New Product Within An Existing Firm Marketing Essay

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To identify the Key Success Factor while introducing the new product in an existing firm with the help of factor analysis. Effective product launch is a key driver of top performance, and launch is often the single costliest step in new product development. Despite its importance, costs, and risks, product launch has been relatively under researched in the product literature.

The launching and developing the new product is the most important part of entire research that is going to be accomplished. After the completion of research, we get the factors that will help us, while introducing the new product launch. we used of factor analysis to find the tables and factors of

communalities total explain rotated matrix factor. After the result of factor analysis we get and factors that will influence to promote the developing the new product launch with the context of Value Chain Modeling, SWO, PEST, Procurement Strategy, Distrbution Strategy and Logisting Strategy to support Procurement and Distribution Strategy, while new product are being launched.



Factor analysis is used to find latent variables or factors among observed variables. In other words, if your data contains many variables, you can use factor analysis to reduce the number of variables. Factor analysis groups variables with similar characteristics together. With factor analysis you can produce a small number of factors from a large number of variables which is capable of explaining the observed variance in the larger number of variables. The reduced factors can also be used for further analysis.

There are three stages in factor analysis:

1. First, a correlation matrix is generated for all the variables. A correlation matrix is a rectangular array of the correlation coefficients of the variables with each other.

2. Second, factors are extracted from the correlation matrix based on the correlation coefficients of the variables.

3. Third, the factors are rotated in order to maximize the relationship between the variables and some of the factors.

A. Literature Review

Marketing Manager view product at three levels:

(Marketing Engineering by Naresh K. Malhotra)

Core Product: The core product is the most fundamental aspect of a product the need and want that the customer satisfies by buying the product. (Ted Levitt, 1960).

Tangible Product: tangible product consist of features, styling, quality level, brand name and packaging. They make the core product into something that customers can buy. Transform customer's desire for adventure, excitement, finding a mate, or getting away from it all into a tangible product that they can conveniently purchase a visa credit card transform customers desire for secure, convenient and quick access to credit into a tangible product.

Augmented Product: The augmented product includes enhancement to the tangible product in the form of additional services and features to make the product competitively attractive, such as toll-free customer information, installation guides and delivery warranty and after-sale services.

The product is the most important element of the marketing mix. To develop and manages successful product mangers must take key decision during the key product development process and in managing the portfolio of existing product. Here we focus primarily on new product developments (NPD), which consist of several stages (Urban and Hauser 1993).

The cost and risk associated with new product are high. Most new product fail to achieve the objectives managers set for them, and they are withdrawn from the market. Urban and Hauser (1993, p.61) estimate that the average costs in (1987 dollars were $700,000 for opportunity identification, $4.1 million for design, $2.6 million for testing, and $5.9 million for introduction.

Several researcher studies indicate that using a disciplined approach to developing new product improves the likelihood of success. For example, His et al. (1989) report that firms that use the full range of up-front activities associated with the stages shown in exhibit 7.1 have a 73 percent success rate as compares with a 29 percent success rate for firms that use only a few of the up-front activates.




Why do so many new products fail? Usually for many reasons. Companies often are so enamored of their new product ideas that they fail to do their research, or they ignore what the research tells them. Sometimes the pricing or the distribution channels are wrong. Sometimes the advertising doesn't communicate. Successful product launches result from an integrated process that relies heavily on research and solving up-front issues. Let's review several of the critical issues that affect product introductions.

New Product Development (Philip Kotler Gary Armstrong)

Test Marketing

Standard Test Markets

Controlled Test Markets

Simulated Test Markets

Developing the product concept into a phusical product in order to ensure that the peroduct idea can be turned into a workable product. (Philip Kotler Gary Armstrong).

Test Marketing

The Stage of new product develoment in which the peoduct an marketing program ae tested in more realistic market setting.

Standerd Test Marketing

Standerd Test Marketing have some drawbacks. They can ne very costly and they may take a long time.

Despite these disadvanteages, standerd test markets are still the most widely used approach for major in market testing, however companies today are shifting toward quicker and cheaper controlled and simulated test marketing methids.

Controlled Test Marketing

Controlled test marketing systems like scantrack and information resources, behavior scan track individual consumer behavior for new product from the television set to the checkout counter. (Philip Kotler Gary Armstrong).

Simulated Test Markets:

This silulation provides a measure of trial and the commercial's effectiveness against competing commercials. The researchers then ask consumers the reason for their purchase or attitude, usage, satisfaction and repurchase intentions.

Simulated test markets overcome some of the disadvantages of standard and controlled test markets. They usualy cost much less, can be run in 8 week, and keep the new product ronments.

Value Chain Modeling:


Product development



Dispatch / delivery

Decision Making

Capacity planning

Manufacturing planning

Materials planning


Production & manufacturing quality

Business model (RRSP / LTA)


OEM Planning data

Own forecasts

Material supply

Production orders

Parts supply


When will be the Ideal Time to Launch a SWOTT Analysis for new Product Launch within existing firm? 

Your SWOTT analysis should be focused on your business. The information that you expand concerning your business is a vital tool that you can use over and over for a second time.


To expand approaching keen on the strengths of your company, what they think are the strengths of your business. Important Key words are as follows:

Purchasing Power

Regular demand

Purchasing Probity and Goodwill.

What is the recompense of your variety of business?

How will business perform well?

Does other person perceive as your strengths?

Which kind of competitive advantages you have?

How you will maintain your economic return?

Evaluation idea generation

Evaluation after concept development

Evaluation after business analysis

Evaluation after process and system development (functional testing)

Evaluation after service market testing

Evaluation after launch final preparation

Evaluation after service launches (short term)

Evaluation after service launches (long term)


High sensitive imported material

Occasionally this information is tricky to be frank about, nevertheless the more straightforward you are, the better the scrutiny becomes. The important and Key words are as follows:

What is the possibility that your business can grow up?

How you will think you can be a superior?

What problems keep reoccurring?

How you will avoid?

How you identify your competitive weaknesses?


Opportunities engage mutually internal and external, such as you success in your carrier to get promotion also your company's success to get promotion.

Alternative Materials.

Possibility of vertical integration with a supplier.

What are the positive opportunities facing your business?

Where will favorable opportunities face your business?

Which kind of opportunities can set you ahead of your war?

If you want to add or delete a route, product, or service, what opportunities can be taken place from your transform?

What will be your rival vulnerabilities?


A threat is an imperative part for those with superior futurist skills who are talented in seeing "the large image."

Competition for the material from Competitors, Few Suppliers and exchange rates.

How you will face barrier?

Can you expend extra occasion working in your production than that will be effective on your production?

Is it possible that your weaknesses threaten in your business?

How you will differentiate your doing best rather than your rivals?

What laws, legislation, and environmental effects might impede your business processes?

You need to describe your business marketplace challenging?

PEST Analysis

PEST analysis is very significant that an association want to consider its surroundings before commence the marketing process. In fact, environmental analysis should be constant and nourish all aspects of planning. The organization's marketing background is organized up from: PEST analysis stands for "Political, Economic, Social, and Technological analysis" and describes a structure of macro environmental factors.

Political Factors

The political ground has a vast manipulate upon the regulation of businesses, and the payments authority of consumers and other businesses.

How established is the political environment?

Will government strategy manage laws that legalize or tax your company?

What will be government's circumstances on promotion principles?

What is the government's strategy on the financial system?

What is the government assessment on ethnicity and religious conviction?

Economic Factors

Being a Marketers need to judge the status of a trading cutback in the short and long-terms. It is principally accurate when preparation for New Product Launch within existing firm. You need to come across at:

Concentration charge?

The height of price increases Employment stage per capita?

Long-term projection for the market Gross Domestic Product (GDP) per capita?

Sociocultural Factors

The social and cultural influences on production differ from state to state. It is extremely significant that such factors are measured.

What is the main religious conviction?

What will be attitudes to overseas goods and services?

Does language impact upon the transmission of products onto markets?

How much occasion perform to consumers have for freedom?

What will be roles of men and women within the general public?

Technological Factor

Technology should be centralized for aggressive improvement, and is a most important key of globalization. Think the following points:

Do technology permit for products and services to be completed more economically and to a superior standard of class?

Does the technology put forward consumers and businesses added innovative products and services such as Internet banking, new generation mobile telephones, etc?

How the supply changed by new technologies e.g. books via the Internet, flight tickets, auctions, etc?

Do technologies recommend company a new technique to correspond with consumers e.g. banners, Customer Relationship Management (CRM), etc?

Procuremet Strategy:

Procurement Strategy is the means by which Procurement process will be accomplished. In spirit, it is about organising assets and developing processes and skills in order to maximise procurement involvement to business goals. Often the Procurement Strategy is, in effect, a plan for change.

Diminish new product material costs by almost 18%;

Improve entrée to pioneering new products and more stable supply;

To boost the precision of product costing;

To develop new product quality by more than 20%.

To trim down time to market cycles for new products by 10% to 20%, allowing companies to detain superior market share and profit margins for being an early mover.

Level of Procurement Strategy:

Institutional Strategy

Corporate Strategy

Business Strategy

Institutional Strategy:

It engages to make the decisions and commitments that describe the human and social standards by which the organization operates. This is strategic question "What kind of reputation, character or personality do we wish this enterprise to have? Therefore the institutional strategy has strong ethical implications.

Corporate Strategy;

It involves making decision that set and guide resource allocations for the total enterprise. It shows the strategic question "What business or business should we be in? its normally involves with decisions relating to three alternative grand strategies i.e.


When an organization seeking to expand its comparative market share by such strategies as:

Market development

Product development

Horizontal integration

Vertical Integration

Joint Venture


Objective at achieve a hard but with slow performance improvement.


Objective at revising a turn down in concert by such strategies as:

Harvesting: To maximize short term profit and cash flow

Turnaround: To attempt to restore the operation structure in early performance.

Divestiture: To sold out one or more units focus to raise cash and core activities.

Business Strategy:

It is the strategy that normally use for a single division or strategic business units (SBU) which are being operated by the larger organization. In a single business organization institutional and corporate strategy will also be the business strategy.

The challenge of supplier integration

There are several key management issues that can enable improved supplier integration into new product development. These are discussed below.

Distribution Strategy:

Distribution strategy should be based on new advancement of computer sytechnology such as advance bar codes technology and hand held computer system that ensure to find out the product fastly and smooth way with the least time management procedure that will be heplful to scan the inventory to keep in shalves and bins an employees have to just make two scans product once to identify the location then it is easy to know from where the product have to pick up.

On the other hand the hand held computer will help to find out the particular product with regards to location of a particular product from a particular bins and shalves to the warehouse then the computer will verify the bins and shalves picked up a product, then an employee will match whether its right product or not. The quantity of the product required from the warehouse that is being entered by the employee into the computer and then computer will updated the level of inventory in main server.

Apart from above an other factor is helpful for distributon strategy that is packiging, it should be in proper manner and also the packiging depart has precise information about the product that is going to be packed. The computer will ensure to eleminate the uneccessary paper work. The manager and supervisor can easily supervise their employee and lead them. This enabled efficient distribution strategy will help management operation and surve customer want rapidly.

Logistic Strategy to Support Procurement and Distributon Strategy

What Is a Logistics Strategy?

During the creation of logistics strategy the companies define the level of services at which its logistics organization is at its cost effective. Due to the supply chain are constantly being changed and developed, a company can be developed number of logistics strategies for new product development such as specific countries or specific customers.

Why Implement a Logistics Strategy?

The supply chain continuously changes and that will influence any logistics organization. To find your feet to the elasticity of the supply chain, companies must need to build up and execute a formal logistics strategy. This will agree to a company to classify the impact of pending changes and make organizational or functional changes to ensure service levels are not reduced.

Conclusion & Recommendation

Based on the above analysis, we have extracted seven factors and all those factors are named and explained below:

Factor 1:

Factor #

Factor (Attribute) Description


Extracted Attribute


Always available in Market


Market Orientation


Promotional activity



Market segment



Best from the rest



Market research



Product durability






R&D approach


Factor 2:

Factor #

Factor (Attribute) Description


Extracted Attribute


Proper Advertising


Product Promotion (Prelaunch)/ (Awareness Generation)


Product Positioning



Product Safety & Life


Factor 3:

Factor #

Factor (Attribute) Description


Extracted Attribute


Product Quality


Needs & Wants Based


Launching Ceremony



Product Size & Volume



Product Color



Consumer Preference



Consumer Need Survey



Product Mission / Purpose


Factor 4:

Factor #

Factor (Attribute) Description


Extracted Attribute




Company Support


Product Portfolio



Company Image



Product Design



Supplier Base



Proper Sponsorship


Factor 5:

Factor #

Factor (Attribute) Description


Extracted Attribute


Easy to Access


Innovative but Available


Product Benefit & Attributes



Use Current Market Trend


Factor 6:

Factor #

Factor (Attribute) Description


Extracted Attribute


Packaging Factor


Quality Features


Product Distribution



Product Safety & Life


Factor 7:

Factor 7

Factor (Attribute) Description


Extracted Attribute


Attractive & Appealing



During the creation of 'Logistics Strategy' the companies define the level of services at which its logistics organization is at its cost effective. Due to the supply chain are constantly being changed and developed, a company can be developed number of logistics strategies for new product development such as specific countries or specific customers, specific prices .

The 'Procurement Strategy' sets out the means by which procurement policy objectives will be achieved through prioritised 'action plans'. These will identify specific tasks and associated timescales for completion.

The procurement process provides a structured approach and a 'route map' for undertaking excellent tactical and strategic procurement together with guidelines on when to employ the full range of strategic procurement tools and techniques. Linkages with other related processes, principally project management and the Gateway Review Process, will also be addressed.

The "Distribution Strategy' Apart from above an other factor is helpful for distributon strategy that is packiging and delivering, these should be in proper manner and also the packiging depart has precise information about the product that is going to be packed. The computer will ensure to eleminate the uneccessary paper work. The manager and supervisor can easily supervise their employees and lead them. This enabled efficient distribution strategy will help management operation and surve customer want rapidly.