Research is vital but takes one main thing, funding. It is important to calculate the costs when making extensive planning. Costs may include:.
Market research to establish whether the intended customers like the idea in this form.
Technical research to bring the product from the drawing board through research and development, to test market condition.
Test market(a limited market run) where many aspects of the product are tried out, but in particular the product itself and the price etc.
Executive time, to co-ordinate the research work and make decisions on "go-ahead- or "discontinue-.
It is important to note that on that graph the development stage shows profits as a loss. This stresses the importance of successful launch to recover the development expenses.
Stage 2 ;The launch.
This is the stage when the go ahead has been given and the new product introduces itself to the new market place. The failure rate of new products is remarkably high, despite all of the research and development undertaken. The only reason test markets do well is because the consumers there are only curious, and will try anything once. The diagram shows a slow sales uptake and an even deeper trough in the profits curve. This is because of the costs a launch stage covers:.
The product must be made available to both the trade and to the public; the costs of distribution are high.
No-one is aware of the new product, so it must be promoted and sold to the trade and public; promotional costs are high and sales teams are expensive.
The timing of the launch must be careful and thought through in detail. .
Stage 3: Growth.
The launch has been successful, and customers are pooring in outlets to buy your product, you have reached the growth stage. This is a very encouraging time for the business as sales begin to exceed and take to their peak. Depending on the originality of the product, profit should look to take a heavy increase, and if the vigorous marketing and promotion required takes place, then demand for the product should be at high levels nation wide.
