Marketing's role in successful new product development in commercial, investment and merchant banks
This thesis investigates marketing's role in new product development (NPD) in commercial, investment and merchant banks. It examines how marketing inputs contribute to new product development success. NPD success can be measured at two levels of analysis - at the program and at the project level. Our study is concentrated at the program level at which sustained product development success is examined, rather than one-off project success. Successful product developers are identified as those banks with a better record of being first to market with new products. This measure of product development success is important in the financial risk management market in which commercial, investment and merchant banks compete fiercely. Based on peer evaluation seventeen banks were identified as innovative, that is to say; active new product developers in the financial risk management market from a universe of almost 130 U.K. and foreign banks with established operations in London. From these seventeen eight participated in our research study. Data was collected in two stages. First, personal interviews were conducted with the heads of the treasury divisions or the heads of derivates desks to collect background information for control purposes. Second, detailed questionnaires were administered to two further members of each bank who were involved with the development of financial risk management products. The questionnaires consisted of statements for which respondents were invited to indicate agreement or disagreement on 5-point Likert type scales. Our findings show that it is not the trappings but the quality of marketing inputs that contribute to program success. Quality of marketing inputs comprises the quality of approach adopted and the quality of execution. The most important finding is that successful product developers adopt higher quality marketing than do less successful product developers. Successful product developers place great emphasis on getting both their approach and their execution right. It was found that successful product developers adopt a market-based approach in identifying new opportunities. They not only adopt a strategy which selects markets on the basis of benefits sought (instead of determining strategy on the basis of primarily internal strengths), but they also use internal marketing to promote this cause. Further, successful product developers possess the appropriate implementation skills to exploit selected opportunities. While we cannot claim that program success will be guaranteed from a market-based approach, our evidence lends strong support that absence of a market-based approach is likely to lead to considerably lesser success in the type of product development investigated in this research study.