Career Connection: New Product Launch Marketing Plan – Final Project
The AzkoNobel Company has developed the most innovative paint applications with Paint Pasties. Paint Pasties blends the most modern application process and function to the paint industry which allows consumers the capability of applying their color and project designs through digital design and ease of use in both domestic and international markets. Paint Pasties are available in varying color swatches which can be easily accessed through an online system. The innovative technology behind swatches for Paint Pasties provides users with an online accessibility that can be synced with any architectural sketch design and Auto-Cad program. The downloadable applications for Paint Pasties make it compatible with most consumers system’s needs. In preparation for the launch of this new product, the marketing team of AzkoNobel Company plan is to ensure the marketing efforts for Paint Pasties is successful. Currently, the plan summarizes several key elements including a SWOT Analysis, identifying the market and its needs. The marketing team also includes outlining the life cycle of the product and the positioning of the product and the AzkoNobel brand. A major focus on this product is a situational analysis.
According to Small Business Chron, “A Situational Analysis is the foundation of a marketing plan. The situational analysis includes a thorough examination of internal and external factors affecting business. It creates an overview of the organization that will lead to a better understanding of the factors that will influence its future” (English, 2015, p.1.). The final components of the product launch marketing plan which will be presented here includes establishing executive summary, conducting situational analysis, clarifying the target market, segmentation of the target market, positioning, financials marketing objective, implementing milestones, measuring performance metrics and contingency planning.
This report provides an evaluation Paint Pasties. The report includes data and information explaining the benefits of the swatches and why it will be a profitable product. Although our target consumers are architects, building corporations and trendsetters fitting the millennial era, Paint Pasties is a new product that is useful and can be proven to be beneficial to all consumers. Our product offers a broad range of modern and technological advanced ideas that our competitors do not currently offer. This report will also include analysis detailing all benefits and weaknesses. Along with the analysis, we will provide our strategic marketing plan that will help to increase our product’s success. The plan also describes our projections for market growth. The market growth includes an online database, with domestic and eventually international sales. Our goal includes maintaining our product with up to date technology, meeting huge consumer demands and increasing sales and profits.
The upcoming product launch of paint pasties is one that will continue to solidify AkzoNobel as one of the world’s major “performance coating manufacturer, global leader of decorative paints and major supplier of specialty chemicals (International, 2016).” After conducting a market analysis, and reviewing the anticipated segmentation techniques, it was discovered that home interior designer businesses in both Germany (domestic) and the United States (foreign), are on the rise. According to Sevcenko (2013), “interior design in Germany has long been about industrial craftsmanship with little attention paid to luxurious interiors. These days, designers are trying to build on a tradition that has taken a back seat to functionality (para. 1 and 12).” The foreign market in the United States has provided a niche for interior designers to blossom into a lucrative business. According to McDavid (1974), “just recently twenty-five large U.S. firms, all experienced in foreign trade, joined in a “Partners-In-Trade program to assist small businesses. This can be a very lucrative area for a small business if it knows how to deal properly with the problems encountered. Under the program mentioned, the experienced companies provide specific assistance in the marketing, product, financial, and legal areas, and act as consultants for a full year in personal conferences, workshops, and seminars (pp 17-18).”
Market Growth Potential and Competitive Analysis
The current industry market growth rate is 3.9%. This makes up the professional market industry of home improvement as a whole. The “average growth rate within the home improvement market is estimated to grow at a 3-5% (Forbes, 2016).” These projected growth rates include market sizes by segments, to include product sales, companies (professional market) and consumer markets. There are continued expectations that “home improvement product sales growth will accelerate over the next two years, increasing to 5.7%, due primarily to housing market activities (HRI, 2015).” The expected market growth rates should yield a moderate to high market growth increase of about 2-3% each year, but with a projected acceleration of 5.7% over the next two years. Paint Pasties market growth, all other things considered, will almost triple by end of projected year 3.
The competitive analysis for Paint Pasties revealed that its’ formidable competitors will be those entering the market with the “newest thing”. Competitors will be innovators that will use both reference (direct) and economic (indirect) models of competition. “In direct competition, you differentiate your startup and/or product from them. Indirect competition involves fighting for the company and/or product supremacy (Mars, 2014).”
Pricing, Segmentation, Target Market, and Positioning
Market penetration will be the price strategy. Since Paint Pasties will have a segmented market presence in both foreign and domestic platforms, the price strategy will be based on a per-product retail price. The starting retail price will be $12.00 for each pouch. Because of the advantages of selling directly, higher margins can be achieved with premium pricing that will still appeal to customer segments (Kotler, and Keller, 2016 p 64). There is room to increase unit prices after the first year, which incrementally increase our break-even point for year one. “It was very popular to achieve a competitive advantage through lower prices or through offering a more perceived value (Shakhsir, 2014). “ Based on the decided market segmentation of German (domestic) and U.S (foreign) markets, AkzoNobel will be focus on only one target market profile for each location. The profile will reveal statistics that will better serve the customer and yield market growth in both markets. The collected stats are geographic, demographic, psychographics and behavioral.
The Paint Pasties statement: “Unlike traditional paint and paint brushes, paint pasties will provide a combination of low price, functionality, and comfort. You will become a Visual Artist.” The Strategy: Engaging prospective customers to buy-in to the functionality and comfort of Paint Pasties and win them over. The positioning statement and strategy have carefully been selected to help Paint Pasties grow as a recognizable brand in the market. Its attractiveness and ease of use will help Paint Pasties revolutionize home improvement tasks.
Marketing Communications Plan
Communicating channels through media is an important aid to Paint Pasties international and domestic recognition. Infomercials can assist in many ways through logos in paint supply areas, as well as color swatches in native languages to minimize communication barriers. The scope of more than one channel of integrated marketing will help AkzoNobel increase Paint Pasties market coverage and lower channeling costs. Internet marketing and infomercials will support appropriate networks to attract prospective customers, increase product awareness and build consumer trust. However, the reach of both channels is predicated on the culture of communication, generated leads and any additional “soft-sell” aspects of the sales process (Karjaluoto, Mustonen & Ulkuniemi, 2015 p 709).” Because Germany (domestic) markets have thrived advertising and film over the past several years, it is suggested that the domestic German market perform internet marketing and the international US market perform infomercial marketing. The domestic German market is still growing as far as the internet is concerned, which affects most nearby regions that still have no internet access. The US international market, however, has a wider scope of television access.
The price set for Paint Pasties was based on the existing swatch colors (therefore no new costs), and set on a Paint Pasties that is 12″ x 12″ in size. With this in mind the cost for one Pasties would be Sq. inches’ x 10 cents = $14.40 2. Add width & height and divide by 2 = $12 3. $1 per running inch of 24″ decal = $12.
Below are the sales projections, based on the 3% to 5% growth in the markets:
Break Even Analysis
While breaking even might not seem like much of a business goal, its importance is evident in projecting forecast data. Your break-even points provide important benchmarks for long-term planning. Knowing your break-even for areas such as sales, production, operations and investment payback can help you with pricing, debt service and other functions of operating your business (Ashe-Edmunds, 2016). Based on sales and forecasting data, below is Paint Pasties break even analysis.
Sales goals in dollars are usually the basis for promotional budgets. Opinions on what this percentage should be vary widely, but it is generally believed that 2 to 5 percent of your revenues should be allocated to promotion and advertising. There are several factors that should go into determining what the magic number is for you. If your competition is aggressive and fierce, you may have to spend more. If you are a start-up business, you will definitely need to invest more to increase awareness within your target market. If you are entering a new area of specialization, again, you will need to invest more. For new business you generally need to double your promotional spending.
As this is a new product for AKzoNobel, the approach will utilize industry standards as stated above, but take the higher percentage of five percent. As E-commerce is the focus of the promotions we will expect to spend 5% of our projected sales for year one, the following year we will move to 4% and stay at 4% for year three. Based on these numbers with our first year revenue project at $81,300 we will spend $40,650 on our internet marketing plan, year two we will spend $36,000, and year three we will spend $42,400. The team will concentrate on utilizing the existing website and concentrate monies on the promotional efforts of the new product, therefore these are additional cost above the promotion budget AKzoNobel has in place.
Digital marketing expenses include the internal or external costs of designing and managing your website, together with the ongoing costs of developing and updating site content. You can either generate site content internally or hire specialized content writers. If you are considering a social media program, you will incur costs for planning, implementing and monitoring the program (Linton, 2016).
As mentioned the team will utilize the existing design team for the promotional efforts of Paint Pasties as an added product within their current product line for fillers, wall treatments, sealants, and putties for consumers. The team will need to allocate a percent of their resources, which are typically salaries, marketing research, promotions, public relations and advertising costs. Based on our break-even analysis the unit cost with labor and overhead is $2.20 per unit. The overhead costs per unit for an existing e-commerce model is $10.80 per unit; the team will be utilizing approximately a quarter of the existing resources to market Paint Pasties.
Intended Marketing Objectives
“One of the main barriers to innovation success is the absence of organizational structure that would enable a firm to develop novel ideas and technological capabilities throughout the organization.” (Hauser, J., Tellis, G. J., & Griffin, A., 2006) As a new product in the industry, marketing efforts will be strategically implemented to ensure the success of the Paint Pasties. In the first year of business, the goal of the marketing team is to create brand awareness. Through this effort, the company seeks to introduce the product to the market, promote the company’s website, and add the value of purchasing the product. Marketing efforts will highlight the product’s features, benefits, and attest to the brand’s commitment to providing a quality product to its customers. In the second year of business, the company commits to increasing sales and customer engagement. The company will launch promotional activities to include product giveaways, branded promotional gifts, and interactive contests via social media. This will help build brand loyalty and increase brand awareness through word-of-mouth and social media marketing. In the third year of business, the marketing team’s goal is to generate additional sales. This will be accomplished by strengthening relationships with business partners and current users of AkzoNobel’s products.
Project Implementation milestones
“Successful organizations incorporate project planning and best practices into their business models. Such organizations use project planning and best practices to ensure they are being the most efficient, effective, and sustainable they can be. The Project Planning and Best Practices study documents the project planning process; defines the key elements of the usual project plan and risks associated with not addressing each element appropriately; and offers some industry best practices to mitigate those risks. The high tempo of most contemporary, professional projects engenders a demanding environment that allows little margin for failure to mitigate these risks” Allen, M., McLees, J., Richardson, C., & Waterford, D. (2015).
AKzoNobel will create a complete project plan for the product launch of Paint Pasties. Below are the project milestones, with a comprehensive plan to be shared weekly with the launch team, and organization.
Evaluation, Control Metrics, and Methodology to Measure Performance
“Key Performance Indicators help all organizations define and measure progress toward corporate goals.” (Milichovský, F., 2015) Key Performance Indicators (KPI) should be integrated into the business and the management team to ensure reliability and consistency. It is important to have control metrics and measurements in place and evaluated on a regular basis for the growth of the company or product. These control metrics can include customer feedback and target market sales. Measurements can range in a qualitative state from satisfaction reports, improvement requests, or complaints. In sales, the measurements are tracked by qualitative measures from revenue, profit amounts, or units sold. These measurements are created to track the effectiveness of the marketing plan and areas to improve. The methodology should include the controls and measurements to continually be monitored, and data gathered to understand the company’s needs and plans.
Contingency Plan and Strategies
Having a contingency plan in place for Paint Pasties is crucial since it will provide a backup plan to handle the risks that are associated with bringing the new product to market. It allows one to look past the best case scenarios and to take into consideration the what-if possibilities to manage risk and mitigate future issues. According to Hamel (2016), “The purpose of a contingency plan is for a business to have a specific set of instructions in place if certain events that may interrupt normal business operations occur.” The elements included in Paint Pasties’ contingency plan are risk, impact, risk management, and planning.
An emergency plan to cover the risks of both external and internal events will help to map out what will be done to handle these risks. An external risk for Paint Pasties would be its competitor’s launch of a new product that could overshadow the extraordinary benefits that Team D’s product has to offer. To combat this risk, Paint Pasties will prepare marketing ads that will counter its competitor’s marketing ads and ensure segmented and other potential consumers that the benefits of Paint Pasties are far more beneficial than that of its competitors. For internal risks such as damage to production facilities, a plan to secure backup facilities will be implemented in both domestic (Germany) and foreign (United States) locations. An impact contingency plan will be put in place to deal with the uncertainties that the targeted market may have. The target market includes interior designers, first time home buyers, house flippers, trendsetter and home building supply companies. The marketing for Paint Pasties realizes that not all of our targeted audiences will be impressed by the new product, and this could have an impact on sales. For this reason, the impact contingency plan will include incentives that will focus on gaining the business of those audiences that are not convinced that the product will enhance their painting experience.
To manage operating risk that could affect the ability to produce the expected volume of products in both domestic and foreign regions, a risk management contingency plan will prove to be vital. If the demand for Paint Pasties is higher than anticipated, funds will be set aside to hire more employees to meet the demand needs. To deal with legal risks such as product liability, a contingency plan to emphasize quality control and organizational responsibility will be instituted. Money will be reserved for the need to train and better inform employees of their roles in producing errorless, high-quality products should there be a need.
Potential Legal or Ethical Considerations
It is imperative that a new product launch marketing plan recognize potential legal and ethical issue that can arise from a new product launch. According to Kotler & Keller (2016), “Organizations must ensure every employee knows and observes relevant laws.” For Paint Pasties’ foreign U.S. area, marketers must make sure truth in advertising (p 665).” According to Ingram (2016), “The Federal Trade Commission Act set forth requirements for truth in advertising and created the FTC to enforce the provisions of the act.” There are protection laws in the U.S. that protect consumers from false, deceitful and unfair advertising. For this reason, the marketing plan must entail advertising that is an accurate representation of what Paint Pasties has to offer. Another legal issue that can arise is advertising harmful products. There are well-enforced regulations in the U.S. that prohibit the advertising of harmful products. The marketing team for the new product launch must ensure that any harmful ingredients in the new product are made visible to the consumer. Any hidden knowledge of harmful ingredients can result in potential lawsuits and could cost the company financially and compromise the brand’s name. While it is legal to use most advertising tactics, some are considered to be unethical. Examples of this would be subliminal advertising, emotional appeals and taking advantage of less educated individuals (Ingram, 2016). To mitigate the issues surrounding unethical advertising, the marketing team for Paint Pasties would need to be mindful to keep their messages free from unethical tactics.
The introduction of a new innovative product within an established organization, which has created a brand on its own, is creating a path to success. The ease of Paint Pasties to the users identified as the target market is critical; therefore the on-line presence along with compatibility within place architectural design mediums provides a positive experience for the customer. The potential growth recognized in both the Germany and U.S markets for home improvement over the next years, provides the base platform to introduce the product. The low increase in overhead due to the existing marketing, manufacturing, and operational resources provides the product positive sales increase of 2-4% over the next three years, with minimal investment to the e-commerce existing platform. The introduction of infomercials for the product in both the markets will need to be monitored and adjusted based on acceptance, to continue to evolve the communication channels, for both the ecommerce and infomercial approach.
As with any new product introduction, whether a new organization, or within an existing organization, quality checks in all areas are critical. As part of the overall project milestones, tasks will be performed to monitor the marketing success, financial predictions, ecommerce clicks, target markets, and customer satisfaction. Measuring performance on a continued basis is critical to a new product success.
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MKT 571 Week 6 Team Assignment Career Connection New Product Launch Marketing Plan Final Project.docx