Collaborating with vendors on new product introductions

Abstract

New product introductions create the most anxious moments in an organization, for the product has not yet passed the litmus test of consumer satisfaction. Anxiety surmounts as the organization puts its weight behind the activities (Strategic) it is stronger at to push the product in to the market. Very often an organization s existence will solely rest on the success or failure of the new product being launched. Apple was anxious when it introduced iPod if not for iPod, Apple s existence would have been uncertain today. Much of these tensions can be alleviated if only organizations actively involve their consumers and vendors much early in their product creation process. C.K Prahalad and Venkat Ramaswamy call this exercise as co-creation. They propose that organizations follow DART (Dialogue, Access, Risk and Transparency) as four corner stones in creating the co-creation experience. They further propose a new order of business scenario where N=1 (Number of consumer to focus on is one). This though sounds similar to mass customization, however includes THE customer in the product creation process (Co-Creation experience). This model seems to render STP irrelevant as there is no point in Segmenting, Targeting and Positioning when the company in fact needs to segment, target and position to every consumer. Co-Creation, nevertheless being a profound model, throws some limitations in terms of active participation from the vendors/customers. Co-Creation and thus the adoption of DART calls for substantial understanding between the vendor and the customer and thus requires that the relationship to be at least 2-3 years old. Environmental factors in certain industries acts as a natural barrier for co-creation to flourish. Industries where there are constant tensions of vertical integration will not be able to adopt co-creation with vendors/customers. In general co creation can become too intense for the vendors and the customers to create/extract meaningful value out of the relationship. A generic and broader framework may thus be favorable to foster meaningful value creation by a vendor in a B2B scenario. Notion of this short term research will be to identify/propose such generic frameworks that can be used for vendor customer collaboration more specifically in the area of new product introductions.