Case Study 8 New Product Development (NPD) Tony Gauvin, 1006

Company 8 Financial Services firm Consumer retail banking 200 banks in 20 States 30% market share Goal – New (High-tech) Product Development Improve image as a technologically advanced in institution Online store providing consulting for customers that wanted to start their own businesses Theme “Marketing is a process for creating and delivering goods, services, and ideas to customers “

Company Background NPD into the online environment failed Focused on e-commerce and CRM Failed to thoroughly understand BI syndicated research issues Concern over technology-image decline Entrepreneurial customer base product to start own business bank would leverage intra and extranet technologies

Overview Marketing department reports gradually declining customers satisfaction compare to major competitors Company’s technology image Overall customer satisfaction Willingness to recommend Award winning intranet and extranet technology Goal- increase in key indicators in relation to competitors

Goal and strategies Create a new, high-tech retail banking product Process >> new product development Data Syndicated research study Employee interviews Marketing, IS and Advertising company Idea generation Idea screening Result Electronics store infrastructure Market-driven (need) Technology driven (been there –done that)

New Product Development (NPD) Six types of new products (review) New-to-the-world products New product lines Additions to existing product lines Improvements and revisions of existing products Repositioning(s) or restaging(s) Cost reductions

Managing the New Product Process Idea generation Idea screening Concept development and testing Market strategy development Business analysis Product development Market testing Commercialization

New Product Failure Rate 98-99% 80% 98-99% 80% Depending on the study

NPD Method Organizational improvisation (Moorman 2001) Simultaneous planning and implementation Requires High levels of internal knowledge Real time communications among product team members Outside-looking-in information source

NPD method Technology Map (Capou and Glazer, 1987) Conduct technology resources inventory Address resource gaps Determine “what to sell” Evaluation of new Product

The product Online Stores Maintained and handled by Company 8 $1000/month Promotions Free hosting for 90 days $150 savings In branch merchandising Direct sales Result – Sales far below expectations Regroup (focus groups) and reintroduce Results 75 stores in 2 years (expected 300) Withdrew product

General Reasons for New Product Failure CEO ego Market size overestimated Poor design Incorrect positioning Incorrect advertising Overpriced High development costs Competitor reaction

Why Did It Fail? Further into NPD before simultaneously implement? Step 3 in the organizational improvisational plan outside looking in information source Issues range of technological sophistication and product support services out-of-core competency Surprise Key indicators all improved

Stakeholders Customers Serving current Shareholders Negative impact

E-Biz Components eCommerce Online store front Business Intelligence Surveys (Advertising & employees) Did not survey customer till after deployment Customer Relationship Management Goal of the project Supply Chain Management N/A Enterprise Resource Planning N/A

Value Bubble Analysis Not initially included in promotion and communications Assumed that off-line and on-lien customers behaved the same Technology savvy customers ignored the traditional marketing since it was ALL place-bound in the physical banks Used ATMS and online banking Value Bubble analysis is based on what should have been done

Attract Did not do much Should have Off-line and online traffic building Press releases SEO Reciprocal links Technologies Site design ASP CSS JavaScript JSP

Engage Did implement Password for eSupport Community section Helpful hints Technologies Java calculators HTML forms Did not use DOM

Retain Intended to provide Updates and enhancements Send s Redo “helpful hints” Technologies Account and password “caching” Should have Cookies (greetings) Database

Learn Good implementation Pop-up surveys for customer satisfaction Customer registration Profiling Technology ASP JSP Database Clicksteam??

Relating Customizable navigation based on usage 36 hour turn around on tech support Technologies ASP PHP CSS JavaScript

Success or Failure FAILURE with this product SUCCESS with the objectives Problems Bad BI Not customer concentric Product did not match customer wants and expectations Moved away from core-competency Organizational improvisation for small “fleet-of- foot” technology companies not BANKS Future success likely if they have “learned their lesson”

Summary Good example of a dot.com failure More learning is available by analyzing failure than success Questions??