Hypothetical Product Reassessment - Essay Example

? Essay Product Reassment Marketing July, Hypothetical Product Reassment Introduction Proposal is for foreign distribution of fax machines. This product proposal is intended to benefit U.S. fax machines manufacturer/dealer, Canon and its stakeholders in the United States. Project is due for implementation in 2014 in China. Objective of the proposal is to give life to the dying industry of the fax machine through entry of foreign markets. Desired impact and outcome of the project is its long term effect of the product projected by the sustained profitability of the company. Definite measure to sustain the project is thru distributorship or partnership as specific form of entry to the China market. Picture of the product is shown in Annex 1, while profile of the company may be downloaded in its company website. Discussion . Life cycle of the fax machines in the United States have reached maturity and declining stages. It has been overtaken by fast technology changes in communication. At this stage, manufacturers are left with three options: to look for new markets, to accept its fate, or to upgrade features of its products to present a new appeal. While it seems that US market is saturated and has reached maturity, other foreign markets are still on a developing stage. One such country is China, that despite for its being big in terms of economic development, has low usage of Fax machines. According to CIA Factbook, (2013) China has a population of 1,349,595,895 and is considered the most populous country in the world. It has a literacy rate of 92.2% which is a very good segmentation target for the product. Repositioning needs a risk management plan that involves a market research. Since there are issues why the fax usage is low in this country, and before entry, a market research should be conducted in order to ascertain acceptability of the product. Market research helps the company understand the customer and its relative situation. The branch of research ideal for repositioning is market profiling or segmentation survey to know following conditions: to identify who are the customers, why are they or not customers. The survey may also include questions about purchasing decisions in order to know motivational factors from interest to actual purchase. This section opens up with the idea of major factors that lead to the level and rate of adoption of new products. Fax machines are not a totally new product, but the idea is to reintroduce it to a new market, which is China. A method that could be used to check on adoption rates is the concept testing or test marketing. Concept testing gives an idea of customers reaction before funds are spent for it, wherein “A cross-section of the general public could be asked to respond to this product idea and may be able to comment on the intrinsic appeal of the idea and, more especially, could make suggestions as to where it would best be positioned in the market” (‘Agricultural and Food Marketing Management” n.d.). Two Test marketing advantages outlined in the study of FAO stated that it provides an opportunity to obtain a measure of a product's sales performance under reasonably natural market conditions. Market share can be estimated and used as the basis of the decision as to whether or not the product is launched nationally. Test marketing also offers an opportunity for management to identify and correct product or marketing strategy weaknesses before a national launch takes place. An idea that could be carried out in the launch is product service or component that could complement the product. Fax machines are one of the products carried in the portfolio of Canon. Copiers would be the best complement for Fax machines. It could be offered as a combined package at a discounted price. After sales service could also be an attractive proposal. In every product category, service or warranty is provided. So that sales and service would be maximized, on-line system of ordering or servicing should be in place so that customers can access services of the company at once. E-Marketing and on-line services facilitate fast transaction and reduce overhead costs as it eliminates middlemen transactions. In entering a foreign market, the most likely distribution problems that could be encountered are far and many. Distribution is the process of bringing the product from end to end, from the manufacturer in the U.S. to the final consumer in China. It refers to an organization, or set of organizations involved in the process of making a product or service available to consumer (MARS, 2012).In doing this, manufacturer has to spend in channels of spending such as selling, financing, information gathering, servicing, risk taking, storage, and transportation. These functions can very well be handled by a manufacturer’s agent, distributor, or partner (or whatever term it is called). For instance, Canon is a well known company in U.S. and has an admirable website of its products wherein customers can find information and order for its products. Customers can order online in which they will receive post-sale support by being directed to Canon’s local distributor or partner. Choosing a distributor or partner is a decision problem since when choosing one, company should be assured that relationships with customers are developed and sustained. Customers of this product are segmented as technical buyers, economic buyers, and end users. Company has to reach them so they can buy the fax machine. In choosing a distributor or partner, MARS, a website dedicated for growth of companies, suggested considering the complexity of installing the product, and the push and pull marketing concepts. Complexity means that when it is easy to install, it is also easy to buy. Accordingly, in push marketing, distribution channels promote and sell the product to consumers. This is commonly found in stores where consumers make decision to purchase in the store. This type of marketing suggests a low loyalty to the product. Pull marketing on the other hand, the product is advertised to consumers so that they know already which to buy when they go to the store. This implies a high brand loyalty. (MARS 2012). Terms of agreement, may at times be source of problem in distributorship. Tom Balzer. (2013), a legal expert, said terms that may arise in distributorship agreements are the clause of exclusivity, termination clause, and frequent price changes. These things should be properly written out before an agreement is formed to avoid legal cases in the end. Distributorship may be formed as exclusive or non- exclusive. Exclusive suggests that partner is the sole distributor in the territory, whereas non-exclusive means partner is only one of the distributors in the territory. Exclusive arrangement implies that it operates without competition in the non-exclusive territory. This arrangement also prohibits both parties to seek new distribution partnership. (Glen Balzer, 2013) Conclusion Until the market research is completed, budget, and other areas needed for implementation cannot be established yet. Data that could be gathered from this would form part of the estimate of the market share. Pricing has been established by the company but could be offered at a discount or a combo product with copiers. Of the three options for a declining market, foreign market entry would be most the most practical strategy as it will give new opportunity for Canon Fax Machines. Entry is through distribution or partnership arrangement. This idea saves on new investment costs of manufacturing. However, Company will have to spend on costs of marketing research to test acceptability of the product. References Cited “‘Agricultural and Food Marketing Management” (n.d.).New Product Development. FAO Document Repository. Retrieved from http://www.fao.org/docrep/004/w3240e/w3240e04.htm Balzer, Glen (2013). “Preventing top 10 mistakes with distribution agreements”. Expert Ages. Retrieved from http://expertpages.com/news/top_10_mistakes_with_distribution_agreements.htm Canon: USA, Consumer & Home Office . Retrieved from http://www.usa.canon.com/cusa/consumer/products/copiers_fax_machines/fax_machines CIA Factbook, (2013). “China” https://www.cia.gov/library/publications/the-world-factbook/ MaRS.(2012) “Distribution”. Retrieved from http://www.marsdd.com/articles/distribution/ Read More