Market Research Practice

Author: Zheng Zongcheng et al. / Country:
Publisher:
Publishing Date: 2002-01-01
Features:
(3) Business Analysis Stage The purpose of business analysis is to estimate the future sales, profits, and return on investment of a new product and determine whether it aligns with the company's goals. If it meets the company's objectives, the product can be further developed; otherwise, it should be canceled. Business analysis is not exclusive to this stage; in fact, at any stage of development, whenever new information about the product and market is received, business analysis is required.
(4) Product Development Stage After passing the business perspective review, a promising product concept must be sent to the "Research and Development" department for design. This stage requires significant investment, so the new product concept must be reviewed with extra caution. The product development stage includes four steps:
1. Engineering Design The Research and Development department must draft numerous blueprints, establish product specifications that meet the characteristics envisioned in the product concept, while also adhering to economic principles to create a commercially viable product.
2. Consumer Preference Testing The preliminary product developed by the Research and Development department undergoes a series of consumer preference tests. The purpose of these tests is threefold: identifying the most appealing combination of features to customers, assessing the level of consumer acceptance, and uncovering any design flaws that need improvement.
3. Brand Naming A brand is the name a company uses to distinguish its product from competitors. Brand naming is a crucial step in new product development. A brand name helps create the product's image and is essential for large-scale promotion and advertising. A good brand name greatly benefits product sales, whereas a poor or generic name may hinder marketing efforts. For example, when Coca-Cola's lemon-flavored soda was initially launched in the market, it was named "Siboli," leading to slow sales. After a period, the name was changed to "Sprite," significantly altering consumers' perception of the product. This demonstrates the importance of a brand name. Therefore, when naming a brand, it is essential to understand potential image issues to avoid negative perceptions post-launch. Negative images are often difficult to correct, often resulting in product withdrawal from the market. Although a product can be relaunched with a new brand name, the company's reputation suffers, and financial losses occur. Thus, companies should prioritize brand name selection and use scientific research techniques for branding.
4. Packaging Design and Testing
(1) Packaging Design When designing packaging for a new product, the first step is to determine the role of the packaging, i.e., its primary function—is it for "protection," "implying" quality, or "highlighting" unique features, etc. Once the role is defined, the next step is to decide on the design elements, such as size, shape, material, color, illustrations, and descriptions, with each element offering multiple options.
(2) Packaging Testing Due to the significant impact of packaging on product sales, thorough testing is conducted before a new packaging is finalized. Common tests include:
① Engineering Tests: To verify the packaging's durability under normal conditions.
② Visual Tests: To ensure clarity of fonts and harmonious colors.
③ Distributor Tests: To determine whether distributors find the packaging attractive and easy to handle.
④ Consumer Tests: To assess consumer reaction to the packaging.
(5) Market Test Marketing Stage Market test marketing involves formally trying to sell a product and its marketing plan in a carefully selected and objectively measurable test environment. Whether a new product should undergo test marketing depends entirely on the company's confidence in it. Consumer goods are more frequently test marketed than industrial goods. For new industrial products, salespeople often send samples to potential customers for feedback, then refine the product based on these responses. In contrast, new consumer goods are typically tested for market reaction before mass production. The results of test marketing not only help determine whether a product should be launched but also guide the company on which marketing activities will yield the greatest economic benefits.
(6) Product Launch Stage New product launches must be well-planned and orderly. The following tasks are typically required:
1. Necessary Preparations
(1) The production department should develop plans for large-scale production.
(2) The sales department should train sales staff and ensure the product is quickly displayed in retail stores.
(3) Develop advertising and promotional plans.
2. Determining Launch Speed New products are rarely launched nationwide at once but are initially introduced to a "primary" market and then gradually expanded to a "secondary" market. This projected market expansion rate is influenced by various factors. If test marketing results are highly satisfactory, indicating high profitability or signs of potential competition entering the same market, a rapid nationwide launch may be necessary. However, the speed of launch should consider the company's available resources. If the company lacks confidence in its new product, a gradual approach is advisable, waiting until signs of full market acceptance emerge before proceeding.
3. Developing Product Marketing Strategy During the product launch stage, the company must establish a strategy to guide the new product from the introductory phase to subsequent stages of its product life cycle. For example, the company may adopt a combination of "low price and high promotion" to quickly capture a significant market share or use "high price and moderate promotion" to recoup investments sooner.
III. Market Research and New Product Development As previously stated, companies developing new products must focus on consumer needs. Relying solely on experience or intuition often leads to significant losses. Below are two examples of the author providing market research services to companies, whose approaches and outcomes differed.
One American candy company, known for its technology and capabilities and considered one of the top 20 candy manufacturers globally, planned to enter the Chinese market in 1990. They conducted extensive foundational market research, such as analyzing population distribution, age structure, consumption scale, target consumers, consumption habits, typical buyers and purchasing behavior, sales channels, existing products, pricing, major manufacturers, and promotional activities. Discovering great potential in the Chinese market, they proceeded to deeper research on consumer preferences. Specifically, they asked whether consumers preferred certain flavors. According to the company, with their technology, they could produce various flavors based on consumer demand—after all, the customer is king. Later, they tested five categories of ten different-flavored candies in Guangzhou, Shanghai, and Beijing, allowing consumers to rate them. From this research, they identified the three most preferred flavors and proceeded with production. By the end of 1991, the company launched its new product in the Chinese market, receiving excellent feedback with sales steadily increasing. Their next plan was to invest in a factory in China. This company's new product entry process was supported by scientific market research, demonstrating a solid, well-structured approach to marketing, full confidence, and the use of scientific methods to minimize investment risks.
In contrast, another company faced challenges in new product development. We believe that if market research had been conducted first, the marketing outcomes would have been better.