The Importance of Market Research when Entering New Markets

Panasonic is an example of a company using market research to enter a new market. The company is about to enter the European smartphone market. While Japan is Panasonic’s main market for phones, the company does not see many growth opportunities there. Laurent Abadie, Panasonic European CEO, stated how the decision to enter Europe was on behalf of the consumer demand. The European market for mobile phones is continuing to grow and mature, but does not have many choices for consumers. Hence, the Panasonic Eluga will be the company’s first phone to enter the market in April. It’s sleek design and quality features will hopefully win over smartphone users. As stated by Abadie, “We believe the market lacks a range of phones that successfully mixes beauty, high-quality engineering, and the most advanced lifestyle-enhancing technologies.” Through analyzing market offerings, Panasonic was able to create a product that provides unique features. Not only does the Eluga possess a sleek appearance, the phone is waterproof and works with Panasonic’s Smart Viera TVs.

There are many elements involved with entering new markets. A company must take multiple factors into consideration and do extensive research to prevent and mitigate the risk of failure. For instance, cultural differences can have significant consequences on a firm’s decision to enter a new market. Specific customs may prohibit a market from being interested in the company’s offering. Also, many firms are restricted due to language barriers. Product slogans can translate to completely different meanings. Unfortunately, this has prevented various companies from entering some markets. For instance, the baby food company Gerber is not in France because its name translates to “vomit” in French. In addition, Crayola needed to change some crayon names due user perceptions. The color “Indian red,” originally named after a specific red pigment from India, users assumed it to be named after Native Americans. Hence, Crayola changed the name to “chestnut.” It is vital for firms to understand the social norms, customs, and culture of different markets to ensure successful implementation. Despite globalization, markets continue to have specific characteristics that may require firms to alter their products before entering these regions.

Good market research permits firm’s to set realistic goals. Panasonic hopes to sell 1.5 million smartphones in Europe by March 2013. Furthermore, market research enables firms to understand possible threats and barriers they may encounter. For example, Fujitsu is looking to enter the European smartphone industry. While Fujitsu is still negotiating the logistics of entering Europe, it is important for Panasonic to be aware of this possible competitor when making decisions.

Markstrat

I am very excited to begin the MarkStrat simulation. I feel this will allow my teammates and I to apply not only what we have learned in M510, but our other courses as well.

I predict I will find resisting real world assumptions most challenging. As Professor Talbott explained in class, we must remember to play the game within the simulation. Also, with so much information available, I imagine it will be difficult to sort and identify what data to focus on. However, I am looking forward to seeing the effects of our decisions and how our team’s company performs relative to our competitors. Since each company starts the simulation in a different initial position, I am interested to see if one position has any particular trends across the three industries in our class.

The simulation will give me a good understanding of the types of decisions that need to be made everyday in business team environments. 

Culinarian: Should Companies use Price Promotions on Premium Products?

Thursday’s class made me think a lot about the effects pricing has on customer perception and its importance to a company’s market position. As is the case with Culinarian, competing as a company that offers quality products, the negative effects related to price promotions may outweigh any benefits. It is important for employees to not make false assumptions. For instance, many assume that offering a price reduction will generate more interest in their product, and increase their customer base. However, there are factors that counter this argument. These include the indirect effects associated with price promotions. When retailers offer premium products at discounts, consumers may question the item’s quality, brand value, and effectiveness; this damaged view of the product may deter them from making the purchase.

I do not think premium goods should offer price promotions through their main distribution channels. The most effective way for consumers who are unable to pay full price, but interested in purchasing these products, is by making the purchase through discount stores/websites such as eBay or amazon. These mediums can be very effective to increase product distribution of premium products without affecting its perceived value.

Product Pricing & Kelley Bstore

Price determines customers’ willingness to pay for a company’s product/service, and is therefore directly linked to overall profit. If an item is over or under priced, it can have significant influences in the overall performance of the company and future business.

I believe price is used as a promotional method, to an extent. Depending on the industry, advertising a product’s price may be advantageous. However, it is important for companies to remember that some consumers may use price as a measure of quality. Hence, when buying a product that is not frequently purchased, such as a washing machine, customers may look at lower priced machines as signaling poorer quality (i.e. less efficient, has a shorter life). On the other hand, products with less differentiated benefits, such as a bag of chips, may find pricing as an advantageous tool. This is a key reason why generic brands are purchased at grocery and convenient stores.

Reading this article allowed me to think a lot about the importance of knowing your customer. As a manger of the Kelley Bstore, I continued to relate our pricing system with the methods explained. Being relatively new, the store currently uses a pretty arbitrary pricing system. Our current system is most similar to cost-plus pricing. We calculate the total product cost and allocate delivery fees to each product. With cost as our lower pricing bound, we then think of how much we would be willing to pay for this item. Although our main customer base (Kelley students) has similar preferences to the management team, it would be beneficial to send out direct-response surveys regarding price preferences on specific merchandise. I feel these can be a great method to increase overall profit and understand customers’ opinions on our prices.

Product Success & Growth: "The Diffusion of Innovation"

I found our class discussion on “Diffusion of Innovation” very interesting. One of the main takeaways I had from this lecture was the need to create a mutant in order to find new ideas and develop new products. Professor Talbott commented that evolution does not happen without mutation. I found the truth behind this statement very intriguing. Mutations are normally perceived to be negative, altering a product away from what it was supposed to be. However, in reality, these “mistakes” are necessary for growth.  Changes in products enable society to learn about consumer responses and the best methods to market, distribute, and satisfy the customer demands. In order for growth to occur, change needs to be made.

Furthermore, understanding the product lifecycle really demonstrates the need for various types of consumers. I liked the article’s point that one should not try to change the adoption spread. Each user segment is necessary for the most efficient adoption outcomes. On behalf of everyone’s different personalities, their demands are satisfied at different times in the product lifecycle. For instance, it is just as important to allow innovators to talk about brand new items which few have discovered as it is for the late majority to take their time and observe the product becoming integrated in society before becoming a user. 

I am interested to learn about differences between product adoption rates prior to our current technology and social media phase. Technology permits the transfer of information through an easy-to-use and efficient medium. It allows strangers to share opinions and comments on just about any product/service. While the credibility behind some information available through internet sites may be uncertain, websites that have built strong reputations offer accurate and helpful information.