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CommercializationTEST MARKETING PRODUCT DEVELOPMENT BUSINESS ANALYSIS Commercialization Test marketing Product development Business analysis Concept testing Screening Idea generation
Business analysis provides a tentative outline of a product’s position in the marketplace, including its probable profitability. During this stage, the firm considers how the new product, if it were introduced, would affect the firm’s sales, costs, and profits. Marketing personnel usually work up preliminary sales and cost projections at this point, with the help of R&D and production managers. In the product development phase, the company must find out first if it is technically feasible to produce the product and then if the product can be made at costs low enough to justify a reasonable price. If a product idea makes it to this point, it is transformed into a working model, or prototype. Test marketing is the limited introduction of a product in several towns or cities chosen to represent the intended market. Its aim is to determine buyers’ probable reactions. The product is left in the test markets long enough to give buyers a chance to repurchase the product if they are so inclined. Marketers can experiment with advertising, pricing, and packaging in different test areas and can measure the extent of brand awareness, brand switching, and repeat purchases that result from alterations in the marketing mix. During commercialization, plans for full-scale manufacturing and marketing must be refined and completed, and budgets for the project must be prepared. In the early part of the commercialization phase, marketing management analyzes the results of test marketing to find out what changes in the marketing mix are needed before the product is introduced. The results of test marketing may tell the marketers, for example, to change one or more of the product’s physical attributes, to modify the distribution plans to include more retail outlets, to alter promotional efforts, or to change the product’s price. Products are not usually introduced nationwide overnight. Most new products are marketed in stages, beginning in selected geographic areas and expanding into adjacent areas over a period of time. 8. WHY DO PRODUCTS FAIL? Why does a new product fail? Mainly because the product and its marketing program are not planned and tested as completely as they should be. For example, to save on development costs, a firm may market-test its product but not its entire marketing mix. Or a firm may market a new product before all the ‘bugs’ have been worked out. Or, when problems show up in the testing stage, a firm may try to recover its product development costs by pushing ahead with full-scale marketing. Finally, some firms try to market new products with inadequate financing.
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