Discussion Board Response
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disscussion_board_response_assignment_instructions.pdf
Instructions: Read the following two discussion questions (in blue) and answers that are provided to each of the discussion questions (in green). Then write a half page, single-‐spaced response to each of the discussion question answers provided (you are responding to the answers). You will need a detailed response to the answers that involves application of the source materials (see attachments that are the source materials and supports the questions and answers) as well as any additional information you would like to provide in answering the questions (please provide at least one reference in each of your single spaced responses). Your written responses need to reference and expand upon the answers given to the discussion questions and reference the attached materials. Thus, even if you are sharing an anecdote that relates to the topic, at some point, you need to connect it to the attached source materials. Question 1: Utilizing the information in the Module materials, discuss the eight steps of the New Product Development Process by illustrating how your firm would utilize these eight steps and what improvements would you recommend to them. Answer: The New Product Development Process consists of 8 steps: idea generation, idea screening, concept development and testing, marketing strategy development, business analysis, product development, market testing, and commercialization. According to Kotler and Keller, firms often times create internal teams or divisions to focus on product development and implementation (p. 436). Companies such as 3M and General Mills employ venture teams to develop a specific product or business. The text refers to them as intrapreneurs, as they serve an almost entrepreneurial purpose within a company. Many companies use a stage-‐gate system “to divide the innovation process into stages, with a gate or checkpoint at the end of each”
(Kotler, 2016, 436). The first step in the process is idea generation. According to the text, marketing experts believe to find “the greatest opportunities and highest leverage for new products by uncovering the best possible set of unmet customer needs” (Kotler, 2016, p. 438). In this stage firms gather ideas and “inspiration” for potential products or future opportunities. Corporations turn to internal sources for ideas such as employees and external sources such as customers, advertising agencies, and competitors to name a few (Kotler, 2016, p. 438). Prior to my position as an underwriter at State Farm, I worked as a sales representative for a State Farm agent. Many product ideas started from customers as a means to better serve them and maintain a cutting edge in the insurance industry. For example, smart phone applications have exploded as a means to conduct business such as for shopping, travel, and now finances. GEICO was leading the insurance industry with its commercials of the “wee little big” demonstrating the efficiency of their application. Before introducing the Pocket Agent® App, it started as a simple idea from consumers who needed their insurance at their fingertips as with anything else. The next step in the New Product Development Process is idea screening. At this stage, according to the course study materials, “marketers need to ask: is this product idea compatible with company objectives, strategies, and resources?” The purpose of this stage is to “drop poor ideas as early as possible” (Kotler, 2016, p. 443). As costs rise with successive developmental steps, managers use this stage to narrow down only those ideas worth considering for further development. This includes creating ranking charts for screening. As ideas move to this stage at State Farm, leadership evaluates cost, efficiency, and effectiveness. The costs for the Pocket Agent® App included salary to new technology developers and licensing. Also, at this stage, State Farm had to consider if the product would be well received by
customers and are competitors utilizing similar technology. Next is the concept development and testing stage. According to the course study materials, companies “attempt to obtain initial feedback from customers, distributors, and its own employees.” Focus groups and surveys are utilized during this stage. Marketers introduce focus groups to drawings or mock-‐ups of ideas. Then customers provide their likes and dislikes of the product idea. State Farm would gain tremendously from focus groups. As many of our processes and products are customer centered, allowing customers to provide feedback prior to implementation would prevent unnecessary costs in development. I believe it would be beneficial for State Farm to utilize focus groups of a wider pool of its agents, agent staff members, and employees. This way agents will be familiar with customer platforms and could offer suggestions as to what would benefits customers based off of their interactions. The fourth step in the process is the marketing strategy development. This stage encompasses a three step strategy for introducing the product. The first step involves describing the target market, the planned brand positioning, market share, and profit goals sought. The second step involves pricing, distribution strategy, and marketing budget. The third and final step outlines the long-‐run sales and marketing and profit goals. (Kotler, 2016, p. 448). Essentially, according to the course study materials, marketers desire to know if there is a cost-‐effective marketing strategy for the new product. State Farm marketed the Pocket Agent® App for millennials who prefer to conduct business via technology versus sitting with an agent. The company hoped to attract more of this demographic which would increase profits. State Farm relies heavily on its agents to relay information to customers. Agents are central to the company marketing strategy. If I could offer a suggestion for the company, it would be to utilize commercials to discuss new products, initiatives, and platforms,
instead of using commercials primarily for agent publicity (all agents featured on State Farm commercials are real agents). Stage five is the business analysis. The course study materials describes this stage as where “marketers need to ask: will this product meet our profit goal?” After getting the idea, ranking its worthiness, generating feedback from consumers, and designing a marketing strategy, companies want to know will this product make them money. Market research and financial projections will be used in this stage. Companies also seek to know at this stage if the new product would meet company objectives. State Farm’s corporate objective is centered on our policyholders and our ability to meet claims obligations. The business analysis will determine if the product would add to our monetary reserves to pay claims and place State Farm in a higher, more favorable position in the insurance industry. The next stage in the New Product Development Process is the product development stage. In this stage, quality function deployment is initiated by taking a list of desired customer attributes and translating them into engineering attributes. Prototypes are developed and rigorously tested internally. Then, products are consumer tested, which could include lab testing with consumers. This stage is generally conducted at State Farm headquarters in Bloomington, Illinois. Prototypes are tested thoroughly, which can take a long time. When State Farm informs its employees that something new is coming either for customers or employees, we know it could be possibly years before it is made available. That in part is due to the amount of testing, retesting, and more testing. There have been incidents where this stage was not done thoroughly and caused in interruption in operations for over six months and the unintentional deletion of policies! Stage seven involves market testing. According to Kotler and Keller, many companies forgo this step in the process. Why?
Often times, “managers find it difficult to kill a project that attracted much effort and attention, even if they should do so based on market testing” (Kotler, 2016, p. 451). However, companies that perform market testing, estimate four variables: trial, first repeat, adoption, and purchase frequency (Kotler, 2016, p. 451). State Farm chooses to undertake market testing because each product, discount, technology application can have a different reaction. In the textbook, Revlon skips this step based on prior product rollouts. However, in the insurance industry, that method of relying on prior experience is not absolute. The final stage in the New Product Development Process is commercialization. Course study materials states that if success is achieved in the market testing, then the product is ready for a wider market. State Farm completes this step via its agents. Certain regions of agents across the country will have access to or start a new process before the rest of the country gets on-‐board. For example, State Farm introduced Initial Loss Reporting (ILR) to be the first step in the auto claim process. This service was started in only one region to test its effectiveness before rolling it out to the entire country. However, when the company tried to mass introduce the Drive Safe and Save® discount, many agents were not applying it. Its effectiveness was “lost in translation.” Gradual introduction to products by region is most effective for State Farm. That way agents know something is coming and can have time to adjust any existing processes and gain as much knowledge as possible.
References Kotler, P., & Keller, K. (2016). Marketing management (15 [edition]. ed.). Pearson Education. “Course Study Materials” is making reference to PowerPoint presentations posted by Dr. Eastman
Question 2: Utilizing the information above, please discuss what represents luxury to you, why it represents luxury to you, and how does price impact that perception? Answer: According to Kotler and Keller, “luxury brand marketers have to remember they are often selling a dream, anchored in product quality, status, prestige” (p. 377). I grew up on a very modest income. My family shopped at stores such as Payless, Walmart, Kmart, and primarily the Value Village thrift store. Money was spread thin and luxury was essentially a dream. At that time, I established a frame of mind that luxury is essentially something that is out of reach or something that is not affordable. It did not have to do with quality but rather affordability. Luxury, as a kid, was going to the mall to buy something from Aéropostale or even being able to window shop. I recall when my mother purchased a Lexus and being invited to The Taste of Lexus event. Kotler and Keller state regarding marketing luxury brands that “one trend for luxury brands is to wrap personal experience around the products” (p. 377). Those Lexus events emanated luxury. You were able to test drive newer models, view cooking demonstrations with high end cookware, or indulge in gourmet food. Now, as a young adult, luxury is mainly represented by quality. I emphasize quality because growing up shopping at the above mentioned stores, the items we purchased were not of high quality. They would tear, break, or become destroyed fairly easily and quickly. Benjamin Wallace shared on his Ted Talk his experience with trying various luxury brand products. Some, he believed, were worth the cost, and, if he could afford them, would purchase the products. But many he believed did not necessarily live up to the “hype” of the cost. These items were no different in appearance and feel than items not seen as luxury. I would prefer
to spend my money on items that may not necessarily be rare but are of high quality and within my budget. Knowing that I can afford high quality items gives me a sense of accomplishment. I have arrived at the point in my life that I can afford luxury. Recently, I purchased a 2012 Chevrolet Cruze LTZ RS. I desired a luxury car without the luxury price. I wanted the “bells and whistles.” My car has leather seats, sunroof, seat warmers, etc. I honestly feel a sense of luxury knowing that my Chevy Cruze has similar trim and quality to BMW, Lexus, and Mercedes Benz. References Wallace, B. (n.d.). Benjamin Wallace: The price of happiness. Retrieved September 27, 2015.
