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. However, there are some problems that hinder the company to overcome this challenge. The focus of this paper is to identify these problems and to identify business practices such as benchmarking that seems to be the solution to the problems base on other existing companies today to determine the usefulness of such practices. The paper aims to present the importance of benchmarking and how it can help a business firm such as UWB.
USA World Bank, for the past years, has not been very successful with its launched products. The past several initiatives of the New Product Development President have been only marginally successful. This year, the new product development team is obliged and pressured by the board of directors to launch and develop a winning product to be able for the company to achieve its goal of further increasing its market share. The team president initiated the Instant Reward Card, a card which 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.
In the scenario, it was mentioned that the idea was formulated based on what the bank presidents and personal bakers hears. As stated in the scenario, ‘bank presidents and the personal bankers have their ears to the ground’. This is one of the problems of UWB, having no system or standards of gathering ideas in product development. With the instant reward card, the team had based the idea on hearsay. They initiated the idea and proposed it without establishing clear understanding if that is the product that the customers really needed and wanted.
Aside from that, the company has no standard methodology used when conducting research. Research is a very necessary tool for the company to establish facts especially when creating new products. According to American Marketing Association, marketing research is the systematic gathering, recording, and analyzing of data about problems relating to the marketing of goods and services (SBA, 2006). Research gives a company a view on the potential of the product to be developed based on the potential market, the size of the market, or the marketing strategy to be used to effectively promote the product. Market research will also identify trends that affect sales and profitability. Although, the new product development team conducted research to determine the potential of the product, the team has not clearly understood the methodology used and how reliable the research is.
Moreover, UWB also does not have external perspective on opportunities for the product. For example, they did not study other banks or the competitors if these banks already have a product that can be compared to the instant reward card. If other banks have it already, they should have been study on how the product is doing in the market, the benefits it gives the customers, its disadvantages and how the product has been profitable so far to the banks who has that product. By doing that, UWB can be able to add value to its instant reward card, making it more attractive to the customers. This technique to measure an organization against other organization and identify opportunities and approaches to improve is called benchmarking (Crow, 1999).
Benchmarking is the process of identifying, understanding, and adapting outstanding practices from organizations anywhere in the world to help a company improve its performance (TBE, 2006). As noted above, it is a tool to improve, and any business process can be improved and benchmarked, including new product development.
Benchmarking is basically comparison of a company’s practices with other companies, not necessarily within an industry but also with other industry. For example, Ford Motor Co. as part of its Ford 2000 strategy to reduce production cost, studies and observed operations not only of rival auto manufacturers such as GM and Toyota but also other companies which show excellence like GE, McDonald’s, and Xerox to find best practices currently practiced for each particular operation that are applicable to Ford (Penman, 1999). Ford Motor’s benchmarking is a continuous process and one of its key implementation is the “American Keiretsu”. As the name implies, Keiretsu is first modeled by Toyota (Kotabe, 1998) and currently being practiced by GE, Microsoft and others. With American Keiretsu, suppliers become involved in the design and development of products (Penman, 1999).
Another company who uses benchmarking is IBM. By 1993, IBM experienced straight decline in revenues brought about by change in the marketplace because of its creation of new products such as PCs that had lower profit margin than some of the firm’s traditional offerings (PDBPR, 2002). This event has led IBM to make analysis and benchmarking of some of the best practices in market planning and product development. IBM found out a suit of practices, from within the company and outside the company which offered the best opportunity for IBM to move forward (PDBPR, 2002). Practices such as structured process; team based management; asynchronous development and business tiers; and customer $APPEALS which is a psychographic method developed by Peter Marks to understand what motivates customers to buy a product (PDBPR, 2002), helped IBM established new approach to product development. Because of benchmarking, IBM became committed to develop only those that had the best chance to win the market and say no to other opportunities.
The problems of UWB can be solved by using the approaches made by the companies mentioned above. They can consider observing other companies in the bank industry and in other industries to determine the best practices in launching a new product such as the methodologies used in formulating new ideas and the effective methodologies used in determining the market, its size and other factors that can affect the profitability of the product. After observation and studying of other companies, UWB can now formulate its own standard. Moreover, they should also observe within UWB itself. In the scenario it was stated that the VP for marketing development had successful relationship with one of the market segment of the company. The VP might have some best practices that should also be benchmarked and considered to be adapted by the team in creating and developing new products.
References:
Crow, Kenneth (1999), Benchmarking Product Development,
DRM Associates Online
<http://www.npd-solutions.com/bmpd.html>
Kotabe, Masaaki et al (1998) Ford Motor Company and Die Development,
University of Texas at Austin Graduate School of Business
Penman, Bob (1999) Ford Motor Company, Management of International
Operations MGMT 222
Product Development Best Practices Report (2002), IBM’s Journey Back
to Profitability; Integrated Product Development Plays Key Role,
online
< http://www.roundtable.com/PDBPR/IBM.html>
The Benchmarking Exchange online date retrieved: March 24, 2006
<http://www.benchnet.com/wib.htm>
United States Small Business Administration, Marketing Research,
Online Date Retrieved: March 24, 2006
<http://www.sba.gov/starting_business/marketing/research.html>
Credit:ivythesis.typepad.com
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