The metal processing industry is characterized as a key sector for the smooth functioning of modern society, with great dynamics, where the main barriers to entry of the new companies are associated with large start-up capital.
It is directly affected by the fluctuation of the stock market. Abrupt increases or decreases in prices are often crucial to business survival, as rising raw material prices require an increase in capital raised through short-term high-interest loans. The sharp decline results in depreciation of stock value and large economic losses.
The ever-changing business environment, a shorter lifecycle of products and a constant search for competitive advantage make it necessary for metal processing companies to innovate in terms of their products, services and operations.
Design and production of new products pose a very high risk of failure and consequently great financial losses. Reducing the risk of economic losses due to a “failed” product is the ultimate goal of a multitude of researches that have been carried out over the past decades to identify factors that directly or indirectly affect the success of new products.
It is estimated that almost half of the investment in new products has been distributed to products that have not succeeded in the market. In the bibliography, evidence has been reported that out of the 13,000 new products of 700 American producers, about a third were unsuccessful. Survey results (Hopkins) show that only half of the participating companies have achieved the successful performance of two-thirds of the total number of new products. Cooper, in the survey of 122 innovative industrial products, reports that in every 100 products that are fully developed, only 60 are commercially successful.
Research and practice have shown that marketing has one of the key roles in product success and overall business performance.
The success factors for the metal works industry, traditionally associated with the product (quality, certification and product promotion), are not sufficient for modern market conditions.
The amount of investment to create innovative products in the metal processing industry can often be detrimental to the company in the event of failure, so it justified research to identify the key success or failure factors of innovative products and to revise the role of marketing in overall performance.
Ten years ago, I conducted research related to a dissertation on Key success factors for innovative products and the role of the marketing in the metal works industry.
The main objective of the survey was to examine the effects of various factors inside and outside the company on the success of new products.
The results of the survey responded to the following research questions.
Q1: What are the key prerequisites for a company to successfully create innovative products in today’s industrial market conditions?
Q2: What organizational and operational changes are imposed on companies to increase their adaptability to new market conditions?
Q3: To what extent does the level of marketing development in the company affect the success of new products?
Q4: What are the parameters that have the greatest impact on the performance of new products?
The results of previous surveys show that the market-oriented company is attempting to build its entire organization in a unified system so that the entire market environment is covered and the entire company is mobilized toward customer satisfaction.
The company’s perception of the functional role of marketing can be used as a measure of the degree to which the company has incorporated the principles of market orientation.
By allowing marketing to lead the development of corporate strategy and increasing the number of tasks for which marketing and sales departments are responsible, market-oriented companies achieve better interdepartmental coordination in satisfaction of the target market.
Palmer’s research (2002), aimed at exploring the current perception of managers about the role of marketing in industrial and technology organizations, has shown that 53% of respondents believe that marketing is more important than human resources management but much less important than all other features.
Additional data were collected through primary research, as the findings of the secondary analysis only respond to the first two research questions and did not provide all the necessary information.
As a representative sample, a group of associates of the Greek metal processing industry was selected, including traders, project designers, manufacturers and construction companies.
Sales statistics (performance) for one of the company’s innovative products was used as a benchmark for verifying the results of the survey.
Based on the findings, the market orientation of the Company is the basic precondition for market adaptation and the success of new products.
The findings of this research coincide with the findings of previous research (Kotler 1997, Day 1998, Gounaris & amp; Avlonitis 2001).
Based on the researches which preceded it is noted that the operational role of marketing is to manage the following focal points:
• targeting clients and cost-effectiveness of the company
• targeting clients and product development
• targeting clients and providing services and
• Product development and financial performance of the company.
The above-mentioned focal points cover a wide variety of operational and strategic tasks including product development, pricing, promotion, information gathering, etc.
According to the research findings, an increase in the marketing department’s responsibilities and its more active role in corporate strategy can make a significant contribution to the performance of new products.
Also, research results confirmed, that a well-designed marketing strategy and the right timing of introduction of the products to the market have the most powerful effects on the acceptance and success of new products.
For the verification of the findings, the comparative statistics on sales of product ‘X’ were used in the period 2007-2009.
Extract from a MBA dissertation “The key success factors for innovative products in metal works industry”, Lj.Savic, 2009, NTU