Case Study 8

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

2. 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 “

3. 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

4. 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

5. 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)

6. 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

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

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

9. 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

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

11. 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

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

13. 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

14. Stakeholders • Customers • Serving current • Shareholders • Negative impact

15. 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

16. 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

17. 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

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

19. Retain • Intended to provide • Updates and enhancements • Send e-mails • Redo “helpful hints” • Technologies • Account and password “caching” • Should have • Cookies (greetings) • Database

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

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

22. 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”

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