The natural environment and the organizations
Some companies consider that environment-friendly strategies may become an obstacle to struggle and survive in a competitive market, as expressed by (Nidumolu & Prahalad, 2009, p. 57), “many companies are convinced that the more environment-friendly they become, the more the effort will erode their competitiveness, they believe it will add to costs and will not deliver immediate financial benefits”. As a consequence, many CEOs think that “the need to become sustainable as a corporate social responsibility, divorced from business objectives” (p. 57). Nevertheless, organizations have to be open to changes in the marketing environment, to meet the new trends to adapt their aims and strategies. Under these circumstances, the broad environment, which “consists of six components: demographic environment, economic environment, social-cultural environment, natural environment, technological environment, and political- legal environment.” (Kotler & Keller, 2012, p. 34), plays a fundamental role.
In addition, rulers around the world are starting to assume more demanding positions in contradiction of practices of management which attempt against the environment; for instance, “in Western Europe, ‘green’ parties have pressed for public action to reduce industrial pollution. In the United States, experts have documented ecological deterioration, and watchdog groups such as the Sierra Club and Friends of the Earth carry these concerns into political and social action.” (Kotler & Keller, 2012, p. 80). In the same way, Chen (2001) states that “green product development is also stimulated by various forms of environmental standards imposed by governments around the world, which have become increasingly more stringent in the past thirty years” (p. 251)
Additionally, corporate environmentalism play an important role by recognizing “the need to integrate environmental issues into the firm’s strategic plans. Trends in the natural environment for marketers to be aware of include the shortage of raw materials, especially water; the increased cost of energy; increased pollution levels; and the changing role of governments” (Kotler & Keller, 2012, p. 81).
Finally, consumers are showing an irrefutable interest on global warming, preserving and protecting the environment (Kotler & Keller, 2012, p. 82), and companies which invest in developing eco-friendly have found that customers “who are concerned about the environment identify with these companies and are more likely to purchase their products and services” (Noel, 2009, p. 12).
From New Product Development to Green Product Development
The integration of environmental issues into the organizations’ strategic plans is a concern that marketers must start thinking about to face the new challenges in the market for new products.
Let’s define new product development (NPD)
First, we need to highlight that product is a “term used to describe all goods, services, and knowledge sold. Products are bundles of attributes (features, functions, benefits, and uses) and can be either tangible, as in the case of physical goods, or intangible, in the case of those associated with service benefits, or a combination of the two” (Belliveau, et al., 2002, p. 453), and “can be either intended (e.g., offering to customers) or unintended (e.g., pollutant or unwanted effects).” (International Organization For Standardization (ISO), 1994, pp. 1-2).
As consumers become more demanding nowadays, organizations need to offer new products to meet consumer’s needs and keep up with the market challenges. According to (Belliveau, et al., 2002, p. 453), new product is “a term of many opinions and practices, but most generally defined as a product (either a good or service) new to the firm marketing. It excludes products that are only changed in promotion”. Companies can get these new products in two ways: one way is buying other companies, patents from other companies, or a license or franchise from another company, and the other way is through the development of new products from within, which is recommended in order to have an ‘organic growth’ (Kotler & Keller, 2012, p. 567). The new product development refers to “the overall process of strategy, organization, concept generation, product and marketing plan creation and evaluation, and commercialization of a new product.” (Belliveau, et al., 2002, p. 450).
For developing a new product, it is necessary to plan and manage a new product development process that consists of “a disciplined and defined set of tasks and steps that describe the normal means by which a company repetitively converts embryonic ideas into salable products or services” (Belliveau, et al., 2002, p. 450).
Although there is a number of proposed models for the new product development process that differ in phases or stages, and vary in steps and terms, basically, all of them start with an idea to develop a new product to meet a need under specific requirements, and ends with the launch of the product in the market (Murthy, et al., 2008, p. 23).
NPD stages
1. Idea screening: This stage must respond to the inquiry “Is the product idea compatible with company objectives, strategies, and resources?” (Kotler & Keller, 2012, p. 573). The aim of screening is to get rid of weak ideas. Under a strict set of criteria that the executive committee assesses “the product idea, the target market, and the competition and roughly estimates market size, product price, development time and costs, manufacturing costs, and rate of return.” (Kotler & Keller, 2012, p. 578)
2. Concept testing: means “presenting the product concept to target consumers, physically or symbolically, and getting their reactions. The more the tested concepts resemble the final product or experience, the more dependable concept testing is.” (Kotler & Keller, 2012, p. 580). At this stage, it is recommended the use of prototypes to obtain a broader landscape at the evaluation process.
3. Product development: it is the stage when “the company will determine whether the product idea can translate into a technically and commercially feasible product.” (Kotler & Keller, 2012, p. 585). The R&D department works on physical prototypes or simulations to approach the concept to a reality that can be easily tested. Once the prototype has been developed, it is tested by the consumers.
4. Test marketing: It is a very expensive stage. Organizations spend a lot of money on giving out free samples to the consumers in order to identify the possible acceptance the product may have in the market. The test marketing is the final and most crucial stage of the product that basically determines if it is ready to be launched or not, “after management is satisfied with functional and psychological performance, the product is ready to be branded with a name, logo, and packaging and go into a market test” (Kotler & Keller, 2012, p. 585). Finally, it is important to remark that “test marketing also measures the impact of alternative marketing plans by implementing them in different cities.” (Kotler & Keller, 2012, p. 587).
5. National launch or commercialization: the last stage represents the most costly stage of the new product development:
“The firm will need to contract for manufacture or build or rent a full-scale manufacturing facility. To introduce a major new consumer packaged goods into the national market can cost $25 million to $100 million in advertising, promotion, and other communications in the first year. For new food products, marketing expenditures typically represent 57 percent of first-year sales. Most new-product campaigns rely on a sequenced mix of market communication tools.” (Kotler & Keller, 2012, p. 588).
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