Successfully developing new products results in high yields and expansion of a company. However, the product's profitability and penetration in the market are more complicated and pose challenges that may diminish development efforts (Gao & Bernard, 2018). As such, companies that sort to invest in new products have to use the best measures and technologies to ensure product development meets quality standards that suit customer specifications. This has often pushed companies to use modification measures to ensure the market specifications are met in order to successfully introduce the product to the market (Gao & Benard, 2018). This paper explores Tesla’s success with the production of the electric vehicle as a new product for the company.
Development of New Products as a Project
New products tend to open new markets, replace other products, broaden the market for an existing product, or take over the market (Wu et al., 2020). New products carry with themselves the ability to make a company utilize their resources and increase the market share globally or locally. In developing a new product, a company has to keep up with the pace of changing markets. In addition, it is imperative to ensure that the product cycle for new products are shorter to ensure they meet market and customer-specific needs. New products will have to pass through different stages: ideation, evaluation, screening, business analysis, testing, commercialization, and development (Madzík, 2019).These stages are essential in ensuring that aspects such quality, time, and cost are favorable and meet the client’s needs and specifications. In targeting the variables, continuous processes and strategies are born to satisfy customers and increase the market and stable development of a new product (Albers, 2020).
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New products go through different stages which include the front-end, product design, product implementation, and the fuzz back-end. The fuzzy front-end involves undertaking activities that bring about the specificity of a product in the market (Alli, 2018). The product design involves establishing how the new product will meet the market and customer requirements. Product implementation entails designing, validation, and testing of the new product. The fuzzy backend refers to the actions taken for production, market launch, and commercialization of the new product (Wu, Liu, & Su, 2020).
The future of a company depends on its ability to stay relevant in the market. Tesla has been committed to the development of new electric cars in the market. Tesla introduced its first electric car in 2008, the Roadster, which was sold in more than 30 countries (Escobedo, 2017). In 2012, they introduced another product, the Model S, which penetrated the market rapidly in 2013 (Escobedo, 2017). According to Escobedo (2017) Tesla has continued to tailor their products to fit the new green energy model that is being adopted in the market.
In developing electric cars, the engineers in Tesla pride themselves in using the technology to produce the best new product. A process management strategy is used in the development of new products (Kalish et al.,2018). Since the new product passes through different complex stages, Tesla uses an approach called integrated product team strategy to introduce new products (Kalish et al., 2018). Although the process involved is slower, the end products are more complete and meet customer needs and market requirements (MacDuffie, 2018). Tesla introduces its new products in the market through a media release and exhibits that help the customers get an experience of what they will get to use the products.
Valley of Death
The valley of death is a phenomenon where a new product faces difficulty in the commercialization, implementation, and accelerating market entry processes (Mangram, 2012). Entrepreneurs and businesses which tend to deal with technologies often face the problem of the valley of death. Surviving the valley of death is a significant boost for startup companies introducing new products in the market (Mangram, 2012). The Death Valley time spans from the time an initial capital is contributed to the time a product will start making revenue. At the time, the risk of failure is always high. There are massive expenses in the valley of death stage that have to be catered for by a business or a startup before the new product starts generating more revenue (Markham, Ward, Aiman ‐ Smith & Kingon, 2010). The expenses include renting office space and industries, payment of employees, predictable costs, and research and development expense costs. The valley of death stage varies for businesses depending on industry niche, seed capital invested, and the business plan. Unless a business budget for the phase adequately and monitors the costs, the introduction of new products may not be successful. The longer a company stays in the stage, the more difficult it becomes for a company to invest in product growth, and the business will start going down of fail. The survival of a new product in the valley of death sends a message to investors about the product's strength in the market.
Tesla has been able to survive the valley of death when introducing their electric cars. However, in certain instances, the company has also suffered from the phenomena. Middler (2019) points out that Tesla experienced problems after introducing its Model S electric car. Although the product received more reviews, the sales were not doing well, and there was an issue of minor problems in the vehicle that needed correction. The flow of revenue was, therefore, minimal, and Tesla felt the effects (Midler, 2019). A substantial part of the for Tesla came from the Chief Executive, who is Elon Musk. To help Tesla from its Death Valley, the United States government, through the Advanced Vehicle Loan Program, intervened to get the company going (Middler, 2019). Ever since, the company's innovativeness has graced the world markets with such tenacity, and the company growth is increasing at a faster rate (Pinna et al., 2018). Concentrating on green energy and zero-emission, their electric cars are indicated to be the next big thing, and therefore, the company products has often been sold even before they hit the market (Mangram, 2012). Tesla electric cars were pre-ordered even before they were produced, which helped the company products navigate the valley of death.
Activities That Need to Be Managed
When a company offers new product in the market, different activities are needed to be managed. From product development to market initiative, some aspects need to be appropriately checked to ensure the success of a company's product and growth. These elements may include funding, product offering and development, customer management, and employee management. In product offering, designing, and developing products that meet customer needs is paramount (Relich & Pawlewski, 2018). Product excellence needs to be maximized in the market, and a strategy for implementation needs to be managed properly to ensure the final product is complete without defect. In funding, there is a need to investigate the cost of excellence in the product in order to develop a price tag of a unit. It is critical to understand and find funding that will help in navigatng through the valley of death for a product. When it comes to employee management, it is vital to have a team that will work together to build a product that suits customer needs (Madzík, 2019). In customer management, the activities to be managed to revolve around the implementation of the new product. There is a need for customer involvement in product development and implementation to develop the best qualities and cost-effective products.
Tesla performs better in product offerings and develops the best products that suit the market's customer needs. The design and strategy used to build their electric cars are crucial as it ensures they are customer driven (Rimmer, 2018). Tesla has a well-funded mechanism when it comes to product development. The introduction of the Electric car Model S was funded adequately, which helped the product become popular (Rimmer, 2018). Tesla has collaborative and highly productive employees who work towards a common goal in producing electric cars. Tesla products are tailored towards achieving customer wants and specifications in the market.
Market and Research and Development
One of the crucial parts of new product development and introduction is market research and development. The impact and the success brought by research is vital towards a company remaining relevant in the market (Gao & Benard, 2018). Research and development play an essential role in introducing innovations to improve the product offering and impact quality (Gao & Bernard, 2018). An understanding of the market where the products will compete is crucial. There is a need to define the market's strategic goals and a plan for contingencies in case the market performance becomes poor. Having a proper budget to invest in research and development will help keep up the market competition. Research and development will help in the use of forecasting models to produce the estimated performance of the new products.
Tesla has been at the forefront in utilizing research and development to come up with innovative products. In introducing their first electric car, Tesla spent more resources to fund research and development that was supposed to introduce new vehicles that favored green energy development measures that were taking shape in the globe (Stilgoe, 2017). In identifying the market, research and development help Tesla come up with products that penetrate the market and offer stiff competition. Product development for Tesla is done with the latest technologies implemented by the use of research and developments.
High attrition rates for new products
When introducing new products in the market, there is uncertainty on their performance and ability to bring in revenue. According to Thomans and Maine (2019), following the introduction of a new product, customers will first experiment with the product to establish whether it meets their needs and expectations. A failure to meet these needs results in the risk of product failure as customers become one-time purchasers. The attrition rates of new products provide an essential key performance indicator that highlights whether the strategies being used are successful in the market.
Tesla's electric car attrition rates were very high when they introduced the Model S car (Stillgoe, 2017). According to Stillgoe (2017) Tesla’s heavy investment in technology achieved a high level of innovation and produced products that resonated well with the customers. The purchases have continued to soar up, and customer loyalties have been established. According to Thomas and Maine (2019), Tesla continues to improve their product offerings on the new products to cut down on attrition rates and manage their competition.
Implementation Analysis
According to Hardman, Shiu, and Steinberger-Wilckens (2015), in product development, every industry has different stages that are involved in the implementation process. Successful companies that have managed on the global stage and markets like Tesla the development and the implementation of a new is not easy. The electric cars' introduction went through different stages, from ideation to the final stage of market launch. The ideation process involved an iteration of the existing vehicles where a team came up with a different power source rather than gasoline (Midler, 2019). The implementation process involved planning and research on the features of the electric car and customers' preferences (Midler, 2019). Prototyping and costing followed, and the electric car was ready for production. The last step included the actual production and the launch of the car in the market. The implementation process is done through a team approach in Tesla.
Long –Term and Short-Term Recommendation
One long-term recommendation is for Tesla style structures that are attractive to more affluential clients. The second-long term recommendation involves the investment and more funding on research and development to help the company keep up with changing technologies in developing their new products. On short-term recommendations, Tesla should introduce new electric car models that have functional improvements and cosmetic changes to suit customer needs in the market (Stringham, Miller & Clark, 2015).
Conclusion
In conclusion, the introduction and development of new products in the market has never been easy. Companies have always struggled to survive the valley of death and attract investors. Tesla has been devoted to the use of technological innovation to develop new products. They have a clear and innovative way of developing their products, taking the global markets by surprise. Employing research and development and the best management in product development will successfully aid in launching and entering a new product, as evidenced by Tesla’s success in the electric vehicle market.
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