Scenario:
Mobile Manufacturing, Inc.
Michelle Dietrich, president of Mobile Manufacturing, Inc. (MM), stared out of her third-floor window at the traffic below her San Jose, California office and said to herself, “This new product has to be right. If we can’t gain back a significant share of the mobile phone market with this product, MM is not going to be here next year.”
Michelle’s company made its debut in the mobile phone industry in 2002 when it invented the first mobile phone that could access the Internet. At the time, this gave MM a huge advantage over its major rivals.
Mobile Manufacturing, Inc.’s first successful product and initial public offering (IPO) in 2003 raised enough capital to help the firm develop new products, but since then, the technology giants have caught up with them. Although MM had some success with other products, it has not been able to match its initial success and distinguish itself from its rivals. MM—though it was the darling of the technology world in the early 2000s—was struggling to attract first-class employees and new investors; it was floundering in the market.
After several failed attempts at new products, Michelle hired Elena Steokovich, the top cell phone designer and engineer in Europe, to help design a new product. Elena knew her stuff when it came to phone product design, and she had worked with Michelle on MM’s first product. After stints with big-name competitors, she agreed to return to MM to help Michelle restart the product innovation engine.
“I know that just designing a good phone will not be enough,” thought Michelle. “Perhaps the most important question is: How do I know if anyone will buy our phone? Certainly market research will help us identify potential customers so that we can target them effectively, and careful analysis of the research findings will lead us to a good marketing plan. Yes, the marketing plan is the key. I need to know that the next phone we develop will meet the needs and wants of those who crave the latest and greatest technology in their mobile phones.” MM needed to get back a market share if it was to survive in a fiercely competitive environment.
Michelle also knew the mobile phone and technology markets had changed drastically in other ways since MM first entered the market. There were new domestic and foreign companies competing, increased market demand driving prices down, and innovative products being introduced every year. Although some consumers were happy to try out the latest and greatest products, a large number of customers were suffering from feature fatigue, a term used to describe the tiring of the bells and whistles. The customers with feature fatigue just wanted to make phone calls to their family and their friends.
To help ensure that MM has the right marketing plan for its new mobile product, Michelle has hired you as her marketing consultant for this project. As the marketing consultant, you will be responsible for planning, organizing, and implementing the marketing plan for MM’s new product.
Solution
Introduction
For a marketing manager, the need for designing and implementing an effective marketing plan can be overcome by conducting comprehensive marketing research and understanding the forces which have a direct impact on the marketing plan. The aim of conducting this marketing research is to gather the information, analyze, and interpret it for effective decision making. Information related to the competition, environment and target audience is used for devising an effective strategy and implementing on it.
For the new product development, it is needed first to identify the reason why the new product is needed. For MM Inc. new product development is needed to replace its existing declining products and increase its market share. It is also needed to bring in new customers and provide the market with a better product, gaining competitive advantage.
As MM Inc. is committed to developing a new product, it is needed that it increases its profits and its customer base through the introduction of this new product. It should also consider evaluating the product lifecycle. The company also needs to increase its first-time customers, who will be reached through the new product introduction. It will also aid in achieving the targets of the marketing plan regarding ROI, revenue growth, customer-base extension, and profit growth (Claessens, 2015). The process of the new product development is explained below.
Idea Generation
Idea Generation is the first step of the product development process. It is the systematic search for a new idea for a new product which can be obtained internally or externally. The ideas for the new product can be gained by conducting a SWOT analysis (Pahl & Richter, 2009), using brainstorming and focused groups internally, and external environmental analysis for trend analysis (Queensland Government, 2018). Many ideas are generated in this stage (NIBusinessInfo.co.uk, 2018). For MM Inc. the mobile industry is very competitive, and hence it needs some major innovative ideas to get back in the race.
The recruitment of the top-notch designer in the industry would help introduce some new innovative ideas in the company. Looking at the future of mobile phones or more appropriately said “the future of the smart phones”; it is evident that companies are pouring in a large amount of investment in specific areas (Zeine, 2017).
All the Smartphone customers all around the world seem to be holding similar phones in their hands at this time. Smartphone customers would love to have a better and more improved version of the Smartphone with a stronger battery time, high speed connectivity, millions of apps on fingertips with best features and touch screen interface. There can be some new additions and improvements which can be made to create a better Smartphone. For wireless charging to fingerprint within the screen, folding of the screens, multiple cameras, etc. are some of the new ideas (Fowler, 2018).
In the tech industry doubling up its investment in artificial intelligence, and IoT, there are some areas in which MMI can go further. Listing some of the ideas would be.
- Fingerprint scanners going inside the screen
- Use of more lenses for the camera to take one giant picture
- Foldable screens
- Wireless battery with charging through beams of low levels of power transmitted through the air.
Idea Screening
Next up comes the stage of idea screening. In this step, the objective is to erase any unsound concepts before going into devoting resources to it. There are several questions which need to be raised regarding testing the ideas. MMI should look if these ideas benefited the customers in their target market. Proper analysis should be made to have forecasts for the target market growth. The competitive pressure on the idea for the product is to be analyzed for each idea as well. The sales forecast for the idea and the industry acceptance of the particular idea is to be evaluated as well. The practicability of the implementation of the idea regarding its profitable manufacturing and sale is to be analyzed as well.
Folded screens are one of the ideas which are needed to be looked. This idea has been experimented with by companies through the introduction of curved TVs and phones. The threshold has yet to be crossed in which the screens are needed to be folded as sharply as paper. The manufacturing of the foldable tablets or phones is much more difficult to be implemented in production as it means producing millions which can be much easier to break. One way would be to shift to plastic phones which can make more shatter-resistant phones. This technology is more difficult and far to achieve. Hence it is more appropriate to consider it in the long run. Others are good enough to put forward in the next stage (Bhasin, 2017).
Concept Development and Testing
Concept Development and Testing need us to look at the screened ideas and develop their engineering and marketing details. It is needed to investigate their property and rights issues, and look at the market and identify who is the decision maker in the buying process. The benefits and the shortfalls of the products that it will offer should be evaluated. How the customers will react to the product should be analyzed. The cost of producing it should be evaluated.
Looking at the ideas mentioned above, MMI needs to evaluate each in every aspect. The fingerprint scanner going inside the screen has been introduced by Vivo X21 in China and by Xiaomi. However, the in-screen reader is more finicky than the normally used scanners and would need to be looked at precisely. This technology is expected to be in the US market within a year, so it would be more appropriate to use it now. The other idea of using more lenses in cameras has been seen in Samsung and Apple phones. Huawei has also used three lenses in one of its phones. There have been companies who are taking this further to as much as nine cameras for better megapixel shots and low-light performance. The loophole in this idea is its cost. The high-power processor needed to stitch these cameras together doesn’t come cheap. It is also expected to come in the industry later this year.
Batteries charging in thin air are another idea which is revolutionary in its concept as the idea can lead to a no-fuss charging mechanism as the phones would constantly be charging it. It has been implemented by the companies by using beams of low-level power through the air. Some others have been using radio frequencies and infrared frequencies. The downside of this idea is that it is not a fast-charging process. However, it can be of less concern if one’s phone is constantly charging all day. It is another long-term effort which is expected to arrive in the market by 2020; therefore, it can be left at this point (Zeine, 2017).
Therefore, after successful concept development and testing the fingerprint sensor within the screen, more lenses for cameras are the best options to put forward.
Marketing Strategy Development
In this step, it is needed that MMI develops a preliminary marketing plan for the development and introduction of the new product in the market. For this reason, three steps are needed to be taken. Firstly, the target market, structure, and behavior are to be determined. Then the second part should be outlined in which price and distribution strategy should be evaluated. The marketing budget is also needs to be devised. The last part includes the description of long-run sales and goals for profits and the strategy for marketing mix.
For MM Inc. new product, the target market has been defined as comprised of Teens, working couples, College going students, and all working people in between the age of 16 to 45 years. Demographically, the upper, middle and lower middle class and the upper-income level are the target market. As based on the division of lifestyle and social class, urban, modernized, open-minded and young lifestyle is the target for our new product.
Our new product with better battery timing, more reliable and secure software, fingerprint sensor inserted in the screen, and full front screen, better camera with three lenses, and better interface is targeted to the individuals who are looking for long battery timing, secured software and applications, better camera results and graphics in their phones (Team CounterPoint, 2018).
Next, the pricing strategy is important as well. Individuals tend to look at the price and compare it with the value that they are receiving from the product. This comparison should be balanced if not towards the buyers at a price with the lower valued product in the eyes of the potential customer would mean a lost sale.
The distribution channels for the mobile phone industry are also important to be looked at as well as placement and positioning are important in the mobile industry. Distributors, local distributors, and the retail segment can be used for the positioning and placement of the new product domestically and on international forums. Exclusive contracts with international dealers can be made to strengthen global placement.
For the Promotional strategy, a variety of mediums can be used aggressively, and activities promote the new product. Discounted offers to trade partners, distributors, and global dealers can be provided. Celebrity Advertising, print and electronic advertising, outdoor promotional advertising would be utilized to make use of the promotional activities. It is expected that this new product introduction will yield approximately 5% growth in the sales revenue and profit (Fowler, 2018).
Business Analysis
The number of Smartphone users in the US in 2017 has been reached to 224.3 million, while the worldwide Smartphone users are forecasted to reach to 2 billion users by 2020. Apple has 33 to 30% of this US market share, and Samsung holds nearly 30% as well. LG and LTE hold 14% and 9% of the market (Statista, 2017). It is targeted that MM Inc. needs to have approximately 10% of this market at least. It means that MM Inc. should have sales of around 22.43 million in the US market. MM Inc. can target a realistic sales volume of 15 million smart phones in the US market (Team CounterPoint, 2018).
It is needed that MM Inc. conducts a comprehensive analysis of its competition and set its price accordingly. The price setting is important as it impacts on the potential sales volume. If the price higher than the competitive products would make it an expensive product, and much lower would yield fewer profits.
Product Development
It is the stage in which the technical analysis of the product development process is conducted. It is done to know whether the product produced is good and affordable enough to keep the price at an affordable level for the customers. In this step, it is needed that the company MM Inc. implements a working model or a sample or prototype for disclosing the intangible and tangible attributes of the product. It is important in this step to develop a product protocol, which will show the detail of the important attributes of the product. This protocol is to be then handed over to the research department to develop the prototype of the product (Claessens, 2015).
Test Marketing
The physical testing of the product regarding its marketing strategy can be done by producing the mock-up or the physical prototype of the product. In different usage situations, the testing of the products is to be done regarding its placement, pricing, promotion, and packaging. The product can be introduced at trade shows and focused customer groups for testing. After testing, the adjustments as per the experience of the testing should be made. The initial run of the product should be developed and sold in the market. During this time, it is needed that the customer and market response is noticed and observed discreetly. It is important to have discreet observations on the relationship with the suppliers, distributors, customers, and other stakeholders of the market (Klompmake, Hughes, & Haley, 2016).
Commercialization
Commercialization is the last step in which the product is finally launched. For this, a thorough plan for the product placement and distribution, promotion, and production has to be made and implemented. The commercialization would need the filling of the distribution pipeline with the needed amount of the products at the specific point of gaps. Critical path analysis can be utilized to strategize for this step.
The whole process of product development is quite challenging. From the development of an innovative idea to its ultimate domestic and global launch, the integration of the regulatory compliance with the product lifecycle while reducing the business risk and selling the products globally, challenges ranging from minute level to grand level are to be faced.
MM Inc. is therefore required to not only remain prepared for the challenges, but also to plan for it. Contingency plans would be one alternative to remain prepared for any challenges. MM Inc. can also workout on prioritizing its activities and identifying the weak areas which can become the reason for any future challenges and make effective coping plans (Bhasin, 2017).
Conclusion
Concluding, it can be said that even though this new product is of utmost importance to MM Inc., its importance should not impact the planning, and decision-making ability of the company as panicked decisions are not always the right decisions for a business. It is recommended that not only MM Inc. should invest in new product development; major investment should be directed to the Research and Design departments for working out plans for the ideas which have been screened out at this time. The use of the wireless Battery with using of power beams through the air is certainly a good innovative idea which can revolutionize the Smartphone industry. Similarly, the folding screen is another revolutionary idea which should be followed for plans as well. Other than this, it is evident that technology giants are pouring investments in Artificial Intelligence. Soon will come a time in which mobile phones will be AI backed. MM Inc. should be prepared for this time as well. It calls for considerable research and investment in the artificial intelligence field as well. MM Inc. would need to work on revitalizing its branding to attract creative and innovative talent towards itself. This talent hunt is vital for its long-term plans, and therefore, AI researchers should be hired soon enough. Finally, after the domestic launch, MM Inc. should follow the same procedure for the international launch of the product in India, China, and European countries.
References
Bhasin, H. (2017, December 16). New Product Development. Retrieved from https://www.marketing91.com/new-product-development/
Claessens, M. (2015, June 30). Product Life Cycle Stages (Plc) – Managing The Product Life Cycle. Retrieved from https://marketing-insider.eu/product-life-cycle-stages/
Fowler, G. A. (2018, June 29). Whoa! Meet the future phones that fold up, have 9 cameras and charge over thin air. Retrieved from https://www.washingtonpost.com/technology/2018/06/29/whoa-meet-future-phones-that-fold-up-have-cameras-charge-over-thin-air/?noredirect=on&utm_term=.e8d5d2b49902
Klompmake, J. E., Hughes, r. D., & Haley, R. I. (2016). Test Marketing in New Product Development. Retrieved from Harvard Business Review: https://hbr.org/1976/05/test-marketing-in-new-product-development
NIBusinessInfo.co.uk. (2018). Research and develop ideas, new products and services. Retrieved from https://www.nibusinessinfo.co.uk/content/product-development-process
Pahl, N., & Richter, A. (2009). Swot Analysis – Idea, Methodology and a Practical Approach. GRIN Verlag.
Queensland Government. (2018). Generating and screening ideas for new products. Retrieved from https://www.business.qld.gov.au/running-business/growing-business/becoming-innovative/developing-products/new-products/ideas
Statista. (2017). Number of smartphone users in the United States from 2010 to 2022. Retrieved from https://www.statista.com/statistics/201182/forecast-of-smartphone-users-in-the-us/
Team CounterPoint. (2018, May 14). US Smartphone Market Share: By Quarter. Retrieved from https://www.counterpointresearch.com/us-market-smartphone-share/
Zeine, H. (2017, May 23). The Future Of Smartphones. Retrieved from https://www.forbes.com/sites/forbestechcouncil/2017/05/23/the-future-of-smartphones/#4280744b1885
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