.
It is recommendable to critique the financial assumptions connected to the new commodity analysis, considering cases where client's adoption and sales are below the expected or certain vital costs are significantly higher than anticipated. Sometimes even seemingly small variances in critical assumptions can greatly impact on profitability (Bowman & Gatignon 2010). It is also advisable to document the assessment and maintain a back-testing record. The assumptions associated with the financial analysis should be reasonable. On the same note, financial analysis should adequately capture cases other than the most likely or the best scenario.
A new product may fail due to a number of reasons. Firms concentrate on the development of the new item and forget to conduct a research or they fail to implement the findings of a research appropriately. Sometimes the distribution channels or the pricing strategies adopted are incorrect (Allen, n.d.) On other cases, the advertising process communicates the wrong or irrelevant information. Successful product introduction emanate from a well-integrated marketing process that depends hugely on research and addressing up-front issues accordingly. All in all, market research is fundamental. Without the proper information, the entire marketing process cannot generate the desired results (Roney 2003). Market survey may provide critical details that might be utilized in determining the appropriate direction that should be followed during the product launch. It plays a significant role in the identification of wants and needs, pricing strategy, product features, motivation to procure, the desirable decisions and distribution channels. .
1.3 Profit Potential.
Profit refers to the difference between costs and revenues. In business dealing, profits arise when the difference between the selling and buying price is obtained. In an operational firm, net income is referred to as the value of money that remains after the organization pays various stakeholders such as suppliers of raw materials, employees, tax obligation and debts owed to the financial institutions.
