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Tuesday, April 2, 2013

The Development of Products in the Global Internet Marketplace



Service implementation and management requires a keen understanding of the organization and the process of development. Executives that understand these steps are likely to realize higher levels of success when designing new services and creating new revenue streams. Ignoring any aspect of the process could result in poor design, poor implementation, ineffective customer interface or poor cultural fit that loses capital and investments.

Ideas for service innovation can come from a variety of sources ranging from individual employees to customer feedback. When such ideas are brought forward they are often screened to ensure feasibility and fit with the organization’s strategic plan. As a basic process the organization develops the concepts, analyzes its utility, designs the product and then launches it into the market (Johnson, et. al., 2000). The process is cyclical in that feedback from customers and improvements in design encourages produce relevancy. 

No matter how effective innovation is it must have some value to customers. This value can be real or imaginary in terms of a cost or social benefit. Since these values are often dependent on individual perception some organizations consider using a more systematic approach to possible revenue streams.

The value of the product to the customer is one of the most important ways of determining whether or not the successes of such innovations are likely. Some organizations use an equation to determine the relative value of the product or service. An analysis helps to maintain a level of objectivity when making important strategic offerings. 

Value = Results produced for the customer + process quality/price to customer + costs of acquiring the service. 

In such an equation the results produced are based on the value to the customer, the process quality is the value of the delivery system, price to the customer is its monetary cost, and costs of acquiring the service is the amount of effort in obtaining the product. Each of these factors is analyzed in terms of their quantitative value in order to determine the market value of the product or service. 

Organizations that have moved online and capitalized in the virtual e-commerce market have created dominance in commercial selling and activity. With a proper customer interface and a strong distribution network such organizations allow customers to complete much of their shopping and effort themselves. More importantly the amount of actual customer cost in terms of effort has been reduced significantly with improved search engine performance. 

Technology has also been beneficial in developing efficient service quality by bridging the virtual and physical worlds. Ensuring that the entire process of purchasing online to delivery at the door is efficient raises the perceived value of the service. The easier the process the more satisfaction created. Some organizations might use the SEVQUAL approach which includes analysis of reliability, responsiveness, assurance, empathy and tangibles (Fitzscommon & Fitzscommon, 2011). 

The nature of the Internet also creates world integration of services, ideas, and interaction. Despite this growing trend specific cultures still have their own particular customs. Organizations that bridge these cultural gaps to sell products seek ways of understanding how to not only operate businesses but how to manage the labor thus associated. Gert Hofstead (n.d.) conducted a survey that assessed the work-related values in fifty countries that used the following five dimensions of Power Distance (equality), Individualism (individual treatment), Masculinity (traditional work roles), Uncertainty Avoidance (ambiguity tolerance) and Long-Term Orientation (time commitment). Each of these aspects shed lights of how local customers impact business imperatives.

The success of service innovation and development rests on understanding how new developments are processed within organizations, assessed for value, implemented in the market, and relate to specific cultural needs of the target customers. Understanding this chain of development helps to create executive awareness of the overall wider steps to successful service development. Failure is more likely to occur when steps are either skipped or discounted in development. 

Johnson, S., Menor, L. Roth, A. & Chase, R. A critical evaluation of the new service development process: Integrating service innovation and service design. In New Service Development, eds.
Fitzsimmons and Fitzsimmons. Thousand Oaks, Calif.: Sage Publications, 2000, pp.1-32.

Fitzsimmons, J. & Fitzsimmons, M. (2011). Service Management: Operations, Strategy, Information Technology (Seventh Edition). NY: McGraw-Hill. 

Hofstead, G. (n.d.) Cultural Insights. Retrieved April 2nd, 2013 from http://geert-hofstede.com/



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