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5 Steps for Marketing a New Product
Innovative marketing plans are crucial for the success of a new product. An effective marketing campaign requires a well researched marketing plan along with deft execution and realistic pricing. Elaborated below are the five most essential tips a marketing student needs to know in order to make a marketing plan for a new product.
How to make a marketing plan?
Step 1: Market Research
Marketing research is the systematic gathering of information regarding a product or a service which is used by companies either to launch a new product or to modify the marketing strategy of an existing one. Pioneered by Arthur Nielson, marketing research is used today by top global companies in order to get information on consumer behavior before launching a product. Some of the leading companies in this field are Frost & Sullivan (US), Nielson (US), Euromonitor International (UK), Roy Morgan research (Australia) etc. Marketing research may either be qualitative in which the respondents are small in number and are used for exploratory purposes or they may be quantitative in nature in which large populations groups are taken into account in order to draw conclusions using statistical methods. Marketing research is done for a variety of purposes:
- to track the effectiveness of advertising or branding
- to test customer satisfaction
- to measure price elasticity
- to audit distribution channels etc
Step 2: Market analysis
The next step is market analysis. This involves two distinct processes:
- A situation analysis
- Environment scanning
A situation analysis is the collection of methods marketing executives use in a company to do an internal survey of the company’s position in the concerned industry. A similar process is an environment analysis or scanning which is used to do an external survey of the company’s position in the market. They both inform the managers about the market share of the company, the respective positions of the rival enterprises and the competitive advantage which a company might enjoy over another one. Environmental scanning in particular uses methods such as the SWOT, the PESTEL and Porter’s five forces to reveal the true picture of the market competition.
A SWOT analysis involves a careful exploration of four marketing elements:
PESTEL involves the analysis of
- Legal factors.
Porter’s Five Forces proposed by Michael E. Porter, helps companies to locate the current competitive position of the company through an examination of five forces:
- Industry rivalry
- Threat of new entrants
- Threat of substitutes
- Bargaining power of buyers
- Bargaining power of the suppliers
Step 3: Marketing Mix
Marketing mix refers to the tool used by marketers to take into account certain marketing factors in order to make the product ready for the market. The factors have changed over the years. They may be Product, Price, Promotion and Distribution according to Jerome Mc Carthy or Product, Price, Promotion, Place according to Robert F. Lauterborn.
- In a product mix, the tangibility of a product, the wants of the customer are some of the important factors that should be taken into consideration. Companies tweak their products all the time to suit the needs of a foreign market. Not taking into account the cultural attitudes of the local customers can be a costly mistake sometimes. For instance when Nike introduced its Nike Air shoes in Arab countries, it offended the sentiments of the Muslims since the logo of the brand with the image of fire over the word air resembled the word ‘Allah’. After massive protests, the company had to scrap all its shoes.
- Pricing is also crucial. New marketing principles tell us to take into account not just the quantifiable value of the product but also unquantifiable values, such as cost on conscience, cost of guilt, cost of obtaining the product etc. For instance, Whole Foods uses the tropes of organic food and cruelty free treatment to animals in order to sell items which are twice as expensive as those in Costco and Wal-Mart.
- Promotion needs to incorporate all the vehicles of media, be it print, electronic or digital.
- Finally, place of sale needs to carefully explored since virtual space has become more important than the physical market.
Step 4: Branding and Advertising
Branding aims to create an emotional connect between the consumers and the product by carefully modulating the brand image of the product. Advertisement is the channel through which the product is publicized to the consumers. It is a form of marketing communication that is encouraged to manipulate and persuade consumers. Commercial advertising on television began in 1950s in America and got a fillip with the coming of satellite television in the 1980s. This was followed by the internet revolution of the 1990s and the coming of social media in early 2000s. Today use of online marketing and social media are crucial for the launch of a new product.
Step 5: Pricing
Some of the most important pricing strategies are:
- Absorption pricing (where all the costs are absorbed)
- Creaming (prices are kept so high that only a few items need to be sold to break even)
- Monopoly pricing (used by large corporations to deter entry of competitors)
- Loss leader (extremely low pricing in order to increase the product’s market share)
- Predatory pricing or aggressive undercutting (where companies reduce their prices in order to force out competition) etc.
No matter which type of pricing is chosen it is always better to do a thorough environmental scanning before deciding upon the price for a new product.
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