An Insight Into the Marketing Field With Product Development, Pricing and More

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When you go into the marketing field, there are many different paths you can take with your career. Many marketers go into digital or print marketing roles, whereas others may be drawn to event planning.

However, one area of marketing that you may not have yet considered is product research and development. In this rewarding field, you get to work first-hand with researching, planning, testing and developing new products and/or services before they hit the market.

With a better understanding of research and product development and how it fits into the scope of a marketing career, you can determine whether this path may be worth pursuing for you.

Understanding the Basics of Marketing

Before getting into the work associated with product development, research and pricing, it's helpful to understand the basics of marketing as they relate to business.

The Role of Marketing in Business

While any business may rely on marketing professionals for different areas of expertise, the basic function of marketing in business remains the same. The primary purpose of marketing in business is to help make a company's target audience more aware of the brand itself and the products and/or services it offers. Strong marketing helps funnel the right buyers to the company and helps this audience make buying decisions.

Key Components of Marketing

A marketing plan has many different components, which can even vary from one company to the next. Some of the most important components of a marketing strategy include:

Product - This refers to what the company has to offer its customers. It may include products, services, or a combination of both.
Price - This refers to the pricing strategy the company is using, factoring in not just the price of a product or service but any discounts or credit terms offered.
Promotion - This refers to the efforts to spread the word about a brand, its products and the like. Promotions can include not just traditional advertisements but public relations efforts and much more.
People - This refers to the company's employees—especially those who are forward-facing to the customer. This category may also include the company's target audience.
Place – This is the physical location where the company's products or services are made or sold.

An Introduction to Product Development

A product development strategy as part of a marketing plan is a great way to ensure that a product or service has the best chance of succeeding once released to the public. Specifically, product development refers to all the steps involved in bringing a product from concept to reality.

Importance of Product Development

Product development is critical for a number of reasons. For starters, product development and market research can help businesses gauge the demand for a new product or service before the time and effort is put into creating it. Without a real market or demand for it, a lack of product research and development may result in wasted funds.

Product development also helps to ensure that new products and services deliver as much value as possible to the end customer. This, in turn, reflects well on the brand and leads to fueled company growth. In other words, it's a win-win for all involved.

The Stages of the Product Development Process

Each company may have its own process for researching and developing a new product idea. In general, however, the product development process will include the following steps—more or less in the same order:

Idea generation - Product ideas are brainstormed and shared between team members before a single product idea is agreed upon to pursue.
Research - Initial market research occurs, determining whether there is a true need and market for the proposed new product.
Planning - Additional planning, such as finding sources for materials and other resources for production, occurs.
Prototyping - Early prototypes of a new product are completed and tested. Improvements are made as needed.
Sourcing - Materials and resources are gathered and secured for final production.
Costing - Total costs of goods are calculated to determine the correct price and profit margins for the product.
Commercialization - The product is officially released to the market.

Any product development plan should keep all team members involved on the same page while mitigating risk and including specific, measurable success metrics.

User-Centric Approach in Product Development

These days, more companies have shifted to a user-centric approach in the product development process. Specifically, this means that the entire design process of a new product is focused on the end user's needs. Some considerations here may include usability, ergonomics, comfort, convenience, etc.

Adopting a user-centric approach in product development is a great way to ensure that the end product is as useful and valuable as possible. This development process often involves getting members of the product's target audience directly involved with user testing, focus groups and more.

How Market Research Influences Product Development

Market research plays an important role in developing a new product or redesigning an existing product. Specifically, market researchers are needed to learn more about the demographics and needs of the product's target audience, competitor products and other industry trends that may affect the design process. Ultimately, thorough market research helps to ensure that the finished product is useful and addresses a genuine need of the buyer.

Pricing Strategies in Commerce

Even once a product is completely developed, it's not necessarily ready to hit the market. That's because the product or service still needs to be carefully priced. A price that's too high will result in a lack of buyers, whereas a price that's too low won't be sustainable or profitable for businesses in the long run.

Role of Pricing in Marketing

As mentioned previously, price is one of the key components of any successful marketing strategy. The price point at which a product or service is sold can significantly impact the product's success and the business as a whole. Marketing professionals are often tasked with researching different pricing models to determine competitive prices before a new product is released.

Factors Influencing Pricing Decisions

Many factors can go into the pricing of a new product or service, which can vary from one product to the next. However, some of the key factors that come into play here include:

The customer's perception of the product and how sensitive these buyers are to pricing fluctuations.
How competitors have priced similar products or services.
Government laws and regulations related to pricing.
The costs of materials needed to make a product or provide a service.

Common Pricing Strategies in Commerce

Deciding on the ideal price for a product or service takes a lot of careful research and consideration. To help with the decision, many companies will adopt one of several common pricing strategies:

Cost-plus pricing – The pricing model is the most common pricing strategy. It involves calculating all the product costs and adding a fixed percentage to the price to ensure a profit margin.
Competitive pricing - This involves adjusting a product's pricing based on how competitors are pricing similar products.
Price skimming - This strategy is common for new products with little to no competition and involves setting a high initial price to recoup some development costs.
Penetration pricing - Common with brand new products and releases, this pricing model involves setting a lower price early on and increasing prices as your base of buyers grows.
Value-based pricing - Pricing is based on the product's perceived value to the target customer.

Integrating Product Development and Pricing Strategy

While it may be tempting to look at product development and pricing as two very different parts of the process, the reality is that the two should always be intermingled.

The Interplay of Product Development and Pricing

The processes involved in researching and developing a product are always connected with the final pricing of the product, and for good reason. The main reason for this is that many businesses adopt a cost-plus pricing method, where the cost of a product is determined by factors that include the cost of the production of the product itself. In this sense, the costs of materials, equipment and other resources needed to make the product will need to be factored into the final sale price.

H2: Market Research Techniques for Effective Product Development and Pricing

Successful product development and testing require quantitative and qualitative market research methods.

Quantitative Methods in Market Research

Specifically, quantitative methods in market research rely on concrete data or numbers to provide insights about consumer buying habits, product demand and market awareness. Some examples of quantitative measurements that may be collected in market research include:

The number of people who are interested in buying a new product.
The size of the market segment for a particular product.
The average age of a consumer or other demographic information.

Qualitative Methods in Market Research

While quantitative methods can be extremely useful in market research, they are most effective when combined with qualitative research. Specifically, qualitative research refers to opinions and other non-numerical information that can inform product development and marketing. Some examples of qualitative research may include:

Holding a focus group to determine what customers think about a new product before it is released to the public.
Asking for feedback on a marketing campaign or logo.
Asking customers about their pain points on a competitor's product via social media.

How Can Market Trends Influence Your Product Development and Pricing Strategy?

Many factors, including market trends, can influence a product development cycle and pricing strategy. Because trends are constantly changing and evolving, staying on top of these is a must when developing and researching a new product offering.

Recognizing and Understanding Market Trends

Marketing professionals are often tasked with tracking and reporting on marketing trends while a new product is developing. This can be done through monitoring social media, engaging directly with customers and even staying on top of the latest industry news. The information gained about market trends can then be used to adjust product development processes as needed, ensuring that the end product is as relevant and useful to its target audience as possible.

Applying Market Trends to Product Development

Marketers and researchers must also apply market trend data to product development processes. For example, if a new regulation bans the use of certain materials in the manufacturing of your product, this may require your development team to return to the drawing board and come up with a new formulation sooner rather than later.

Adjusting Pricing Strategy Based on Market Trends

Market trends can also affect pricing strategies. For example, if market research reveals that the demand for your product is rapidly increasing, this may be a good time to increase pricing to reflect that higher demand.

What Role Does Consumer Behavior Play in Product Development and Pricing?

Consumer behavior may also come into play when developing and pricing new products before they hit the market. By better understanding consumer behavior and its potential impact on pricing and product development, marketing professionals can help businesses make informed decisions.

Understanding Consumer Behavior

One of the biggest challenges is that consumer behavior can be erratic and unpredictable. However, depending on your industry, you can typically review past consumer data to get a better feel for how customers may act in the future. By analyzing consumer data and making predictions regarding demand, buying habits and the like, marketing professionals can help businesses develop and price better products.

There are many consumer behavioral models that marketers often use to help understand these audiences, including:

Buyer personas
Customer insights (how customers interact with businesses)
Customer life cycles

Impact of Consumer Behavior on Product Development

Ultimately, developing and releasing a successful product depends on putting out a product that your target customers want and need. This is where having a solid grip on consumer behavior can make all the difference in your development process.

For instance, you might discover in your market research that your target audience is environmentally conscious. As a result, you may decide to rework some aspects of your product to make it more eco-friendly and thus more desirable to your buyers. By knowing what your customers want and need, you can develop a product that will check off all the most important boxes.

Adjusting Pricing Strategy Based on Consumer Behavior

Pricing strategies and models may also change based on consumer behavior. For example, while you might initially adopt a "cost-plus" strategy during the early stages of product development, changes in your customers' needs and buying habits may cause you to re-evaluate your pricing model and shift elsewhere. Ultimately, consumer behavior needs to be tracked at all stages of the product research and development phase—and companies must be ready to act quickly on their feet to make changes as needed.

How Can You Incorporate These Insights Into Your Marketing Career?

As you can see, a lot goes into researching and developing new products before they hit the market. The product development process can be long and drawn out, requiring a great deal of market research, planning, concept testing and more. As a marketing professional, you can apply these insights to your future work as a product research specialist or in a similar role.

Still looking for the right marketing program to prepare you for this dynamic and rewarding career? The University of Memphis Global's Bachelor of Business Administration program with a major in Marketing is an excellent path for students interested in careers related to product development, pricing, consumer research and the promotion of goods and services.

Learn more about what a marketing degree from the University of Memphis can do for you by getting in touch—or start your online application today.

Sources

https://www.memphis.edu/uofmglobal/degrees/undergraduate/marketing-management.php

https://apply.memphis.edu/register/inquiryumglobal

https://apply.memphis.edu/apply

https://corporatefinanceinstitute.com/resources/management/5-ps-marketing/

https://www.shopify.com/blog/product-development-process

https://www.uptech.team/blog/user-centered-design

https://www.bdc.ca/en/articles-tools/marketing-sales-export/marketing/pricing-5-common-strategies

https://www.thehartford.com/business-insurance/strategy/market-research/quantitative-qualitative

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