New Product to the Market - Essay Example

?The introduction of a new product to the market involves the creation of the product, bringing it to s and ensuring its growth and prosperity. In this case, the new product is a drink dispenser that can be used for beverages and water. It is made of glass and can handle up to five liters of the drink. The five gallon dispensers are well insulated and easy to clean. The dispenser can keep the beverage hot, warm or cold as per an individual’s preference. This product is quite effective since it can be used anywhere and is portable, hence can be carried by families and friends for trips. It is also cheap and hence affordable to most people all over the nation. Market segmentation involves marketing strategies that are used for classifying a broad market into subsets of consumers with similar needs for the product (Kotler 68). The specific characteristics of the product are divided into different categories of age, location and family size. The marketing strategies are designed to target specific customers. Segmenting helps in measurability, which is determining whether a particular segment is fit enough to be pursued. Accessibility is also a criteria in segmenting which entails reaching a given target group, where a region where people pay less attention is inaccessible. Demographic segmentation is also used to classify the market by dividing it into the variables of age, location and even family size. Demographic segmentation is great for segmenting customers into different groups, where customers are linked to the variables and segmented accordingly. Segmenting of the market involves dividing it into groups of consumers with similar wants. Consumer based market segmentation is performed on a specific product basis so as to create a close relationship between the consumers and the product. This demographic segmentation helps in identifying groups of similar consumers and the potential ones. It also helps in making priorities of the different costumers and understanding their behavior. Good segmentation improves the marketing effectiveness. The segments have different types of industry structure thus have an effect on its attractiveness. Segments are essential in improving manufacturing quality and the market share or the competitive position. The target market is mainly young people in the mid years since they may use the dispenser a lot in carrying alcohol and some types of beverages. Most youngsters prefer carrying beverages around and this dispenser is efficient for them since its pocket friendly, portable and can hold a lot of drinks. Most consumers’ preferences vary with age, in this case very young children may not see the essence of this dispenser but a bit older youngsters will know its importance. Psychographic segmentation is also essential since it helps to understand the consumers’ lifestyle. Product positioning is the next step in product introduction after the target market has been identified. Positioning entails ascertaining a product and how the potential consumers view it. Segmenting helps in matching the consumer’s needs, reduces expenses, improves cash flows and improves productivity. To reach this group of customers, a lot of advertising is involved. Using demographic segmentation we target the young and also large families. With a family of six the dispenser can hold drinks to keep them going all day since the dispensers vary in size and one can get the required one. When considering the potential market for a new product, the size of the market is important since it determines the profit margins that will be gained from the product (Kotler 212). The target group should be stable since the product should be in the market long enough to break even. The potential customers should be easy to reach, that is promotions and distribution channels should reach them. The product can also be reached cost efficiently by the market intervention. The product has many benefits to the consumers since its cheap and readily available; it is portable by those going for picnics and camps. The dispenser also maintains a lot of hygiene to families with young kids since the dispensed drinks stays clean and away from any infections and germs that may cause diseases. It also benefits them by keeping the drinks at the required temperatures. It is made of durable material and has a warranty hence can last for long and incase of problems it has a warranty. The new product is to be introduced at a price of $150, which is an adequate price for the product since it gives an appropriate profit when all costs of production are deducted and it is easily affordable for anyone due to its favorable price. Pricing strategies for the product has three main ways in order to improve profits. This include the business cutting costs and selling more, or making more profit due to better pricing strategies. High prices are not always the solution specifically in a poor economy. The pricing strategy in use is the cost plus pricing which is very simple and involves calculating the cost of production of the products and adding to it a percentage profit to give a selling price. Cost-plus pricing helps in maximizing the profits made, and increasing production. It ensures public utility of the pricing, helps in taking into account the market realities as this approaches the buyer in terms of costs (Kotler 202). In the dispenser case cost plus pricing is effective in that it specifies a single buyer on the basis that the estimated gross plus the cost that the company may not get using facilities. This strategy of pricing may seem inconsistent with maximization of profits. Analysis that is based on marginal costs and equals to the marginal revenue appears not relevant and thus the use of cost plus pricing. Cost plus pricing also reduces the cost of decision making especially in an uncertain market where there is inadequate knowledge. Unknown reaction of the product by customers also makes it a good strategy. Due to unknown reaction of other competitors, the competitive stability is well achieved by setting a price that yields return (Kotler 236). The PLC is the product life cycle of a product and refers to the succession of methods used by this business as the product goes through transitional stages. The lifecycle has four stages which are the introduction, growth, maturity and its decline (Kotler 98). The PLC offers great help to the business and introducing a new product, it helps know the real growth in the market not only an increase in the outcome. At each stage different prices should be charged. In the introduction stage the product is initially promoted, public awareness of the product is done. Here the prices should not be so high but will be increased as the product penetrates the market, this is a strategy to help incase the market has several competitors. At the introduction a price of about 80 dollars would be suitable in order to observe how it will work and the markets reception. In the growth stage the product has grown and there is a lot of expenditure on advertising and production hence the price has to be a bit higher than that of the introduction stage. At this stage the product can go for about $100, once the sales of the product increase the company’s shares stabilize. In the third stage which is the maturity stage the product is expected to take a lot of time, here the sales have a rapid growth and then they begin to go down and stabilize, hence the price must vary from very high then go down as the product enters its final stage. The last stage is the decline stage where the sales of the product fall, the fall may be because most people have already bought the product or competitors have better and cheaper prices (Kotler 213). In this stage the price should be reduced and in order to avoid more losses the cost of spending should also be minimum. Due to the markets down turn there should be intense cut down in prices. At this stage the price will vary from 80-150 dollars. Work Cited Kotler, Phillip. Principles of Marketing. New York: Addison Wesley Longman, 2005. 0000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000he the product. similar needs.000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000 Read More