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Investing in a new product
or service in today's economy is risky. Weak market sectors, consumer preferences, changing economy, foreign competition, and other factors greatly affect
success. Whether you're introducing something new or
revamping an existing product or service - you
need all the information you can get. T-21 can help.
Here's one
example:
HOME
HEALTH CARE PRODUCT.
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Problem. A progressive, mid-sized
company planned a new line of home health care
products for partially disabled people. The General Manager (GM) contacted
T-21 and described their program to a Team Manager.
The GM expressed confidence in the marketability of the line, but said
that his Board of Directors was hesitant, since the company's
potential investment was substantial.
The Board had requested independent Market data, for better assessment of the proposal.
Action. Their T-21
Team Manager suggested both Consumer Surveys and basic Market Research.
He reiterated T-21's Privacy
Policy to the GM, assuring him that all information
about the project and research results would be strictly confidential.
The company accepted T-21's proposal and their TM assembled three
Teams for the project: a Survey Team,1 a
Market Research Team, and a Data Integration Team.
Within fourteen weeks, the Surveys and Research were completed and, in another two weeks, the
Data Integration Team forwarded the Final Report to the GM.
_________________________
1SEE AN
EXAMPLE OF T-21's SURVEY TEAMS AT WORK, BY
CLICKING: SURVEY-EXAMPLE
Results.
The Report indicated a high probability of success, if the product line was produced and promoted properly.
Demographics indicated a current market, adequate to profitably support the product introduction, followed by a
rapidly growing demand over the next fifteen years, and level
sales for another ten to fifteen years. The Teams
noted a growing trend of self-reliance among older individuals, increasing demand for devices
to assist them to live independently. The report concluded that providing well-designed, durable products could make the company an industry leader, and the line
could be viable for an extended period of time.
Within a month, the General Manager
told his T-21 TM of the Board's approval of the new product line.
The company's designers were
working on the first product introduction.
"Your work was exactly what the Board
needed," he said. "Previously, they were hesitant and noncommittal;
now, I can almost feel the difference in their
attitude. I owe you our thanks. If
you're ever up this way, stop in and I'll show you around."
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Before
you take a new Product or Service to Market, you need to know what to
expect. Market Research can help you learn more about
what's facing you: Demand, Competition, and Price Elasticity, among
others.
T-21's solid research helps companies confidently introduce new products and services.
While some market research companies assume a "booster" role for new products -
T-21's policy is strict adherence to factual information, with no enhancement or mitigation.
To minimize unexpected and undue risks for our customers, T-21's Teams
are conservative in their estimates.
Market Research takes considerable time and effort of a number of people, so it's often not a trivial expense, but
it can help you avoid large, unwise expenditures, horrendous losses, or
total market failures.
One example of this T-21
Service follows:
NEW
PRODUCT INTRODUCTION.
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Problem. A
manufacturing company contacted T-21 for help in
determining the marketability of a new product:
a power tool for home workshops and light commercial use.
The company calculated that they could recoup their initial investment in twelve months - based on
their proposed retail sales price and a specified sales
level. They sent their
T-21 Team Manager (TM) a prototype of the new product,
along with accessories, user manual, marketing plan, proposed retail and wholesale price
lists, and contribution margin computations.
Action.
The
TM formed a Market Research Team for the project
that reviewed the prototype and information sent by the
company. Their initial reaction was
positive: it was useful, its ergonomics were well
thought-out, and the color scheme was attractive and modern.
However, the proposed price seemed high for the D-I-Y Home
Improvement market.
The Team started the Market Research by gathering statistics on sales of categorically similar products, buying trends, and other market factors.
Initial research did indicate that the price
would significantly affect sales and would make the company vulnerable to foreign imports of product
"knock-offs."
However, they estimated the company would have twelve to eighteen months, before
competition could begin to affect the product's market.
The Team suggested conducting Consumer Surveys to gauge receptivity.
The company elected to have T-21 develop and execute the Surveys, by contacting customers who
had bought other products from the company. The survey was completed within 90 days, and
reported: Favorable - 47%, Neutral - 19%, and
Negative - 34% (all measurement factors included).
However, the survey results for pricing, alone, showed: Favorable -
9%, Neutral - 12%, and Negative - 79%.
Sales were estimated by the Teams
for the first 2 years, in 6-month segments, based on sales figures of the company's other products, the survey results, and
T-21 Market Research. The Final Report indicated
that, due to relatively low sales levels from product pricing, a break-even
point might be reached at 18 months and moderate profit could
follow - if there was no significant competition.
One part of the Team's report stated, "... if
significant foreign competition enters into the market before the break-even point, the product line would likely be
unprofitable ..."
Results.
The
Market Research Team's Final Report concluded that the proposed plan posed
"... a moderate- to high-risk for loss." Although the company's policy
specified that all production must be within the U.S.A., the T-21
report noted that "... foreign manufacture might
sufficiently lower the cost to reduce the loss risk."
"Knowing now is better than
finding out later from experience," the Project Manager
said. "We're going to take
a look at producing it overseas and bringing it in at a lower
price. We appreciate what you did here. We
could have taken a big hit on this one."
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