New Product Entering Strategy

New Product Entering Strategy

The goal of marketing is to build and manage profitable customer relationship. Marketing seeks to attract customer[1].Before entering a new product in a market, a company should do analysis of its target market, customer needs and wants and customer demand. Marketing construct of 7ps and we should apply this 7ps.


* Product: provide value to a customer.

* Price: competitive and entail profit.

* Place : where the customer can buy a product and how the customer can reach out to that place

* Promotion: communicating about the benefits of using a particular product or service rather than talking about its features.

* People: refer to employees, customer etc, and essential for everyone to realize the reputation of the brand.

* Process: method of process providing a service. Essential that service is helpful to the customers.

* Physical (evidences): refers to the experience of using a product or service.

The introduction of Tata Nano received its media attention due to its targeted low price.[3] As Tata comapny is one of the largest company in India[4] and now they are aiming to distribute their product Nano in Europe. Company should know the marketing environment of the country before distribute the product. There are two types of factors affecting on market environment. They are external and internal environment which can also called macro environment and micro environment.

Macro environment[5]

The company macro environment is the place where the company must start its search for opportunities and possible threats. Company macro environments consists of 6 major forces are political, Economic, Social, Technology, Environment and Legal.

Political Factors

The political factors shows substantial business regulation, strong government agency enforcement, and the growth of public-interest groups.[6] For example: EU enlargement, the euro , international trade, taxation policy.[7]

Economic Factors

Economic factors that effect consumer buying power and spending patterns. Marketers must pay close attention to major trends and consumer spending patterns both across and within their world market.[8] For example: interest rates, exchange rates, national income, inflation, unemployment, Stock market.[9]

Social factors[10]

Social factors changes in social trends can impact on the demand for a firm's products and willingness of individuals to work. This factor forces to monitor is population because people make up markets. For example, the population of UK has been ageing. That increased the costs for firms that committed to pension payments for employees.

Technology factors

The most dramatic force shaping people's live is technology.[11] New technology create new market and opportunities. Every new technology replaces old technology. Marketers need to understand the changing technological environment and how new technologies can serve human needs.[12] For example: innovation, new product development, rate of technologies obsolescence.

Environmental factor

The deteriorating condition of the natural environmental is bound to be one of the major issues facing in business. In many cities, air and water pollution have reached in dangerous level.[13] Temperatures changes can impact on industries. Major climate changes occur because of global warming and with greater environmental awareness which cause external factors is becoming a significant issues for firms to consider.

Legal factors

This factor is related with legal environment. In recent years in UK there were a lot of significant legal changes that have affected the behavior of firms.legislation affecting business around the world has increased steadily over the year.[14] Example health n safety law, competition law , employment law ,etc.[15]

Micro environment factors

The actors close to the company that effect its ability to serve its Customer, Suppliers, Distributors, Competitors, Public and Company.[16] Customer is the most important factor in micro environment.


Pricing Strategy in India

The basic strategy for new product pricing strategy involves skimming and penetration.[17] Skimming is designed to obtain as much as margin per unit as possible. This unable company to recover product investment more quickly. Penetration pricing enables the firm to strive for quick market development and makes sense when there is a steep experience curve, which lowers costs; a large market; and strong potential competition. Penetration pricing is opposite of skimming pricing.[18] As penetration pricing is set for the low cost and get a high market share in a short time. This strategy is good for the new product at introducing states. It can get a big market share initially. Tata Nano company use market penetration pricing strategy for their product launched in India. We can say that Tata Company is using penetration pricing strategy because Tata Nano becomes the world's cheapest car[19] and it is also new product in the market.[20] As there are a lot populations in India and most of the people can not afford car. There are 65millions people using scooters for their transportation. Tata Nano is aimed for those 65 millions people. The strategy behind this project was the consciousness of the number of Indian families who had two wheeled transport, but couldn't afford a four wheel car, and was based on the company's success by producing the low cost 4 wheeled Tata Nano car in 2008.[21] Tata Nano can help them out of this life. As Tata Nano become the world cheapest car, the average price of Tata Nano is100, 000 rupees which is equivalent to £1500.[22] The price of Tata Nano is not very different from motorcycle price people will surely buy Tata Nano instead of motorcycle.[23] Because Nano became the world cheapest car and using penetration pricing strategy. The purpose of penetration is to persuade as many customer as possible to buy the product and penetrate the market.[24] This type of pricing is more successful in the sale of price-sensitive products (items with elastic demand). When using this pricing policy, manufacturing, distribution, and promotion have to be united into the marketing strategy sequentially to penetrate market rapidly.[25] This allow the marketer to save on fixed expenses (through mass production) and to increase the profit margin (through volume sales).

The advantages of penetrating pricing are :

* capture a large number of customers for a company in a relatively in a short period of time.

* Ability to move into a market in which the leaders are offering higher prices and lure away large numbers of customer.[26]

* It can create goodwill among the all-important early adopter segment. This can create valuable word of mouth.

· It can be based on marginal cost pricing which is economically efficient.[27]

The disadvantages of penetrating pricing are:

* Penetration pricing become ostensible if the product is not high demand by customers.[28]

* Low profit margin may not be maintainable long enough for the tatcis of penetration to be effective.[29]

Tata Nano received peoples' attention due to its lower pricing strategy. As it is aimed for middle class people who are willing to buy cars. Because of this reasons Tata company choose penetration pricing strategy for its product, Nano.

[1] Marketing: an introduction, 7th edition pg-34

[2] viewed on 20.1.2010

[3] viewed on 21.1.2010

[4] Assignment 2010 , introduction

[5] Marketing management: 8th edition , pg-170

[6] Marketing management : 8th edition pg 171

[7] viewed on 21.1.2010

[8] Marketing : an introduction 7th edition pg- 85

[9] viewed on 21.1.2010

[10] viewed on 21.1.2010

[11] Marketing : an introduction 7th edition pg-89

[12] Marketing : an introduction 7th edition pg-90

[13] Marketing management : 8th edition , pg-159

[14] Marketing management : 8th edition , pg-92

[15] viewed on 21.1.2010

[16] Marketing : an introduction 7th edition pg-69

[17] Marketing essential, 2nd edition , McGrew Hill pg-396

[18] Marketing essential, 2nd edition , McGrew Hill pg-396

[19] viewed on ( 18.1.2010)

[20] Marketing Strategy. (p - 175).McGraw-Hill

[21] viewed on (18.1.2010)

[22] 2010 assignment : introduction

[23] viewed on (16.1.2010)

[24] Marketing essential,2nd edition, McGrew Hill

[25] Marketing essential, 2nd edition, McGrew hill

[26]Marketing essential, 2nd edition, McGrew hill

[27] viewed on (18.1.2010)

[28] Marketing essential, 2nd edition, McGrew hill

[29] viewed on (18.1.2010)

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