for originality, open-mindedness, curiosity, a focus approach to problem solving, persistence, a relax and playful attitude, and receptivity to new ideas. Creativity can be designed into organisations. Most companies want more highly creative employees and often seek to hire creative individuals. However the individual is only part of the story, and everyone has some potential for creativity.
Innovation is the process by which an idea or invention is translated into a good or service for which people will pay, or something that results from this process.
To be called an innovation, an idea must be replicable at an economical cost and must satisfy a specific need. Innovation involves deliberate application of information, imagination, and initiative in deriving greater or different value from resources, and encompasses all processes by which new ideas are generated and converted into useful products. In business, innovation often results from the application of a scientific or technical idea in decreasing the gap between the needs or expectations of the customers and the performance of a company’s products. In a social context, innovation is equally important in devising new collaborative methods such as alliance creation, joint venturing, flexible working hours, and in creating buyers’ purchasing power through methods such as layaway plans. Examples are the multiblade shaving razor, fluoride toothpaste, and laptop computers, fax machines, instant photography, and handheld computers.
The development of a Culture of Creativity and Innovation
Creating a culture of Creativity and innovation is not a mysterious process whereby creativity and practicality magically merge. Creating a culture of innovation requires thought, effort, a high tolerance for change and risk, and the ability to combine traditional organizational arrangements with fluidity and non-traditional imperatives.
There are two key elements that make an innovatively-driven culture work: Good ideas come from anywhere, not just from a “product development” group.
Everyone has a vested interest in the success of an idea; and everyone is rewarded for their contribution to the idea’s success.
For Example Kirk (whose job is in Customer service) is excited. He’s got his meeting with the Executive Product Development Committee, the group that vets new ideas from all over the company. His company encourages a person with an idea to be its advocate, and Kirk has spent weeks of his own time gathering the data to support his belief in this new product idea.
Two weeks later, and Wow! The Executive Committee, after some discussion and numbers crunching, agrees with him. So now the company will create a “Kirk’s Idea Product Development Group,” with members from all the relevant areas of expertise.
At this point, Kirk’s company does something very clever. It rewards everyone involved in the project, financially and with company-wide recognition. The other staff members who helped, when the ideas Group was not available to do their regular jobs. And the executives who managed the areas that were short-staffed receive recognition as well. Now, obviously, not all products that are brought to market are a success. Some are only marginally profitable, and some fail. Some, however, are not merely innovative at the margins. Some can become breakthrough products. This is true for any product development process. But look at what this type of approach can give a company, beyond potential market share and revenue:
The vested interest in the success of the product is spread widely throughout the company, far beyond just management and the people directly involved in it.
Kirk and all the people in his development group have expanded their knowledge base beyond their previous functional expertise, making them better-rounded, more valuable and (hopefully) more productive employees.
Cross-functional collaboration becomes a commonplace.
Employees throughout the enterprise – no matter where they fit in the organization chart – are motivated to be innovative and creative to the benefit of the company
Market research is the function that links the consumer, customer and public to the marketer through information. Information is used to identify and define marketing opportunities and problems; to generate, refine, and evaluate marketing actions; to monitor marketing performance; and improve understanding of marketing process. Every marketer needs research.
Marketing research keeps informing organization about the changes in tastes and preferences of consumers from time to time. This is very helpful for the producers to adjust t the production accordingly. Marketing research is helpful in discovering new markets for the product and maintaining the existing markets. It is greatly helpful in the improvements of the quality of the products and produced as it keeps informing the organisation about likes and dislikes of consumers. If the product is not of desired quality, improvement can be made in its quality on the basis of information revealed by marketing research.
Marketing research is crucial to business success. They provide the information that links marketers with their customers, and provides the background information needed to make effective decisions on a wide range of issues. Market research will create communications at Early Morning Foods with current and potential customers. Once you have good research, you should be able to formulate more effective and targeted marketing campaigns that speak directly to the people you’re trying to reach in a way that interests them. Market research helps you identify opportunities in the marketplace. It also uncovers and identifies potential problems. It’s important to know, for later comparisons, the position of your business at particular moments in time. Ongoing market research allows you to make comparisons against your benchmark measurements as well as chart your progress between research intervals thus creating benchmarks and helps you track your progress. Market research most importantly helps you evaluate your success.
Information gathered through market research helps you to determine if you’re reaching your goals.
The Primary and Secondary data collection method are an integral part of the new product development process.
To gather information the manager at Early Morning Foods can gather secondary data. Secondary data consist of information that already exists elsewhere, having been collected for another purpose. Secondary data can be obtained more quickly and at a lower cost than primary data. Secondary sources sometimes can provide data that an individual company cannot collect on its own, information that either is not directly available or would be too expensive to collect. For example, it would be too expensive for Early Morning foods to conduct a continuing audit to find out about the market share or competitors brands. However through secondary sources these information are made available to companies, sources such as Data – Ref: Mintel Report – dated 17th August 2011
Total sales in the UK cereal market rose by 17% between 2006 and 2011, to reach an estimated £1,472 million.
Nine in ten (88.5%) consumers ate breakfast cereals in 2010, three in five of them doing so daily, so scope for volume growth is relatively limited. Must carefully evaluate the quality of secondary data, they must also take great care when collecting primary data to assure that it will be relevant, accurate, and unbiased information. Primary data consist of information collected for the specific purpose at hand. Early morning Foods has to make a number of decisions or research approach, contact method etc to collect primary data. They can use observational research, which is gathering data by observing relevant people, actions, and situations. For example, if early morning foods mangers want to get information on wither their new product or existing product they can choose to observe their behaviour to the product by handing out samples and have the customer try it on spot. In the case of the new product development process observation helps manger s in their decision whether to continue with the product. Using this method helps to provide information that people are unwilling or unable to provide. However because of its limitations such as not being able to observe a customer’s feelings attitudes and motives it is also recommended that observation is used with another method such as survey research.
Survey Research is an approach use to gather data by asking people questions about their knowledge, attitudes, preferences and buying behaviour directly. Survey research is quickly becoming the number one tool that market researches use to gather data. The advent of online survey tools has led to widespread use of quantitative surveys in order to collect, analyze, and use data that can contribute to a more effective business model, better marketing strategies, improved customer service and more. Survey research methods have been shown time and time again to benefit market researchers. The survey method is very cost effective. Data collection is much easier, which tend to use easy to read data sources that can be compiled and analyzed as needed for your market research needs. Sample size is one of the most underrated aspects of all types of research, including market research. Far too many companies make the mistake of assuming their small sample of only a few dozen participants is enough to make any firm conclusions. Surveys allow you to reach thousands of possible participants if necessary, which ensures a more accurate sample in which to draw conclusions. The anonymity of surveys allows people to feel more candid with their responses. To get accurate data, you need your participants to be as honest as possible with their answers. Surveys provide more honest responses than other types of research methodology, especially if it is clear that the answers will remain confidential.
MARKETING STRATEGY AND PLAN AND THE NEW PRODUCT DEVELOPMENT
Marketing strategy is the marketing logic by which the business unit hopes to achieve its marketing objectives. It consists of specific strategies for target markets, positioning, the marketing mix, and marketing expenditure levels. Marketing strategy should detail the marketing segments on which the company will focus. These segments differ in their needs and wants, responses to marketing, and profitability. The company would be smart to put its effort and energy into those market segments it can best serve from a competitive point of view, and then develop a marketing strategy for each targeted segment.
The manager should also outline specific strategies for such marketing mix elements as new products, field sales, advertising, sales promotion, prices, and distribution. The manager should explain how each strategy responds to threats, opportunities, and critical issues spelled out earlier in the plan. Through strategic planning, the company decides what it wants to do with each business unit. Marketing planning involves deciding on marketing strategies that will help the company attain its overall strategic objectives. A detailed marketing plan is needed for each business, product or brand.
A marketing plan is a business document written for the purpose of describing the current market position of a business and its marketing strategy for the period covered by the marketing plan. Marketing plans usually have a life of from one to five years.
The purpose of creating a marketing plan is to clearly show what steps will be undertaken to achieve the business’ marketing objectives. A marketing plan might include a description of its competitors, the demand for the product or service, and the strengths and weaknesses from a market standpoint of both the business and its competitors. Other elements usually contained in a marketing plan include: Description of the product or service, including special features, marketing budget, including the advertising and promotional plan, description of the business location, including advantages and disadvantages for marketing, pricing strategy and market segmentation. A marketing plan also outlines a company’s overall marketing efforts. Marketing process can be realized by the marketing mix. The last step in the process is the marketing controlling.
The marketing plan can function from two points: strategy and tactics (P. Kotler, K.L. Keller). In most organizations, “strategic planning” is an annual process, typically covering just the year ahead. Occasionally, a few organizations may look at a practical plan which stretches three or more years ahead. Like a business plan, a marketing plan is an important document that needs to be updated on a regular basis. Even five year marketing plans should be revisited periodically – at least once each year – to address changes in market conditions, demand, pricing issues, etc.
Therefore it is very important for Early Morning Foods to develop and maintain a marketing strategy and plan.