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Commercialization and Marketing Activities in New Product

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Commercialization and Marketing Activities in New Product See discussions, stats, and author profiles for this publication at: https://www.researchgate.net/publication/322232292 A Case study of Apple’s success with iconic iPod and iPhone Article · January 2011 CITATIONS READS 3 20,039 3 authors, including: Muhammad Tariq Yousafzai University of Swat 26 PUBLICATIONS 46 CITATIONS SEE PROFILE Some of the authors of this publication are also working on these related projects: Waste Management View project Entrepreneurship Education View project All content following this page was uploaded by Muhammad Tariq Yousafzai on 27 January 2018. The user has requested enhancement of the downloaded file. 1 Title New Product Development Processes A Case Study of Apple’s Success with iconic iPod and iPhone Principle/Corresponding Author: Given name Tariq, Family Name, Muhammad, Email: [email protected]/[email protected] Affiliation Address, Sarhad University of Science and Information technology, 36 B, Chinar Road University Town, Peshawar, Khyber PukhtoonKhwa, Pakistan Phone+92-91-5846508 Cell+92-333-5838252 Co-Author* Given name Rabia, Family Name Ishrat Email: [email protected] Phone+92-91-5846508 Affiliation Address, Sarhad University of Science and Information Technology, 36 B, Chinar Road University Town, Peshawar, Khyber PukhtoonKhwa, Pakistan Co-Author ** Given name Hashim, Family Name Khan Email: [email protected] Affiliation Address, (IMS) Institute of Management Studies, University of Peshawar, Khyber PukhtoonKhwa, Pakistan Phone+92-3005845007 1 2 Abstract This paper focuses on NPD processes which show a high failure rate, making businesses to rethink over their new product and processes. This has lead companies to adopt a more customer oriented approach where previously unheard voice of the customer is now taken to consideration. While launching new products level and form of innovation that a particular market could absorb should be determined in the first place and new product or services should be launched accordingly. Once the company strikes the right combination for success; the company can further use its existing image to launch new improvements in the form of line and brand extensions. Apples frequent usage of its brand name (i) as in iPod, iMac and iPhone as well as in many other new products symbolizes the company’s intentions of leveraging its success pattern across products and categories. It has been observed that other than costs many products fail because of a universal but largely ignored psychological prejudice, as consumer resist any distortion in their current-state-of-affairs. Shrewd companies like Apple devises strategies compressing the lifecycles of brands iPod—iPhone. Besides this companies also try to acquire network externalities, where a customer is contained by a dominant network such as Macintosh or PC operating systems. Companies must also realize the fact that new approaches to marketing, commercialization and NPD must work coherently to maintain a sustained competitive advantage. In such a case companies must strive to adopt innovative and integrated practices by coming out of their silos and assume responsibility for new product development via using strategies such as creative marketing, lean manufacturing, flawless operations, and sophisticated use of concurrent process reengineering (rugby approach as against rally race) and corporate entrepreneurship initiatives like Apple so as to attain first mover advantage and reap the economic benefits from their new product or process innovations. Key Words: Job based segmentation, first mover advantage, network externalities, Apple, line and brand extensions, Planned obsolescence, critical mass and voice of customer 1. Introduction Gourville, (2006) contends that product failures reveal that new products fail at a startling rate between 40% and 90% depending on the product category. The commercialization and marketing stages come in the later stages of New Product Development (NPD) processes; however, they have a pivotal role to play in new product success. As a consequence, there is greater focus on commercialization and marketing issues today, up front, than ever realized before. Therefore companies are now taking into consideration a more detailed job based segmentation approach, because sometimes the consumer has hard times in precisely expressing, the core benefit of certain product, as these may be use getting done various jobs in various situations. According to Mueller, (1997) proposes that consumers follow a six step process to completely absorb innovative products or services. However, these steps may vary and overlap each other due to level of consumer network externalities, brand loyalty, transaction, learning, and obsolescence costs. Another important factor is that consumers over the years develop associations (brand loyalty) with existing products or services and resist any change in the status quo by over valuing the old products too much; on the other hand, companies commercializing new products over estimate their innovative features, design and differentiation. This creates a complex situation where companies need to create awareness about their new products through innovative new product launching campaigns. Companies need to find out the success recipe first and then they should launch their products or services. If the success formula is attained then the company can once and for all use it by launching new and improved versions of the products in the form of line and brand extension (Ibid). 1.1 Problem and Purpose Steven et al. (1957) makes an interesting analogy to launch of a new generation of products and a journey into an uninhabited area as no one can fathom going out without a blueprint for guidance into a jungle. The same holds true for new product development process where a large number of new products fail because the innovators (suppliers) and the end-user do not see and appreciate the market through the same lenses. There needs to be oneness of thought between companies and consumer, which is not readily available, as often times there is a gap between the buyer and the seller’s imaginations. A company sells their innovative products to consumers for solving a certain problem but consumer may not be aware of even the primary usage of the product, its total transformations and augmentations. Therefore, voice of the customer should be taken to consideration when embarking on a New Product Development (NPD) process. However, once the right combination of people, resources and process is attained in the launch of a hit label or brand and the success formula is revealed, then it becomes easy to launch even more success stories in the form of new products or services. It is therefore for this case we have chosen the iconic Apple company brand as our empirical parameter for this scientific paper. RQ: To analyze the high rate of new product success on a companies like Apple in comparison to a higher than normal rate of failures in other firms? 2 3 The purpose of the study is to find out ways and means that would help managers in matching their products with their customers. This is in line with basic marketing principle which stresses that the wants needs and demands of the customer should be taken to consideration first and then a product or service should be commercialized so as to satisfy the consumer in the best possible manner. However, in practice this is the other way around, especially companies coming up with really innovative products face difficulty in testing their products on the market as the demand is latent, and consumer needs are not clear. The consumer needs to be educated first about the concept and how the product will revolutionalize the way he or she do things currently. In specific terms, main purpose of the scientific article is to find out the success recipe for New Product Development and how companies like Apple, Sony, Philips, and Dell make good advantage of the success recipe. 2. Literature Review Song and Montoya (1998), contends that new product development is a high risk proposition for firms to start, as it involves higher risk in targeting a budding market segment where customer wants are hidden and service or product requirements are unspoken. On the other hand, new products often create considerable opportunities for firms to differentiate their offering (product or service) and helps in attaining a lead from competitors through cost, quality, style and flexibility. Mueller, (1997), proposes that the innovating firm may achieve a first mover advantage that would create considerably better results for the company in the short and long term. However, first mover advantage may not always results in profiting as customers, imitators and rival firms may quickly emulate your success and take away a greater share of the market share (Teece, 1986). In the same vein, Steven et al, (1989) proclaim that a successful new product launch creates industry wise unique standards, which may become barriers of entry for new firms trying to penetrate. It also helps in refreshing the minds of the engineering personnel; sales force and give them a sense of accomplishment and may serve the opportunity for strategic corporate renewal and redirection to the firm (Ibid). It is interesting to note that the EMI, CT scanner lost market share to late entrants; Bowmar which launched the first pocket calculator, lost market share to Texas Instruments and Xerox a first mover in the office computers business lost market share to late entrants such as Apples Macintosh which had striking resemblance with Xerox’s core product ideas such as the mouse (Teece, 1986). A study of the US market conducted by John and Gourville (2006) reveals that nearly 30,000 products are introduced yearly in the packaged goods industry. Almost 70% to 90% among these fail to occupy store shelves for more than a year. Another study, indicates that almost 47 % of the companies who enjoyed first mover advantage by commercializing before others in a particular line of business had failed, meaning that firms that introduced new product categories left pursuing those modern ideas Ibid).
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