David V. Tennant - Product Development

Subsidies are used to move the economy from one form of business to another. In the case of EVs, from a polluting energy fuel to a cleaner fuel source.

It creates jobs, and therefore economic activity and a tax base.

New technologies keep industry competitive at home and abroad.

The above table lists just a few of the opportunities that EV vehicles will offer to large companies and entrepreneurs alike. There will be many spin-off companies as a resulting shift in transportation focus.

It must be emphasized that numbers on paper always look optimistic and tough questions should be asked in our market evaluation for both cars and trucks. Consider the following:

With both cars and trucks growing in popularity, this means the utility electric system, the “grid,” will see additional loads. In the United States, the grid system is not entirely consistent. In the Southeast, there is ample excess power, so straining the system is not considered an issue for the short term. Longer term planning will certainly be needed.

Some areas of the country, primarily on the West Coast, utilities may struggle to meet this new demand without building new power plant capacity. How does this impact your marketing targets for EVs of any kind? Further, California has designated that only zero emission cars can be sold beginning in 2035. How will this impact the electrical system? How will this impact utilities, car dealers, and most of all, the residents of California? What does this mean if you are a car dealer in California? If you’re an entrepreneur, does this open an opportunity?

Many utilities have been shifting from coal to cleaner forms of energy, primarily natural gas, solar and wind power. If the price of natural gas increases (while the price of gasoline might decrease), what are the implications? As a marketing professional, does this make you rethink the opportunities or do alternative opportunities arise?

Most likely, a marketing group would develop several models (that is, an Excel spreadsheet) that consider the implications for various increases or decreases in the price of gasoline vs. the price of electricity. To some extent, the regulatory issues are out of your control, but one would expect the impacted parties: utilities, car dealers, and the public would offer opinions to their elected officials.

In the Southeast, a number of utilities are employing various modeling techniques based on anticipated adoption of EVs (refer to Table 2.8). Some of the questions to consider include:

Current EV use is 2% of the total car market. What strain, if any, does this produce on the electric system if that use rapidly accelerates to 10%? 20%? 30%?

How much additional power would be needed in the next 10 to 20 years?

If new electric generating stations are needed, what kind of fuel should be considered? Nuclear? Alternative (wind, solar), natural gas?

It takes anywhere from two years (wind, solar), to five years (natural gas) to 14 years (nuclear) to build specific types of generation. When should we start planning for new construction?

Where should these plants be located (usually near a water source)?

In which direction is the regulatory wind blowing regarding fuel choice?

What is the impact if rural areas do not adopt EVs, but large cities do?

Table 2.8 Utility Model EV costs.

Spreadsheet courtesy of Cobb EMC

1 As a manufacturer of new Semi trucks, where should your development efforts be focused? Electric? Natural gas? Hydrogen?

2 For electric trucks, this means that the national electric grid must be able to support millions of vehicles charging simultaneously overnight. Some areas of the country have plenty of power to support EVs; other areas are short and are struggling to provide power during normal and peak periods. How does this factor into your company’s products?

3 Public policy can change. With each election cycle, changes mean that public policies regarding the environment can change. Is it possible have a voice or influence so that alternative vehicles are more fully supported through legislation?

Strategic planning is important as it charts a company’s path to future profitability.

Marketing and Sales are different disciplines. Marketing is concerned with the four Ps; sales is concerned with obtaining new customers and contracts.

The four Ps include Product, Promotion, Pricing, and Profits.

Product development includes four stages: Introduction, Growth, Maturity, Decline.

It is common for companies to use spreadsheet models to determine costs, pricing, profitability, using sensitivity analysis.

Breakeven point is where all development costs have been recovered and profitability of the new product starts.

A business case analyses a new product’s feasibility, potential in the marketplace, SWOT review, and other factors. This can also be called a business plan or feasibility study. Its results are used by senior management to make a decision (go or no-go).

Marketing and Engineering sometimes have different goals and accountabilities. This can lead to organizational conflict.

The role of Product Manager is a leadership position.

1 The project leader has an important role. While all of the below are important, which is the most important and why:CommunicationsIntegrity and trustConflict resolution

2 Some companies believe that a Product Development Manager must have strong technical skills. Is this true? Why or why not?

3 What value does the Marketing Group bring to the product development effort?

4 If the cost of each new product is $40, and our company expects margins of 25%, should we price our product at $50? Why or why not?

5 One of the costs that may be in our product’s development is legal costs. What kind of legal activities would be incurred?

6 Why is it important to know the break-even point?

7 What are methods to anticipate customer demand and pricing?

8 Projects should always exist to support the corporation’s strategy. Why?