Strategic planning and launch of new products

In this first chapter we have proposed to carry out a deep and extensive bibliographic review to address the theoretical framework on the subject.

The basic aspects regarding the strategic planning of companies and their strategic business units will be developed. Subsequently, a deep analysis will be made of the fundamental conceptual aspects in relation to the process of launching new products through different points of view of the authors, for which it is necessary to analyze the basic postulates with respect to market research..

the-strategic-planning-and-the-process-of-launch-of-new-products-1

The objective of this chapter is to provide us with the essential theoretical elements to later assess the opportunity to introduce new products in the business portfolio of the “Fidel Rodríguez Moya” Center Repair Company.

1.1 Strategic Planning of Companies.

1.1.1 Corporate Strategic Planning.

The business environment has become increasingly complex, dynamic and uncertain, making companies more vulnerable while offering more opportunities for successful development. The practice of strategic planning allows companies to adapt and respond to a constantly changing market, as well as to develop and maintain a viable fit between their objectives, resources and opportunities.

Strategic planning is the process of maintaining a viable fit between the company's objectives and resources and changing market opportunities. Its objective is to model and restructure the business and product areas of the company in such a way that they provide satisfactory benefits and growth, the essence is to identify current opportunities and threats which, when combined with the strengths and weaknesses of the company, provide the foundation company to define where you want to go in the future.

1.1.1.1 The Strategic Planning Process.

Figure 1. Corporate Strategic Planning Process.

Source: Kotler, Philip. Marketing Management: Analysis, Planning, Management and Control. nineteen ninety six.

1.1.1.1.1 Corporate Mission.

The mission must be based on five elements; history, each company has a history of goals, policies and progress; the preferences of the current leaders, those who run the company have their personal goals and visions. The market environment influences the mission of the organization, it defines the main threats and opportunities that must be taken into account. Company resources determine which missions are possible; companies must base their mission on competitive advantage.

In developing a market-oriented mission statement, management should avoid making its mission too narrow or too broad. Each expansion step indicates new opportunities, but it can also lead the company to unrealistic adventures beyond its capabilities. The mission must focus on a limited number of objectives, it must be motivating and highlight the policies that the company chooses to honor.

1.1.1.1.2 Identification of the Strategic Business Units.

Business should be viewed as a customer satisfaction process, not as a goods production process (Levitt, 1960 ). Products perish but basic needs remain.

A strategic business unit (SBU) can be defined on the basis of three dimensions: the target audience who will be served, the needs to be met, and the technology that satisfies those needs (Abell, 1980).

A SBU can be one or more divisions of the company, a product line within a division, or sometimes a single product or brand. They have the characteristics of being a single business or a set of related businesses that can be planned separately from the rest of the company. They have their own competition that you are trying to match or exceed. They also have their own director, who is responsible for strategic planning and achievement of objectives and who controls most of the factors that affect profit.

1.1.1.1.3 Valuation of the Investment Portfolio. Definition of Strategies.

Definition of the business portfolio.

Guided by the company's mission statement and goals, management must now decide which set of businesses and products will best match the firm's strengths and weaknesses relative to the opportunities in its environment. You must analyze the current business portfolio and decide which businesses should receive more or less attention and resources and develop growth strategies to add new products or businesses to the portfolio. Top management can't decide what to do based on impressions alone - tools are needed to rank their businesses based on their profit potential. Various portfolio valuation models have found wide use. Two of the best known are the Boston Consulting Group and the General Electric model.

Boston Consulting Group model.

The Boston Consulting Group, a leading consulting firm, developed and popularized a model known as the growth-share matrix, which is divided into four cells, each representing a different type of SBU.

Main characteristics of the business units.

Questions: they are businesses that operate in high growth markets but with a relatively small participation. The term question mark is well chosen because the company has to seriously think about whether to invest money in the business or not. Stars: If the question mark is successful, it becomes a star. A star business is one in which the company is a leader in a high growth market. Star products are usually profitable and become the future dairy cows for the company. Dairy Cows: A cow product typically produces a lot of cash for the company. This does not have to finance a large expansion, as market growth has stabilized. The company uses empty businesses to pay its bills and support its star, question and dog businesses,They tend to demand cash. Dogs: These businesses usually generate low profits or losses, although sometimes they can generate cash. Dog businesses often consume more management time than they deserve and require resignation or planned elimination.

The company's portfolio planning task is to determine what role to assign to each SBU in the future. Four alternative objectives can be pursued: to build, to increase the UEN's market share, even if profits have to be reduced to achieve it, it is especially appropriate for questionable businesses, whose share must increase to become stars. Maintain, here the objective is to preserve the participation quota of the strategic business units, it is appropriate for cows in a strong position and it is sought that they continue to provide a good generation of cash. Harvest, you want to increase the income of the SBUs in the short term, regardless of the long-term effect,This strategy is appropriate for weak empty businesses whose future is confusing and which requires more cash generation. Divestment, here the aim is to sell or liquidate the business, because the resources can be better used at another strategic level, it is usually appropriate for business dogs or questions that act as a hindrance to the profits of the company.

As time passes, the SBUs change their position in the growth-participation matrix. Thus, it becomes a tool for experts in strategic planning; They use it to try to value each business and assign to them the most reasonable objectives and resources.

General Electric approach.

If additional factors are introduced, the growth-share matrix can be converted into a multifactor matrix, as is the case advocated by General Electric. Each business is rated on two broad dimensions: market attractiveness and competitive position. These two factors make great business sense in valuing a business. The success of companies varies to the extent that they are located in attractive markets and have the competitive advantages to achieve profitability. If one of both conditions fails, the business will not produce as beneficial results.

In strong SBUs the firm should invest and grow, maintain its level of investment in those that have a general medium attractiveness and those that have a low general attractiveness, the company should seriously consider harvesting or discarding them.

1.1.1.1.4 New Business Planning.

The company's plans for its current businesses will allow it to project its sales and profits. However, often, projected sales and profits will be lower than corporate management wants over the horizon. If there is a gap between desired future sales and projected sales, management will have to develop or acquire new business to close this gap in strategic planning.

Companies can fill the gap in three ways: the first is to identify opportunities to achieve growth within the businesses themselves (intensive growth opportunities); the second is to identify opportunities to build or acquire businesses that are related to the current ones of the company (integrated growth opportunities); the third, in identifying opportunities that add new businesses that are not related to the company's current ones (diversified growth).

Intensive growth: corporate management must monitor whether there are opportunities to improve results in its current businesses. Ansoff proposed a very useful framework for detecting new growth-intensive opportunities that he called the growth-intensive strategy matrix. First, management must consider whether it can gain a higher market share in its current markets and products (market penetration strategy, where management looks for ways to increase the share of its products in current markets). It must then consider whether it can find or develop new markets for its current products (market development strategy, management must also look for new markets whose needs can be satisfied by its products).Develop new products or new interests for your current markets (product development strategy, management might consider some new product development possibilities). Finally, it should also check if there are opportunities to develop new products for new markets (diversification strategy). Integrated growth: the management must review each of its businesses to identify possibilities for integrated growth. Often times sales and profits in businesses can be increased through integrated backward, forward and horizontal growth within the industry itself.Diversified growth: makes its full sense when good opportunities can be found outside of current businesses. Three types of diversification can be considered.The company can look for new products that have technological and / or marketing synergies with currently existing product lines, even if the products are directed to a new class of consumers (concentric diversification strategy). Second, the company could research new products that interest its current consumers, through a technology that is not related to its current product line (horizontal diversification strategy). Finally, the company could look for new businesses that are not related to production technology or current products and markets (diversification strategy in a conglomerate)although the products are directed to a new class of consumers (concentric diversification strategy). Second, the company could research new products that interest its current consumers, through a technology that is not related to its current product line (horizontal diversification strategy). Finally, the company could look for new businesses that are not related to production technology or current products and markets (diversification strategy in a conglomerate)although the products are directed to a new class of consumers (concentric diversification strategy). Second, the company could research new products that interest its current consumers, through a technology that is not related to its current product line (horizontal diversification strategy). Finally, the company could look for new businesses that are not related to production technology or current products and markets (diversification strategy in a conglomerate)Finally, the company could look for new businesses that are not related to production technology or current products and markets (diversification strategy in a conglomerate)Finally, the company could look for new businesses that are not related to production technology or current products and markets (diversification strategy in a conglomerate)

1.1.1.2 Strategic Planning of the Strategic Business Units.

The need to direct the company in business areas is determined by the existence of a competitive position for each activity. In multi-business companies, each of them can offer different profitability options, opportunities and growth. Each strategic business unit develops its own strategic planning, which involves going through eight stages that appear below.

Figure # 2. The Strategic Planning Process in the UEN.

Source: Kotler, Philip. Marketing Management: Analysis, Planning, Management and Control. nineteen ninety six.

1.1.1.2.1 Mission of the Strategic Business Units.

Each SBU of the corporation has to define its specific mission framed within the general mission of the corporation. The definition of the mission should indicate the general objectives and policy of the strategic business unit, going beyond the objectives and policies of the corporation.

1.1.1.2.2 Analysis of the External Environment.

The company must be up-to-date on the key forces of the macro environment (demographic / economic, technological, political / legal and socio / cultural) that affect its business. You must also know who are the most significant actors in the microenvironment (customers, competitors, distribution channels, suppliers) that affect your ability to profit from the market.

The business unit has to categorize these environmental factors and establish a marketing intelligence system that assesses trends and the importance of their development. Then, for each trend or development, the marketer must identify the threats and opportunities involved.

A marketing opportunity for the company is a specific market in which the company could develop marketing actions enjoying competitive advantages. Opportunities can be ranked in relation to their attractiveness and likelihood of success for the company. The probability of success of an opportunity for the company depends not only on whether its strengths are related to the success requirements to operate in relation to that target audience, but also on whether those strengths exceed the position of the competition.

An environmental threat is a challenge arising from an unfavorable trend or development in the environment that would lead, in the absence of adequate marketing actions, to a loss of the company's position in the market.

Gathering the threats and opportunities faced by a UEN, we will classify them into four groups: ideal, it is one that presents great opportunities and small threats. Speculative, when you have both opportunities and threats. Mature is one that has opportunities and threats that are small and problematic when it is low in opportunities and high in threats.

1.1.1.2.3 Analysis of the Internal Environment.

One assumption is to perceive attractive opportunities in the environment and another to have the competencies to succeed in relation to those opportunities. Each business area has to work out its strengths and weaknesses. A competitive advantage is achieved when you are relatively better than the competition in an important factor.

In examining the strengths and weaknesses, the company should not correct all its weaknesses, nor delight in all its strengths. The big question is that the business area must be limited to those opportunities in relation to which it has strong points or it must also consider the best opportunities in relation to which it would have to acquire or develop strong points.

Objectives formulation.

For this system to work, the different objectives of the UEN must be hierarchical, quantitative, real and consistent.

The business unit must rank the objectives hierarchically, from the most to the least important. As far as possible, the objectives should be formulated quantitatively. Management uses the term goal to describe those objectives that are specific in magnitude and time. Converting general objectives into specific objectives facilitates the planning, management and control process. A business must choose real and feasible objectives. The levels should come from an analysis of opportunities and strengths, not a simple wishful thinking. Finally the objectives must be consistent or confusion will be generated.

1.1.1.2.5 Formulation of the Strategy.

The objectives indicate where you want to direct the business and the strategy defines how to get there. Various types of strategies can be listed. Porter has condensed them into three generic types that provide a good starting point for strategic thinking:

Cost leadership, the business strives to achieve the lowest costs of production and distribution, so that it can put them lower than its competition and achieve a high market share. Differentiation, the company focuses on achieving superior returns in relation to some important advantage valued by the market as a whole, and on those strengths that will give it a competitive advantage in relation to a specific benefit. Focus, here the business focuses on one or more specific market segments instead of serving the entire market. The company needs to know the needs of these segments and seeks to be a leader in cost or in some form of differentiation within the segment.

1.1.1.2.6 Program Formulation.

Once the business area has developed the strategies to achieve its objectives, it must define its programs to carry them out. If the business has decided to achieve technological leadership, it must implement programs that strengthen its research and development departments, gather intelligence on the most advanced technologies that can affect the business, develop advanced products, train the sales force. so that they understand what these products are and educate customers, create advertising programs to communicate their position as a leader in technology and so on.

Program Management.

The fact that the company has developed a clear strategy and well thought out programs may not be enough, because it may fail to manage the programs. Strategy is just one of the seven key elements of great companies.

The first three elements: strategy, organization and system of the McKinsey 7's structure is considered the “hardware” of success. The other four: style, staff, skills and company culture are the "software."

1.1.1.2.8 Feedback and Control of Results.

As decisions are made, the company needs to control the results and developments that occur in the environment. The company can, in fact, count on that the environment will change during the planned period and that it will then be pressured to make appropriate adjustments in one or more of the phases of the planning process if it is to achieve its objectives.

Some companies permanently review their strategic planning, adapting their programs to changing environmental conditions, maintaining their main objectives and strategy. On the other hand, some dominant companies fail to realize when their demand or environment changes from stable behavior to turbulent behavior and they do not respond quickly enough.

The strategic effort allows an organization to better identify where the business opportunities are, avoid improvisation and mistakes that can be very costly, discover which competitive advantages to develop to improve its position and expand current businesses, its more mature and declining products must be replaced by others hitherto unknown.

Launch of new products.

1.2.1 The Components of an Innovation.

Companies can add new products through both acquisition and internal development of the same. The path of acquisition can manifest itself in three ways: the takeover of other companies, the purchase of selected patents, or the acquisition of licenses or franchises from other companies. In these cases, the companies do not develop the products but rather acquire the rights over other existing ones.

What do we understand by new products? For our purposes, this concept includes original products, improved products, modified products and new brands that the company develops through its research and development (R&D) efforts, also interested in the perception of consumers of its novelty.

The conception of a new service can be understood in different ways: firstly, as a total innovation in the market, that is, the appearance of a service that is introduced into an undefined market and not quantitatively evaluated. Second, it may be known services that are offered in combination to a market that has its basic needs covered. Third, it can be about adding services to existing ones, that is, companies can increase their basic offer. Finally companies can expand their range of products.

An innovation is defined as the start-up, original and progressing bearer of a discovery, an invention or simply a concept. According to Barreyre, an innovation can be broken down into three elements: a unit to be satisfied; In other words, a function or a set of functions to fulfill; the concept of an object or entity suitable to satisfy the need, that is, the new idea; some ingredients (inputs) that comprise both a body of persistent knowledge and materials or an available technology that allows this concept to be made operational.

We can retain three possible criteria for classifying innovations: the degree of novelty for the company, the intrinsic nature of the concept at the base of the innovation, and the intensity of the innovation.

Degree of novelty for the company.

The evaluation of the degree of novelty for the company is important because the novelty determines, to some extent at least, its competitiveness or its competitive capacity. The more the company ventures into new terrain, the greater the strategic risk to it. Four levels of risk can be distinguished: the new product destined for a known market and based on a known technology, the risk is doubly limited since the company relies on its distinctive competencies. The risk of a new product destined for a new market or segment, but based on known technology, is essentially commercial and calls into question the marketing know-how of the company. The new product intended for a known market, but based on a new technology for the company,the risk is technical and calls into question their technological know-how. The new product destined for a new market and based on a new technology, the risks accumulate and we find again the characteristics of a diversification strategy.

In attention to the degree of novelty with which the products are perceived by companies and the market, the firm Booz, Allen and Hamilton distinguished six categories of new products:

New products for the world: they are what create a totally new market New product lines: these are new products from a company that allow it to enter a market segment for the first time Product additions to the lines: they are new products that complete existing lines Improvements or revisions in existing products: consists of new products that provide better performance or are perceived as having a higher value by the market, replacing the previous ones. Repositioning: these are products Existing companies approaching new markets or segments Cost reductions: creating new products that provide similar returns at lower costs.

Choffray and Dorey (1983) propose a classification based on the nature of the changes contributed to the physical or perceptual characteristics of the new product. The proposed distinctions are as follows:

Original products. These are products whose physical and perceptual characteristics are defined on new dimensions. Reformulated products. These are products that are mainly affected by the definition of the physical characteristics, without modifying the basic dimensions on which they are evaluated. Repositioned products. They are the products in which the way the potential buyer perceives them is modified, therefore intervening only in the perceptual dimensions.

Technological dominant or marketing dominant innovations.

A second classification of innovations rests on the intrinsic nature of the new idea. On the basis of this, innovation is distinguished from dominant in marketing.

The dominant technological innovation rests on the physical characteristics of the product. Technological innovation results, then, from the application of exact sciences to industrial practice; essentially comes out of the laboratory or the R&D department.

The dominant commercial or marketing innovation is essentially based on the modes of organization, distribution and communication that are part of the marketing process of a product or service. Therefore, commercial innovation is based on all activities related to the channeling of the product from the manufacturer to the end user. It results more from the application of human sciences, it is organizational and one cannot speak exactly of scientific and technical progress, it gives more importance to imagination, creativity, know-how, than to financial resources.

Intensity of innovation.

A third classification of innovations emphasizes the intensity of the innovation. This will result from the novelty of the concept and the technology on which its realization rests. The concept can be traditional, improved or new; the same for technology. Assessing the strategic role of technology is important; consultancy Arthur D. Little suggests a distinction between key technologies, grassroots technologies, and emerging technologies. (Ader. 1983)

Key technologies are those put into operation by a company that have a greater impact on its competitive collapse, expressed in terms of product quality or productivity. Core technologies are those that are widely available and no longer constitute a foundation for competition. Emerging technologies are only at the level of experimentation, but they are liable to modify the future bases of competition.

1.2.2 The New Product Development Dilemma.

Given the degree of competition in the world, companies that do not develop new products are exposed to great risks. Its products will be subjected to changes in the needs, tastes and whims of consumers, to the threats of new technologies, to increasingly shorter life cycles and to growing domestic and foreign competition.

Reasons for creating new services. (Large 1994)

The reasons that induce the company to create new services or modify existing ones are mainly the following. (Large 1994)

Market motives. The launch of new services places the company in a better competitive situation. New services are created because new needs appear and the market demands them. Companies that wish to be competitive must focus on the consumer and research the market to provide those services that are in demand. Strategic reasons. The launch of new services may pursue the creation of complementary products; exploit to the maximum the distribution channel; occupy a market niche in which other manufacturers are not located and thus manage to meet an unsatisfied demand; fend off competitors, sometimes companies create services to react to competitive innovations. For this, it must have tactical services, the basic services are easily imitable, in general,they cannot be patented and the barriers to entry are weak. A good way to defend against competition could be to improve the quality of the service provision process. Technical reasons: take advantage of by-products from other production processes; Make the most of the installed quality of the company. Profitability reasons: increase profits, or combat the seasonality of sales. Dynamic reasons: the company must provide an image of being up-to-date and having the capacity to renew its services. Legal requirements, currently compliance with certain regulations results in the creation of new services, their abandonment or their modification; Social pressure, in the face of certain interests or values, can also be a force that affects the development of new services.

Explanatory factors of success:

Once the reasons that lead to the creation or modification of new services are known, it is necessary to analyze some features that characterize successful companies. Contributed by the study by Booz, Allen and Hamilton (1982), the factors that contribute the most to success are: the adaptation of the product to market needs; the adaptation of the product to the distinctive forces of the company; the technological superiority of the product; the support of the general management; the use of a new product evaluation process; the favorable competitive environment and the adapted organizational structure.

Three factors or groups of factors appear as the keys to success: the superiority of the product in relation to competitive products, that is, the existence of distinctive qualities that allow the conception of better products for the user. The company's marketing know-how, or understanding of the market, the customer's buying process, the rate of adoption of the product, its duration and the size of the potential market. Technological know-how, that is, a good synergy between research and development, engineering and product. (Cooper, 1979). These three key factors are controllable by companies, which excludes any fatalism in an innovation strategy. It is the quality of the organization and management that determines success.

There are other factors that also contribute to success: a significant price or performance advantage; a significant difference from existing products and a good idea not yet tested. The rules governing the development and success of a new product or brand are thus simple and indisputable: offer consumers, for the same price, a value higher than that of the competition, guarantee the new product a significant difference from your competitors and, if possible, be the first to introduce a new idea or concept. (Davidson, 1979).

Why do new products fail?

On the other hand the development of new products is also risky. There are several explanatory factors that hinder successful development:

Lack of good ideas in some areas: in some sectors there are few ways to improve products Fragmented markets: fierce competition leads to market fragmentation so companies have to target their new products to similar segments, resulting in fewer Sales and fewer profits for each product Government and social constraints: New services now have to meet certain public criteria, such as consumer safety and environmental friendliness. Thus, the new requirements of governments have decreased innovation in the chemical industry and complicating the design of new services and communication in industries. The cost of new product development processes:companies have to come up with a lot of ideas in order to get one that is profitable, as well as cope with rising R&D, manufacturing and marketing costs Scarcity of capital - many companies with good ideas cannot find the funds to do research on them Shorter development times: probably, many companies have the same idea at similar times but victory will smile at the fastest. Companies have to compress the development time of new products with the help of computer-aided design, with the interaction of other partners, with early proof-of-concept and with advanced marketing planning systems. shorter and shorter: when a company has been successful with a product,its competitors copy it so quickly that it shortens its life cycle.

A French study carried out by the Department of Economic Studies of the Caisse Nationale des Marchés de I 'Etat (CNME), which analyzed the main causes of failure, reached the following conclusion: first, the superficial nature of the analysis of the market that includes the underestimation of the terms of diffusion of the market product and / or the overestimation of the size of the potential market resources. Production problems that include difficulties in the development of the final product. In addition to the lack of financial resources and problems in marketing.

1.2.3 The New Services Launch Process.

For the process of developing new services to be successful, it is essential to create decision procedures for each level and for each stage. The phases of this process are as follows: idea generation, idea screening, concept test and development, marketing strategy, business analysis, product development, market test and commercialization.

1.2.3.1 Generation of Ideas.

The new product development process begins with the search for ideas, which should not be a casual task. Top management must define the products and markets to emphasize and the objectives of the new products; It should also indicate the percentage of effort to devote to the development of new products, the modification of existing ones or the copy of competitive products.

Sources of ideas for new products.

Ideas for creating new products can come from many sources: customers, scientists, competition, employees, channel members, and top management. The marketing philosophy holds that the needs and whims of consumers are the logical starting point for researching new product ideas. The needs and whims of customers can be identified through customer reports, projective tests, group dynamics, suggestions and customer complaints. Many of the best ideas come from asking customers to describe their problems with using the products.

Companies also rely on their scientists, engineers, design personnel and other employees for the generation of ideas, establishing a corporate culture that encourages each employee to seek new ideas to improve the evolution of the company, its products and services.

In addition, good ideas can be found by examining the products and services of competitors through their distributors, suppliers, vendors or representatives. This competitive strategy focuses on product imitation and improvement rather than innovation.

Salespeople and company distributors are another interesting source of new product ideas, as they have first-hand information about customer needs and complaints.

Top management can also be another very important source of new product ideas, although this path is not always constructive, because executives often push ideas without having investigated in depth the size or interest of the market.

New product ideas can come from many other sources, including inventors, patent attorneys, university labs, consultants, advertising agencies, marketing research companies and industry publications, etc.

Idea generation techniques.

Good ideas come from both inspiration and technique. These can help individuals and groups generate good ideas. Some of them are the following: list of attributes, this technique requires making a list of the most important attributes of a product and then modifying each of them in search of improvement. Forced relationships, in this case several objects are listed and each project is considered in relation to the cited objects. Morphological analysis, this method requires identifying the structural dimensions of a problem and examining the relationships between them. Identification of needs / problems, this technique requires the collaboration of the consumer in the generation of ideas, ideas and solutions are requested.Each of the problems must be assessed to remedy it and determine what improvements need to be made to the product. Brainstorming, to achieve maximum efficiency in the session, four main lines are cited: no criticism, freedom of thought is welcome, quantity is sought, attendees are encouraged to combine and improve their ideas (Osborn, 1963). Synectics, Gordon described five principles that support this method: postpone, autonomy of the object, use common place, deepening and generalization, and use of metaphor.Gordon described five principles that support this method: postpone, autonomy of the object, use common place, deepening and generalization, and use of metaphor.Gordon described five principles that support this method: postpone, autonomy of the object, use common place, deepening and generalization, and use of metaphor.

1.2.3.2 Sifting of Ideas.

The purpose of the idea generation phase is to create as many ideas as possible and that of the subsequent phases to reduce the number to a more practicable and attractive number. The first phase of brainstorming is screening. Here companies must avoid two types of mistakes. One is "abandon profitable ideas," which occurs when the company stops considering a good idea. The other mistake is "move on now" and it occurs when companies allow poor ideas to move to later stages. The purpose of the sifting phase is to discover and stop poor ideas as soon as possible.

Below is a checklist to conveniently screen the ideas that have been generated. Companies must look at a number of aspects to determine if they are in a position to develop new services. These criteria are of various nature and are shown below: financial, such as the cost of developing the service, profitability of the investment in its development, contribution to the profit and payback period of the investments to be made. Degree of competition in the sector; the abundance of competition discourages the creation of new services. Degree of customer loyalty, expected benefit from the service in price, quality and other advantages derived from the qualification of the company's sales force. Human Resources,Companies must pay attention to the training of their personnel, their motivation, their knowledge of the service and their degree of consumer orientation. Strategic aspects of the new service within the current lines, coherence with the image of the company and future expansion plans. Market for the new service in terms of its expected size and possible geographic areas where the services will be sold. Legal aspects; Limitations due to regulations coming from public powers or internal to the sector.Market for the new service in terms of its expected size and possible geographic areas where the services will be sold. Legal aspects; Limitations due to regulations coming from public powers or internal to the sector.Market for the new service in terms of its expected size and possible geographic areas where the services will be sold. Legal aspects; Limitations due to regulations coming from public powers or internal to the sector.

1.2.3.3 Development and Concept Test.

Attractive ideas need to be refined before becoming a product concept, so that we can discern between a product idea, a product concept, and a product image. The first is a possible product that the company could offer to the market; the second an elaborate version of the idea, expressed in terms that make sense to consumers, and the third, the concrete idea that consumers acquire of a current or potential product.

Concept development.

Any product idea can be translated into several product concepts, these represent concept categories, that is, they position the idea in a category. The category of the concept is who defines the competition and not the idea of the product.

It is about concretizing the product ideas that have survived the preliminary evaluations, specifying the functions or expected advantages of the product, the group of buyers to which it is intended and the technology that will be used to materialize it. A product concept can be defined as a description, preferably written, of the physical and perceptual characteristics of the final product considered and of the promise that it constitutes for a specific group of users.

A clear and precise definition of the product concept is important for several considerations. In relation to the general management of the company, this describes the positioning sought by the new product and thus specifies the importance of the means to be put into operation as expected. The product concept constitutes in a certain way the specifications for the R&D department, in charge of fine-tuning the physical support capable of realizing the product promise. The description of the promise, that is, of the advantages provided to the user, also constitutes the specifications for the development of the advertising platform for the advertising agency in charge of communicating to the market the distinctive qualities claimed by the new product.

Concept test.

It is about submitting the description of the concept to a group of potential users to measure the degree of acceptance. This description can be done in two ways, either in a neutral form or in the form of a fictitious advertisement representing the new product as if it were an existing product. The first is simpler to carry out and avoids the obstacle of the influence, difficult to control, of the creative element of an advertisement. On the other hand, the advertisement has the advantage of better reproducing the purchasing atmosphere of the future product and thus making the proof of concept more realistic. (Habib & Rensonnet, 1975)

Some of the basic objectives of the concept tests are to know if the services are credible and attractive, identify those that can be successful, establish priorities, collect data on suggestions given by the market regarding uses of the service that could be added to those thought by the company, and detect the existence and profile of the interested market segments. The specific aspects that must be checked are: acceptance of the concept, that is, the positive assessment of its usefulness for the market. Credibility of the concept, or degree of confidence in the possibility of its development. The predisposition to test the concept or inclination to consume it regularly if found in the market and originality, or degree of differentiation from other services provided by competitors; that is to say,the positioning of the concept.

The results of a concept test should, however, be interpreted with caution, especially when the concept is very new. Consumers are asked to express their interest in a product that they have never seen or used. Consumers are often unable to foresee what they would like or what they would not like. A more reliable estimate of the product acceptance rate is given by the percentage of respondents who have a positive purchase intention and who are convinced that the product responds to a previously unmet need.

Developing proof of concept can save the company a lot of time, effort and money, and above all it avoids damaging its image as a result of the failure of services that are of no interest to anyone. It should not be forgotten that the services have very particular characteristics, which are experience and creed. Due to its intangible nature and the existence of few search characteristics, the cost of service failures is higher than that of goods.

Development of a Marketing Strategy.

The director of new products must develop a strategic marketing plan to introduce these to the market, a plan that will be refined in the later stages. This marketing plan consists of three parts. The first describes the size, structure and behavior of the target audience, the intended positioning for the product, sales, market share and expected profits in the next five years. The second part refers to the pricing strategy, distribution and the market budget for the first year. The third part shows the long-term sales and profits as well as the evolution of the marketing strategy and the marketing mix over time.

Currently, consumer-oriented companies can use a technique called conjoint analysis to quantify the importance of the attributes of services (Grande & Abascal, 1995). This technique measures the joint effect of several independent (explanatory) variables, generally nominal, on the order of the explained variable (a preference). Its main application in marketing is that it provides quantitative information about the value system that a decision maker has from an ordering of preferences on alternative products with different levels of attributes.

The basic idea is that the consumer must choose between several imperfect options and the final decision requires a compromise: the sacrifice of some qualities of the service to obtain other more desired characteristics. The joint analysis measures the relative importance of each of the attributes that characterize a product, and helps to design its preferred combination, as well as to know the participation of each attribute in the total valuation of the product. Studies of this type begin by selecting the set of attributes that the product can have and the possible levels.

1.2.3.5 Business Analysis.

Once company executives have developed the marketing concept and strategy, they can proceed to assess the appeal of the new business proposition. Management needs to estimate sales, costs, and profit projections in order to assess whether or not the new product meets the company's objectives. If so, the new product concept can move on to its development phase. As new information is received, the business analysis will undergo successive revisions.

Sales forecast.

Once the product concept has been developed, the positioning and the target market have been determined, the company is in a position to carry out quantitative evaluations of the sales figure that can be carried out, the marketing means to be put into operation and the risk involved in the product launch.

The first problem that arises is that of estimating the sales volume. The approaches that can be adapted in the study of this problem can be grouped into three categories: subjective methods, feasibility studies, and test-based methods or test markets. Subjective methods are based on experience, judgment and the set of information accumulated, more or less, informally, in the company and based on analogous products, on the characteristics of the distribution, on the size of the potential market and global demand, in the market shares of rival brands, etc. Feasibility studies, the purpose of which is, after having exploited the secondary information available, to collect the missing information on the spot by directly questioning potential users,distributors and, if possible, competitors. Market tests or test markets, in which purchasing behaviors are observed as they actually manifest in a competitive environment, and which allow estimating purchase and repurchase rates, as well as the potential sales of each product.

Management needs to estimate whether sales will be high enough to provide a satisfactory profit. The sales estimation methods to be used vary depending on whether they are a one-time purchase product, an infrequent compare product, or a repeat purchase product. In the first type of product, sales grow at the beginning, obtain a maximum point and later approach zero, as the number of official buyers decreases (sales will not decrease to zero as long as there are new buyers in the market). Products that are rarely purchased have life cycles influenced by both physical and mental obsolescence, which is associated with changes in lifestyles and tastes.Sales estimation for this product category requires estimating the first purchase and replacement sales of the product separately. In the life cycle of repetitive buying products, where a fixed population is assumed, the number of first-time buyers initially grows and then decreases as new ones remain to be tried. If the product is moderately satisfactory, the repeat purchase will be fast, especially in satisfied people who will become regular consumers. The sales curve will soon reach a plateau level that will represent loyal consumers; At this point, the product will no longer be considered as new.where a fixed population is assumed, the number of first-time buyers initially grows and then decreases as new ones remain to be tested. If the product is moderately satisfactory, the repeat purchase will be fast, especially in satisfied people who will become regular consumers. The sales curve will soon reach a plateau level that will represent loyal consumers; At this point, the product will no longer be considered as new.where a fixed population is assumed, the number of first-time buyers initially grows and then decreases as new ones remain to be tested. If the product is moderately satisfactory, the repeat purchase will be fast, especially in satisfied people who will become regular consumers. The sales curve will soon reach a plateau level that will represent loyal consumers; At this point, the product will no longer be considered as new.The sales curve will soon reach a plateau level that will represent loyal consumers; At this point, the product will no longer be considered as new.The sales curve will soon reach a plateau level that will represent loyal consumers; At this point, the product will no longer be considered as new.

Estimation of the first sales of a new product, it is used to estimate the evolution of the first sales for a given period of time. Estimation of replacement sales. This means knowing how long the stock will last at the distributor. The minimum level of stock indicates the need for replacement purchases. Since replacement sales are difficult to estimate before the product is in use. Typical sales estimate. For the usual purchase products, the seller has to estimate the purchase frequency equally, in addition to the first sales, since the value of these is small and the repetitions occur once the new product has been introduced. It is important to know if the buyback rate is going to increase,to stabilize or descend and the rate of evolution of it.

Figure # 3 Sales during the Life Cycle for Three Types of Products.

Source: Kotler, Philip. Marketing Management: Analysis, Planning, Management and Control. nineteen ninety six.

Estimation of costs and benefits.

Once the sales estimate is made, management can estimate the costs and benefits. When assessing the profitability of a service, its intangible nature should not be forgotten, which makes it impossible to patent it. It cannot be prevented from being imitated, a circumstance that will contract the potential market and that will negatively affect the positioning achieved.

Companies use measurement instruments to assess the merit of a new investment project. The simplest is known as the deadlock analysis, where management estimates how many units of product it must sell to avoid losses, given its price level and cost structure.

Another method, the most complex, is risk analysis. In this case, three estimates (optimistic, pessimistic and most probable) are made of each uncertain variable that affects the profit figure, given a marketing environment and a strategy for the planned period. The computer is in charge of giving the results for the data set, showing the different possible performance figures and their probabilities.

1.2.3.6 Service Development.

It consists of specifying the concept of service. In this phase, its functional attributes, the price, the brand name - if any - the distribution channel and the necessary communication activities are defined. Developing a service requires specifying it, this task is simple when it comes to goods, as models or prototypes can be designed. On the contrary, the intangibility of the services requires the creation of some artifice that facilitates their understanding.

In Anglo-Saxon literature, the concept called blueprint appears frequently, which can be translated into our language as a service provision process diagram (DPPS). It consists of a conceptual and graphic description of what the service consists of, what its phases are, how long each of them requires, what problems may arise and what are the tolerance levels of the times of its provision.

Service companies must develop this DPPS for three reasons: it identifies the phases that must be followed sequentially to provide the service, which helps their understanding, both internally to select ideas, screen them and configure the service, as well as with future clients to develop tests concept. It helps to detect possible problems in the service provision process, assesses its degree of importance and allows responsibility to be attributed. It allows setting the tolerance levels for the times that each of the phases last. If tolerance levels are exceeded, the quality of services could be adversely affected.

1.2.3.7 Market Test.

It consists of an experimental test in a reduced area or with a selected sample in order to know how the product is perceived, its degree of acceptability and the use made of it. The information can come from stores, consumer groups through panels or direct surveys to buyers.

The objective of the market test is to assess both the preferences of consumers and merchants in the handling, use and repurchase of the product, as well as the size of the market. The main points of discussion are: how much to invest in a market test and which type is the most suitable.

The amount to invest depends on the investment cost and risk of the new product, the pressure of time and the cost of the research. With products of high investment and risk, it is worth developing market tests in such a way that no mistakes are made; the cost of the market test will be negligible in relation to that of the project, and will also affect the discussion of how much to invest in it.

Market testing is an essential link in the chain of creating new products. The mistakes made in its implementation can be very serious. Some of the reasons why products fail are due to errors in market tests: poorly determined test objectives, the quality of the pre-series product does not correspond to that of the final, poorly selected sample or experimental market, misinterpretation of the results, poorly made extrapolations or confidence in insignificant results.

Commercialization.

When (at what time)

In the commercialization of a new product the decision of the time of entry is critical. The company faces three choices:

Be the first to enter. The company that enters a market first enjoys “first-mover advantages,” which consist of acquiring some key distributors and customers and gaining a reputation for leadership. If the product is released before it is fully developed, the company could acquire an imperfect product image. Parallel delivery. The company could plan its entry time with the competitor and if the competitor rushes to launch, the company do the same. If the competitor takes their time, the company should take theirs as well, using this additional time to refine their product. The company could agree to have the costs of promotion and launch shared by both, subsequent delivery.The company could delay its launch until the competition has done so, which would have three potential benefits. The competition will have borne the cost of educating the market. The competitor's product may reveal failures that can be avoided by the new entrant. And the company can know the size of the market.

The decision of when to enter carries with it additional considerations. If the new product replaces an old one, the company could delay its introduction until the stock of the old product runs out. If the new good is in seasonal demand, it could be held until the time is right.

Where (geographic strategy).

Small businesses will select an attractive city and a blitzkrieg to enter the market and subsequently do so in other cities. Large companies will introduce their products in one region and subsequently move to others. Companies with national distribution networks will launch their new models on a national scale.

In deployment marketing, the company has to assess the attractiveness of the various alternative markets. The most important evaluation criteria are market potential, local reputation of the company, cost of supply in the area, quality of research data in the area, influence of these on others and penetration of the competition. In this way, the company orders the markets and develops a geographic deployment plan.

Who (target audience).

Within a geographic area, the company must decide its distribution and promotion to the best groups. The ideal target audiences for a new product should have the following characteristics: be "early adapters", highly consumers, opinion leaders, speak favorably of the product and be able to reach them at low costs. Few groups have all of these characteristics, so the company will have to rank the various potential groups based on those characteristics and target the best of these groups. The goal is to generate strong sales as soon as possible to motivate the sales team and attract new distributors.

How (go-to-market strategy).

The company must develop an action plan to introduce the new product in the deployment markets, distributing the marketing budget among the various components of its marketing mix and signaling a specific time for the different alternatives.

To sequence and combine the various activities involved in launching a new product, management can use network planning techniques, such as the critical path.

1.2.4 Consumer Adoption Process.

The consumer adoption process begins where the business innovation process ends and describes how potential customers come to know about new products, how they test them, and how they adopt or reject them. Currently the marketing is focused on the more frequent users in which the product is initially aimed at the very users, who are easily identifiable and people who adopt the product quickly. According to the theory of early adapters, we distinguish the following: within a segment people differ in the amount of time that elapses between their exposure to a new product and its testing; initial adapters share some traits that differentiate them from final adapters;there are specific means of reaching the group of initial adapters; The initial adapters group tends to be opinion leaders and is helpful in communicating the new product to other potential buyers.

It has been observed that those who adopt new products move through the following stages: awareness, the consumer is aware of the innovation but lacks information about it. Interest, to find information about the innovation. Evaluation: it is considered whether or not the product is worth trying. Test: the consumer tests it to estimate its value. Adoption: make use of innovation on a regular basis.

Organizations are increasingly recognizing the need and benefits of regularly developing new products. The key to successful innovation lies in having an appropriate organization that handles new product ideas and develops correct marketing research, which involves collecting relevant information to solve a specific problem.

1.3 Marketing Research System.

1.3.1 Marketing Research. Concepts.

The company must guide management and strategic planning from a marketing perspective. Management must develop and maintain a marketing information system and have the ability to have a good market research system.

This section will dedicate its study to market research, this is not a concept of limited application, but on the contrary every day its field of application opens up.

Marketing research consists of the design, collection, analysis of data and relevant information to solve a specific marketing problem that the company faces.

Commercial research is defined as a function of the company that unites the consumer, the client and the public with the entrepreneur, through information that is used to identify and define business problems and opportunities; generate, improve and evaluate marketing actions; control results and better understand business processes.

Market research is the application of scientific principles to classical and survey methods of observation and experimentation, in the search for more precise knowledge about consumer and market behavior, in order to achieve more effective marketing.

The ten most common marketing research activities are defining market characteristics. the measurement of the potential of the same, the analysis of the participation share, the analysis of the sales, the studies of business trends, the short-term predictions, the product competitiveness studies, the long-term forecasts, the studies of prices and product tests.

The Marketing Research process.

Market research is carried out to better understand a problem, this involves a process in which five steps must be carried out:

Figure # 4. Marketing Research Process

Source: Kotler, Philip. Marketing Management: Analysis, Planning, Management and Control. nineteen ninety six.

1.3.2.1 Define the Problem and the Research Objectives.

The first step for the marketing and research director is to carefully define the problem and agree on the objectives of the investigation because unless the problem is well defined, the cost of collecting data may well exceed the value of the findings. Management must strike a balance between defining the problem too broadly or defining it too narrowly.

Not all projects can be so specific in defining their objectives, and three types of research projects can be distinguished: exploratory, descriptive and causal. Exploratory research seeks to gather preliminary data that shed light on the true nature of the problem, sometimes suggesting hypotheses and ideas about it. Descriptive research defines certain magnitudes and causal research investigates the cause-effect relationship.

Development of the Research Plan.

The second step of marketing research involves developing the most efficient plan to collect the information you need. For this, decisions must be taken when preparing it: data sources, research methods, research instruments, sampling plan and contact methods.

Data sources .

The research plan requires collecting primary secondary data or both.

Secondary sources: Researchers usually begin the investigation by examining secondary data sources to see if their problem can be partially or totally solved, without the need to collect expensive primary data. Available secondary data sources include both internal sources (company profit and loss accounts, sales reports, previous research reports), and external sources (government publications, data banks, books, business services) (Lodish, 1983).

Primary data: most marketing research projects involve, to some extent, the collection of primary data, which, while more expensive, usually involves information that is more relevant to the specific problem.

Research Methods.

Primary data can be collected in four ways: observation, group meetings, interviews, and experimental designs.

Research through observation: Through observation of suitable people and places, relevant data can be obtained. Researchers can observe behavior when it occurs naturally or in pretended situations. This type of research can be used to obtain information that people are unwilling or unable to provide.

Research through group meetings: A group dynamic is a meeting of six to ten people who spend several hours with a trained interviewer to discuss a project, service, organization, or other marketing problem. Group dynamics is a useful exploratory stage, to be developed before designing a large-scale investigation. It provides insights into consumer perceptions, attitudes, and satisfaction, which help define research topics in a more formal way.

Research through the interview: interviews are halfway between observation and group dynamics on the one hand, and experimental research on the other. The companies carry out interviews to understand the knowledge, beliefs, preferences and satisfaction of consumers and measure these magnitudes over the total population.

Experimental research: the research method with the highest scientific validity is experimental research that requires selecting similar groups of subjects, subjecting them to different treatments, controlling for strange variables and checking if the differences in responses are statistically significant. The purpose of experimental research is to achieve cause-effect relationships, eliminating competing explanations of the observed results.

Research instruments.

When collecting primary data, marketing researchers can choose between two classes of instruments: questionnaires and mechanical instruments.

Questionnaires: it is the most common instrument to collect primary data, a questionnaire consists of a set of questions that are presented to the respondents to obtain their answers. It is a very flexible instrument because there are different ways of asking. The way the question is asked can influence the answer. Marketing researchers distinguish between closed and open questions. Closed questions are characterized by having pre-established all the possible answers and the interviewee has to make a choice between them. Open questions allow interviewees to answer in their own words.

Mechanical instruments: mechanical instruments are used less in marketing research. Galvanometers are used to measure a subject's interest in a specific advertisement or drawing; the tachoscope is an instrument that provides “flashes” of an advertisement, with an interval that can vary from less than one hundredth of a second to several seconds. After each presentation the interviewee describes everything he remembers. The cameras, for their part, study the movements of the human eye and check at which point they focus first, how long the gaze is kept on a certain item, etc. The audiometer is another mechanical instrument that is placed on the televisions that participate in the test and that collects the audience time of each program, as well as the changes from one channel to another. (Blackwell, Hensel, Philips, Sternthal,1970).

Sampling plan.

The marketing researcher must design a sampling plan that includes three decisions: who to interview, how many, and how to choose them.

Sampling unit: definition of the type of people in the sample. The marketing researcher must define the target audience for the sampling. Once the type of sample has been determined, the structure of the sample must be decided, that is, the way to provide each of the possible people in the sample with an equal or determined possibility of being chosen.

Sample size - Large samples provide more accurate results. However, it is not necessary to sample the entire population, or even a very large part of it, to obtain reliable results. Whenever working with a sample, we must be aware that there is a certain degree of error. However, if the investigator is able to specify the degree of error he is willing to tolerate and the risk he wishes to take, he can, with considerable precision, determine the sample size to use.

Sampling procedure: to obtain a representative result, a probabilistic sample of the population must be selected that allows the calculation of confidence limits and sampling error. There are three types of probability sampling that are too costly or time consuming, therefore marketing researchers develop non-probability sampling.

Probability sampling: simple random sampling, each member of the population has the same probability of being chosen. Stratified random sampling, the population is divided into mutually exclusive groups, and random samples are taken from each group. Sampling by areas, the population is divided into mutually exclusive groups, and the researcher takes a sample of the groups to be investigated.

Non-probability sampling: convenience sampling, the researcher selects the most accessible members of the population to obtain information. Judgment sampling, the researcher uses her judgment to select the members of the population that provide the most accurate information. Sampling by quotas, the researcher determines and interviews a certain number of people in each category.

The mail-in questionnaire is the best way to reach individuals who would not grant face-to-face interviews or whose responses could be skewed by interviewers. Respondents can give more honest answers or answers to more personal questions. Telephone interviews are the best method to gather information quickly and provide flexibility, greater control of the sample, and allow the interviewer to clarify questions that are not understood. Personal interviews can take two forms, arranged and non-arranged. The former assume that they are requested in advance, the non-concerted consist of talking to people in their homes or offices, on the street or in shopping centers, the interviewer must win their cooperation.

Collection of Information.

The researcher must prepare for data collection, which is generally the most expensive phase and the most subject to error. In the case of interviews, four main types of problems arise: certain interviewees are not at home and must be recontacted or replaced; some refuse to cooperate; others deliberately provide biased or dishonest answers, and finally, certain interviewers are dishonest.

In the case of experimental research, the researchers must be concerned with the formation of the groups and with deciding the control variables; not to influence the participants with their presence to administer treatment uniformly and to control external factors.

1.3.2.4 Information Analysis.

The next step in the marketing research process is to draw conclusions from the data. The researcher tabulates the data, develops frequency distribution tables and extracts means and measures of dispersion of the most significant variables. Later you will try to apply some of the more advanced statistical techniques and decision models in the hope of discovering additional information.

Presentation of the Data.

The market researcher should not overwhelm managers with a lot of data and statistical techniques, but should present the most relevant findings in relation to the marketing decisions facing management. At this stage the researcher should summarize the plan in a written proposal. The proposal should cover the management problems addressed and the research objectives, specific training to be obtained, sources of secondary information or methods for collecting primary data, and how the results will help in decision-making in management.

Characteristics of a Good Marketing Research.

After examining the main steps in a marketing research process, we will now examine five characteristics of good research:

Scientific method: effective marketing research uses the principles of the scientific method; careful observation, hypothesis formulation, prediction and testing. Creativity in the research method: Ideally, marketing research develops innovative ways to solve a problem. Multiple methods: Competent researchers shy away from relying solely on one method, preferring to use the most appropriate method for each problem. Data and model interdependence: Competent marketing researchers recognize that facts take on special meaning within models that address problems. Information value and cost:Competent marketing researchers are interested in buying the value of information with its cost because it helps decide which research projects to use and whether or not it is worth collecting more information.

All companies should worry about developing new products, even if it is only for the reason that traditional products will enter their phase of decline at some point, for this it is advisable to carry out a diagnosis that allows knowing the current situation of the company in general and of each of its Strategic Business Units.

Download the original file