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Title: Product Development Assignment Help

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New Product Development: Solarz

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Contents

Introduction .......................................................................................................................................5

Product ..............................................................................................................................................6

Test Market ...................................................................................................................................... 11

Brand Strategy.................................................................................................................................. 11

Packaging Considerations ................................................................................................................. 12

Launch............................................................................................................................................. 13

Action/promotional plan................................................................................................................ 14

Marketing objectives ..................................................................................................................... 14

Marketing mix .............................................................................................................................. 16

Conclusion ....................................................................................................................................... 17

References ....................................................................................................................................... 18

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Introduction

In an era of technology, most of the products are technology-based. Gadgets have

become technologically advanced, smaller and portable. With the increase in portability,

electronic products have become easy to carry outside home. Mobile phones, digital camera,

tablets and laptops have become a necessary part of day-to-day life of human beings

(Papadopoulou, 2011). Battery chargers needed to charge the gadget, however, need a stable

electricity source, which is usually home or office (Giachetti, 2013).

The industry of alternative energy is booming at a significant pace. Niche renewable

energy sources, such as solar energy in the form of geothermal and concentrated solar power are

witnessing a rise (Varadarajan, 2012). Solar energy is one of the major growth areas in the space

of renewable resources. With the increasing need of development of renewable energy for

electricity purposes, solar power products have started to find a place among products that run

through electricity. As per the latest developments, China led to the installment of record 12 GW

solar panels in 2013, which makes it the largest solar market in the world. While US and China

are leading markets of solar energy development and consumption, other nations all over the

world are also focusing on use and application of solar power products (Alternative Energy

Stock Outlook - Feb 2014 - Industry Outlook, 2014).

Mobile industry is at booming stage. By 2015, 2 billion people will use smartphone

mobile, which is a huge number (2 Billion Smartphone Users By 2015: 83% of Internet Usage

From Mobiles, 2014). Mobile phone chargers, thus, become a necessity. Looking at the solar

chargers in the market, they use various types of solar panels that range from the panels of

inefficient thin film having efficiency of 10 percent or less. However, companies that produce

solar chargers with low efficiency surround the solar charger industry. They are not capable of

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meeting expectations of consumers. In such scenario, the launch of solar charger for mobile

phones will help in targeting people with smartphone users.

Product

Description and specification: Solarz is the name of the solar charger which is an environment-

friendly product. It works in a very simple manner of absorbing solar energy, conversion into

electrical energy and storage into the lithium battery. The voltage output element releases

electrical energy. The product needs to be exposed to the sun for long hours so that it can

accumulate sufficient energy into its lithium battery. Once charged, it can be used for charging

even in the night as it uses absorbed solar energy present in the battery. Solarz is meant for

travelers, mobile phone users and those who remain out of home for a long time, such as sports

people. The product is needed because of the problems people face when they are out of home

and cannot charge gadgets they carry, such as mobile phones, digital camera and MP3 players.

As Solarz uses solar energy, it is an environmental friendly product and will prove to be

extremely convenient to those who spend a significant amount of time in the sun. It is needed to

address the problem of gadgets getting out of battery at any time.

Idea generation process: The process of idea generation is the act of generation of applicable and

novel ideas and is associated with the frequent problem solving. It is a crucial step in a new

product development (Paulus & Yang, 2000). As per the stages of New Product Development

given by Booz, Allen and Hamilton (1982), idea generation refers to search for product ideas that

can meet the objectives of the company (Bhuiyan, 2011). Customer-focused idea generation is a

critical success factor in the idea generation (Gordon, Weilbaker, Ridnour & Judson, 2008). The

idea of solar charger came from the formal research through secondary data available on the

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internet. From customer feedbacks in secondary resources, it is identified that travelers and

sports people face problems of charging their gadgets as they remain outside home for a long

time. Mobile phone market is witnessing significant growth. The need for charging the battery is

needed anywhere and anytime. In the situation of unpredictable supply of grid power and

availability of abundant solar power for travelers and sports people, the idea of solar charger is

generated (Varadarajan, 2012).

Concept testing: The concept testing is another important step in the development of new

product. In this stage, concepts of new product are tested within a group of target customers for

finding out whether the product has high customer appeal (Amue & Adiele, 2012). After the

generation of idea of developing a product that can use solar power for charging cell phones, the

product idea was tested among a group of 20 individuals. Responses of individuals explained

that they needed a product that can be able to give power to batteries of gadgets they usually

carry such as digital camera, mobile phones and MP3 players. They also showed an interest

towards the use of environment-friendly products. Thus, the product was modified to make it

adaptable for frequently used gadgets.

Business Analysis

Key strategic decisions such as alliances: As Solarz promises to charge the mobile phones and

similar other gadgets, it will be launched with a strategic alliance with local mobile

manufacturer. The alliance will be aimed at co-branding their product with solar charger so that

they can ensure customers a steady power, even in offshore locations and remote areas. Strategic

alliance is an important decision to be made in new product development and business plan. It is

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essential to choose the correct partner so that it can make a product launch successful (Herring,

Jones & Bailey, 2009).

Time: The time taken to develop a product is as follows: Initially, concept development, business

plan and fund seeking will take place in 4 months. Second step is the formation. It includes

completing all legal formalities, recruitment of sales and engineering team that will take three

months. Next is the testing program and market research, which will take six months. Initial sales

will take three months. Product launch through development of effective customer service

program will take two months. Promotional strategies and marketing plan will be made for one

year. Final step of optimization of efficiency and broadcasting feedback and results will take

three months. Thus, thorough research and development analysis will help in tracking the

progress of the product. It will give sufficient time to market as well as develop the new

innovative product line (Tzokas, Hultink & Hart, 2004).

Risk: Since the potential for returns of the product is great for Solarz if it becomes successful in

the market, the risk associated with the product is high. Use of solar energy in products is an

emerging technology. For the business venture in particular, crucial uncertainties are related to

finance and market. Since the potential partners for the venture are mobile manufacturing

companies, they can be tight in fund provision for investment in the technology whose benefit

remains uncertain. Since the product is relatively cheaper than the wired power industry

products, it will become essential to convince the partners that the set price of $40 and $60

remains to be as it is until the market becomes well-established among consumers.

It is necessary to keep prices low so that customers can be attracted at the initial level. In

today's market, money is spent on systems that are efficient in terms of functioning

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and contributing to the development of alternative energy solutions in future (Alternative Energy

Stock Outlook - Feb 2014 - Industry Outlook, 2014). Solarz meet the criterion. Furthermore,

strategic alliance with target partners will help in avoiding additional expenditure on branding

own name as consumers will continue to purchase the products from the established partners in

the mobile phone field (Singh, 2012).

Expected benefits: Expected benefits include improvements in the method of energy efficiency

and carbon neutrality when wired mobile phone chargers are replaced with solar charger

technology. As the venture has the potential for high returns, investors can see the expected

benefits in terms of increase in their reputation for giving an offering that is environment-

friendly. The easy-to-use design will help in making the product popular and reachable to a large

number of mobile phone users.

Size and potential of the market: Solarz will be initially launched in Australia. The potential of

the market is vast due to a large number of cell phone users, travelers in the country and sports

activities (Sport and Physical Recreation, 2012).

The Return on Investment is one of the most critical aspects that are connected with the launch

of any new product or technology. ROI will be measured by using measures for consumer

acceptance. The evaluation of ROI also includes the percent of market share attained in the set

lifetime value of the customer and customer satisfaction over the period. The net present value

will be calculated by taking into account average annual revenue per customer, average gross

profit margin before marketing expenditure, cost of capital and average number of years a

customer is held. The cost of capital is the factor that reflects the time/value for money

(Goldsmith, 2012). Estimated values for ROI are presented below:

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The venture expects to earn $100000 in average annual revenue from clients after

breakeven. The average gross margin before marketing expense will be 40 percent. The cost of

capital is 12 percent. The average customer relationship is expected to last for four years. The

NPV is then approximately $120000. The marketing budget can be set to $200000. The venture

can spend $10000 on selling promotional discounts at point of sales. With $120000 as customer

value, the new product can be given at rebates at 12 POS before winning one customer. If they

can win one customer at one POS, it will turn up to net profit of $110000 win over the lifetime of

the end user of Solarz. Thus, it is essential to do a major amount of investment in marketing and

selling of the product as Solarz is the new product and requires a spread of awareness in the

target market.

Cost of production and breakeven: The cost of production will not be high as the materials used

in making the solar charger are not expensive. Raw material costs will be 50% of the selling

price of the product, and other expenses cost will be 45% of product selling price. Branded

players charger is priced between $20-$30 while unorganized sector has the price of charges

under $10. Thus, with the price of $20-$60, the venture aims at attainment of sale of 1-lakh units

in the initial year. Breakeven will be attained at the sale of one-lakh units including retail sales

and bulk sales. For retail sales, prices will be $60 for 40000 units. For bulk sales, prices will be

$40 for 60000 units. Breakeven will be attained at the end of one year as total sales expected is

$4.8 million, while total expenses including cost of raw materials and other expenses is also

estimated at $4.8 million.

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Test Market

In order to test the product and receive the feedback, prototyping will be done. The

product will be tested by integrating it into wireless devices, such as mobile phones, digital

camera and MP3/MP4 players and will be given to people who are have high mobility and travel

a lot. Ideally, positive feedback will be used for addressing any criticism about the failure of the

solar charger. The testing program and market research will take six months. It is essential to test

the product so that any negative feedback can be taken into account and addressed before the

product goes for the actual launch. The product will be tested in four metro cities of Australia for

monitoring the marketing mix strategy and for modifying the product before the final launch.

The principal objective of test marketing is to find out whether the new product is going

to be accepted or not when launched in the market. It is helpful in reduction of the commercial

risk when the product is launched in the market. It will be used as predictive research tool.

Marketing research team will conduct test marketing in a controlled environment (Beri, 2007). It

will distribute the new solar charger in select outlets and will maintain the sales data. As the

product will be distributed in limited outlets, media advertising will not be done. In this way,

competitive firms will not be able to get the results of the test, and the cost of running the test

will be very low.

Brand Strategy

Association of a brand to a product affects the success of the new product. In the

concerned venture, strategic alliance is sought with branded mobile manufacturers and mobile

phone operators. It is the part of bulk sales of Solarz apart from retail sales. In the bulk sale

strategy, local mobile phone manufacturers will be a partner. People continue to buy the

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products, such as laptops, mobile phones and digital camera from established brands. It will help

in automatic association of Solarz to innovative and wireless power device. The partners will

market the products that will help in branding Solarz. Strength of brand associated with the new

product is as follows: the product need not separately market itself as it will be benefitted from

the awareness and reputation associated with the brand name of the partner (Beri, 2007). The

weakness, however, lies in the risk of the technology being copied with better features and

enhancements (Verhoef, Lemon, Parasuraman & et al., 2009). In order to overcome the

weakness, Solarz will go for the copyright of some of the material in later phase when the

product continues to grow along-with positive articles in the media for Solarz. Thus, a strong

brand image and the creation of awareness of the benefits of solar power for charging electronic

gadgets will help in long-term success of Solarz.

Packaging Considerations

Packaging is a crucial aspect of a new product. It has a separate identity in the process of

product development. It involves decision regarding changes in the overall design of the

package, such as size, shape, color of the material, etc. With the help of packaging improvement,

the product can get a new look (Chandrasekar, 2013). Solarz will be packaged in a simple way to

give it a look of easy to handle and convenient to use the product. A solar charger indicator will

also be given so that the consumer can always know the status of the solar charger. The internal

battery will store nearly 1000-5000 mAh for provision of full charges to gizmo gadgets. As the

charger will be used for various gadgets, it will come in two colors to give the vibrant feel of use

of alternative source of energy. Initially, it will come in two colors- standard black and sunny

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yellow at edges of the charger. Later, other color variants of Solarz will be launched depending

on the demand of the product.

Launch

Five W's in marketing are essential to understanding for an effective launch of a new

product. The development of marketing program is done in a particular order- why, who, what,

where and when (Burns & Snyder, 2009).

Why: It is related to the reason for the development of marketing plan (Boone & Kurtz, 2011).

The program is launched to create awareness of Solarz and its benefits in comparison to

electricity chargers, such as environment-friendly, use of alternative source of energy, easy to

use and multi-utility charger.

Who: The target market is Australia. It targets mobile users who are frequently out of homes,

such as travelers and sports people. They remain out of their home for more time, thus need

frequent charging of their gadgets.

What: It is related to specific features of the product. It includes multi-utility charging facility

and indicator for battery status.

Where: It is related to the place of communicating the product. The place will be retail outlets

and promotional events.

When: It is related to time of communication (The Five W's of Marketing, 2010). It is presented

in the promotional program of Solarz.

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Action/promotional plan

Market segmentation: Travelers and high mobility users

Sports People- Australia is a sporting nation. Most of the physical and sport recreation activities

use outdoor facilities, such as beaches, parks and walking trails. 11.1 million people participate

in outdoor sports activity in Australia every year (Sport and Physical Recreation, 2012).

Target market: All people with high mobility are the target market for Solarz.

Marketing objectives

Four categories for marketing objectives are set as follows:

Advertising:

Objectives-

To create awareness of the product among consumers

To increase expenditure on activities of sales and marketing by 15% in next five months

of the product launch.

Strategies-

Search Engine Optimization: Application of search engine optimization for keeping

Solarz at the top of key search results on the internet.

Development of own sales team for promotion and advertising and learn from marketing

activities of partners in a strategic alliance (Chandrasekar, 2013).

Personal selling:

Objective-

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Sales team of Solarz speak to 600 potential customers in Australia within the first two

months before the launch date of the product.

Strategy-

Use of prospecting as well as need satisfaction approach through the activity of acquiring

a list of all customers in selected sports facilities and tourist spots who seek to have high

mobility in their routine lives (Beri, 2007)

Sales Promotion:

Objective-

Get 30 percent of the target market to participate in rebate programs during the first six

months of the launch of the product.

Strategy-

Get 40 percent of the target market make use of offline and online discount coupons for

purchasing Solarz from the strategic partner during the first six months of the product life

(Goi, 2009).

Public relations:

Objectives-

Publishing press releases and articles for spreading awareness of the product in the init ial

first year

Organizing regular media conferences to update about add-on features and future

developments in the subsequent years of product launch (Debelak, 2005)

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Strategy-

Organization of regular media conferences and seminars (Verhoef et al, 2009)

Marketing mix

Product: Product is the tangible element of the marketing mix and is paramount to be taken care

because end users build the image of the product through its features and characteristics (Adebisi

& Bayode, 2011). Solarz is a multi-utility charger that runs on solar energy. It looks simple and

unique with two color variants- black and yellow. The product is offered to high mobility users,

such as travelers and sports people, who may face the situation of electricity shortages or may

not remain near the power grid when needed.

Price: The price is set at $40 for bulk sales and $60 for retail sales. The price is kept reasonable

to attract more customers in the first period of launch (Singh, 2012). Awareness of the

technology and promotion of use of solar charger is crucial in the initial launch period.

Breakeven points will be attained at the end of the first year of launch. After the first year,

awareness will be built, and prices thus be raised to make profits.

Place: Solarz will be sold through both distribution channel of strategic alliance partner and

through direct selling through sales representatives in all cities of operation. Two types of place

for distribution will help in reaching large number of people in the target market (Moghaddam &

Foroughi, 2012)

Promotion: Promotion is an important element of the overall marketing mix. It is necessary to

have suitable promotional plans in place so that a large number of people can be made aware of

the use of sources of alternative energy for charging the high tech gadgets people carry today.

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The promotional campaign will include newspaper ads at all three- local, regional and national

levels. The promotional campaign tagline will be ‘bid adieu to battery low'. As Solarz will be

made available at all leading outlets, promotional messages will be sent through radio FM

channels and gadget discussion bulletins in the TV news channels. The product will be promoted

through sales promotion and direct marketing too as mentioned above to increase the awareness

of the solar charger and increase sales (Yasanallah & Vahid, 2012).

Conclusion

New product development process is a significant part of the marketing process. It

involves the concept of provision of the right product at the time and place with the good price

and the right quantity. Market research has shown that travelers and sports people need some

constant power supply source for charging their high-tech products. Solarz is developed

by keeping in mind two factors: the growing inclination of consumers towards environment

friendly products and identified need of some constant power source for recharging mobile

phones and other high-tech products, such as digital camera and music players, . Any new

product needs market testing as well as research on packaging and promotional elements so that

the risks related to its failure can be mitigated. With the help of following proper product

development process and keeping marketing plan in place, Solarz will be able to meet the

marketing objective of increasing awareness among consumers in the best possible manner. It

will also help in attaining the financial objective of reaching breakeven point at the end of the

first year of launch.

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