Product Strategies

Week 12 Reflection

Perceptions

This week we come to study the new product strategies, which is an important step and it could influence the firm’s future. We mainly focus on two parts of strategies, new-product development strategies, and decisions in international market. These two parts can be combined by a triangle, which can achieve stable attractiveness of the marketing offering.

A company could acquire or develop the new products. If the company acquires new products, it could buy from other companies, buy patents, licenses or franchises from other company. For developing, the company could make new product by themselves or contract with researchers or new-product development companies to create new product or technology. Actually, there are less than ten percent of all new products are truly innovative and new to the whole market because of the big cost and risk. Companies could improve their existing products to make new products.

There are many challenges for companies during the development of new-product which include the innovation imperative, new-product success, and new-product failure. Companies may fail to develop new products especially new technologies. Established companies more focus on incremental innovation that is react slower and the newer companies create disruptive technologies which is cheaper and more likely to alter the competitive space. In addition, there are many reasons of the failure such as the wrong marketing research, marketing size or the development costs too high.

There are eight stages in new-product development which are idea generation, idea screening, concept development and testing, marketing strategy development, business analysis, product development, test marketing and commercialization. At the first stage, managers should think of the idea is worth to do and then they should combine the idea of the company objectives, strategies, and resources. Test is basic and important because it could make the company realize the feeling of customers. Besides, the company need to find the cost-effective and affordable marketing strategy and then do the business analysis to test whether the product meet the company’s profit goal. Then, the firm need to make or buy the new product and do some market testing to realize whether the new product have met expectations. Finally, the firm should make sure the product sales meet expectations and modify the marketing program according to de reflect of the sales. There are five adoption processes stages which includes awareness, interest, evolution, trial, and adoption. I

In addition, the company should think of whether it could enter the international market and how to enter the market.

Key Questions

1. What are some of challenges facing of the company when launching a new product?

We used KFC as an example to answer this question. Different country has different cultures and tastes. When KFC launches the new hamburger in Australia, it should test the proper size of the hamburger and make the delicious sauce to meet Australian demands. If the company make the wrong marketing research and receive the wrong information from customers, they should face the big new product development cost and make themselves vulnerable to increase the competition with McDonald’s and Hungry Jacks.

2. How price sensitivity affects the possibilities for new-product price setting?

We used Derby Thai as our example to answer this question. As a restaurant, the main products are Thailand cuisines, also the services. Price of its new food will have high price sensitivity because it has a lot of substitutes produced by restaurants nearby. The price sensitivity means how will the consumer react by increase or decrease the price of products. And because of the high sensitivity, Derby Thai need to pay attention on price of its competitors and make a similar price that can be easily accepted. However, it is the only restaurant provides Thailand food there. That is to say, it can set price for their unique Thailand food that has low price sensitivity for maximum marketing skimming.