Page 156 - DMGT509_RURAL MARKETING

Unit 8: Rural Product Strategy

(d) Marketing strategy Development: The next step is marketing strategy development, Notes
designing an initial marketing strategy for introducing this car to the market. The marketing
strategy statement consists of three parts. The first part describes the target market; the
planned product positioning; and the sales, market share, and profit goals for the first few
years. The second part of the marketing strategy statement outlines the product’s planned
price, distribution, and marketing budget for the first year. The third part of the marketing
strategy statement describes the planned long-run sales, profit goals, and marketing mix
strategy.
(e) Business Analysis: Once management has decided on its product concept and marketing
strategy, it can evaluate the business attractiveness of the proposal. Business analysis
involves a review of the sales, costs, and profit projections for a new product to find out
whether they satisfy the company’s objectives. If they do, the product can move to the
product development stage.

To estimate sales, the company might look at the sales history of similar products and
conduct surveys of market opinion. It can then estimate minimum and maximum sales to
assess the range of risk. After preparing the sales forecast, management can estimate the
expected costs and profits for the product, including marketing, R&D, operations,
accounting, and finance costs. The company then uses the sales and costs figures to analyze
the new product’s financial attractiveness.
(f) Product Development: So far, for many new-product concepts, the product may have
existed only as a word description, a drawing, or perhaps a crude mock-up. If the product
concept passes the business test, it moves into product development. Here, R&D or
engineering develops the product concept into a physical product. The product development
step, however, now calls for a large jump in investment. It will show whether the product
idea can be turned into a workable product.
The R&D department will develop and test one or more physical versions of the product
concept. R&D hopes to design a prototype that will satisfy and excite consumers and that
can be produced quickly and at budgeted costs. Developing a successful prototype can
take days, weeks, months, or even years. Often, products undergo rigorous functional
tests to make sure that they perform safely and effectively. The prototype must have the
required functional features and also convey the intended psychological characteristics.
(g) Test Marketing: If the product passes functional and consumer tests, the next step is test
marketing, the stages at which the product and marketing program are introduced into
more realistic market settings. Test marketing gives the marketer experience with
marketing the product before going to the great expense of full introduction. It lets the
company test the product and its entire marketing program—positioning strategy,
advertising, distribution, pricing, branding and packaging, and budget levels.
The amount of test marketing needed varies with each new product. Test marketing costs
can be enormous, and it takes time that may allow competitors to gain advantages. When
the costs of developing and introducing the product are low, or when management is
already confident about the new product, the company may do little or no test marketing.
Companies often do not test market simple line extensions or copies of successful competitor
products.

(h) Commercialization: Test marketing gives management the information needed to make
a final decision about whether to launch the new product. If the company goes ahead with
commercialization—introducing the new product into the market—it will face high costs.
The company will have to build or rent a manufacturing facility. The company launching
a new product must first decide on introduction timing Next, the company must

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