Fontys International Hogeschool Economie

Fridgeman′s FridgeMaster Product Report

by

Ingo Titze

Table of contents

Summary page 3

Introduction page 4

Chapter 1: product development process

1.1 Why we need a new product - the market situation page 5
1.2 Generating ideas for a new product page 5
1.3 Product features page 7 1.4 Idea screening page 8
1.5 How we prevented widespread mistakes in new product development page 9
1.6 Results from our customer focus group page 10
1.7 How our new fridge fulfils wishes page 11
1.8 A short description of the target group(s) page 11

Chapter 2: Fridgeman′s macroenvironment

2.1 Introduction into the German macroenvironment page 13
2.2 The demographic environment page 13
2.3 The economic environment page 14
2.4 The natural environment page 14
2.5 The technological environment page 15
2.6 The political environment page 16
2.7 The cultural environment page 16

Chapter 3: Market and Competition page 20

Chapter 4: Marketing-mix

4.1 The product and the product levels page 22

4.1.1 The core product page 22
4.1.2 The actual product page 22 4.1.3 The augmented product page 24

4.2 Pricing and placing page 25

4.3 Promotion-mix

4.3.1 Introduction page 27
4.3.2 Advertising page 28
4.3.3 Personal selling page 31
4.3.4 Sales promotion page 32
4.3.5 Public relations page 32

Chapter 5: Conclusions page 33

Summary

Our company "Fridgeman" has been on the market for refrigerators a very long time. In the last few years a strong competition grew up that made us think about a new product idea in order to prevent any price wars that would possibly have killed our firm. In a meeting that included members of all different departments of our company we developed the idea of a high-tech refrigerator with a lot of automatic functions that make its user able to save time and money in everyday life. For instance it will be able to order all needs for foods automatically at the next supermarket so that the user just has to pick up a basket full of food when he or she drives home. Moreover it saves energy, has a huge recipes database included and can make its users suggestions for healthy meals they particularly need. We defined careerists and busy single households to be our main target group but even everyone who wants to save time or who does not have the motivation to do shopping will be in our focus. The product does not have to face any competition when it is introduced into a brand-new market segment and we will keep a technological lead of one year towards our competitors. This will enable us to come up with new innovations every time the other firms have copied our old product features. Moreover we offer several services to support every customer in case that there is a malfunction of the fridge. The macroenvironmental forces offer a lot of opportunities to us especially the category of the cultural environment which also includes Faith Popcorn′s latest trends. For example the development towards more single households and more people who withdraw into their homes to mind the "big ugly world" offers a great opportunity to us. There is no actual danger that will make the launch of our product very risky due to the fact that we keep control of our production and distribution costs and that we are very experienced in manufacturing fridges. The "FridgeMaster" will underline our high quality level because our company offers its products on a premium market. Nevertheless our prices are affordable for a broad range of people even for our new product. The standard version will cost 1399 DM within the first 6-8 weeks and after this period 1599 DM have to be paid. A product variation which is smaller and runs on castors will cost 1449 DM. With the launch of the product we concentrated on a new distribution channel: besides the specialised trade the "FridgeMaster" will be sold in big "Metro" supermarkets. An alliance between our company and the Metro has been established and this cooperation seems to become very successful. In order to reach our potential customers we have developed a thought out promotion-mix. We will use several media, e.g. television, radio and newspapers to give first impulses and more detailed information to our target group. Special trained salespeople will answer any questions our customers might have. We are going to win new customers by a rewarding system if an existing customer canvasses new customers and as mentioned above we will offer an introductory price. Furthermore our new innovation will be described in several magazines which concentrate on lifestyle or even technology. We are hopefully that people will talk about the "FridgeMaster" and therefore a positive "mouth-to-mouth" propaganda will start.

Introduction

This report deals with the introduction of a new product into a new market segment. A medium-sized company has to face strong competition in their old market and therefore the management decides to escape from the risk of price wars by developing an innovative product. This product should fulfil at least two main functions: to save the company by providing it a technological lead and to amaze and fully satisfy its customers. Compared to a lot of other product launches several factors and aspects have to be considered. Opportunities and threats occur from all sides which will strongly influence the success the market introduction will have. The aim of this report is to depict how the management tries to prevent mistakes that are often made and it should even be a kind of guide for other product launches. The report is structured in a logical way: first the product development process is being described. Here it is shown why no company′s management should lose its mind into blind enthusiasm without thinking about hard facts, e.g. costs and expected profit margins. Moreover the target group and its needs or wants have to be defined exactly and a close description of the new product′s benefits and features has to be given. Secondly the management has to focus on developments outside their well-known area: the forces of the macroenvironment offer several opportunities but also a lot of threats. In addition to this the current market situation has to be analysed. The following chapters describe the marketing-mix. Chapter number three deals with the product itself: the product is being divided into three levels and thereby many questions concerning the brand name, the quality or the packaging have to be answered. The fourth chapter provides the most important facts about the pricing and placing strategy: where does the company want to sell the product and at which price? The fifth part of the report concentrates on the promotion-mix: the company has to make its new product known to the public and potential customers. This can be done by many possible ways which combine the means of advertising, sales promotion, personal selling or public relations. The last chapter gives a summary about the most important aspects that have been mentioned in the previous chapters in order to gain a good overview about the most important results.

Chapter 1: product development process

1.1 Why we need a new product - the market situation

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