Marketing and Strategy Theory Essay Example | Topics and Well Written Essays - 3250 words

Marketing and Strategy Theory - Essay Example The introduction section examines the fact that the rate of failure for the introduction of new products in retail grocery industry falls within the 70 to 80 per cent range. It then develops a theoretical model explaining why this happens. The theoretical model then culminates in a set of hypotheses that are further investigated by the paper. The conclusion part of the paper summarises the main issues brought out by the paper and gives inferences where appropriate. It then confirms that indeed the rate of failure for the introduction of new products in retail grocery industry falls is very high. The rate of failure for the introduction of new products in retail grocery industry is very high; it falls within the 70 to 80 per cent range. Linton Matysiak and Wilkes is a product development and market research firm specializing in perishable foods. The firm carried out a review of 1935 new products introductions by top food companies in the United States (Linton, Matysiak and Wilkes, 1997). This review was aimed at determining national introductions, regional breakdowns, line extension mortality, new item mortality and the overall product mortality. It also ventured into determining the ratio of line extensions to new items. The firm examined a number of issues such as the number of product line extensions, the number of innovative and new items and the locations where new products were introduced. On the other hand, the review found that the Top 20 grocery retailers in the United States enjoy a 76 per cent rate of success in the introduction of new products. However, the bottom 20,000 food companies in the US found to have slightly less than 12 per cent rate of success for new products introduced (Linton, Matysiak and Wilkes, 1997). The review found a number of differences between the top 20 companies and the bottom 20,000 companies in new product introductions. A notable one is the lack of strategic marketing on the part of the bottom 20,000 new product introductions. The research also observed lack of research among the bottom 20,000 food companies in the US. On the other hand, the top twenty companies were observed to greatly embrace strategic marketing and research. Before any new product introductions, these companies had gathered all the vital information through research. Strategic marketing elevated them even higher (Quinn, 1998). These two aspects are what are believed to be the magic behind the success of the top 20 companies. New product introductions were found to cost an average of $270 per product for each store (Linton, Matysiak and Wilkes, 1997). This is quite a sum of money considering that every year a supermarket may introduce about 5000 new products. It therefore becomes very difficult for the small players to compete effectively with the larger and already established players in the retail grocery industry (Porter, 1980). Groceries spend about $956,800 for every store, most of which eventually fail. Strategic marketing and market research can therefore go a long way in increasing the success rate for new product introductions. This can greatly save money for both retail stores and manufacturers, since any successful new product introduction pays off in the long run. The survey further observed that big corporations practice strategic marketing as an essential part of their day-to-day business management. The firm made use of statistics from the US Commerce