New product development is a very difficult and expensive task. To work out the concept of a new product or brand is just the first step to ensure that the market accepts it. How to create and launch a new product on the market? The answer is simple:
Use 4Ps of Marketing
What is 4Ps? This function was introduced by Philip Kotler, however, many brand managers still neglect it, and try to “come up with a wheel” themselves. 4P of marketing is:
New product development t is actually the ratio of these four factors to occupy a market share. We will analyze each factor separately.
New product development in 4 basic steps
4Ps of marketing: product
The term “product” means a set of factors that determine your product. For example, a top manager of a large company is unlikely to buy strong beer with national heroes on the label – it is intended for blue-collar workers. At the same time, a worker from the same company is unlikely to buy an expensive whiskey – it is intended for a top manager.
First of all, the product must match its target audience. For example, launching a new brand of milk in a region where dairy sales are growing every year, and there are suitable suppliers who can quickly and inexpensively supply raw materials, seems like a good idea.
Please keep in mind that any product is created during planning. And you need to consider many factors, but they are united by one thing – the target audience, which will buy this product.
4Ps of marketing: price
Very often brand managers do not understand the basics of pricing, trying to entrust this task to economists or even logisticians, which can lead to an unprofitable product at the start. However, pricing is the most important indicator in sales. What do you need to lay in the price?
Let’s leave our example with a new milk brand in a region where objectively there is a need for it. If there is a local supplier who will sell us raw materials at relatively low prices, then this will be a good basis for creating a brand – then we can put a larger % on the remaining costs. What other costs could be?
Firstly, the costs of the distributor and the sales team. This is very important because, in simple words, sales staff must be motivated to sell our product. Also, logistical costs in overcoming long distances can be very significant – and this point is especially important, for example, for individual Russian regions.
Secondly, the cost of entry into retail chains and promotion. It’s not a secret for anyone that in order for a product to go on the shelf in a retail chain, you first need to pay this retail chain. Commercial conditions may vary depending on the country and region, but you should always remember that these costs are very significant. Especially if we considering constant promotion.
Thirdly, the economic situation and competition. Today’s FMCG market is extremely dynamic, and very often situations arise when a retail chain or a separate outlet can make a choice in favor of your competitor. Therefore, a separate percentage of risk in such cases must be pledged necessarily.
So, it is important to understand that in addition to the cost price, there are many more factors affecting shelf price. Pricing for a new product may seem complicated, but believe our experience – this is a doable task.
4Ps marketing: place
In this case, a place should be understood as sales channels and even specific outlets where a new product will be sold. For example, a distributor can quite successfully sell new merchandise to retail outlets – motivate sales staff would be good enough.
New product development usually goes side by side with the understanding in which distribution channels and retail chains this product will be sold. The issue of access to retail chains also depends, in most cases, on specific commercial conditions. And where else can you sell a new product?
Today, one of the fastest growing distribution channels is online trading. Federal or international marketplaces such as Alibaba allow you to not only sell within the country, but also abroad. A separate article on this topic can be found here.
4Ps marketing: promotion
Assume that the product concept, price, and distribution channels are defined, and it will soon be launched and presented to distributors. In this case, the promotion of a new product will be needed. How to do it right?
ATL advertising and BTL promos are the two main components for creating demand for a new product. When advertising in the media, including on the Internet, you can create awareness of a new product and foster demand for it. And using BTL promos – in particular, discounts, a gift for a purchase, sweepstakes and promotion through distribution channels – you can very effectively ensure sales growth.
New product development is not an easy process, however, as you can see, a scheme for successful launch and promotion already exists. The main thing in this process is to have the courage to move forward.