QUESTION

Research Problem

The main Research problem which the company is facing is whether it should venture into the development of a new product or not? The few major questions related to research problem are:

• Whether the company should launch the new product in the market or not?
• The corresponding research problem here is whether the new product would be accepted by the market or not?
• How much time will it take for the new product to gain some market share in the present market?

In order to successfully establish the new product in the market a Successful Business research plan is all the more important. It should summarize all the questions like:

• Who are the target buyers for new product?
• What sources of uniqueness or positioning in the market our new product has?
• Where can we implement the marketing spending plans?
•  When is the right time for the marketing spending plans to occur?
• How much, profit, sales and spending will be done all through the plan?

SOLUTION

Serious strategizing is very important before launching a new product in the market, the entrepreneur’s needs to go back and develop a broader scope of strategic planning before the launch which should cover following main points, instead of just being busy with the sales force, conducting marketing programs, supervising the staff and conducting everyday chores in the company. Following things should be well considered before the launch and the plan should cover these points mainly:

• Complete range of products or services your company offers
• All the prior markets served by your company
• Environmental and internal variables affecting the product
• All the vital organizational elements needed like production, finance, research etc. Should be pre-planned.

That is why a comprehensive market research plan is needed for mainly three reasons:

1. To gain marketing expertise in order to implement the corporate strategy developed for new product
2. Vital marketing decisions like which niche to target, distribution channels and direct marketing tactics all are directly related to marketing research plan only.
3. Top management foundation should be of support while developing the marketing research plan( Henderson 2000)

It has been found and suggested by Kerlinger (1994)that the marketing research problems which are well defined should have three common characteristics like:

Literature Review

We need to first understand what business we are in like in “Marketing Myopia” Theodore Levitt in 1925 in his article which was published in Harvard Business Review said that many organizations get into deep trouble, as they never got to know what their real business is for example Railroads thought that they were in railroads business but later they realized that their main business was transportation. Thus after finding the nature of business starts off with Situational Analysis.

Situational Analysis is alsoknown as marketing audit, which is helpful in getting a ‘snapshot’ of the current situation of your business. The main benefit of Business Review is getting to know about the future prospects through various factors like:

• Economic- Demographic Variables
• Technological Variables
• Political –Legal Variables
• Socio-cultural variables
• Internal Review
• Snapshot

Marketing Research Plan for a new product development should help us in:

• New Product Strategy development
• New product Design
• New Product Development Types
• New Product Development Process
• New Product Development Levers(Subramanian, A)

It has been found that there are many a times new product failures in the market when they are launched. Sometimes due to overestimation of market size and sometimes due to poor marketing research. Designs problems, Excessive development costs and incorrect positioning pricing and advertising are some of the other major reasons which result in failure of the new product. The competitive reaction is also not estimated rightly many a times which causes new product failure. Thus the new product development should be value added which can only be assisted by taking proper help of tool called marketing research. Let us find out how we can add value to the new product:

The process of Development of New Product:

The opportunity identification can be done by internal sources as well as external sources like the customer, competitors, supplier, and distributors and by outsourcing too.

 Ideation

Idea generation has major role in new product development and it requires a cross functional team whose main job is to generate ideas and Identify opportunity areas for the new product development. The main tools which are used for Idea Generationare 🙁 Subramanian, A)

• Brainstorming
• Suspending Judgement
• Encouraging creativity

The team identifies the new opportunity areas by:

• Sketching or prototyping
• Problem solvingtechniques , so that the new idea can be brought to table
• Prioritising the new ideas

Concept Development:

It is done by the marketing and the advertising agency. They do the development of concept by conducting: Focus Groups”. The main objective of forming and analysing these focus groups is to analyse whether the concept new product development fits the market which has been identified as the opportunity area or not and the constraints it will have to face in the area. With the help of Focus groups they are able to refine the new product concept and define the product concept by answering the questions like:

• What is the new product concept?
• What will be the benefits of the new concept to the users?
• Help in getting important information about the new product like the size, package, varieties and the pricing of new product.

Marketing Research

It involves gathering of market specific information about target market and then using that information for further analysis. The perfect knowledge and awareness of the procedureswhich are used in marketingresearch would be of great help to any entrepreneur to gather process and interpret the marketing information. (Subramanian, A)

Options for Market Research in New product development

Marketing Research Questions for New product Development

In order to generate the questions for sound market research or Hypothesis generation we need to test the research questions directly. The questions should be such that the person should be interested in answering them. The best way to clarify the objectives is to have discussions with different levels of management as they have better understanding of the surrounding environment and the markets and the problems associated with them. However studying the products of the competitors, brainstorming, analysing the secondary data available for the new product and getting reviews related to the researches which have been done on problems related to the new product will also be helpful.

The necessity to do market research prior and during the new product launch will entirely depend on the kind of venture it is. However there are few typical research questions which are common for every venture and they are listed below according to the subject involved.

Sales

1. Do you have the full knowledge about the competitor’s sales performance going by the product and the territory?
2. Do you really know that which all accounts are profitable and how will you recognize the potentially profitable ones?
3. Have you deployed the sales power in the correct place, where it can get you maximum profit and thus maximise your investment in selling costs?

Distribution

1. Are you thinking about launching just one new product or a new product line and are you aware of the distributors and dealers attitude towards the new product?
2.  Are you sure that the sales force of distributors and dealers is talking the right thing about the new product or services?
3. Have you witnessed any change in the distribution pattern with geographical change in your target markets?

Markets

1. Are you well aware of the useful information about the comparative differences between the buying habits of the consumers and the tastes too according to the territory and the kind or type of new product you are planning to launch?
2. Do you have all the information which is required for the brand, repeat buying and manufacturer’s loyalty in the product category of new product you are planning?
3. With the help of market 5reasearch would you be able to clearly plot from period to period the market share of your new product sales?

Products

1. Do you know the trustworthy quantitative method to test the acceptability of new product in the market and the changes in the product?
2. Do you know any dependable method to test the effect of change in packaging and new product on the sales?
3. Are you aware that whether by adding levels of high or lower quality will create new and profitable markets for the new product or not?

Advertising

1. Are you able to target the right people with your new product advertising?
2. Are you well aware that how much effective your new product advertising is in comparison to the one of your competitors?
3. Is the budget allocated by you enough and apt for bigger profits- as per territories, products and market potentials?

Expected outcomes of Marketing Research Design

The market Researchdesign should significantly contribute towards market and Knowledge research Design. An effective Marketing planning while clearly determine a comprehensive and clear approach of creating customers for new product. The following elements are very vital for this:

• MarketingResearch and
• Sales research
• Marketing Information System
• Sales Forecasting
• Marketing Plans
• Evaluation

MarketingResearch will help in findings out who are the potential buyers, buying habits of the customers and what do they want.

Sales Research will help in promotion and distribution of the product as per the findings of market research for big profits in the market.

Marketing Information System helps in collection, Screening, storing, retrieving, analysing and disseminating the marketing information based on which the plans, actions and decisions are taken. (Dickinson, P.R)

Sales Forecasting helps in coordinating personal judgement with dependable information collected about the market.

Marketing Plans helps in chalking out plans in order to achieve long term goals related to marketing and sales.

Evaluation helps in finding and assessing all the diversions which happened from the marketing plans formulated.

After forming a research brief a research proposal is made, which is a document created after carefully analysing all the aspects covered in research brief. This research proposal leads to a research design. And there is a set of procedures which are to be followed for research designs which are listed below in the figure for Research Design:

Research Method

The research method that can be used is Concept Screening or Testing by producing a Concept Board. The Concept board will conduct a survey which will:

• Collect representativesamples of end users via Internet or Panels
• Show the new concept to the end user and ask about their buying intent, value and the uniqueness of the new product

Then they will analyse these results by making a comparative analysis of the collected scores with internal criteria’s, benchmarks and norms. Then after this analysis they will forecast the “trail”. If the end user shows intent to buy the product during the trail stage only, this means that the concept is successful and is qualified for development in future. This means it clears the first stage gate.

Finally comes the Product Development stage where in the initial stage there are very broad design n parameters are taken like:

• Producing early prototypes
• Showing and getting feedback from the end users
• Refining the design

Then the product is finetuned and the design is finalised by:

• Varying formulations on the key ingredients
• Conducting product testing amongst the end users
• Conducting experimental designing which is a very powerful tool to learn about various aspects of product
• Optimising the final design and packaging of the product.

Position Development

Positioning is developed using the targets, benefits, support and frames of references.

Communication strategies which are mainly the media strategies are developed.

Testing and refining of the copy is done using Qualitative research techniqueslike: Communications Check”. The advertisements are produced, tested and refined as per the need.

 Finally the Final Test is conducted for the new product.

The main questions which need not be answered through Marketing plan Development are:

• Final Positioning Statement
• Sales Plan: Like who will sell, where and how will the new product be sold?
• Advertising Media Plan is made reading how will the product be advertised?
• Promotional Plans are developed where the new product ispromoted amongst the consumer using “coupons” and trade promotions are done using “on-sale”.
• Production plans are made about where the product will be manufactured and how it will be made?
• FinancialPlanningisdone which involves budgeting etc.

Finally the Test Marketing Stage comes when the new product is test marketed in two stages:

• Simulated Test Market
• Live Test Market

Simulated Test Marketing

It is very similar to concept test but here the marketing test is done with the product itself.

Samples are given to the consumers who show some interest in the concept.

The trail potential is measured and the reaction to the product is also recorded for each and every end consumer.

The reaction of the end user towards the product is very useful in forecasting the rate of repetition of buying the product.

On the basis of trail forecast and the repeat forecast the volume of the product can be forecasted.

Live Test Market

It is mainly used to measure the actual sales volume of the new product through two measures. The controlled method helps in knowing the behaviour scan of the end user and the conventional method is through the normal channels.

In live test market the sales rate, trails and the repeat sales are tracked.

Then they are compared with the goals set initially and then the gap between the two is found out.

After further investigation all the gaps are closed and tried to reduce by following the required measures.

Finally the commercialisation of the new product is done By Nationally expanding the reach of the product from the test market, through a proper market rollout plan. It involves significant investment of capital by the company like in case of Brick and Mortar the equipments are needed. Then there is involvement of distribution cost like the slotting fees in the form of sales incentives which will have to be given to the sales personnel for the sales. The product will have to maintain its platform by growing and sustain the competition and gaining a competitive edge.

Data Collection methods

Secondary Data Collection Methods:

Already compiled information is called secondary data and it is cheaper than gathering new or primary data. The entrepreneur should make sure that he has utilised and exhausted all the secondary resources before moving ahead in the research process.MarketingDecisions can be made all alone based on purely secondary data. It is of two types Internal and External secondary data.

Internal Secondary data: It is the data which is available within the business venture. For examplethe business records can be of great help in giving internal data.

External Secondary data:  These data are mainly available in various periodicals, government publicationsand trade association literatures.

Problems in using secondary data:

• Data might be outdated, thus of no use
• The units of measurement used in secondary data might not blend with the current problem
• The problem of validity of data always persists

Primary Data Collection methods:

If the secondary data is insufficient then we need to gather primary information which can be done either by Observational Techniques or Questioning Techniques.

Observational techniques do not require any contact with respondent and is the oldest method of collecting data. They can be used very economically but they have limitation of being restricted to descriptive studies only. (Aaker, D.A., Kumar, V. & Day, G. 2001)

Questioning Techniques there is direct contact with respondent. Mainly Surveys and Questionnaire are the two methods used in Questioning techniques. Where surveys involve contacting the respondent through mails, telephone and personal interviews. Mail surveys are used when the dispersion of respondents is very wide but it has been found that they show lower rate of response.Telephone surveys and personal interviews are the best as they have high rate of response and involve verbal communication with the respondent. Personal interview surveys are more expensive than mails and telephone surveys.

Methods of collecting techniques used:

Personal interviews and electronic interviews

After collection of data the Analysis of that data is also very important which involves resolution of data into its components, so that’s its elements and structure can be revealed. In case of quantitative data which is the case of new product launch there are mainly three kinds of determiners which can be chosen for the correct statistical tools, so that the data can be analysed on proper form. The main three determinates are:

• Number of samples collected which are to be compared
• Find whether the samples which are to be compared interrelated or interdependent on each other.
• Know the level of the data measurement which is being needed. The data can be ordinal, ratio scaled or nominal. For example we ask mostly a common question in every kind of new product market research which is about the age of the person. In this case two types of questions can be framed and which will give two different kinds of level of measurement for data like asking the question:

(a) Pleases indicate the age group you belong to:

15-21 years —

22-30 years—-

Over 30 years—

(b)How old are you? —– Years

On one hand the question (a) will give rise to nominal data and the question (b) will give rise to ratio scaled data. In case of format (a) there are very few statistical tools which can be applied for research analysis, while in case of question (b) it allows to conduct almost all the statistical tests including the parametric test and this way we can establish the cause and effect relationship between two variables it would be better to design and collect data which isratio scaled and not nominal to get result which is cause-effect based.

Time Scale:

Time scale helps in allotting deadlines to all the activities of marketing research and it is very important to set the time scale before starting any marketing research activity.This will help in completing the whole program on time and within the slotted period. Time pressures are there because the management always wants concrete answers for the marketingresearch activities conducted time to time by the organization. Time constraints act as overriding factor while planning any research design.Because of the time factor the research plan will be designed in such a manner that it is not quite elegant but gives on time right on schedule information which might not be precise.

( Savalia & Sanghvi 2010)

Budget

While making the budget we should keep three important things in mind:

• Marketing budget
• Implementation Schedule
• Performance Analysis

Mostly the budgeting for any market research plan for new product is conducted on spreadsheets and separate budgets are being allotted for advertising, marketing research, promotion, and staff costs. The staffs costs include several heads like travel expenses, salaries, bonuses, phone bills, electricity bills, fuel expenses,allocated rent etc.

Marketingresearch should be tried and made low cost at every stage. It should not be en expensive affair. Here are sometips which will help in reducing the cost of research.These tips are beneficial for entrepreneurs which have low budgets and want to conduct market research before new product launch.

Tip 1: Launch a contest where the participants will answer short questions related to the quality of the new product or services. The entry form can be dropped while entering the stores in the deposit boxes.

Tip 2: The questionnaire regarding the quality of product can be piggybacked with the sales brochure or the catalogue of the company. Do not forget to ask very important question in the questionnaire about the new products the customer would like the company to offer in near future.This will help in future organizational evaluation and collection of primary data.

 Tip 3: the grievances should be given great priority instead of neglecting or taking them casually as theorganizations are now following the approach of management by exception. The unsuspected problems can be revealed while conducting management follow ups or doing in-depth interviews with the consumer.

Tip 4: A standard set of short questionnair4e should be developed for telephonic interview for collecting primary data which will help in analysing the quality of your product.Many clients will feel flattered if they are asked for their opinion and plan to buy your product in near future.

Tip 5:  Various product packages have been clubbed with successful researchquestionnaires. This way the company is able to find out how the client got to know about the product, and why did he purchase the particular product, but in this case the company just analyses on customers preferences and neglects research aspect.

Draft Research Instrument:

Telephonic Interview Questionnaire

1. Do you have five minutes to give your opinion about new product?
2.  What features would you like in the new product?
3.  Any previous problems with the old product?
4. What added new features are you looking forward?
5. What would be the approximate pricing you desire from the new product?
6. Would you buy the new product and leave the old one for price or features?

References

• Aaker, D.A.,Kumar, V. & Day, G. 2001, marketing Summary, John Wiley &Sons Inc.
• Best, J.W., & Kahn, J.V. 1998.  Research in education (8th Ed.). Needham

Heights, MA: Allyn and Bacon

• Dickinson, P.R. ,Marketing Research for New Ventures, viewed form http://210.46.97.180/zonghe/book/203-Entrepreneurship(fifth%20edition)-Harcourt%20Colledge%20Publishers-Donald%20F.%20Kuratko/chapter_8.htm
• Green, P.E., Tull, D.S. & Albaum, G 1993, Research For Marketing Decisions, 5th edition, Prentice-Hall
• Henderson, C. 2000, Marketing ResearchGraffiti, Asia Market research dotcom, Henderson Consulting International, Manila, Philippines.
• Kerlinger, FN. 1994, Foundations of Behavioural Research, 1st edition, Holt, Rinehart and Winston, p. 174.
• Savalia, K & Sanghvi, N 2010, research Proposal for understanding the effectiveness of television , hoarding, newspaper&online advertisements in cross media Campaign on consumer awareness of Vodafone., slideshare.net, http://www.slideshare.net/nikitasanghvi/vodafone-market-research-proposal

• Subramanian, A. New Product development, Strategy, tactics and Process, http://www.pinpointskills.com/docs/Anand%20Subramaniam/New_Product_Development.pdf
• Tactical Marketing Plans, PSU BA 316, viewed on 1^st November, 2011 fromwww.sba.pdx.edu/faculty/johne/316/TacticalMarketingPlans.doc.

• Yeong, A. 2001, Introduction to BusinessResearch Methods, viewed on 31 October, 2011 from http://www.slideshare.net/anthonyyeong/introduction-to-business-research-methods

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