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Stage 8- Commercialization

The New Product Development Process

Stage 8- Commercialization

The New-Product Development Process (NDP) is outlined above by Kotler & Keller (2012).

Commercialization is the final stage of the NDP which takes place after a successful test marketing stage. During the commercialization stage, plans for full-scale manufacturing and marketing mix must be refined and completed, and budgets for the project must be prepared (Pride et al, 2011). The introduction of new products incur huge financial costs for an organisation and can take several years after the initial commercialization decision to be properly introduced (Mcdaniel et al, 2011). 

Commercialization incurs the company’s highest cost to date and the following factors needs to be considered (Kotler & Keller, 2012);

When? (Timing)

When a company has almost completed the development work on its new product, the company faces three choices;

1.      First entry- Enter the market first to lock up key distributors and customers

2.      Parallel entry- Coincide with the competitor’s entry.

3.      Late entry- Delay launch to learn the size of the market.

Where? (Geographic Strategy)

Companies select markets based on potential, local reputation and cost of communication media.

To Whom? (Target-Market Prospects)

The company needs to target initial distribution and promotion.

Example of Commercialization

In 2013, Slazenger launched their new range of cricket products in Halifax, England. Slazenger chose to launch their new products at ‘The Cricket Asylum’ in Halifax which is a specialist cricket shop, this allowed Slazenger to reach their fans and target market directly. By launching their products in a specialist cricket store, Slazenger managed to keep costs minimal as well as making sure that every customer visiting the store would be interested in cricket and therefore interested in Slazenger’s new products. 

The new products were launched in January 2013 which marked the start of a new cricket season with England playing test matches in India and also marked the start of an Ashes year therefore at this time, there is a high amount of interest in cricket and cricket equipment which will increase Slazenger’s sales and profit.

Commercialization of Quick Baseball

To commercialize Quick Baseball, I applied the following criteria to my new sports format (Kotler & Keller, 2012);

When: Quick Baseball will launch just before the start of the MLB season (February 2015). The launch will occur at this time because the target market will be aware of the upcoming baseball season so interest will be high.

Where: Quick Baseball will be launched in the USA, this is due to the large number of baseball players in the USA. (See Appendix B for Number of Baseball Players in the USA).

To Whom: The target market will be the viewers that currently watch MLB in the USA- Approx. 1.01billion people (Calcaterra, 2014).

How: I created a logo for my product at the product development stage of the NDP. Quick Baseball also passed the test marketing stage so now I am going to promote my product on social media and in Baseball magazines across the USA.

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References

Calcaterra, C. (2014). Comment of the Day: How many people really watch MLB games?. (online) Hardballtalk.nbcsports.com. Available at: http://hardballtalk.nbcsports.com/2011/09/15/comment-of-the-day-how-many-people-really-watch-mlb-games/ (Accessed 3 Feb. 2015).

Kotler, P. & Keller, K.L. (2012) Marketing Management. Global Edn. Harlow: Pearson Education.

Mcdaniel, C.D, Lamb, C.W, & Hair J.F, (2011) Introduction to Marketing 11th Edn. Ohio: South-Western Cengage Learning.

Pride, W., Hughes, R. and Kapoor, J. (2011) Business. 11^th edn. United States: Western Cengage Learning.

Statista, (2015). Number of softball players & baseball players in the USA, 2014. [online] Available at: http://www.statista.com/statistics/227429/number-of-softball-players-and-baseball-players-usa/ [Accessed 3 Feb. 2015].

Appendix

Appendix A- Number of Baseball Players in the USA

(Statista, 2015)

Stage 7- Test Marketing

The New Product Development Process

Stage 7- Test Marketing

The New-Product Development Process (NDP) is outlined above by Kotler & Keller (2012).

After the product development process it is necessary to find out whether the new product is going to be accepted into the market or not (Beri, 2013). Test marketing is a controlled experiment, done in a limited but carefully selected part of the marketplace (Beri, 2013).

Test marketing involves placing a product for sale in one or more selected areas and observing its actual performance under the proposed marketing plan (Evans & Berman, 1982). The purpose is to evaluate the product and pre-test marketing efforts in a real setting prior to full-scale introduction (Hiltz, 2001). The aim is to assess how large the market is and determine the reactions of consumers and resellers in an authentic setting. Most companies use test marketing to lessen the risk of product failure (Kazmi, 2007).

Test marketing is essentially an exercise in experimentation, where the market place is a laboratory. It also brings out that the predictability of sales or profit is the objective of test marketing (Beri, 2013).

Example of Test Marketing

The National Basketball Association (NBA) is the most watched men’s professional basketball league in the world. In 2015, the first NBA Global Games took place in London, where the New York Knicks played the Milwaukee Bucks in a regular season game. The NBA used this event to test the market in the UK as they eventually want to break into the UK market. An average of 151,500 people play basketball at least once a week, compared with more than 2.1million who play football (Sport England, 2013). Through this test marketing process, the NBA are able to estimate the profitability of future events in the UK and hopefully increase the number of people that play Basketball in the UK.

Test Marketing Quick Baseball

To test market Quick Baseball I am using a GANTT chart. A GANTT chart shows the key stages of a project and the duration of each as a bar chart (Martin, 2002). I have used a GANTT chart to enable me to identify the different marketing components and when I am going to implement these components (See Appendix A for Quick Baseball GANTT chart).

The main components I am focusing on are the 4p’s of the marketing mix;

·         Product (Research, Name, Logo, Profitability): Between January and May I researched Baseball and found a gap in the market for Quick Baseball. I then came up with the name ‘Quick Baseball’, logo (see Figure 1) and worked out how much profit it could potentially make (See Appendix B for Potential Profit).

·         Price (Distribution Channels): My distribution channel is direct to end users.

·         Place (Cost, Price): From May to June I worked out how much the format would cost and then set the product price.

·         Promotion (Publicity, Advertising, Tickets): To promote Quick Baseball I would advertise the format and tickets on social media and in relevant magazines such as ‘Baseball America’.

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References

Beri, G. (2013) Marketing Research. 5th edn. New Delhi: Tata McGraw-Hill.

Calcaterra, C. (2014). Comment of the Day: How many people really watch MLB games?. (online) Hardballtalk.nbcsports.com. Available at: http://hardballtalk.nbcsports.com/2011/09/15/comment-of-the-day-how-many-people-really-watch-mlb-games/ (Accessed 22 Jan. 2015).

Evans, J. & Berman, B. (1982) Marketing. New York: Macmillan.

Hiltz, M. (2001) The Marketers Handbook: A Checklist Approach. Markcheck Publishing.

Kazmi, S. (2007) Marketing Management; Text and Cases. India: Excel Books.

Kotler, P. & Keller, K.L. (2012) Marketing Management. Global Edn. Harlow: Pearson Education.

Martin, V. (2002) Managing Projects in Health and Social Care. London: Routledge.

Sportengland.org, (2013). Sport England - Active People Survey 7. [online] Available at: http://archive.sportengland.org/research/active_people_survey/active_people_survey_7.aspx [Accessed 27 Jan. 2015].

Appendix

Appendix A- Quick Baseball GANTT Chart

Key

	Indicates the 4 p’s of marketing.
	When the implementation of the components is going to occur.

Appendix B- Potential Profit

Target Market	Viewers of Major League Baseball (MLB)
Size of Target Market	Approx. 1.01billion people (Calcaterra, 2014)
Planned Price	Ticket price 40% cheaper that current prices for MLB. So to watch a MLB game at Boston it would cost $50. To watch a Quick Baseball game at Boston it would cost $20
Profit Goals	Aim to sell an average of 20,000 tickets a game (60 games will take place during the season) at average price of $15. Total profit at end of the season= $18,000,000

Stage 6- Product Development

The New Product Development Process

Stage 6- Product Development

The New-Product Development Process (NDP) is outlined above by Kotler & Keller (2012).

Product development occurs when a concept is converted into a physical offering or when the service is created (Beech & Chadwick, 2007). The product development stage of a new sports product/format is made up of numerous stages; product construction, packaging, branding, product positioning and attitude and usage testing. (Mullin et al, 2000).

The research and design department of an organisation aim to design a prototype that will satisfy potential target consumer needs, and one in which can be produced quickly and at budgeted costs (Kotler and Armstrong 2012).

The aim of the research and design department is to design a prototype that performs safely and is able to be produced within the budgeted manufacturing costs and also includes the following (Kotler & Keller, 2012):

·       -  Product Construction & Packaging Decisions

·         -Branding Decisions

·         -Product Positioning

·         -Attitude & Usage Testing

Example of Product Development

Cricket is a sport where attendance at games is decreasing. The traditional 5 day format (test match cricket) is becoming increasingly less popular for spectators. 40 over cricket is a relatively new format of cricket which has been developed to try and increase public interest in cricket. 

In this format each side has one innings and the aim is to set the highest score possible in just 40 overs. “It's the ideal amount of time to pack in plenty of action while also giving players a chance to construct innings and making for a better spectator experience.” (Crowe, 2014). 

The target market was of the younger population and families and it was positioned alongside T20 cricket as it shares the party atmosphere and friendly environment. 

Branding decisions such as the logo (see Figure 1) and the name of the format are simple and self-explanatory which suits its target market of the younger population.

Figure 1

Quick Baseball

To develop my new sport format- Quick Baseball, I will use the considerations outlined by (Kotler & Keller, 2012):

·        - Product Construction & Packaging Decisions; The cost will be minimal as Quick Baseball can be played with the same equipment and on the same field as regular baseball.

·       -  Branding Decisions; my new format will be called ‘Quick Baseball’ it will be played by MLB teams and tickets have to be purchased to watch Quick Baseball so it is exclusive. Also at this stage I have developed a logo for Quick Baseball (see Figure 2).

·         -Product Positioning; I will select a market segment and position the new format against competitors. (See Appendix A for Perceptual Map).

·         -Attitude Usage & Testing; My brand will perform differently to MLB because my target market is the younger population and these will be my frequent customers. I want them to have the perception that Quick Baseball is a quick, free-flowing game. Therefore customer needs will be different to MLB, I want to keep my customers satisfied by creating a party-like atmosphere which will keep them entertained.

Figure 2

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References

Anderson, J., Anderson, J., Romanowski, D., Kreinces, E. and Isaacson, B. (2014). Customer Usage & Attitudes « MMR Strategy Group. [online] Mmrstrategy.com. Available at: http://mmrstrategy.com/marketing-research/usage-and-attitude-studies/ [Accessed 11 Dec. 2014].

Beech, J.G. & Chadwick, S. (2007) The Marketing of Sport. Harlow: Prentice Hall

Crowe, M. (2014). [online] Available at: Cricinfo, (2014). Martin Crowe: Forty overs is one-day cricket's future. [online] Available at: http://www.espncricinfo.com/magazine/content/story/713821.html [Accessed 11 Dec. 2014]. [Accessed 11 Dec. 2014].

Kotler, P. & Keller, K.L. (2012) Marketing Management. Global Edn. Harlow: Pearson Education

Mullin, B., Hardy, S., Sutton, W. (2000) Sport Marketing. Illinois: Human Kinetics

Statista, (2014). Major U.S. sports leagues: average attendance 2013-2014 | Statistic. [online] Available at: http://www.statista.com/statistics/207458/per-game-attendance-of-major-us-sports-leagues/ [Accessed 11 Dec. 2014].

Appendix

Appendix A- Perceptual Map of Sport Attendance in the USA

My market segment will be very similar to MLB so I will be targeting the younger population as they attend MLB games more regularly that the older population as the perceptual map above shows.

Stage 5- Business Analysis

The New Product Development Process

Stage 5- Business Analysis

The New-Product Development Process (NPD) is outlined above by Kotler & Keller (2012).

Business analysis is a very important stage of the NPD process because it is the final stage of assessment before deciding whether or not to develop the idea into a product. The primary focus of this stage is to determine whether the product will be profitable or not. Therefore the business analysis stage “will help you determine the costs involved in your proposed NPD, and forecast the profits you may make from the product in future financial years. The costs of developing a product are substantial. Your business analysis will also help you eliminate inappropriate ideas and avoid unnecessary costs.” (Business.qld.gov.au, 2014).

Considerations in business analysis include; demand, cost, sales and profitability (Lamb, Hair & McDaniel, 2009).

Demand: This relates to the products market size and potential. Price/sales relationship: speed of sales growth, seasonality and rate of repurchase.

Cost: The cost to produce the product including start-up costs vs. running costs.

Sales: Forecast sales volume. The number of people expected to buy the product- market share.

Profitability: Time to recoup initial costs. This is a direct outcome of the considerations above.

Example of Business Analysis


Onez Sports Center is the name of a proposed futsal center located at the University Terengganu in Malaysia. Business analysis has been done for this futsal center; this analysis outlines the four considerations mentioned by (Lamb, Hair & McDaniel, 2009).

Demand	The target market is the students of the university. (10,000 students in total).
Cost	(See Appendix A for Breakdown of Operational Cost) Start-up costs RM85,000, operational costs RM14,395 pcm
Sales	Market share will be divided with the competitor (UMT court which provides free futsal services).
Profitability	The business analysis states that the facility will be profitable so the start-up and operational costs which is RM99,395 will be reimbursed.

Quick Baseball

In relation to my new sports format- Quick Baseball I have researched the considerations mentioned by (Lamb, Hair & McDaniel, 2009). 

For demand I have researched the current market size of Major League Baseball (MLB) whom will be my main competitor and hopefully Quick Baseball will have a similar market size to the MLB which is 5,293,083 on average for all teams in MLB. (Baseball-almanac.com, 2014).

The cost of attending a Quick Baseball game will be considerably lower than the cost to attend an MLB game. I plan to price tickets 40% cheaper than current prices for MLB. An average ticket prices will be $15.

In terms of sales; these low ticket prices should see similar attendance figures to MLB fixtures. Average attendance for the 2014 MLB season was 30,450. (ESPN.com, 2014) (See Appendix B for MLB attendance figures).


By taking cost and sales of Quick Baseball into account, it will be hugely profitable. 58 games will take place during the season. If attendance figures are the same as attendance figures for MLB $26491500 profit will be made through ticket sales alone.

500 Words

References

Baseball-almanac.com, (2014). Baseball Markets by Al Streit. [online] Available at: http://www.baseball-almanac.com/articles/baseball_markets.shtml [Accessed 4 Dec. 2014].

Business.qld.gov.au, (2014). Business analysis of new products | Queensland Government. [online] Available at: https://www.business.qld.gov.au/business/business-improvement/new-product-development/strategy-analysis-new-products [Accessed 4 Dec. 2014]

ESPN.com, (2014). 2014 MLB Attendance - Major League Baseball - ESPN. [online] Available at: http://espn.go.com/mlb/attendance [Accessed 4 Dec. 2014].

Kotler, P. & Keller, K.L. (2012) Marketing Management. Global Edn. Harlow: Pearson Education

prezi.com, (2014). BUSINESS PROPOSAL : FUTSAL CENTER. [online] Available at: https://prezi.com/cgfym15tdfjx/business-proposal-futsal-center/ [Accessed 4 Dec. 2014].

Appendix

Appendix A- Breakdown of Cost, Onez Sports Centre

(Prezi.com, 2014)

Appendix B- MLB Attendance Figures

2014 Attendance		Home				Road			Overall
RK	TEAM	GMS	TOTAL	AVG	PCT	GMS	AVG	PCT	GMS	AVG	PCT
1	LA Dodgers	81	3,782,337	46,695	83.4	81	33,830	79.2	162	40,262	81.6
2	St. Louis	81	3,540,649	43,711	99.4	81	32,022	74.4	162	37,867	87.0
3	NY Yankees	80	3,401,624	42,520	85.7	81	35,512	85.2	161	38,994	85.5
4	San Francisco	81	3,368,697	41,588	99.2	81	32,936	72.7	162	37,262	85.5
5	LA Angels	81	3,095,935	38,221	84.2	80	28,174	65.1	161	33,229	74.9
6	Boston	81	2,956,089	36,494	98.5	81	31,867	73.6	162	34,181	85.1
7	Detroit	81	2,917,209	36,014	87.3	81	28,800	68.0	162	32,407	77.5
8	Milwaukee	81	2,797,384	34,535	82.4	81	32,328	75.6	162	33,432	79.0
9	Texas	81	2,718,733	33,564	68.3	81	27,155	64.3	162	30,360	66.4
10	Colorado	81	2,680,329	33,090	65.5	81	31,659	71.2	162	32,375	68.2
11	Chicago Cubs	81	2,652,113	32,742	79.6	81	33,096	76.4	162	32,919	77.9
12	Washington	81	2,579,389	31,844	76.7	81	29,864	68.8	162	30,854	72.6
13	Baltimore	80	2,464,473	30,805	67.8	81	29,671	70.4	161	30,235	69.0
14	Cincinnati	81	2,476,664	30,576	72.3	81	32,140	74.1	162	31,358	73.2
15	Pittsburgh	81	2,442,564	30,155	78.6	79	33,316	76.1	160	31,715	77.3
16	Philadelphia	81	2,423,852	29,924	68.6	81	31,136	71.1	162	30,530	69.9
17	Toronto	81	2,375,525	29,327	59.5	81	29,708	71.2	162	29,518	64.9
18	Atlanta	81	2,354,305	29,065	58.4	81	30,804	71.7	162	29,934	64.6
19	Minnesota	81	2,250,606	27,785	70.3	79	26,943	63.6	160	27,369	66.9
20	San Diego	81	2,195,373	27,103	63.5	80	32,877	72.0	161	29,972	67.8
21	NY Mets	80	2,148,808	26,860	64.3	81	32,217	73.4	161	29,555	69.0
22	Arizona	81	2,073,730	25,601	54.0	79	31,481	70.6	160	28,504	61.9
23	Seattle	81	2,064,334	25,485	53.2	80	28,158	66.3	161	26,813	59.3
24	Oakland	80	2,003,628	25,045	71.4	81	28,757	65.6	161	26,912	68.2
25	Kansas City	81	1,956,482	24,154	63.7	81	26,872	62.8	162	25,513	63.2
26	Houston	81	1,751,829	21,627	52.8	81	27,191	63.0	162	24,409	58.0
27	Miami	81	1,732,283	21,386	57.1	81	28,892	65.4	162	25,139	61.6
28	Chicago White Sox	79	1,650,821	20,896	51.5	81	28,519	66.7	160	24,755	59.4
29	Cleveland	78	1,437,393	18,428	42.4	81	29,107	68.9	159	23,868	55.7
30	Tampa Bay	81	1,446,464	17,857	52.4	81	28,685	65.8	162	23,271	59.9

*In recent years most cases of doubleheaders are split/day-night doubleheaders which means they have two gates/separate attendance figures. In these cases above they are true doubleheaders with only one attendance number. (ESPN.com, 2014)