NEW product DEVELOPMENT TEST MARKETING PROSPECT AND challenges
NEW PRODUCT DEVELOPMENT TEST MARKETING PROSPECT AND CHALLENGES
1.0 Background of the Study
New goods serve numerous functions for the organisation, including sustaining growth and so protecting the interests of investors, employees, and suppliers of the organisation. New goods assist the company remain competitive in a changing industry (Patrick, 1997).
The outcomes of product development have a direct impact on competition. They represent the difference between slipping behind a market leader and being the rival who sets the norm, motivating others to follow suit (Wheel Wright and Clark 1995).
Finally, new items diversify marketing risk. The investment community favours new items; new products boost the top line, increasing the firm's and shareholder value (Patrick 1997).
The academic and commercial literature is rife with disjointed lists and explanations of why new products fail and what elements contribute to success.
There is plenty of advice available to those that want to achieve the revenue growth, profit growth, and reputation for innovation and leadership that come with successful new product launches. Organisations devote significant human, material, and financial resources in new product development.
Furthermore, significant study has been undertaken in both the academic and industrial sectors to determine the factors that contribute to new product failure and success. However, the figures on product failure that we constantly hear about are terrifying. How may these apparently contradicting facts be reconciled?
The primary motivator of the efficient consumer response (ECR) programme is an industry estimate that the excess cost to the supermarket system in the product development and launch process can be as high as 4% of net sales; these costs include both.
v All development and introduction costs connected with failed products, including product cancellations prior to introduction and product withdrawals after debut.
v Excess expenses associated with launching successful new items, primarily excess production costs due to the first enormous inventory building required for introductory bargains and special incentives, such as free goods.
Industry data from a study commissioned by the joint industry task force on new goods and completed by Deloitte and Fouche Consulting Group in 1995 suggest that new product introductions cost the food system (manufacturers, brokers, wholesalers, and retail grocery stores? Approximately 252 per skill, per store.
It's worth noting that the study was based on 1988 data. Assuming an industry inflation rate of only 2.5% over the last decade, this value currently approximates $320 per skill per store. The industry definitely invests a lot of money in items that are offered but do not prosper.
The goal of this study is to look at the challenges and opportunities of test marketing new goods with Guinness Nigeria plc.
1.1 Statement of the Problem
The goal of the study is to look at the opportunities and problems of test marketing as an affect now product in Nigeria.
1.2 Objectives of the Study
The aims of this research work are as follows:
1) Examine the test market in relation to the Nigerian breweries industry.
2) Determine the role of test marketing in the sales of new products.
3) To analyse the challenges connected with selling innovative products.
4) To understand the need for doing a test market.
5) To investigate the impact of test marketing on the profitability of an organisation.
6) Identify the challenges and opportunities for test marketing of new items.
Ho: Test marketing has an impact on the sales of new items.
Ho: Test marketing does not affect the sales of new items.
Ho, Test marketing has an effect on the profitability of an organisation.
Ho: Test marketing has no effect on an organization's profitability.
1.4 Significance of the Study
A significant feature of FCR, effective product introduction, addresses concerns about the worrying amount of new goods issued each year, with the majority of these being life extensions (Kaln and McAlister 1997). A supplement titled “Efficient new product introduction” appeared in the July 1997 edition of Progressive Grocer.
This report was intended to “describe techniques for new product introduction advancing the understanding of distributors, brokers, and manufacturers within the grocery industry,” and it cited a project undertaken by Ernest and Young, who provided the data cited in the report. Prime Group, Inc. computed product introduction success and failure rates as part of the study.
Determining what determines a new product's success or failure is an important first step in calculating and measuring success and failure rates. Is a new product failure when a product concept shows enough strength during early stage testing to sustain investment in product development but fails to survive beyond product or market testing?
Is a new product a failure if it is launched, achieves retail distribution, and generates revenues that do not match stated targets? If a new item is launched and gains retail distribution, but the revenues do not meet the specified targets, is the new product a failure?
If a new item is introduced and generates large first-year distribution and revenue, but then loses distribution and revenue following the seasonal period, or are they simply substitutes for other products in our existing lineup?
Clearly, the industry needed to establish a common definition of what defines new product success or failure. Even more fundamental was the requirement to explicitly define what defines a new product.
Is a product considered new if it is new to the consumer? Most industry experts agree that a product that is new to the consumer is a new product. But what about a product that is fresh to the company? Or a product that promises better performance?
The Progressive Grocer study is important for its specification of (1) a classification scheme for new food and associated items that differentiates new products from new it PCS.
(2) a specific definition of product failure that is used to evaluate whether a new product is considered successful or unsuccessful, and (3) empirical data on failure and success rates.
Previously, with the exception of data provided by information resources integrated in their yearly “New product pacesetter” reports, little actual evidence was provided to either limit or challenge the popular wisdom that 4 out of 5 (or worse) new goods fail.
1.5 Scope of Study
This study covers new product development, test marketing opportunities, and problems. As an example, consider the Guinness Nigeria plc bottling company in Edo State. It will be completed from January to August 2014. accommodated the records for a two-year period with Guinness Plc or their distributors.
1.6 Definition of Terms
1) New products: New products are goods and services that differ considerably in their attributes or intended applications from the company's valuable items.
2) Efficient customer response (ECR): is a trade and industry organisation dedicated to making the grocery industry as a whole more responsive to consumer demand and eliminating needless expenditures from the supply chain.
3) Product development: The creation of items with unique or distinct characteristics that provide new or additional benefits to the customer. It may also include changing an existing product.
4) Product concept: It is an understanding of the product's dynamics in order to highlight its best attributes and features. Product concept believes that buyers prefer items with the highest quality, performance, and features.
5) Product launch: A product launch is the first appearance of a product. The first time a buyer sees and buys the goods. It refers to a new product that is being introduced or released onto the market.
6) Test market: In business and marketing, a geographic region or demographic group is used to assess the viability of a product or service in the mass market before a large-scale launch.
7) Organisational environment: External institutions or forces that may have an impact on the organization's performance. These include supply, consumers, competitors, the government, regulatory bodies, public pressure, and so on.
8) Cross-functional team: A group of persons with diverse functional expertise working together to achieve a common goal.
9) Market testing: The sale of a new product in a small area to determine how well it will sell and to identify any potential issues.
10) Virtual test market: A computer simulation of (tens of thousands) of virtual consumers making purchasing decisions in response to new (and existing) product offerings and marketing activities. As a result, virtual test marketing generates a market share projection for each product in the virtual marketplace.