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Subject name: Strategic Operations Issues

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No. of pages: 14

Word count: 2397

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Title: New Product Management

Assignment Topic:

Investigate the company’s new product development process. For example, this might entail:
finding out if the company has its own detailed process; exploring how the process is used to
develop new products; comparing the company’s approach to what the textbook says; and
analysing what you have observed or found in order to discuss possible recommendations for
improvement. If there is no clear process in evidence, you might discuss the type of process
that the company could be using; ‘

Word Count: 2397

Executive Summary:

One of the most core understandings in new product development is that the majority of
product development comes from primarily three of six identified categories. These are
recognized as the categories of adding to existing product lines (approximately 26% of new
products come from this source) or from improvements and revisions to existing products
(approximately 26%) followed closely by products that take a company into a new category
for it, known as new to the firm products (or new product lines) (approximately 20%) (AIB,
Topic 1, Introduction to New product Management & Crawford & Benedetto 2011).

This assignment will focus on the REA Group, owners of some of the biggest online real
estate portals in Australia and internationally with the focus primarily on their Australian
operations.

This assignment will set out to discover what new product management systems and process
have been adopted by the REA group and go on to analysis many of the new products they
have developed and released over the 2013-2014 financial year. These processes will then be
weighed against those set out by Crawford & Benedetto, (2011) in their book, New Products
Management.

This assignment will aim to analysis and give recommendations, if any, against REA
approach to new product management and critic the REA groups’ ability to look at product
requirements and innovation through their customer’s eyes.

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Table of Contents:

1.0. OVERVIEW OF THE REA GROUP

1.1 REA Group Products & Services..................................................................... 5

1.2. 2013/14 Products............................................................................................. 6

2.0 ANALYSIS OF REA PROCESS OF PRODUCT DEVELOPMENT

2.1 Observed REA Group Process of New Product Development........................ 7

2.2 Current REA Group Product Management Systems........................................ 8

2.3 Analysis of REA Process of Product Development......................................... 9

2.3.1 Comparison against 5 Phases Method of Product Development 10

3.0 CONCLUSION............................................................................................................11

References ...................................................................................................................13

Appendices List...........................................................................................................14

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1.0 OVERVIEW OF THE REA GROUP

REA Group Ltd and its subsidiary companies, known as the REA Group (or REA), are a
global online real estate advertising company with their head office located in Melbourne,
Australia.

The REA Group is public company listed on the Australian Stock Exchange (ASX: REA)
with the majority of the group being owned by News Corp. Australia which is a subsidiary of
News Corp. (REA Group (2014)),

The REA Group (2014) corporate website states the REA Group owns and operates many of
the leading real estate website in Australia, Europe and Asia and goes on to describe the
majority of their property portals as being ranked first in their respective markets and the
combined REA’s multinational portfolio of property websites are visited by over 11 million
unique browsers each month.

In Australia the most well-known consumer websites are www.realestate.com.au and

www.realcommercial.com.au and for the purposes of this assignment we will focus on the
products and services primarily offered in Australia around the main real estate advertising
site of www.realestate.com.au.

1.1 REA Group Products & Services

Within Australia, the REA Group offer a range of digital products and services aimed at two
core consumer groups. The first group is their paying customers who are generally real estate
agencies and other corporate advertisers such as banks and lending institutions. The second
core group, who are the non-paying users of their end product, www.realestate.com.au are the
general property consumers. This typically is members of the general public who are looking
to property based needs and transactions, for example, looking to purchase a property or are
using the REA Group services to analysis the property market.

The REA Group Annual Report (REA Group 2014, p. 16) assemblies the range of products
offered into three core groups:

1. Property listing products: Available to real estate agents, this area offers different
levels of features (example featured listings versus standard listings) and are available to
residential and commercial real estate agents and property developers who are generally
monthly subscribers to the REA Group’s primary websites.

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2. Specialized display advertising products for general media advertisers such as banner
advertisements for banking institutions.

3. They also offers customised websites, mobile sites and apps to these buyer groups
which are focused on the general consumer and designed to help engage people who are
looking to make a property based decision.

REA Group aim is to deliver an effective online advertising solution using their range of
property websites to help real estate agencies either sell or rent properties and also win new
property listings therefore continuing the agent’s use of REA sites.

This fits in with the strategic vision of the group which is set out as: 'To empower people by
making property simple, efficient and stress-free' (REA Group 2014, p. 4).

1.2 2013/14 Products

In order to understand the methods REA used to forecast trends going forward, this
assignment will first review the products released during the 2013/2014 financial period to
recognise how the REA group identified opportunities to gain an understanding as to the
strategic plan for their release.

The REA Annual Report 2014 (p. 16) highlighted some of the innovation and new products
the REA group delivered over the past 12 months from their collaboration with their
customers.

When focusing on the core target markets for the flagship product in Australia,
www.realestate.com.au, the marketing focus was set out to make the site the ‘go to’ place for
all things property.

Using this basis, the first new product released was the www.realestate.com.au blog has
which provided relevant house hunting content to the general consumer and included tips,
guides and ideas for many topics related to property. This was further developed by utilising
social media to help share the content.

Next came the provision of ‘Sold’ data. The REA group recognised through marketplace
analysis that this information is of very high importance to both potential buyers and even
property sellers. It was further highlighted that the market was driven by the need for such
information to assist them making informed property decisions.

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This resulted in the addition of ‘Suburb profiles’ which was launched in November 2013, to
continue this request for information by consumers and provided content such as average
prices, current demand levels and general demographics for any particular area.

In March 2014, REA released a new ‘Invest’ section on www.realestate.com.au which

provided relevant suburb information including comparisons, price growth date and rental
yields which enabled and assisted potential investors with property decisions.

The analysis of these products highlighted similarities to the methods discussed in Boudreau
& Lakhani (2013) where the feedback from collaborative communities was utilised as a
method to identify core opportunities for product development.

This method of analysis continued and based on the same reading, one of the next issues
identified by the consumer market was that two-thirds of consumers said finding the right
agent was regarded as one of the most stressful parts when they decided to sell their property.

This lead to the launch early in 2014 of the new ‘Agent Profiles’ section. Based on the
feedback of consumers, REA designed this section to help consumers get to know local
agents whilst also enabling real estate agents, the other customer group of REA, to be able to
build their personal brand and target local sellers.

The final product, although launched overseas, also shows similar methodology as it was
based on feedback from both real estate agents and consumers. This was the launch of
www.myfun.com. The consumer feedback from real estate agents recognised strong interest
coming from Chinese property buyers and addressed lingual issues by utilising Chinese-based
‘concierges’ who interact with interested buyers from the site and help them to connect with
the Australian based real estate agents.

2.0 Analysis of REA Process of Product Development

2.1 Observed REA Group Process of New Product Development

Within the Australian operation, maintaining the marketplace share of www.realestate.com.au

is critical to the REA group so that they remain at the forefront of consumers thoughts, in a
similar manner to that discussed by Bertini, Gourville & Ofek (2011) where the process of
‘Brand-name continuation’ is discussed and in an online based environment is one of the most
critical issues as discussed by Pitta (2001).

According to the REA Group Corporate website (2014):

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 REA Group’s business goal aims to deliver effective online advertising solutions
through continuous innovation that in the end delivers a great user experience for
their customers and consumers in the market place who are real estate agents,
commercial clients and even house hunters.

There is many directions a company can employ to move forward and based on the findings
of Amarant (2007) plus an additional subsequent informal interview with Mr. Kieran Harte,
Chief Product Officer of REA Group, carried out for the purposes of this assignment,
provided a basis where he confirmed the REA Group Product Management is deliberately set
up into different functional areas.

These areas which are overseen by REA Product Managers are;

• Display advertising
• Local Real Estate Agents products
• Data
• Consumer experience

The Product Manager for each section is responsible for ensuring they have an understanding
of all external market factors and building a concept paper and potential business case.

The focus them moves onto ensuring each Product Manager is accountable for the completion
of any product requirements, getting it built and negotiations with both sales and marketing
for the launch.

2.2 Current REA Group Product Management Systems

During the interview with Mr. Harte (Amarant 2007) it was stressed the REA group aimed for
their products and services to be constantly evolving so to ensure the REA group continue to
provide an exceptional user experience and outstanding value and return on investment for
our customers and shareholders, a view echoed in the 2014 REA Group Annual Report.

The interview and the REA Group Careers website (2014) set out the workings within REA,
particularly in the areas of Consumer Experience & Product Marketing (CEPM).

The REA group CEPM divisions are in three specialist areas:

Customer Product Marketing Team (CPM) - Focused on product and marketing activities,
particularly those that maximize value delivered to advertisers, they are accountable for
developing and maintaining consumer experiences to address changing market needs in the

8
real estate sector. This includes strategy development and execution particularly in key
marketing areas such as product management, new product development, pricing and
customer marketing communications.

Project Management Team – They work with the CPM team and are accountable for the
strategic development and execution in key marketing areas such as product management,
new product development, pricing and customer marketing communications.

Consumer Products Team (CPT) – This incorporates three key areas, each with its own
dedicated team looking after each:

Consumer Products – This team is responsible for the consumer strategy for REA, they drive
any site improvements and measure the success of changes through growth in consumer usage
and engagement, overall consumer satisfaction and the Return On Investment (ROI) from
events which incorporates items such as leads to agents, property interest to vendors and
general advertisers.

Experience Design Team – The ease of use and general functionality of the site is critical to
the user experience. The use of technology and a clean easy to use design help the REA group
maintain a high repeat user level.

Web Search Strategy Team - Wylie, A (2006) describe many of the strategies to make a
websites more engaging and in the property market this reflect staying means top of
consumers’ minds through the use of innovative marketing and media strategies and utilising
cutting-edge SEO techniques. The Web Search team is charged with increasing and sustaining
general search traffic to REA websites, this is done through brand awareness generated by
paid and organic search strategies.

The other key area for this team is to generate successful SEO “Proof of Concepts” thus
ensuring new products are SEO-ready pre-launch, consistently mitigating against potential
risks and maintaining (and improving)current service levels not only the unique visitors but
also the groups joint websites continue to grow.

2.3 Analysis of REA Process of Product Development

Roger et al. (2004) highlight the framework that all businesses should adopt to help guide
product development which consists of three elements which are:

• A new product process,

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• A Product Innovation Charter (PIC)

• A well-managed product portfolio.

REA group have through the adoption of their CEPM operational model have covered the
three elements highlighted plus support the key point highlighted by Crawford & Benedetto
(2011) “that all three of the strategic elements must be in place, and each is co-ordinated with,
and supports, all the others”.

REA’s model does this by separating the end consumers from the customers this allows the
CPM team to implement a new product process and enabling a PIC process to be followed to
allow growth in key areas relevance to the company’s overall strategic objectives whilst the
CPT ensure the end user experience is maximised encouraging use and therefore continuing
the ongoing engagement from their paying customers, the estate agents and advertisers.

2.3.1 Comparison against 5 Phases Method of Product Development

Crawford & Benedetto (2011) discuss the basic new products process in five phases:

Phase 1. Opportunity identification / selection (the discovery phase)

Phase 2. Concept Generation

Phase 3. Concept / Project Evaluation

Phase 4. Development

Phase 5. Launch

The REA strategy for new products appears to ensure that products are developed address
both corporate objectives and market opportunities this is done through the CPT. The team
focuses site improvements and they measure the success of changes to the site through growth
in consumer usage, engagement and overall consumer satisfaction and the ultimate Return On
Investment (ROI) to the customers.

This function primarily focuses on Phase 3 of Crawford & Benedetto (2011) process model as
the first stage, which then leads back to opportunity identification and concept generation
(Phases 1 & 2).

This then leads to Phase 4 the development, and as the online world is similar to the service
industry as it does not prove a tangible product, as explained by Crawford & Benedetto
(2011);

10
Given the importance of customer interaction in service success, it is no surprise that getting
customer participation early is critical to successful new service development.

This allows the REA group to test and deliver superior value to the consumer enhancing their
experience and facilitating ongoing use and by utilising many of their lesser known sites they
can easily undertake a testing that allows for “stage gates” as described by Cooper R (2004)
as a go/no-go decision without effecting the process of ‘Brand-name continuation’ (Bertini,
Gourville & Ofek (2011)) associated with realestate.com.au.

3. Conclusion

Productivity is one of the key ingredients for successful product development.

When teams collaborate in developing new innovations, having the right mix in the team’s
will ensure that its overall marketability will happen relatively quickly and accurately –
making everyone productive across the board.

The REA group have implemented many systems to help ensure they remain at the leading
edge for product innovation including:

• The defining of opportunities using customer usage analysis based on a clear vision for
company on developing strategic new products

• A process driven PIC that encourages staff group that is built around concept generation and
problem solving.

• Clear concept testing & concept evaluation studies

• Clear cross departmental communication to minimise financial issues.

• A continuous improvement model and processes to listen to both customers and consumers

The REA group have identified many of the core concepts involved around new product
management, aside from the legal matters involved with new product development;
understanding the marketing messages you are aiming to portray is often the next biggest part
of testing a new concept. Does the consumer understand, need, or even want the product?

By introducing the products and services to private tests groups and forming test panels has
enabled REA to gain valuable information allowing last minute improvements and tweaks
before delivering the final end-product.

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It is the findings from this assignment that REA has effectively made use of a production
department to make plans to produce the product, have a dedicated marketing department to
distribute the product and have stages in place to ensure the finance department can provide
the finance for introducing the new product.

Therefore REA Group have shown that the productivity undertaken during the product
development can be maximised if the goals are clearly defined along the way and each
process has contingencies clearly outlined.

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REFERENCES

Australian Institute of Business (AIB), 2014, Topic 1, Introduction to New product

Management, in New Products Management Learning Materials, AIB, Adelaide.

Amarant L. 2007, 5 Minutes With Kieran Harte (REA Group), viewed 29 November
2014, http://www.brainmates.com.au/interviews/5-minutes-with-kieran-harte-rea-
group

‘About REA Group’, REA Group 2014, viewed 29 November 2014, http://www.rea-
group.com/irm/content/about-rea.html

Boudreau, K & Lakhani, K 2013, 'Using the crowd as an innovation partner', Harvard
Business Review, vol. 91, no. 4, pp. 60-69.

Cooper R., 1999, ‘From Experience, The Invisible Success Factors in Product
Innovation’, Journal of Product Innovation Management, vol. 16, pp. 115-133

‘Consumer Experience & Product Marketing’, REA Group 2014, viewed 29

November 2014, http://careers.realestate.com.au/rea-group-careers/consumer-
experience-product-marketing/

Bertini, M, Gourville, J & Ofek, E 2011, 'The best way to name your product 2.0',
Harvard Business Review, vol. 89, no. 5, p. 36.

Crawford, M, Di Benedetto, A, 2011, New Products Management, Tenth Edition,

McGraw-Hill Publications, New York.

Ibid, Page 14

Ibid, Page 19, Figure 1.4

Ibid, pp. 44-45

Pitta, DA 2001, 'Internet currency', Journal of Consumer Marketing, vol. 18, no. 4/5,
pp. 382-383

REA Group Annual Report 2014, REA Group 2014, viewed 29 November 2014,
http://www.rea-group.com/irm/content/news-annual.html,

Ibid, Page 96

Ibid, Page 16

Ibid, Page 4

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 Roger J., Cavusgil S., Schmidt J. & Shin G., “Internationalization and the Dynamics
of Product Adaptation; An Empirical Investigation,” Journal of Product Innovation
Management, March 2004, pp. 185-198.

Wylie, A 2006, 'What do world-class Web sites do that yours doesn't do?: Apply
these techniques from award-winning online communications', Public Relations
Tactics, 13, 5, p. 13, Business Source Complete, EBSCOhost, viewed 1 December
2014.

APPENDICES

A. REA Group Annual Report 2014

14