This paper discusses about Scenario One which are all about the USA World Bank. The paper is focused on the challenges and opportunities of the company based on the scenario. The paper identifies the most significant opportunities as well as the end-state goals of the organization.
Summary
USA World Bank, UWB, is an international major bank, with branches across the country as well as in several locations worldwide. The company has a large consumer base including small business organizations. UWB has been so far successful in its ventures and has already positioned itself in the market.
Being an international major bank with a reputation, UWB has an opportunity to further expand its market through different strategies. To address this issue, every year, like most companies do, UWB launches a new product to increase its market share. The new product needs to be profitable and something that will excite customers and an advantage to every sector of the market. During the past years, the products that the company had launched were just marginally successful and the board members of the company are demanding for some winning products. The most significant challenge now is to launch and develop new product that will definitely be successful and profitable for the company.
For years now, the product development team is headed by its president, Brian Allen who in the past had some winning products but lately, his ideas were not so good that, as mentioned above, the products that the company had launched through him were not very successful. This year he is pressured to develop a product that will change the trend and he has come up with the idea of Instant Reward Card. Instant Reward Card is basically a credit card where customers can earn rewards from their purchases with the card and is comparable with a business credit card with discounted interest rates.
Under him is the Vice President of New Product Development, Mary Monroe who although very collaborative has not been so keen in assessing research about new products. Since she is the one responsible for studying research on new products, she is also the one responsible in deciding which new product should be presented to the board and eventually be developed with the approval of the president of new product development team. She hired a research company to conduct the marketing research for the Instant Reward Card. Based on the research, the product will be successful and can make people switch to UWB from their current bank if the incentives are strong enough.
Moreover, the company’s VP for marketing development, Jim Wilson seems to be a company’s human asset who has been focused on building business for the UWB. With his four years in the company, he has increased the company’s small business segment through good and successful business relationship with small business organizations and owners as well as with relationship managers.
When the new product, the Instant Reward was initiated, he conducted an analysis regarding the stand and reaction of small business owners to the product with the cooperation of relationship managers. Each relationship manager conducted focus groups in their region to assess the feasibility and marketability of the product in the small business segment.
With the research done by the relationship managers, it was found out that small business clients demand for a card that will allow them quicker access to capital and at the same time can earn rewards. The initiated instant reward card seems to have advantage and more demand to consumers but they want a card which can be used for their businesses. Also, according to the study, a great percentage of UWB’s small business segment will consider other banks that have the product that they need if the reward card for small business will not be launched first. They called it small business card.
Because of his concern with the small business card, he consulted some of the company’s executives and consequently, he got their approval and support and advised him to coordinate the idea with the VP of the new product development before the presentation of the instant reward card to the board of directors who will approve the products to be launched.
However, when the small business card idea was presented to the VP of the new product development, Mary seems to be insisting on the consumer products although she reviewed the analysis on the small business card. She was so dependent and reliant on the research done by outside firm to the instant reward. Jim also approached Brian about the small business card but Mary had decided that it is the one that should be presented to the board.
Moreover, the company has a new Board of Directors member, Bea Hansen which seems to be another asset of UWB. She is a statistics professor and makes decision based on facts; she is reasonable and not political. She adds up to the approval body of UWB.
During the presentation of the proposal for the new product to be launched the coming year, Brian presented data showing a nationwide demand for product like instant reward card. But Bea questioned the reliability of his data. She asked for the size of the sample and time frames in which the data was collected.
She argued that the sample even though large, may not represent the nationwide demand for such product; that sampling error may occur and that the data will be more reliable if age and income were considered as variables for the survey. She also argues that the time frame of collecting data should have been considered because business trends especially in banking changes quickly; the data accurate a month ago may not be true next month. Because of the issues brought up by Bea, the presentation was cancelled to give Brian time to prepare for his presentation and to provide the board members copy of the market research on instant reward card.
On the next presentation, even before Brian can start, Bea already pointed out the flaws on the market analysis on instant reward card based on statistical data of the research. She explains the importance of information about age which has a practical value in predicting the likelihood of people who will switch to UWB because of the new product. The importance of other variables such as the gender and the types of questions used were also elaborated. Because of these, other board members had seen flaws on the marketing analysis of the product and started to have doubts on its reliability. Consequently, the presentation was again cancelled to give Brian some time to review on his data and for the board members to come up to a decision.
Brian conducted a meeting with the some key members of the product development team including Mary, Jim and Tom. Tom is marketing associate that is good in analyzing statistical data. Brian, because of Bea now became concern on how data on research were obtained. He is considering redoing the research the focus group method which was used in the small business card research. According to the scenario, focus group method use variables such as the size of the company and a mix of founders of such companies. In focus group the response rate of 50 percent is adequate for the data to be reliable. Brian also has become concern on how other companies think up new products and gather ideas before coming up to a new product initiative. Also, on the financial side, the product should be profitable so Brian need to coordinate with the accounting for the ROI and for some details about the system for estimating payback period.
Analysis
On the scenario, it can be identified that the end-state goal of USA World Bank is to further expand its market share by developing a new product every year. With this goal the company will be able to expect a yearly increased in market share and gives the customers something to look forward to especially the small business segment, a segment where the bank can expect more profit. Mutually, small business segment and UWB benefit with each other.
At UWB, the challenge is creating new product which is a challenging role to the company’s president of new product development who he handles it himself. But if he shares the responsibility with other team members, together they can think of brighter ideas on how to delight the customers with new products. For example, when the instant reward card was initially proposed, Brian should have got some ideas of other team members since each one of them handles different aspect of marketing. They could have had brainstorming, carefully analyzing and weighing which idea is better. They can incorporate each other’s idea to come up with the best possible product.
The situation in the scenario also gives the company an opportunity to improve on its method of collecting data that will be the bases of marketing analysis. It is important for the company to have knowledge and awareness of how to interpret data. Moreover, the new product development team should have the ability to conduct its own research and not heavily rely on outside research firm especially now that they have Bea on the company which can act as a consultant for analyzing gathered data. As a statistician, Bea can be of great help to the company in conducting research needed in marketing a new product. Based on the scenario and her background, her knowledge is of great advantage for the company and as an academic person, she is very much aware of research and feasibility studies.
Brian as the brain in his department should also have hands-on on his works. He should have the basic knowledge of interpreting data and research as well as on what effective approach and methodology to be used when launching a new product. Over the past years, Brian and his team were not so successful with their new products. This seems to be because of lack of definite approach on how to gather data and on how to conduct research and market analysis.
Analysis of the marketing research findings is very important in developing new product. Failure in market research findings can cause failure of new products. Also, overestimated demand and size of market is also a significant factor in new product failure (Anonymous, 2006).
There are different research techniques or methodology used today that should answer questions that will help one develop new product concept. These questions include: to what extent do potential customers for the proposed venture find the concept attractive; is there actually a viable market for the concept at all; if the concept proposed is wrong, can it be modified to tap a genuine demand; how can the concept be modified to optimize the potential opportunities; and what pricing model is acceptable/unacceptable in the market (Benchmark, 2001).
It was stated in the scenario that the team had developed the idea based on what the bankers’ perceptions and is not a reliable basis of the concept. Depending on the research techniques or methodology used, the research should also determine the viable market for the concept as well as its size to be able for the company to project if the concept will be profitable.
On the part of USA World Bank, the primary goal will be achieved if the problems faced by the team can be seen as opportunities. To summarize, the problem includes questionable data that could have been prevented if Brian and Mary are good in analyzing market research, which can lead to product development failure if the board members did not recognize errors on data.
References:
Benchmark Research Ltd. (2001), NPD An Introduction to New Product
Development research techniques and how it can help your business online http://www.benchmark-research.co.uk/attachments/solutions/Developing_New_Products.pdf#search=’failure%20of%20market%20research%20for%20product%20development’
Anonymous, Chapter 11 Developing New Market Offerings (PowerPoint)
Online date retrieved: March 22, 2006
<http://www.courses.psu.edu/mrkt/mrkt520_uqy/CHPT11.PPT#256,1,CHAPTER 11>
Credit:ivythesis.typepad.com
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