BUS606: Operations and Supply Chain Management

In today's customer-oriented environment, another recommendation follows. A NPD-SSCM strategy needs to seamlessly incorporate critical market information into these processes and focus on the end customer. Consumers are increasingly aware of environmental and social responsibility issues and their purchasing decisions are taking these into account. For example, some companies seek sustainability certifications, such as ISO-14000 (for environmental standards) and ISO-26000 (for social responsibility standards), as ways to demonstrate their engagement in sustainability. Companies that lack certification or fewer then their competitors may trigger a loss of trust of negative images to the customer. In response, consumer product strategists are working to bring environmental and socially responsive products to market through focusing on the key stages of the product life cycle. Through product lifecycle management, managers expect operational benefits, such as cost reduction and risk management reduction, and they may influence consumer's experiences, which potentially increases revenues and market share. Gradually, management is recognizing that environmental impacts of products over their life-cycle can best be managed through goal-oriented and market-based mechanisms that provide flexibility. While consumer's interested in supporting environmental and social issues grows, it is important that consumer product strategists evaluate the consumer's care for the environment and community – and how much they are willing to pay to support these concerns – as they develop appropriate sustainability strategies. Until product sustainability is treated as unequivocally positive for the end consumer, companies will struggle with sustainability efforts and marketing products that are more sustainable. Therefore, marketing efforts need to understand the end customer and develop strategies to positively influence them.

As mentioned previously, managers can stimulate green NPD through a green company policy, and through these actions, managers can extend the product's market orientation. Specifically, to build an extended market orientation toward green NPD that can balance green and non-green issues during the NPD process, managers should implement procedures and rules that encourage green NPD. Designers need to balance the consumer's perceived trade-offs between product performance and sustainability. To minimize misunderstandings, a structured management process with market planning and process management is required.

Market planning evaluates current market needs and compares them with company capabilities to meet these needs. Detection and pursuing an understanding of end customer requirements is necessary to fulfill those requirements. In order to accomplish this, current best NPD into SSCM success factors (which are supported by Product Lifecycle Management (PLM)) includes incorporating sustainability into NPD by evaluating product safety for the end-user, detecting marketing needs for ecological and social demands and restrictions, evaluating market changes to comply with company goals, resources and capabilities, and analyzing the market for sustainable needs and capabilities. Customer feed-back for future products can be incorporated through web-based applications and an integrated database. Changes in market requirements build a source for the next product concepts and need to be evaluated with respect to sustainable new product development, capability for introduction, and resource skills.

Market orientation, green targeting, green positioning, and customer outcomes influence green NPD. An important driver of successful product innovation strategies is the proposed market orientation (the processing of information about customers and competitors), and taking this a step further, research on sustainable NPD indicates that processing information about non-market stakeholders (regulators and special interest groups) is a critical antecedent of green product introduction. Additionally, the newness of the innovation is another product characteristic that is associated with green NPD as well as market orientation and performance. With respect to the introduction of green NPD into the market, strategies are characterized by the degree to which green aspects are incorporated into green targeting (degree to which a consumer segment values green attributes) and green positioning (degree to which green attributes are used to communicate to the market how the product differs from existing products). Green targeting extends from niche to mass marketing; while green positioning firms may position green attributes at the core or not at all. Greenness and industry type affect green targeting, that is, green products tend to be targeted at a green niche if a green niche is present or emerging. Companies struggle to reconcile greenness with costs. Unfortunately, while green niches are emerging in some markets, market demand for green products in many industries is still low. A positive relationship between green products and reputation may exist as external and internal stakeholders perceptions may be impacted even though the financial outcome may be low. Very green products are often related to very innovative products.

Managers must understand the importance of marketing of green new products which is very complex due to factors such as greenness of the product and industry factors, which impact upon green targeting and green positioning.