New Product Development - Essay Example

New Product New product development requires extensive evaluation and strong marketing strategies that will ensure successful introduction and performance in the market. The idea of developing magic cloth was from internal sources. The company employees conducted a market survey and collected information from the customers on the drawbacks of the regular razor and on their expectations of the quality of the shaving gadget. The opinion of the suppliers was also analyzed to assist develop a better product.

The magic cloth was developed in the conventional eight sequential stages. The first stage was the idea generation stage where various ideas were generated (Keiser and Myrna 75). The ideas were thereafter screened looking at the feasibility and the profitability of the product sales. The ideas that passed the screening test entered the concept development and testing stage. It is at this point that the ideas are stated in a manner that targeted consumers can understand. The concepts were then tested with a small constituency of the target market.

Strong concepts that meet the target market expectation proceeded to the marketing strategy stage whereby the initial products are marketed among the target consumers. The next stage is the business analysis stage in which the sales and costs analysis is taken to determine whether they are in line with the company objectives (Keiser and Myrna 76). The magic cloth met the customers’ satisfaction and was profitable because of the high sales rate. The cost analysis also showed that the economies of scale would reduce the unit production stage.

The final stage is the commercialization stage in which the product was launched officially for sale in the market. In setting the prices, the company considered the costs incurred in the production process and marketing costs (Keiser and Myrna 77). Other factory overheads and operational costs were also included in determining the total costs. After consideration of all the costs, a margin was set which would ensure that the targeted profit is earned. Besides, the price set was pegged on external factors like the prices of competitors.

In the highly competitive industry, consumers are sensitive to prices and any overcharge could lead to a loss of sales. Moreover, the demand also had an impact on the sales price. At times of high demand, the magic cloth was sold at a higher rate compared to the low demand period. Since the prices cannot be constant in a free market where competition is encouraged, there were ways in which the prices were adjusted. First, segmental pricing was used whereby; different market segments incurred different costs because of the differing characteristics of the segment.

Discounts were also given to customers as a way of ensuring repeat purchases and customer loyalty. For instance, consumers were given a discount of 15% in the first year of introduction while the large-scale purchases attracted a discount of 20%. These discount prices acted as a promotional strategy for the company. At the same time, the magic cloth was sold at a relatively high cost to create a perception of better quality products. Psychological pricing is normally used to give consumers a perception that may not be true in real cases (Keiser and Myrna 78).

This made a particular class of customers become the customers of the product. In summary, the successful introduction and sale of a product in a market require calculated strategies and reevaluation of decisions. Customers must therefore be given the required attention because they are the determinant of the sales quantity. Failure to integrate their interests and suggestion make marketing strategies futile.