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The Size And Profitability Of The Company Marketing Essay

1163 words (5 pages) Essay in Marketing

5/12/16 Marketing Reference this

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More importantly, R&D plays a major role in the innovation process which is gradually more important for a firm to succeed and to develop. R&D results make use to introduce innovative products and services to the market and also make use in high quality jobs, thriving businesses, improved goods and services and also in more proficient procedures.

Firms can structure their R&D in number of ways. They can have Centralized, Decentralized or Hybrid structures. Hence, the following factors can be taken in to contemplation when firms introducing there R&D structures.

The size and profitability of the company

When R&D activities are centralized it is more thriving and controllable for smaller firms with smaller profitability. Ultimately with the growth of the firm, it should go for a decentralized structure for the purpose of reducing the inertia of bureaucracy and to carry out administrative activities professionally.

The Range of Products available.

When deciding on what structure to follow in R&D centers, the range of products available is a very important aspect to consider. If a firm has wide range of products available, then it can use decentralized R&D structure. Hence, according to the needs of the locals they can customize and supply their products and as a result of that, it will boost up the dispersal innovations all over the market. Firms which do have a less range of products will consider to follow a more centralized R&D structure.

Scale of Research

When the firm’s intention is to use expensive research equipment, or when it is essential to create a “Critical Mass” of researches for a particular project, and when communication among research groups is vital, centralization of R&D has advantages.

Need for Functional Integration

When it is essential to have strong links with other tasks, mostly with manufacturing and marketing, there are advantages in decentralization of R&D.

Companies in which the goals of R&D include, developing emerging markets and building knowledge for technology breakthroughs tend to have centralized structures. Decentralized structures are more common in companies whose focus is incremental product innovations. Hybrid structures are common for companies that are market leaders, a scenario that requires a balance between breakthrough innovation and product development.

http://www.allbusiness.com/company-activities-management/company-strategy/10548672-1.html

Can you identify one or more circumstances when a company might wish to delay introducing its product?

The value of any technological innovation is only partly determined by what the technology can do. A large part of the value of an innovation is determined by the degree to which people understand it, access it, and integrate it within their lives. Deployment is not just a way for the firm to earn revenues from its innovations; deployment is a core part of the innovation process itself.(Shilling, 2008, pp276). Ineffective deployment strategies can cause even the most innovative and breakthrough products to fail. Therefore, an effective deployment strategy can be considered as a key element in a technological innovation strategy.

To reduce the costs and to amplify the timing of entry options most firms try to reduce the development cycle. But there are circumstances where firms might delay in launching their products. Some reasons where firms may delay introducing their products are mentioned below.

Product launching Time

During the festive seasons the sales of most products are accelerated than the other season; for example during the Christmas season and other festive seasons gift items and consumer electronics sales are higher. By waiting for such seasonal effects, firms can leverage sales of the introduced products within a very short time. To fit with such seasonal effects firms may delay launching their products into the market.

Fear of cannibalizing the sales of its other products.

If a firm’s existing products are very profitable, firms are more likely to delay introduction of a new product to the market until the profits for the existing product begun to considerably reduce. This strategy is intended to maximize the return on investment in developing each generation of the product. But, it is advised to cannibalize its existing product and introducing a new product to the market. Therefore, it will not let the competitors to accomplish a significant technological lead.

Wait until the firm adequate production capacity and complementary products.

Sega rushed the launch of its ‘Saturn’ gaming console before it had adequate production capacity and so they were unable to stock important vendors who originally supported their products (Schilling, 2008, pp278). For the success of a product, availability of fair amount of complementary products is very important. In order to give ample time to increase the production capacity and complementary products, firms might delay the launching of their new products to the market.

To make consumers believe that the product is from next generation

If a new product is introduced too early to the market consumers may think that it is another competitive product that they have already purchased and will not believe and accept it as a next generation product. Consumers who purchased the previous generation product might not be willing to spend money on the new product so soon. To avoid above mentioned circumstances, firms may delay in launching of their new products to the market. So that, consumers may not underestimate its technology by believing that it belongs to the previous generation. But if firms introduce their product too lately, the image of the company which had as a technological leader might be losing.

In the ‘frog’ case study, would frog’s approach to product development be effective in a firm that primarily manufactured, marketed and distributed its own products?

In the case study it has mentioned, Frog’s team members do a significant amount of research to understand their clients’ business, brand, users and technology. Further after research and brainstorming they come up with novel designs that would suits the firm’s requirements. They will turn over all the production specifics, models, tools and production details to the client once the designing is done. In addition to that Training, testing and manufacturing-partner support is also conducted if required. Hence, in a firm that primarily manufactured, marketed and distributed its own products Frog’s product development process can be very effective.

Since, industries such as Fashion, Automobile, Furnishing, Toys, and Consumer Electronics etc. requires a large amount of novel designs, Frog Design’s approach probably be more appropriate. Because, they are coming up with the modish designs that would make an emotional reaction in the minds of consumers.

Sometimes the frog’s approach may not be effective, since it can be expensive to support a number of tryouts in product designs.

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