Feasibility analysis, product development & other aspects for introducing new products

Once the product concepts have been tested, the next step is to conduct a market feasibility study. This study involves the following:

1.Estimation of demand in the target market at different price levels.
2.Forecasting sales based on demand estimation and competitive analysis.
3.Estimate the cost of serving the market segment, taking into account cost of transportation, warehousing, margins required by the trade to market the new product, promotion expenses and sales force cost(if additional sales force is required)
4.Based on the cost and anticipated sales revenue, calculate the break even price and the sales volume. Once the product concept is feasible, the firm now takes the concept to the next stage of product development.

Product Development

This is the stage where the product ideas now move from the concept and design boards to R&D and manufacturing for physical development. Both these departments should keep the customer feedback in mind while developing the physical version of the product. They must ensure that the product is easy and safe to use by an average customer. This becomes all the more important in durables and other industrial products where the user may not have the same level of knowledge and understanding as the R&D scientists.

After the product has been developed, it must be put through rigorous functional and consumer tests. Functional tests are performed under laboratory and field conditions to make sure the products deliver what they promise. Tire manufacturers conduct intensive stress tests to ensure that their tires perform under the most difficult conditions. Pharmaceutical companies conduct clinical trails before they give out the product to their medical representatives.

Test Marketing

The new product is now tested on four parameters: trial, first purchase, adoption (repeat purchase) frequency and the volume bought each time. In marketing research, a marketer has to be careful in avoiding pit falls.

On account of the risks involved in test marketing, most companies avoid it. But those who do test market know that it can yield valuable information about customers, dealers, marketing mix and strategy.


Once the test marketing is completed and the firm has favorable results, it is then ready to commercialize the product, or in other words, launch the new product. The launch plan must consider the following:


Parle (Export), A Food and Beverage company decided to launch Alphonso Mango fruit juice as its new product. They considered the mango fruit juice would be liked by all age groups and all income groups. Alphonso Mango was selected for the purpose of bottling the juice in bottles so that the consumer could drink the juice directly from the bottle with a straw. Mango juice from Alphonso was positioned as the tastiest mango juice as compared to other mangoes and also as a thirst quencher in summers.

The company selected Delhi to launch this product for the following distinctive reasons;

(a) Summer in Delhi is the worst with temperature shooting up above 450C .
(b) An average Delhi-ite consumes more fresh fruit juices than any other consumer in the country. That is the reason there are a lot of small and big fruit juice outlets in every nook and corner of Delhi street.
(c) Other fruit juice and soft drink competitors who were already catering to Delhi did not have enough strength for proper distribution.

Parle decide to initially let Maaza (Mango juice) ride Piggy back on Limca . Limca was the most popular brand of soft drink well established in Delhi. Parle launched the product in May 1986 when the summer heat started going up. The retailers showed resistence for Maaza. Parle solved the problem by offering to take back unsold Maaza bottles. But they asked the retailers to take / keep certain number of Maaza bottles along with the Limca bottles. The concerned sales person even helped retailers by storing appropriate number of Limca and Maaza in their refrigerators / freezers.

After placing Maaza with the retailers Parle came out with eye catching advertisements in Print and electronic media and catchy slogans on the Radio. This encouraged retailers to sell Maaza with more enthusiasm. Initially they offered Maaza to their friends, relatives and business associates. Because of good taste and thirst quenching properties it was liked by one and all. The demand for the product increased and the retailers started placing genuine orders for Maaza. The demand exceeded the capacity. Soon Parle increased the capacity and extended the product nationally.

So the launch plan must consider timing (whether the first to enter, or late to enter like Onida or parallel entry with main competitor), place and strategy in terms of price, promotion, distribution, and product features. If Maaza was launched in the home town of Parle that is Bombay it would not have achieved that much success as Bombay is not that hot nor do the people consume so much of fresh fruit juice as compared to Delhi.

It is important for the marketing team to appreciate that every successful new product directly affects the company’s bottom line in a positive way. Consequently this affects its share price at the stock exchange and the stock holders of the company. Company’s brands are assets and they need to be nurtured and evaluated accordingly. This also enhances the value of the Brand. In short launching of a new product for a company precludes the enhancement of Brand value and Branding decisions.