AN ANALYSIS ON UBER’S PRODUCT DEVELOPMENT PROCESS AND ITS APPLICATION IN VIETNAM

FOREIGN TRADE UNIVERSITY
FACULTY OF ECONOMICS AND INTERNATIONAL BUSINESS
---------***---------

GRADUATION THESIS
Major: International Business Economics
AN ANALYSIS ON UBER’S PRODUCT DEVELOPMENT
PROCESS AND ITS APPLICATION IN VIETNAM

Student’s name : Tran Phuong Anh
Student ID

: 1211150014

Class

: A23 – High Quality Program

Intake

: 51

Instructor

: Vu Thi Bich Hai, MIB

Hanoi, May 2016


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Contents
LIST OF ABBREVIATION ........................................................................................ iii
LIST OF TABLES AND FIGURES ............................................................................iv
INTRODUCTION .......................................................................................................... 1
Thesis Objectives .......................................................................................................... 2
Thesis Scope ................................................................................................................. 2
Thesis methodology ...................................................................................................... 2
Thesis structure ............................................................................................................. 3
CHAPTER I: THEORETICAL FRAMEWORK ....................................................... 4
1. Introduction to product development : .............................................................. 4
1.1.Definition: ........................................................................................................... 4
1.2.Product development - service product: .............................................................. 4
1.2.1.Difference between service development and traditional product
development: ............................................................................................................. 4
1.2.2.Types of service development:............................................................... 5
2. Product development process: ............................................................................ 6
2.1.New product development process: .................................................................... 6
2.1.1.Philip Kotler and group of Sak Onkvisit and John J. Shaw: .................. 6
2.1.2.Karl T. Ulrich and Steven D. Eppinger: ................................................. 8
2.1.3.Stage – Gate model: ............................................................................. 11
2.2.Product development process – service product: .............................................. 22
2.2.1.Factors that make service development different from traditional
development: ........................................................................................................... 22
2.2.2.Emerging Trend in Service Development Process .............................. 23
CHAPTER II: UBER’PRODUCT DEVELOPMENT PROCESS: CASE OF
UBERPOP IN NETHERLANDS ................................................................................ 26
1. Introduction about Uber : ................................................................................. 26
1.1.Business Idea: .................................................................................................... 26
1.2.Uber‘s development timeline: ........................................................................... 27
1.3.Uber‘s product lines: ......................................................................................... 29

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2. Uber’s product development process – the case of UberPOP in
Netherlands: .............................................................................................................. 31
2.1.The application of Stage – Gate model on UberPOP case: ............................... 32
2.2.The applied product - UberPOP ........................................................................ 33
2.3.UberPOP‘s development process ...................................................................... 34
2.3.1.Idea generation ..................................................................................... 34
2.3.2.Stage 1+ 2: Scoping and Building Business Case: .............................. 35
2.3.3.Stage 3: Development .......................................................................... 41
2.3.4.Stage 4 + 5: Pilot launching as Testing and validation: ....................... 46
2.3.5.Post launch review as pilot evaluation: ................................................ 49
CHAPTER III: APPLICATION TO TRADITIONAL TAXI IN VIETNAM ....... 55
1. Overview about taxis in Vietnam: .................................................................... 55
1.1.Overall current practices: .................................................................................. 55
1.2.Practices of the product development in traditional taxi in Vietnam and
some problems: ........................................................................................................ 58
2. Lesson learnt from product development process of Uber and suggestion
for application in traditional taxis in Vietnam: ..................................................... 61
2.1.Adapt to the competitive environment: ............................................................. 62
2.2.Be customer- oriented: ...................................................................................... 63
2.3.Include drivers in product development process: .............................................. 65
2.4.How to make use of media channels effectively: .............................................. 66
2.5.How to cut down the cost: ................................................................................. 67
2.6.Be flexible with the change in the market: ........................................................ 69
CONCLUSION ............................................................................................................. 70
REFERENCES ............................................................................................................. 72

iii
LIST OF ABBREVIATION

ABBREVIATIONS

MEANINGS

B2B

Business to Business

NPD

New Product Development

VOC

Voice of Customer


iv
LIST OF TABLES AND FIGURES
TABLES
Table 1.1: Factors that make service development different (Kahn 2013) .................5
Table 1.2: The most popular sale tools used in B2B product launch (Adam 2012) .21
Table 2.1: Uber's successful timeline ('How Uber work' 2015) ...............................28
Table 2.2: The ultimate Uber driver training course ('The ultimate' 2016) ..............43
Table 2.3: Uber's communication phases - stakeholders - activities (Leeuwen 2014)
...................................................................................................................................48
FIGURES

Figure 1.1: New Product Developement (Kotler 2006) ..............................................7
Figure 1.2: Key activities and responsibilities of different functions within
organization (Ulrich and Eppinger 2012) ...................................................................9
Figure 1.3: The typical Stage - Gate model (Cooper 2001) ......................................12
Figure 1.4: Sources of product idea (Mahmutllari 2014)..........................................13
Figure 1.5: Eighteen diferent media used in B2B product launch (Adam 2012) .....20
Figure 2.1: The typical Stage - Gate model (Cooper 2001) ......................................33
Figure 2.2: Dutch government cost per passenger (Davids et al. 2014) ...................37
Figure 2.3: Uber's pricing strategy (Lawrence 2014) ...............................................41
Figure 2.4: Proportion of UberPOP's driver education (Davids et al. 2014) ............42
Figure 2.5: Uber's pricing overview (Leeuwen 2014) ..............................................44
Figure 2.6: Uber's price comparison (Leeuwen 2014) ..............................................45
Figure 2.7: Partner Economics Calculation (Leeuwen 2014) ...................................45
Figure 2.8: UberPOP's users by gender (Davids et al. 2014)....................................50
Figure 2.9: Customers' response to the importance of different aspects in their
choice of transport alternatives (Davids et al. 2014) ................................................50
Figure 2.10: Customers' response to the importance of different aspects in their
choice of transport alternatives (Davids et al. 2014) ................................................51
Figure 2.11: Customers' rating on uber POP drive(s) safety (Davids et al. 2014) ....52
Figure 2.12: Netherlands's average number of person in car (Davids et al. 2014) ...53
Figure 2.13: UberPOP's strong growth in usage (Davids et al. 2014) ......................54
Figure 3.1: Vietnamese's public transportation preference (Q&Me 2015) ...............55
Figure 3.2: Vietnamese's choice of taxi brands (Q&Me 2015) ................................56
Figure 3.3 Taxi price comparison among South East Asia countries .......................60
Figure 3.4: Uber's pricing strategy (Lawrence 2014) ...............................................68


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INTRODUCTION

Taxi is a potential industry in Vietnam among different public transportation
available in the market as it is preferred by the users in terms of speed, time
convenience and privacy. However, the way traditional taxi brands in Vietnam or
the traditional taxi industry as the whole functions for decades seems to remain
unchanged since its birth, which, therefore, create no difference among the brands.
The emergence of newcomers with distinct function such as Uber or Grabtaxi with
their initial success in attracting the users in local market recently soon put the
traditional ones under pressure. The case put conventional taxi brands with the
matter of innovation.
Innovation, in these modern eras, is considered a key factor in managing the
business‘s growth, particularly the innovation in products. In other words, how to
develop and manage the process of creating the new product or even just to improve
the former ones play a significant role in deciding whether the company is capable
to expand its business and grow.
Uber – a technology - based taxi brands, which entered the market 7 years ago, has
evolved into one of the most valuable start – up ever. Starting from the idea with the
incentive of solving a practical problem of finding the cab, Uber was successful in
developing their initial idea into a complete modeled product. Uber keeps growing
by successfully develop many new product lines and expand the business over
hundreds of nations and attract billions of investment despite the fact that the
company has also faced the disapproval from the local governments in many
countries, claiming that Uber has competed unfairly with the local traditional taxis.
In the case of Uber, it would be worth studying the process of how a start - up
develops its new product so successful that it has rapidly taken over a remarkable
proportion of market share while at the same time dealing with the pressure from
the authority.
The content for the thesis topic covers the studying of model, which Uber uses to
develop their product line by looking at a specific case of UberPOP development in

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Netherlands. In further extent, the thesis would also briefly generalize the current
practices and problems faced by traditional taxi in Vietnam with the access of
technology-based companies and draw out the lesson learnt from UberPOP case in
order to help the traditional taxi brands in Vietnam to compete in local market.
Thesis Objectives
The purposes of the thesis mainly focus on these following points, which would be
presented in separated chapters:
 Review the product development process studied by different authors and
how this process is applied differently between service products and tangible
products
 Analyze a case of Uber – how Uber developed the new service of UberPOP
in Amsterdam, Netherlands
 Lesson learnt from UberPOP case and application suggested for Vietnamese
traditional taxi brands
Thesis Scope
Content: The thesis specifies the research content on the product development
process that Uber applied to UberPOP and those activities taken by the company in
each phase of the process. Moreover, the practices of traditional taxi brands in
Vietnam together with some lessons and suggested application would also be
covered to the extent of this thesis.
Time: Though in analyzing the case of UberPOP, the timeline would fall in the
range between 2014 and 2015, the time scope would be tracked down from the time
of Uber establishment up to present time since the thesis would give an overall view
on Uber. In chapter 3, the thesis would cover the content of the current practices of
Vietnam taxi market; therefore, the timeline covered would be from 2014 up to this
day.
Thesis methodology
In the thesis, the main method used is synthesis and analysis. Qualitative,
description and comparison method will also be used. Data and statistics from

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reliable and/or official sources will be compiled and processed in order to give firm
grounds for the reasons and findings of the thesis.
Thesis structure
Aside from the introduction and conclusion, the thesis consist three parts:
Chapter 1: Theoretical framework
Chapter 2: Uber‘s product development process: case of UberPOP in Netherlands
Chapter 3: Application to traditional taxi in Vietnam


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CHAPTER 1.

CHAPTER I: THEORETICAL FRAMEWORK

1. Introduction to product development :
1.1.

Definition:

According to Karl T. Ulrich and Steven D. Eppinger (2012, p.2), product is
―something sold by an enterprise to its customers‖ and product development is ―the
set of activities beginning with the perception of a market opportunity and ending in
the production, sale, and delivery of a product‖.
In other more specific definition, product development process is defined as ―the
sequence of steps or activities that an enterprise employs to conceive, design and
commercialize a product‖ (Ulrich and Eppinger 2012, p.12)

The rule is to focus on improving systematic methods for guiding all the processes
involved to bring a new product to the market.

1.2.

Product development - service product:

1.2.1. Difference between service development and traditional product
development:
Service is a particular type of product, which is not tangible as a commodity and
can be described as ―a bundle of utilities or satisfaction‖ (Onlvisit and Shaw 2009,
p. 333).
According to Philip Kotler (2006, p. 224), ―service is an act or performance that one
party can offer to another that is essentially intangible and does not result in the
ownership of anything‖.
For this fundamentally difference from tangible product, service requires unique
considerations in its creation and development.
The best approach for developing innovative new services is lying upon solving
customers‘ problems and meeting their needs. A company can develop innovations
that separate it from rivals and establish real differentiation – which is a great
development in service through delivering new improvement that address customer
needs, which is not fulfilled.


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Due to its different nature, service development has its own set of attributes,
challenges, and processes that need to be distinguished from those of traditional
product development. For example, ―manufacturing‖ in service development often
consists of support or ―delivery‖ processes components that ultimately create the
customer‘s experience. Customers play a direct role in the service delivery process,

making their involvement in development much more essential. In addition, because
the success of service delivery is highly influenced by the person, people, or
technology that interfaces with the customer, minimizing variation in delivery
quality and consistency is critical for success (ed. Kahn 2013, p. 52)
The table below would summarize four main factors – ―4I‖ that, according to Kahn
(2013, p. 52-56), make the service development different from traditional product
development:
Table 1.1: Factors that make service development different (Kahn 2013)

Factors

How they are different?

Individualized experience

Services are consumed differently from different
consumers
The core aspect of a service is not a physical hard good,
but the intrinsic value customers receive and the
memories they retain
Customers‘ reaction to and assessment of the service is
immediate.
Services should be thought of as the holistic sum of
their individual parts.

Intangible value

Instantaneous Evaluation
Inseparable components

1.2.2. Types of service development:

There are three ways in which an enterprise could develop its product that is in the
service form. Either way can lead to the result of a new face of the product offered
due to the changes and development in width or in depth.
Service line extension is the augmentation of the existing service line such as in the
case of a restaurant adds a new item to the menu or an airline offering a new route.


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Service improvement is referred to the changes in feature of the original services
that are already offered.
Style changes referred to the way of bringing changes that have significant effect on
customer perception, emotion and attitudes. For example, a brand changing its
colour theme or logo shape is considered a style change.

2. Product development process:
2.1.

New product development process:

Different authors, in general, have almost the same ideas on the activities that
should be involved in the procedure of developing a new product. These activities
are grouped into stages and the stages are ordered into a process, of which the later
maybe the result of the earlier or the preparation for the one after that.
Despite the similarity in most of the activities involved; however, each author or
group of authors‘ studies is differentiated by the way they investigate the process.
2.1.1. Philip Kotler and group of Sak Onkvisit and John J. Shaw:
According to Philip Kotler (2006. p. 261), ―in order to successfully develop a new
product, firms must carry out strong new-product planning and set up a systematic,

customer-driven new product development process‖ for finding and growing new
products. The process, which he believes is made to serve this purpose include these
eight following steps:


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Idea
Generation

Idea
Screening

Concept
Development
and Testing

Marketing
Strategy
Development

Commercialis
ation

Test
Marketing

Product
Development

Business
Analysis

Figure 1.1: New Product Development (Kotler 2006)

In the process, Idea generation is the systematic search for the new-product ideas
(Kotler 2006)
Idea screening is the following step with the aim of reduce the number of ideas to
the most worthy and possible ones, which is spotting good ideas and dropping poor
ideas as soon as possible.
Concept development and Testing is the step in which the idea is developed into a
detailed version and then brought into testing with a group of target customer
(Kotler 2006)
Marketing strategy development is the phase in which the project team would
design a marketing strategy in order to introduce the design of complete version of
the product to the market later on (Kotler 2006)
Business analysis is the stage reviewing some financial factors with the aim of
figuring out whether the sales, costs and profit projections for new products would
meet the objectives of the firm.
Product development is the stage in which an assigned department would develop
the product concept into the physical version. This step cost a lot of efforts in
investment because its result would decide the possibility of the idea to be
developed into a workable product


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Test marketing is the following step that the product and its proposed marketing
program are tested in realistic market settings (Kotlers 2006)
Commercialization comes after the test marketing process and the decision on this
step is dependent in the result of the previous step. The test marketing will provides

the needed information for the management board to decide on whether to launch
the new-product. Once it is agreed that the product would be introduced into the
market, it is called commercialization.
According to group of Sak Onlvisit and John J.Shaw, the new product
development process consists of 6 distinct steps in comparison with 8 steps given by
Philip Kotler, which starts from the generation of new product ideas to the fullscale commercialization
The process is on the same basis with Philip Kotler‘s; however, it omits the two
steps of Concept Development and Testing and Marketing strategy development.
Nevertheless, this difference does not make the two given processes divergent in
their essences. In fact, the product development phase may include the Concept
development and Testing‘s activities such as lab and technical tests as well as
manufacturing pilot models that Kotler mentioned in his separate step named
accordingly. Furthermore, the Test marketing phase of these two author groups
consists of same activities and serves the same purpose of finding out the potential
marketing problems and the optimal marketing mix. While Kotler splits Building
marketing strategy as a distinct step that need to be considered even prior to the
product development step, the other two do not think that it is necessary.
2.1.2. Karl T. Ulrich and Steven D. Eppinger:
Karl T. Ulrich and Steven D. Eppinger, with a slightly different perspective from
the groups of marketing authors, give out another process that includes six distinct
steps that is more focusing on the product development activities.
This process is designed mostly to be applied by the company whose product is in
tangible form as it is more focusing on product design. Ulrich and Eppinger, with


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the overview on the organisational structures and functional orientation tendancy,
give a map on what each functional department should carry out in each phase of
the process.
Though difference in the names of the phases, it can be obtained that the activities

that these two authors belive to be taken out in each step is somehow similar to
what Philip Kotler and group of Sak Onkvisit and John J. Shaw think.
The below figures shows the six phases in generic development process and also
identifies the key activities and responsibilities of the different function in the
organization during each development phase given by the two authors:

Figure 1.2: Key activities and responsibilities of different functions within organization (Ulrich and
Eppinger 2012)


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Planning: The planning activity is often referred to as ―phase zero‖ because it
precedes the project approval and launch of the actual product development process
(Ulrich and Eppinger 2012, p. 13). In this phase, all the opportunities for the new
product would be recorded and scanned together with the identification of market
goals and available technology assessment
The outcome of this phase is the statement which includes the market target for new
planning product, project mission statement, business goals, key assumptions, and
constraints (Ulrich and Eppinger 2012, p. 13)
Concept development: ―A concept is a description of the form, function, and
features of a product and is usually accompanied by a set of specifications, an
analysis of competitive products, and an economic justification of the project‖
(Ulrich and Eppinger 2012, p. 15). In this phase, a list of different product concepts
is planned and evaluated. One or some qualified concepts out of the list would then
be chosen for further stages of development and testing.
System-level design: “The system-level design phase includes the definition of the
product architecture, decomposition of the product into subsystems and
components, and preliminary design of key components. Initial plans for the
production system and final assembly are usually defined during this phase as well‖
(Ulrich and Eppinger 2012, p. 15). Since this process is said to be best applied to

tangible products, this phase of the process focused on material design for the
product with the expected output of the layout for the functional specification for
future product.
Detail design: If the system-level design focused on the structure or the outline
design of the product then detail design is the stage in which the layout is filled with
details. ―The detail design phase includes the complete specification of the
geometry, materials, and tolerances of all of the unique parts in the product and the
identification of all of the standard parts to be purchased from suppliers‖ (Ulrich
and Eppinger 2012, p. 15).
Testing and refinement: The testing and refinement phase involves the construction
and evaluation of multiple preproduction versions of the product. Usually there
would be two versions of prototypes tested in order to evaluate the effectiveness of


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the product. Early (alpha) prototypes are usually built with production-intent
parts—parts with the same geometry and material properties as intended for the
production version of the product but not necessarily fabricated with the actual
processes to be used in production. Alpha prototypes are tested to determine
whether the product will work as designed and whether the product satisfies the key
customer needs. Later (beta) prototypes are usually built with parts supplied by the
intended production processes but may not be assembled using the intended final
assembly process. Beta prototypes are extensively evaluated internally and are also
typically tested by customers in their own use environment (Ulrich and Eppinger
2012, p. 15).
The goal for the beta prototypes is usually to answer questions about performance
and reliability in order to identify necessary engineering changes for the final
product (Ulrich and Eppinger 2012, p. 16).
Production ramp-up: In the production ramp-up phase, the product is made using
the intended production system. The purpose of the ramp-up is to train the

workforce and to work out any remaining problems in the production processes.
Products produced during production ramp-up are sometimes supplied to preferred
customers and are carefully evaluated to identify any remaining flaws. The
transition from production ramp-up to ongoing production is usually gradual. At
some point in this transition, the product is launched and becomes available for
widespread distribution. A postlaunch project review may occur shortly after the
launch. This review includes an assessment of the project from both commercial
and technical perspectives and is intended to identify ways to improve the
development process for future projects (Ulrich and Eppinger 2012, p. 16).
2.1.3. Stage – Gate model:
Another reputable and reliable model that is used widely by many world-largest
companies and was investigated by Robert Cooper is Stage gate model.
The Stage Gate model is an organized, structured product development and launch
process which is used to decrease the product failures and increase the success of
the companies in launching new products. It is a series of stages and gates. As


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shown in the figure below, there are five stages and after each stage is followed a
gate. The stages represent the activities that are taken during the NPD process.
Gates are checkpoints that are determined by certain criteria from which companies
decide either to continue with the project or not.

Figure 1.3: The typical Stage - Gate model (Cooper 2001)

One of the differences between Stage-Gate model and the other models is that the
Planning (Idea generation) phase, in the process is mentioned by Discovery, is
prerequisite for the product development process; hence, it is separated and not
included in the process. In this very fundamental ground, thousands of idea is
recorded from many sources and then is evaluated to narrow down to the very best

ideas before coming to the decision of whether to be developed or not.
The figure of the process of idea generation step based on the theories of getting
product idea from many resources would be drawn as followed:


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Figure 1.4: Sources of product idea (Mahmutllari 2014)

It can be taken that ideas can come from various sources, which are Voice of
customers (VOC), Internal Sources, Market research and Competitors.
The VOC methods come from the idea of getting the consumer insights in the
products, which is very expensive; however, effective. Another way to get the idea
from this method is to work with the very innovative customers and come up with
the developed features of the product (Lead user analysis, Eric von Hippel).
The Internal source is another method which uses team knowledge and creativity to
generate new ideas. This method is often called brainstorming. In this method the
aim is to generate as many ideas as possible and normally two general guidelines
are defined; the first one is that all judgment must be deferred and all ideas are
welcome. Criticism is not good and should be inappropriate. This helps to generate
high quantity of idea (Kahn 2011, p. 73; Ulrich & Eppinger 2012, p. 127-128)
Ideas come from market research is generated from identifying and investigating the
market trend and customer response to the product. This method can be assigned as
one of the sub-method of VOC though.
Another source, from which the ideas is generate from competitors. The aim is not
to copy the competitor‘s products but to analyze their product to gather ideas to an
improved product. When using this method it is very important to analyze each part
of the competitors‘ product and define what is wrong with it. It is also important to

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analyze how well the product is doing and what are the materials which have been
used for the positioning of the product.
Scoping is the first stage of the new product development and launch process. In
this stage firstly a preliminary market assessment is done. During the preliminary
assessment a quick scoping of the market prospects for the product is essential.
Such assessment includes; the potential of the product, market acceptance and the
requirements for the product. This process is not a detailed market research but a
desk research which is based only in the existing recourses. Secondly a preliminary
technical assessment is con-ducted. The technical assessment is focused on the
conceptual assessment and the technical feasibility, manufacturing process
assessment, intellectual properties and technical solutions. A preliminary financial
and business assessment is the final check before the recommendations are given. In
this phase only a surficial check of business rationale and financial prospects is
done (Cooper 2001, p. 178-184). The information gathered from the assessments
above will provide the ground to justify the elimination of some projects and
acceptance of some others. After reviewing the results the gatekeepers should the
decision on the project be given. When a project has been approved the project team
together with the gate keepers should propose an action plan for the continuation of
the product development. At the same time the criteria for the next gate are decided
by the project team and the gatekeepers (U.S Department of energy 2007; Cooper
2001, p. 184)
Building Business Case
After the preliminary assessments the second stage is the last predevelopment stage.
In this stage the studies are more detailed. Firstly a study of user needs and wants is
conduced. Defining the customer value and benefit can determine a successful
product (Cooper 2001, p. 184-188). To support this idea even further, in a video
webinar, John Hogan - a value management advisor states that in order for a
company to success with a product the company needs to bring in the customer
value. The customer value will enable the company to understand the profit

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implications of the development decision. The research is important but a product
cannot success without the customer value (Hogan 2013).
Competitive analysis is another important part of this stage. In order to be
successful a company should provide greater customer value and satisfaction than
its competitors do (Kotler et al. 2013, 76). A detailed look of the competition should
be conducted to determine who are the competitors, what are their strengths and
weakness, pricing and business model. Furthermore, market analysis determining
the market size, trends, segmentation and buyers behaviour, is combined with the
two studies mentioned above. This analysis in is a continuation of the preliminary
analysis which was done in the first stage; however, this is a more in depth analysis
(Cooper 2001, p. 197).
Cooper also defines the detailed technical assessment as very important in this
stage. During the assessment the company maps out the technical solutions and
defines the possible risks which the product may face. Manufacturability, suppliers
and intellectual properties are also analyzed in this phase. After technical detailed
assessment a concept testing is very important before going to development. The
concept testing helps the company to prove the interest of the customer or end-user
and to add the final components to the concept. As conclusion, financial business
analysis and a plan of actions are the final reports which should be prepared before
going to the stage 4, which is development (Cooper 2001, p. 184-191)
Development
A product can exist as a concept passing all the business tests mentioned above.
How-ever the product concept needs to go to the next stage that is the development.
In this phase, the R&D team starts developing the concept into a physical product
(Kotler, 2013). An important part of the development is to build a prototype and
start the testing with the customers as soon as possible. During this stage is vital to
seek customer feedback and input continuously. The customer feedback will help to

maintain the product development in the right direction, meeting all customer
requirements (Cooper 2001, p. 253). Cooper underlines that rapid development is


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also very important during this stage. The product should reach the market as fast as
possible in order to gain competitive advantage and receive faster revenue.
Moreover, Stefan Thomke and Donald Reinertsen (2012) from Harvard business
review have analysed several interesting myths on product development. Such
myths can influence the product development and launch process. Firstly, from the
economics point of view the authors are arguing that when purchasing components
for a project it should be done in small amounts and tested in each process without
creating batches. This process will help in improving cycle time, efficiency and
quality. Secondly, for organizing the resources the authors are recommending the
managers to not concentrate all resources in one project as this would not fasten the
product development process but create queue in other projects At the same time it
is also recommended to avoid starting the development too early as such action will
not increase the development speed if the company is practically not ready for
starting it (Thomke and Donald 2012).
Once the product's first prototype has been developed and tested with the
customers, continuous improvement is necessary. The development team should
always give priority to customer feedback and features that bring value to the
customer and not the product itself (Hogan 2013). Moreover, Robert Cooper (2001)
states that a post launch plan is very important to be developed in parallel with the
product development. At this stage the company will need to define what will occur
after the product launch; what should be measured and how it will be done?
Testing and Validation
The purpose of this stage is to completely validate the product and prepare it for the
final launch. Testing is very important to validate the functionality and
documentation of the product. Avoiding this stage can very often result in a failed

product launch (Soni & Cohen 2000).
There are several test methods that can be implemented starting with the preference
test, which measures the market acceptance. During this test the finalized product is
presented to the customer, facing its preferences. The concept and development
tests, which are done in previous stages are applied only in description models, and


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cannot be fully reliable for the final product launch. According to Cooper (2001),
this type of testing would help in minor improvement in the design of the product.
The message received by the customer preference test is a valuable source of
information that can determine how the product should be communicated to the
customer. However it is recommendable to not oversell the product but let the
customer evaluate it. Measuring how much customers like the product is more
important than measuring how good the salespeople are performing.
A Beta test is another testing methodology, which is carried out for a longer period
of time and includes the customers and partners. Commonly, beta testing is the
second phase of the testing after the internal testing. The product is given or loaned
to the customer who will use it in its working environment. During this test, the
product is displayed in the real working environment. The display will help in
defining the strengths and weakness of the product. Some deficiencies that the
product may have, sometimes are not properly shown in the lab testing (Cooper,
2001). All features of the product, benefits and functionality are tested during the
beta test. The feedback received is very important and should be analyzed carefully.
The customer responses will provide very valuable marketing material that can be
used when launching the new products. The underlined benefits and features
received from the customer feedback can be used in designing promotional and
sales material (Vellandi, 2008). According to Soni and Cohen (2000) beta test is a
very important part of the Testing and Validation phase. Other aspects such as
creation of legal document, building up manufacturing plan, and training of sales

services are undertaken during this stage. (Soni and Cohen, 2000)
Market Testing is the final testing methodology that can be done before the product
is launched. The benefits and the cost will depend on the product strategy,
distribution channel and the uniqueness of the product. According to Vellandi
(2008), this testing is completely optional and can be utilized to test the launch
strategy and the marketing plan, in a limited market or group of customers. The
segment chosen to apply the testing is exposed to the complete launch plan and the
finalized product. The main goal of this type of testing is to verify the expected
sales and market acceptance before going to the gate five which gives the green/red


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light for the launch of the finalized products. The second outcome of this type of
testing is that company can evaluate different launch plans by introducing them into
small segments in two different groups. In the industrial products such type of
testing is also called trial selling where each detail is in accuracy with the final
launch plan (Cooper 2001, p. 273-274; Vellandi 2008)
Launching
The final stage of the product development and launch process is the introduction of
the product into the market. On this stage the role of marketing and sales is crucial.
For instance developing a marketing plan is very essential activity in this stage
(Cooper 2001, p. 278-279). For better understanding of the content of a marketing
plan, the appendix three present the content of marketing plan defined by Kotler et
al.(2013, p. 56)
A common definition of marketing is, putting the right product, in the right place, at
the right price, at the right time (Manktelow & Carlson 2012). According to
Mankte-low & Carlson, if one of the previous stages is underestimated or not
considered the launch of the new product can be a failure.
(i)

Defining Marketing strategy

In a product launch process, the company's mission and objectives are defined by
the company since the beginning of product planning. The goal of Marketing is to
create value for the customers and ensure a profitable relationship with the
customers. To accomplish this, a marketing strategy is necessary. The marketing
strategy defines which is the group of the customers company will serve and how
will it be served to this customer group. The group of customers is defined through
segmentation and targeting and the answer on how the company will serve to its
customers comes via differentiation and positioning.
A market segment consists of a group of customers which have similar needs and
respond very similarly to the marketing activities. The marketing target involves the
analyzing of each market and selecting one or more segments as potential
customers.


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Furthermore, Kotler defines positioning as a place which companies occupy in the
customers mind to distinguish their products from the competitors. In the
positioning of a company, the customer value differentiations and the advantages of
the products towards the customers are very important. If a company promises
better value than the competitor, it is a must to deliver those values. This process is
reached through the differentiation of the market offering to create greater customer
value
(ii)

Defining on marketing mix

After defining the marketing strategy, the company should prepare the marketing
mix. The marketing mix is the most important set of marketing tools which

companies can use to influence the demand of the customers for its products. This
set of tools is collected into a group called the four P´s of marketing. The four P´s
stand for product, place, price and promotion (Kotler & Keller 2009, p. 92)
Product is the article which has been developed by a company or manufacturer
which desires to sell it to the customer. Product is the main competing item of the
company and it is considered to be the heart of marketing mix. If a product does not
fulfill the customer needs, or satisfaction, the price, promotion and place will not be
able to achieve the marketing target (Akrani 2010).
Price of the product defines the value of the product to the customer. It is the most
important factor which influences the marketing. Price can be determined by several
factors such as; product manufacturing cost, market share, target customers, type of
the product. (Van Vliet 2013).
Promotion is all about defining the way how the company will communicate with
the customers. The core message is delivered to the customers via defined
promotion tools used in sales and marketing. Promotional activities help to
differentiate the product from competitors, and create a good relationship with the
customers (van Vliet 2013, Akrani 2010).
Place is considered as distribution channel which is used to deliver the products to
customers. However the type of product, which a company offers, influence the way
how it should be distributed (Ehmke et al. 2013).


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(iii)

Media channels

Before launching a new product it is important to understand which media
preferences the target customers have. By using the right media, a company can use
more efficiently the investment in promoting the new products into the market

(Gray 2012). On the picture below, nine traditional media and nine online media are
listed.

Figure 1.5: Eighteen diferent media used in B2B product launch (Adam 2012)

The factors that influence the company‘s decision should firstly be decided in a research where customer's media preferences are listed. Then, company should
consider the available resources to implement each listed media. The industry in
which the company is operating and the position of the company in the industry, are
two other important factors which influence the decision on which media channel
should be used (Adams 2012).
(iv)

Sale promotion

The factors that influence the company‘s decision should firstly be decided in a research where customer's media preferences are listed. Then, company should
consider the available resources to implement each listed media. The industry in
which the company is operating and the position of the company in the industry, are