Answer to Question #266901 in Finance for Jabs

Question

 EXPLAIN how your bank develops new products to meet client needs.

Answer 1

There are various products in different banks and other financial institutions. The need to develop new products arises from various factors;

#internal factors

1) if an organization is sinking in and the available products do not serve well in the market.

2) to increase its profits. Or to expand their business.

3) to achieve sales target .

4) to remain competitive and set a niche for their brand.

5) to be flexible

6) to promote teamwork in the organization.

#external factors

1) to bring innovation in the market for the customers.

2) to satisfy the customer needs and their wants.

3) to bring down its competitors.

# market and regulatory

1) to keep up with the fast moving trends in the market and to not become obsolete.

2) to adhere with the government rules and regulations.

3) to bring a variety of options for the customers to choose from.

Hence, to meet the client requirements banks develop new products.

if we talk about how they do it. Here are some simple steps that can briefly explain the process;

1) idea generation:

This is the initial stage in which a business sources for ideas regarding a new product. It is the most basic stage which lays the foundation for all other phases. Ideas generated shall guide the overall process or product development.

2) screening:

After idea generation, ideas go through a screening process in order to filter out the most reliable ones. The firm can use different opinions from customers, employees and other businesses.

3)concept development: the third stage involves research to find out potential cost, revenues and profits arising from the product. The price of the product can be determined by considering the following factors:

1)cost of the product

2) utility and demand

3)extent of competition in the market

4)govt and legal regulations

5) pricing objectives

Different pricing strategies can be used in order to determine the right price like price skimming , penetration pricing etc. it is a very crucial part as the price of the product should not be too high or too low, it should have a certain balance so that it covers the cost of the product and the customers do get the value for the price .

Business also may conduct SWOT analysis. After thoroughly analyzing its potential threats and strengths business may identify product’s target group which facilitates segmentation. Market segmentation is important as it enable the firm to identify its niche.

product development:

The product development stage involves developing the actual design and manufacture of the product. Development commences with creating a prototype for market testing, based upon the results of test the business owner decides whether to undertake large scale production or not.

5) commercialization and roll out: last but not the least after product development the business launches its promotion campaign for the new product. They may settle the timing and location of their product launch.