New Product Development Innovation Management

Question: Identify the difference between invention and innovation and how innovation can be successfully implemented to achieve growth. Demonstrate a critical awareness of the different models of innovation and how they apply to an industry case studies. Answer: Introduction The organization chosen for preparing this report is Tesla Motors. Tesla Motors is an American automotive company that designs, manufacturing and selling electric cars, components and battery products (Tesla.com 2016). The company was founded in 2003 and has grown significantly in the United States, Europe, Australia, Canada and Asia-Pacific (Tesla.com 2016). The company has made technological advancements and launched four car models. Tesla also unveiled its battery products and made hefty profits. Tesla also built a network of supercharging stations that was spread across various locations (Tesla.com 2016). Tesla has partnerships with multiple companies such as Toyota, Panasonic and Airbnb for production system, engineering support, battery, and various other purposes and reasons (Ramsey 2016). The company has plenty of customers but it needs to make its pathway to profitability. General Motors, Fiat, BMW and various other car manufacturing companies give a tough competition to Tesla (Pento 2016). Tesla is on a road to prove that electric cars can be better than gasoline-powered cars. They are environmentally sustainable with instant torque, zero emissions and incredible power (Tesla.com 2016). Innovative Tesla Tesla is considered as one of the most innovative companies as the electric cars are not just the essence, but the business practices add to their competitive advantage. The business practices of the company are innovative and significantly different than the other car manufacturers leading to increase in revenues. None of the cars produced by Tesla uses gas and has already sold over 107,000 cars (Gross 2016). Even the advertising strategies have helped in racketing up the sales without spending on Super Bowl, New York Auto Show and other expensive strategies. Tesla does not have dealers and sells directly to the retail consumers thereby saving profits (Gross 2016). Tesla was also listed on the FORBES Worlds Most Innovative Companies (Dyer, Gregersen and Furr 2015). Critical Analysis New Product Development is a process of creating, designing and conceptualizing new products and services. The development of new product aims at cultivating, maintaining and increasing market share (Gmelin and Seuring 2014). The new development product goes through numerous stages that are critically analysed as under: Idea generation The development of a new product starts with the concept. The SWOT analysis shall help in determining the internal as well as external structure of the company. It shall further help in finding a possible direction to align with the business strategy. It is argued that an organization must prepare a list of customer needs. The weaknesses, gaps in the product range and areas of product improvement should be identified (Business.qld.gov.au 2016). Feasibility Analysis Based on the above analysis, a large pool of ideas is created. It is argued that the product shall be highly competitive in the market based on its innovative features and performance. The main purpose of feasibility analysis is to assess if the project is technically feasible, profitable and falls within the budget (Ahmad, Mallick and Schroeder 2012). Product Specification The product specification implies the design, advantages and the manner in which it meets the requirements. It also details the features of the product and the technical details that forms a part of product lifecycle management (Gmelin and Seuring 2014). Process Specification After the product specifications are finalised, the costs and prices shall be estimated. Trial production runs shall be made for estimating the costs and prices. The sales forecast shall be made based on the consumer test results. The future cash flows and profits shall be predicted. Investment in production system and distribution system shall be estimated. The marketing strategy shall then be integrated for the product, price, distribution and promotional messages (Gmelin and Seuring 2014). Prototype development Prototype testing is one of the critical yet rewarding stages of the new product development. It shall help preparing the product for market entry. A member of the team with strong project management skills shall manage the product and coordinate the product development. A practical and informative schedule shall be maintained. The processes such as computer-aided design or graphic design must be streamlined. However, the patents shall be put in place and intellectual property shall be protected before the product is out for a test run. The characteristics of the most important customers must be identified and tested repeatedly. The necessary improvements shall be made as recommended by the customers (Business.qld.gov.au 2016) Design Review The design of the car shall be evaluated against the requirements by means of physical tests, walk-through examinations and engineering simulations. Additional effort must be spent for evaluating against ease of localisation, usability, and consistency. Design reviews shall be conducted for addressing the subject matter and issues (Ebrahim 2015). Market Test Market test means testing the product within a specific geographic area. The product shall be launched in the particular region so that the marketing mix can be monitored before the launch. The market test shall assess the different elements of the product. The target marketing strategy, positioning strategy and retail distribution strategy shall be tested before commercialization. However, market testing may be risky for the people actually paying to use the product. Their finance may be wasted if the product does not meet their needs or expectations. Although not always easy to identify, there are indirect costs as well. For example, the money used to test market could be used for other activities. The risk of losing consumer goodwill through the testing of an inferior product is also very real (Hong, Song and Yoo 2012). Product Introduction Commercialization is the process of introducing a new product in the market. The commercialization process is infused with sales, business development and marketing. It is argued that the commercialization of product involves the factors such as the timing, place, target and ways to launch the product (Caner and Tyler 2013). Follow up Evaluation After the product is launched in the market, it shall be followed up for evaluation to assess the response of buyers. The sale units and revenue earned in a quarter shall be assessed. Also, customer feedback shall be generated to assess if the stakeholder needs are met. The impact evaluation can provide necessary feedback to the companies for keeping the business alive. Any required changes shall be made in the new design (Caner and Tyler 2013). Recommendations The organizational communication program must be periodic as well as comprehensive. A deeper relationship must be established with existing customers as it shall be the most critical growth strategy. Before making recommendations, an internal analysis shall be conducted to analyse the environment. Strengths The company manufactures energy efficient cars that run on electricity (Tesla.com 2016). Tesla manufactures environmental-friendly cars and none of them runs on gasoline (Tesla.com 2016). Tesla supplies significant major parts to Toyota (Ramsey 2016). Outsourcing secondary components, it experiences cost reduction advantages (Gorzelany 2014). Tesla has many strong investors and partners such as Toyota, Panasonic, and Airbnb (Ramsey 2016). Weaknesses The cars are expensive in comparison with other car manufacturing companies (Lee 2016). The limited manufacturing capacity delays the delivery time to the customer (Bhuiyan 2016). Tesla lacks experience as it started in 2003 unlike Fords, Toyota or Mazda (Tesla.com 2016). Opportunities As the consumers are getting environmentally concerned, they are making efforts to reduce carbon emissions due to which Tesla may have a great opportunity for expansion (Krupa et al. 2014). Several countries such as USA offer subsidies to green energy companies. Tesla conserves much better energy than the rest (Worstall 2016). The quality control processes can help in significantly reducing cost. The demand for electric vehicles is increasing daily (Barteau 2016). Threats The giant companies such as Toyota, BMW, Fiat and various others give a tough competition to Tesla (Ramsey 2016). The competitors are also increasing day by day as the threat to entrants is high. The cars may not be attractive to the younger generation. The price of the cars may be unaffordable by the middle income consumers (Lee 2016). Table 1- SWOT Analysis A few suggestions that can be made for developing a new product are development of car accessories, manufacturing solar powered cars, and styling new designs for existing model. Looking at the market potential, it is analysed that the customers want innovative and cost-saving technologies. Considering all the variables, the solar powered cars seem like the best option for developing new product. The advantages and disadvantages of using solar powered cars shall be clearly stated to them. An assessment shall be made if they like the concept of solar powered cars since the benefits outweigh the costs. Additional recommendations are considered such as using the solar panels, while keeping the battery supported for electric power as back-up. However, the sun does not shine the whole day, so the panels must be strong enough to trap maximum energy. Also, the battery shall serve the purpose of travelling when the panel is exhausted and has no energy. The market is realistic and there is a need for the product. The product shall help in slowing down global warming, saving money annually, providing energy reliability; cars are noiseless and have low maintenance. The technical capabilities for manufacturing these cars are present in Tesla Motors. The product cost would be acceptable and profitable (Budischak et al. 2013). The main target consumers of Tesla Motors are the older age group. But the solar powered cars can be targeted at the youth as the cars would have dual energy, i.e. battery supported for electric power. The product positioning shall be for the premium or high income customers. Tesla does not invest much in marketing and it should make sponsorships, television advertisements and social media campaign for targeting the age group between 20 and 35 (Mangram 2012). The high performance car shall be safe, desirable and easy handled that would meet the needs of customers (Mangram 2012). The car shall weigh approx 300 kg with 5m in length and 1.8m in width (Thacher 2015). The car height shall be 0.90m. The car speed shall go maximum up to 120 kmh (Thacher 2015). There shall be a micro camera on the rear view with the image displayed to driver. There shall be hydraulic mechanical disc brakes and regenerative electric brake for the motor. There shall be four power trackers. The solar panels shall be on the top of the car where it would capture solar energy. The engine shall also have battery that can be charged through electric current (Thacher 2015). The solar powered cars must then be launched in the market after test marketing. Higher costs shall be incurred as the manufacturing facility shall be built to manufacture products. Also, as designed a large amount may be spent on advertising, sales promotion, sponsorship and other marketing efforts. The product shall be launched initially in London and New York as there is not much capacity to launch the product nationally or internationally. The product shall then rollout over time. The product shall also be launched when the economy is high as the people would have greater purchasing power (Gerken, Moehrle and Walter 2014). Conclusion The above report analyses the new product development of solar powered cars in Tesla Motors. The company is significantly investing on its research and development for making future models that would be smaller and affordable. 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