DOWNLOAD THE COMPLETE PROJECT

1063 Users found this project useful

STRATEGIES FOR MARKETING A NEW PRODUCT IN A SATURATED MARKET

CHAPTER ONE

INTRODUCTION

1.1  Background of the Study

In the age of globalization, companies from entire world face various scenarios. The goal of each company is to increase the revenues through new product launch optimization. New products offer increased sales, profits, and competitive strength for most companies. New products launch could be a means by which the company creates and sustain competitive advantage for itself in the marketplace. Companies like Sony, Microsoft, or Dell continuously launched new products, and made this activity a crucial part of their marketing strategy (Kotler, 2006).

Almost 70-80% of new products launched each year fail; therefore companies attempt to find the main drivers which could affect the launch success. Many successful organizations such as Apple or JVC owe their fortune to new products that they launched (Cooper, 1993).

The critical success factors from an industry are represented by activities that provide the necessary conditions in order to obtain the success–being its main determinants. The company will be successful if it is really good in carrying out these activities and mediocre in all others. For instance, in the software industry, the key success factors are establishing the effective distribution channels and providing after sales services.

Researchers have responded to the increased managerial concentration on new product launch with a lot of studies that attest the new product success. For instance, Mintel–an research company–states that the phone market will grow from 205.1 million units shipped in 2014 to 255.2 million units in 2019, this grow will slow considerably near the end of the forecast period. The opportunities from the smartphone market are reduced due to the increasing majority of adults that have more advanced devices.

New products launch is the key in succeeding in the technology field and generally, the more a company spends on research, development, and launch the more novelty its creates. Samsung Electronics, the world largest technology company by revenue, has spent $10.4 billion for research, development, and launch–the second amount spent for R&D in the world.

Globally, the phone market is reaching 30% of all e-commerce transactions, fashion and luxury items are the most purchased via phone at 33%, and travel on the second position with 27%. Nowadays, the smartphones market is about buying, not only speaking, browsing, researching or playing–and this is a big opportunity for e-commerce business. To pursuit this idea, Apple have transformed itself into an e-commerce company, it have launched its own mobile payment service–Apple Pay (Wallace, 2014).

New products launch is an essential determinant of company performance (Blundell, Griffin, & Reenen, 1999; Urban & Hauser, 1993) thus, it is obvious the necessity to learn more about the factors that affect the success of new product launch. As well as it is attempted to emphasize the main success factors, it is also trying to define the term success (Hart & Craig, 1993), which is not so easy. This aspect is a real issue because how the new product success is defined surely influences the research attempting to describe de factors which contribute to a success launch of a new product (Hart, 1993). Through extensive research, some papers succeeded to identify some dimensions of new product success (Cooper, 2004; Cooper & Kleinschmidt, 2007a), but a lack in knowledge still is: one of the problems is the time perspective–no delimitation was established between short and long term of new product success, other issue is related to the firm characteristics, and also another suggestion is the necessity to measure the indicators of new product success (Griffin, 1993; Hart, 1993). In the light of this knowledge gap, Ernst & Young, 2002 established a success definition: “A new product is considered a success if it achieved at least 80% of 26-week sales per distributing store after two years” (Mathews, 1997).

New products can bring big advantages, but not all new products succeed, therefore it arise a question “What separates the winners from losers?” It is crucial to understand the various success factors when a new product is launched (Cooper & Kleinschmidt, 2007b) this understanding could serve as a guide about how to manage the launch of a product.

The concept of product life cycle is based on the analysis of the characteristics of the product development in terms of adaptation to the needs of the market, where the market is based on inclusion and description of product sales positions and as a result, the benefits derived based on sales volume (Kume, 2007). Companies have recognized the need and demand for the product, but also considering the possible risks of failure by placing a new product or entry in a new market which can be:

- A high degree of potential failure

- Limited distribution

- The need for continuous improvement of the product

- Negative profit

- Higher marketing expenses (Hoechst 2000).

Companies struggle for success on the international arena as they are confronted by large and unfamiliar challenges on the foreign market. When companies enter the global market, they meet fierce competition. To maintain their competitive advantage, they need to be more knowledgeable and focus on specific areas. To survive in this struggle and achieve success, it is essential to leverage a well-developed marketing strategy. A company needs to invest more significant efforts, and carefully adhere to the marketing principles and techniques to be successful on foreign markets, which promote high standards for goods, services and advertising. In addition, it is important to fulfill the requirements and demands of the consumer market in order to sustain high competitiveness in non-traditional types of business cultures (Hoffman, 2005). Launching new products and services in the market represents an important source of increasing the size of a business and the profits of a company. The success of introducing new product on the market is a critical issue of the current marketing programs (Mccole, 2005, and Hoffman, 2005). New Product Development (NPD) speed is critical because product life cycles are shrinking and obsolescence is occurring more quickly than in the past while competition also has intensified. Consequently, to grow, it has become imperative for firms to move new product to market faster. Companies such as Gillette, Honey well and Xerox are often cited as examples of firms that compete on development speed. Firms that succeed in speeding new products faster to market than competitors can obtain first-mover advantages. These advantages stem from the firms competitive start over rivals and are expected to result in dominant market position (Fred and Erik 2009; Hoechst 2000).

In this present economic environment where technological advances happen very quickly and products life cycle is cut short, companies need a strategy for new product development, but also need to know the factors that determine the market success of new products, (Roenrich, 2004). In this study, the researcher analyzed the marketing strategies for marketing new products in a saturated market, the indicators of consumer innovative behaviour and the association between new product development and consumer innovative behaviour.

1.2 Statement of the Problem

Market saturation exists in a given industry when the available supply of goods equals or falls short of customer demand. A variety of factors, including more competition, lower market need and obsolescence, contribute to saturated conditions. The big drawback of operating in a saturated market is that it limits your profitability and growth potential.

New product launch should be a common strategy for many companies in order to obtain and maintain the firm success, but these companies could face a problem–launch decisions can often be very costly and risky (Li & Zhu, 2009). Every firm must develop and launch new products, because they may influence the future of the company. The customers want new products and the competitors will make every effort to provide them (Kotler, 2006).

A lot of theoretical papers have investigated the presence of connections between firm success and new product launch (Klette & Griliches, 2000; Klette & Kortum, 2004; Thompson, 2001; Lentz & Mortensen, 2005).

Therefore, the increasing literature that focuses on examming the link between new products launch and firm success confirms the relevance of this topic (Nurmi, 2004; Loof & Heshmati, 2006; Del Monte & Papagni, 2003; Yang & Huang, 2005), but these investigations have focused more on the R&D intensity and patenting indicators, rather than new products success introduction (Flor & Oltra, 2004; Becheikh, Landry, & Armara, 2006).

1.3 Objectives of the Study

The main objective of this study is to identify strategies to market new products in a saturated market.

The specific objectives are to;

v Examine the various kinds of marketing strategies in marketing a new product

v Identify the processes involved in launching new products.

v identify the causes of new product failure in the market

1.4 Research Questions

v What kinds of marketing strategies are used in marketing of a new product?

v What are the processes involved in launching a new product?

v What are the causes of new product failure in the market?

1.5 Significance of the Study

In this work, attempt will be made to identify its significance to: Business organizations, Academics and the Researcher.

Businesss Organizations:

The need for prudent management of financial resources in an organization is of great concern.

It’s amazing however; that at anytime an organization is going through some hard times financially, first thing that runs into the mind of the management staff is a cut-down on advertisement and promotion budget or eliminate them entirely as a step to ameliorate their predicament. This study therefore, has been designed in such a way as to aid organizational managers realize that measurement is very important in advertising. Therefore, before decisions are taken on whether to eliminate advertisement or cut-down the budgets, efforts must be made towards ascertaining the impact of such advertisement, hence; a call for checks and balances. 

To Academics:

Before this study, some past studies found that advert had increasing effect on consumer satisfaction; others found that advert had negative impact and led to consumer dissatisfaction. No research has ever found why conflicting results were obtained in this area of research. To academics therefore, this work will provide a basis for further research works. To further achieve this, relevant and authentic references have been cited.

To the Researcher:

The researcher is a marketer; hence, embarking on this work will increase her knowledge of media planning. Above all, this study is designed in partial fulfillment of the requirements for the award of HND of the department of marketing, Bolgatanga Polytechnic.

1.6 Delimitations of the Study

Several limitations on the research need to be acknowledged:

a) Financial limitations. No funds were provided for the research. This restricted the authors’ ability to carry out a broader investigation.

b) Time limitations. The process of communication with potential interviewees will be very time consuming since the researcher will have to follow company’s bureaucracy and in some cases didn’t yield any results.

c) Access limitations. The specific nature of this research implied the accumulation of data from the senior of management of the selected companies responsible for strategic issues. It proved extremely difficult to find the necessary contacts in the Internet, which resulted in certain limitations in the research findings.

d) Language limitations. The authors found the area of research challenging, as she is not a citizen of Bolgatanga. Most of the respondents were frafra people, which made it harder to process the data and also necessitated the investment of far more time than had been anticipated.

  DOWNLOAD THE COMPLETE PROJECT