Why do new products fail?
- Incomplete market and product definition: The idea of the target market is too vague
- Too small a target market: eg. Solar dog house, too expensive, therefore nobody wanted it. If they valued their dog that much, they would let it in the house.
- Insignificant point of difference: eg. Polo shirts made by a company that has nothing to do with making polo shirts
- Poor product quality or insensitive to consumer needs on a critical factor: eg. A bad tasting new product, discourages people to re-buy it in the future; or 'kids clothes' that are dry clean only.
- No access to consumers: You may have a great product but if no one can buy it, then you are out of luck
- Bad timing: Just the wrong public attitude at the time
- Poor execution of the marketing mix: Bad - advertising, product, price... etc.
- Market Changes: In the time it takes to make an advertising change, competitors have had time to come in and steal your market share
- "Wearing Blinders": Where you get information, and management says its a bad product, but you go ahead and develop anyway.
Three Different Degrees of Learning
Classification of Consumer Goods (4 types)
- Convenience Goods: Purchased often - Bread, Eggs, etc. Require the minimum shopping effort
- Shopping Goods: Must compare alternatives, but will usually accept substitutes. This includes clothing and blazers
- Specialty Goods: No alternatives accepted. This object is the one you want and will wait for it to come back in stock. If this is known by a marketer, he would talk about - branding, - quality assurance & - lifestyle
- Unsought Goods: Goods that must be sold to a buyer as the buyer is not going to come and search for it.
- Classifications differ in terms of: 1. Effort spent on the purchase decision
- 2. Frequency of purchase, &
- 3. Brand loyalty and acceptance of substitutes.
Most time spent on the 'S's (shopping and Specialty goods)
Benefits of Test Marketing
- Yields a more reliable forcast of future sales than does 'no' testing.
- Can pre-test alternative marketing plans.
- May discover a product fault missed in the product development stage.
- Discover clues to distribution problems
- Gain better insights into the behavior of different market segments
Concerns with Test Marketing
- Problem of obtaining a set of markets that is a reasonable representation of the country as a whole
- Problem of translating national media plans into local equivilents
- Problem of estimating what is going to happen next year based on this year's competitive environment
- Problem of competitive knowledge of your test
- Problem of extraneous and uncontrollable factors
What action should you take with these results?
1. High Trial, High Repurchase Rate
2. High Trial, Low Repurchase Rate
3. Low Trial, High Repurchase Rate
4. Low Trial, Low Repurchase Rate
- 1. GO GO GO
- 2. Drop or Redesign the Product
- 3. Increase Advertising, Awareness, and Sales Promotion
- 4. Drop the Product ;(