Term Paper on "Marketing Strategy New Product Development"

Term Paper 5 pages (1445 words) Sources: 3 Style: Harvard

[EXCERPT] . . . .

MARKETING STRATEGY new product development marketing strategy will help grow the market and, at the same time, the company's market share, while winning over both individuals new customers and customers from other competitors in the industry.

In an interview given to an online company blog, Starbucks CEO Jim Donald amused himself and the audience by pointing out that new coffee and other products are regularly introduced by Starbucks out of fear. While this was obviously said on an amusing note, the importance of product development for Starbucks can hardly be evaluated and, further more, it does indeed have a fear component in its motivation.

It's the fear for the competitors, as well as the fear that the company will no longer be regarded as an innovative, market leader, with a proactive approach, but as a company trailing along in a reactive manner. The first one is the fear of competitors, as an essential motivation for Starbuck's product development strategy. If the company didn't have a strategy based on new product development, it would have meant that the competitors would have received a signal that the company has a reactive approach, an approach where its simply replies to market stimuli. It would have supported an image of Starbucks as a second rated company on the market, a company without initiatives, with tremendous consequences for its relationship with its competitors.

Second of all, Starbucks has had a reputation for new product development and creativity over its history and losing this would be equivalent to losing its reputation as an innovator on the market, something on which the Starbucks brand was built. It is difficult, given the size and importance of Starbucks, to commit to an entire rebranding campaign by which to change the basic marketing strategy from product development to something else. The company does not have experience to lead cost leadership marketing strategies, and it would take an extremely long period of time to promote a new marketing strategy such as this and to get the customers and shareholders used to it.

Third of all, a new product development marketing strategy is essential for Starbucks because it is the type of strategy that brings added value to the company. It is one thing to create value based on existing perspectives (obviously limited) and quite another to go to greater length and innovate, produce and promote new product and services and launch them on the market. The probability that the latter strategy will be successful is much higher.

As a last argument of the importance of new product development in Starbuck's overall marketing strategy, we need to point out towards the relationship with the Starbucks customers. Developing new products, coming up with new ideas is important in meeting the Starbucks customers' needs and matching it.

On the other hand, at Starbucks, it is essential to be able to draw as many ideas on new product development as possible, from all sources available. Virtually, we may consider that each idea left in a Starbucks location by a client is a way to expand the market in his direction and to find the solutions by which that respective market share can be approached.

Authors identified three different sources for new product ideas: customers, internal staff and external technical sources. While all three of these may be important, in Starbucks case it is the first two that may make the difference. Indeed, we have already shown why customer feedback is important and Starbucks locations sometimes have people working there and asking customers whether they have enjoyed a certain new product or what it is lacking. It is a way of actively involving the customer into the production and design of new products. It is an important mean to have a feedback from the people you sell to.

On the other hand, the internal, usually technical sources are the key engine to the new product development marketing strategy. This is because their perspective is always based on clear figures, on distinct analysis of customer behavior and possible market evolutions that will indicate what direction it is best to develop into.

For example, the introduction of the Power Frappuccino in the late 1990s, was based on the large popularity of its predecessor, the Frappuccino, and on evaluation from the internal staff that such a move would fit the new… READ MORE

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