Test Marketing Of New Product Its Effectiveness And Product Performance

Project and Seminar Material for Marketing

Test Marketing Of New Product Its Effectiveness And Product Performance

Chapter One

1.0 Introduction

Development a new product is not easy. Not only are customers needs and wants changing but competition continually makes current products obsolete. New products are the lifeblood of any business. They energize the company’s marketing, sales and distribution activities and provide new opportunities in the face of declining markets for existing products.

New products are simply those that are basically different from the goods, services and bundles of benefits already in the market place.

New products are categorize under any of the following:

  1. Products that derived through new innovative ideas.
  2. Products that replaced the already existing products and significantly unique.
  3. Initiative products that not new to the market.

Olalekan (2002) says, “Market test, in-use tests and other commercial experiments in limited geographical areas are conducted in order to ascertain the feasibility of the full marketing program. In this stage, design and production factors may have to be adjusted as a result of test findings”.

According to Knut (1983), test marketing involves the selection of and the selling of a product in an area which is representative of the marketing area that will be used upon launching the product in full scale. He goes further and says, the purpose of using test market is to reduce the risk by obtaining better knowledge of how consumers will receive the product and to test which sales set –up is best suited.

Adrian (2000), test market aims to replicate everything that is likely to exist in the real market but a smaller scale.

Test marketing is the stage in the New Product Development (NPD) process. To conduct a test marketing affectively, it is very essential to anticipate all the following steps and recognised their interdependence (Harper 1982).

  1. Develop the market test planning
  2. Select the market test
  3. Obtain distribution in test market
  4. Plan advertising efforts in the test market
  5. Decide what do measure
  6. Project the result
  7. Presenting and use of other marketing model.

By the time company goes through these procedure in its effort to test market its new product, it must have been also to pick up some valuable information about the users, traders, market potential and other matters from test market will in turn aid the company in its choice of action among alternative causes of actions.

1.1 Historical Background Of Unilever Nig. Plc

Unilever Nigeria Plc is a corporate entity that is engaged in the manufacturing and marketing of detergents and edible oils and fats, fruit drinks and toilet preparations. From the beginning about 83 years ago, Unilever Nig. Plc the oldest surviving manufacturing company in the country has today grown to its present position as one of the biggest corporate bodies in Nigeria.

Unilever Nig. Plc was formerly Lever Brothers Nig. Plc before changed its name to Unilever Nig. Plc which is the original holding company it’s belong.

The story of Unilever is linked to the history of one man who proved to be a generous in his successful pioneering business among his cotemporaries. His name is Williams Hasketh Lever who later becomes Lord Vixcount lever Hulem.

Unilever extended its business activities to Nigeria where it was incorporated as West Africa Soap Company on the 11th April 1923 by Lord Lever Hulem himself.

It started her operation in 1924 at Apapa with laundry soaps such as key, sunlight and magnet brands. In 1951, lux table soap was introduced and in 19thFeb., 1954, Lady O.M Abayomi opened the margarine factory which was registered under the name van Ren Rergh (Nig) Ltd. also at Apapa. Two years later Aba branch was opened with a laundry soap factory. In 1963, the company started making toothpaste and astral cream at Apapa.

Although the surphur-exiplain was introduced in 1958 the production of detergent soap did not start unit 1964.

1.2 The Product Of The Company

Today, Unilever Nig. Plc produces a large variety of products in four main sections.

(i) Skincare product:

Breeze white, lux soap, astral soap and cream, asepso, sunlight, 3-NSD bar and lifebuoy, Vaseline pure white pears baby lotion e.t.c

(II) Dental Product:

Close-up and pepsodent.

(III) Fabric Product:

Omo, sulf, vim, key soap, sunlight, liquid dish wash and rim bar soap.

(iv) Food And Drink:

Oroyo blue band, royco cube, lipton tea and free top, holsm and larver.

1.3 The Organisational Structure

The Unilever Nig. Plc reports to the overseas committee in achieving its objectives, the organisation has various division headed by directors under a chairman/managing director. Deputy chairman assists him.

It has a board of eight executive directors carrying out its policies and interpreting its objectives and formulating the strategies necessary to achieve those started objectives.

Departmental heads, sectional heads, managers and staff and operatives assist each divisional director. These people perform their own function within the total divisional objectives towards achieving the overall objectives of the organisation.

The brand management system is adopted on the marketing department where brand manager for a specific brand is responsible for the success or failure of the brand. He directs every activity involved in seeing the product to the market e.g. research, quality control, forecasting and planning for the product.

1.4 Distribution System

Unilever Nig. Plc uses different distribution channel to distribute its various products. The company sells directly to the industrials uses like bakers and confectioners and the consumers of the products through the distributors appointed by the company. The company normally base its appointment on certain vehicles, warehouse etc.

For effective distribution of its products, the company divided the country into:

  1. North east
  2. North west
  3. Lagos area
  4. East
  5. West/mid-west

Within each area, distributors are appointed. These distributors sell to sub-distributors known as attaches who sell to retailers before the products get to the final consumer.

Other channels include: cooperatives and supermarkets/department stores that distribute the products to the final consumer.

1.5 Statement Of The Problems

Whenever one considers new product there is immediately talks of the risk, the problems and the failure etc. These are so many problems in defining new products and in defining success or failures.

It is obvious that the date of launching affects the proportion of products extent at any particular time. About one third o all product disappears in the first two years. Nowadays, companies have launched fewer important new products, improved their method of evaluation, (Kotler 2003). Also product if new may fail due to the following reasons.

  1. Do companies are organised for today’s business not tomorrow? Because of this, does new product suffer from insufficient attention?
  2. Does a new product project generate a momentum within a company, which is difficult to stop and then looked at which rose tinted spectacles?
  3. When sales forces have been cut, they find it difficult to cope with new products?
  4. Is it true that wholesalers and retail traders have rightly become more selective than ever before? And some new products have not obtained enough distribution to achieve adequate consumer penetration?
  5. Does the poor product quality, high in price, sensitive market, confused presentation, lack of enough advertisement are all frequent reasons for failure?

1.6 Purpose Of The Study

It is in recognition of the strong fact of test marketing as an important part f the entire product strategy of the company that calls for this study. The primary purposes are:

  1. To investigate the relationship that exists between the marketing result and the actual performance of the product when launched in the market place.
  2. To assess the effectiveness of test marketing of a new product, so as to form an opinion as regards its success.

1.7 Research Questions

The research questions on which hypothesis will be based are as follow:

  1. To what extent can a manufacturer rely on the test market result(s)?
  2. What type of correlation (if any) exists between market test result and actual performance in term of estimating sales and profits?
  3. Does the fact that test marketing exposes the user to the risk of providing competitors with a clean view of what the firm is trying to accomplish constitute an important flow in the concept?
  4. To what extent has test marketing been effective in terms of industry trial and repeat buying behaviours?

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