Marconi Product Development Institute, Inc
Strategic issues in marketing Italian manufactured products in the US market
There are several Strategic Issues facing Italian companies wishing to export their products to the US markets. These issues are the result of some slight cultural differences and of evolution patterns differing between the two markets. This white paper is designed to initiate the thought processes and planning that must take place prior to attempt marketing in the US.
The US market is a very lucrative and immense market. It is diverse enough to allow for a multiplicity of competitors, but discerning enough that the selected products and services must be well considered in order to be successful in the marketplace. The other major difference is that factors other than product features and performance play heavily into the ability to be successful. The best product does not necessarily capture the entire market. This is because of the diversity of markets, consumers and expectations.
The Strategic Issues are discussed as follows:
Issues:
1. Market data
The US market continues to rapidly become a very segmented market with specific requirements. Manufacturers are addressing this market in the US with mass customization in many cases. In order to be an effective supplier in this market, each segment must be identified and designed for in order to be successful in exporting products to the US for Italian Companies.
This market segmentation profile must be targeted at the onset of any development so that the product platform may accommodate the various versions and solutions to capture the market segments.
2. Supply chains in the US
Another issue for Italian suppliers is to understand the supply chains and trends in these chains so that their products are positioned correctly to gain market share. A product can be successful or no because of supply chain management, trends in purchasing and general economic conditions.
3. Route to Market
The route to market is very important for these companies to understand. The currency advantage in selling into the US market for Italians can quickly be erased by taking the less than an optimum route to market. Italian company’s lack of US presence and experience can lead to charting the wrong pathway and eventual new product introduction failure
4. Market driven Products versus Technology driven
The US market best responds to products developed to an apparent or latent market need. With the apparent or latent market need existing, the product has a much better chance of success.
This is not to say that there is no room for a product so advanced that the market must be educated as to its benefits and use. Rather in the later case, more promotional effort is required, which guarantees a competitive response from one or many competitors.
There is also the issue of target markets and reapplying the existing product to address the market. A product designed and manufactured for the Italian Market swill need some redirection and perhaps slight modification in order to be acceptable to the US marketplace. a well informed consultant can assist in these cases.
5. Traditional approach versus interdisciplinary approach
More and more, there is less of a tendency to attempt to launch products developed by the “chief engineer” of a company where the product is developed in the vacuum of the other functional areas of the organization. For any company to be truly successful in a marketplace, the process of identification, development, testing, promotion, sales and distribution must take place among the various functional groups of the organization where by each group contributes their input and absorbs some of the uncertainty.
Below is a listing of the most common causes of new product failure. Every day there are companies making these same errors in the development and marketing of new products. Our attempt is that by listing them here, we can provide a reminder caution for Italian Companies planning to export to the US Markets
MAJOR CAUSES OF NEW PRODUCT FAILURE
- New product/business is off strategy
- Inconsistent organizational systems for evaluating new product ideas
- Poor market planning
- Lack of product distinctiveness or customer benefit
- Top management push in spite of supporting evidence
- Poor market size assessment, forecasting and research
- Incomplete or inaccurate product definition
- Product design (reliability problems)
- Unexpected product development costs
- Missed factory cost target and subsequent price impact
- Unexpected intense competitive response.
Conversely or more positively stated, here are the directives for companies embarking on new product development to follow. By diligently following these precepts, companies will ensure new product success.
LESSONS FOR FUTURE PROGRAMS
1. This summary guides Development Practitioners
2. Carefully execute a marketing assessment of the opportunity and plan out a well-considered development plan.
3. Continuously monitor the progress of the development effort checking original assumptions against real time data.
4. Effectively react to changing market conditions in order to protect your development investment in effort, time, cost, and momentum.
5. Start each development program with enough of an advantage such that as conditions change or actual results fall short of initial expectations, there is some contingency room in the overall effort.
6. Never make the mistake of believing that you’re the only company working on a development, and that all others stand still while your executing your program.
7. Do your part in galvanizing the organization to embrace and execute your new product initiative. Have the organization contribute energy to the effort rather than use only your energy to move the organization to action.
8. Make sure the program delivers the goods at a price that the marketplace is willing to pay and in a time frame that allows success.
9. Don’ t intentionally or inadvertently manufacture sub standard goods.
10. Watch your competition, they are watching you!
11. Target your customer base, and cater to it. Do not cater to collateral pressure. The collateral elements are not paying the bills or contributing to your profits.
MARCONI PRODUCT DEVELOPMENT INSTITUTE, INC.
Web site www.execpc.com/~marconi
E-mail marconi@execpc.comWe are an international organization servicing companies engaged in the process of New Product Development. We can maximize the client return for every dollar and hour invested in New Product Development.
Our Operational Mission is to:
Maximize client return through Learning Systems, Seminars and Consulting arrangements including Direct Development Contracts. Our goal is to improve the development process used in client companies through the use of organized, accurate and interdisciplinary practices, which allow for leverage and higher development program throughput with greater chance of new product success.
Copyright ã 1999 Marconi Product Development Institute, Inc.