Core Concepts of Marketing by John Burnett - HTML preview

CHAPTER 7

INTRODUCING AND MANAGING THE PRODUCT

product's probability of success and allow for final adjustment in the marketing mix before

the product is introduced on a large scale.

However, running a test marketing is

without inherent risks. First, there are sub-

stantial costs in buying the necessary plant and machinery needed to manufacture the prod-

uct or iocating manufacturers

to make limited runs. There are also promotional costs,

particularly advertising and personal selling. Although not always easy to identify, there

are indirect costs as well. For example, the money used to test market could be used for

other activities. The risk of losing consumer goodwill

the testing of an inferior prod-

uct is also very

Finally, engaging in a test-market might allow competitors to become

aware of the new product and quickly copy it.

Because of the special expertise needed to conduct test markets and the associated

expenses, most manufacturers employ independent marketing research agencies with highly

trained project directors, statisticians, psychologists, and field supervisors. Such a firm would assist the product manager in

the remaining

market decisions.

Duration of testing: the product should be tested long enough to account for mar-

ket factors to even out, allow for repeat purchases , and account for deficiencies

in any other elements in

new product (three to six months of testing may be

sufficient for a frequently purchased and rapidly consumed convenience item) .

2. Selection of test market cities: the test market cities should reflect

for

the new product in such areas

advertising, competition, distribution

and

product usage.

3. Number of test cities: s110uld be based on the number of variations considered (i .e., vary price, package, or promotion), representativeness, and cost.

4. Sample size determination: the number of stores used should be adequate to rep-

resent the total market.

Even after all the test results are in, adjustments in the product are still made. Additional

testing may be required, or the product may be deleted.

Step 8: Commercializat ion

At last the product is ready to go. It has survived

developmem process and it is now on

the way to commercial success. How can it be guided to that marketing success? It is the

purpose of the lifecycle marketing plan to

this question. Such a complete market-

ing program will, of course, involve additional decisions about distribution, promotion, and

pricing .

MARKETING CAPSULE

•

1. New product strategies begin by putting

on a

c. Perform a business analysis

continuum.

d. Technical and marketing development

2. There are both internal and external sources for acquiring

e. Manufacturing planning

new products.

f. Marketing planning

The new product development process includes the fol-

g. Test marketing

lowing steps:

h. Commercialization

a. Generate new product ideas

b. Screen ideas

THE WALL STREET JOURNAL.

IN PRACTICE

ing, financing, and running a

nal to fin d articles about these

Organizations must introduce new

business.

companies and products.

prod ucts and manage existing prod-

ucts successfully to remain competi-

ADDITIONAL SITES

tive in today's marketplace.

Check out www. adweek.com for

Products are planned, and the prod-

industry articles about advertising

uct strategy aims to ens ure that

and brand development. The

product objectives are achieved.

Brandweek link on the site provides

Unprecedented advancements

weekly excerpts of headlines from

in technology render shorter prod-

the print edition.

uct life cycles. As a result, product

A dvertising Age is another

plans must provide competitive

resource for information about

distincti veness.

product strategies. Check out

The Interactive Journal exam-

www.adage.com.

ines p roduct development for large

Business Week magazine's Web

and small organizations in Market-

site www.businessweek.co m is a

place. Under the Marketplace head-

comprehensive site. Daily briefings

ing, click on Small Business. This

cover a wide range of topics.

section provides articles targeted

toward small and emerging

DELIVERABLE

businesses.

Use the Interactive Journ al and

Special reports on small and

Additional Sites liste d here to fin d

emerging businesses can be found

three articles about product devel-

in the Breakaway section, also

opment.

each article and com-

und er Small Business.

pare the strategies employed by the

H ere you'll find more

profiled. Why are the

analysis about small business. The

products successfu l, or why did they

Interactive Journal also sponsors

fail ? Write a one-page brief sup-

several online discussions.

on

porting your co nclusions.

one of the links to join an online

discussion.

DISCUSSION QU ESTIONS

R eturn to the Marketplace

1. H ow do organizations identify

home page and click on the Busi-

product objectives when devel-

ness Focus link on the left menu.

oping a product strategy? Why

This link directs you to articles dis-

are these objectives important?

cussing general business develop-

2. What impact do market trends

ments taking place in various

have on new product develop-

companies.

me nt? How do organizations

Return to the Front Section

decide whether to introduce a

and select Starting a Business under

new product or extend an exist-

Resources in the left menu. This

ing product line?

link sends you to the Startup Jour-

3. H ow does the media react to

nal, a site designed to provide new

new products like Apple's

business with a variety of tools.

iMac? What about product fail-

Naviga te the bar at the top of the

ures like Coca-Cola's New

site for information about fra nchis-

Coke? Use the In teractive JOU f-

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