Market Research and New Product Sales | AQA Q1.5, Paper 2 2019
Last updated 27 Oct 2020
Here is a suggested answer to the 16-mark question on whether the use of market research would help guarantee high sales of a new product.
As the market leader with a wide portfolio of cereal brands and vast experience of the market, Kellogg’s will be experienced in using market research to help make their new product launches successful. However, market research is, by definition, always somewhat limited and might not be enough on its own to guarantee high sales.
Several parts of the research in Appendices A to E will help Kellogg’s make a success of a new cereal product, particularly the data relating to customer needs and wants for their cereals. For example, Kellogg’s might be able to use the data in Appendix D which suggests 90% of respondents view cereals as a key energy boost to help develop and position a new product focused on providing energy. If this new product could also be high in fibre and with low/no added sugar, then the data in Appendix C suggests this would also increase the chances the product will prove a hit and generate high sales. Alternatively, Kellogs’ may find there is a gap in the market for a new product that is firmly positioned at customers who are looking for an indulgent, guilt-free cereal. Appendix D suggests 82% of customers might want to try such a product, which, if the sample is representative of the population, is likely to be a large number of potential customers, thereby increasing the chance that sales are high.
However, in several ways it can be argued that the research data in Appendices A to E will not help guarantee a successful new product. Firstly, whilst Appendices C and D provide useful insights into what customers consider important about cereals, they don’t tell us whether existing breakfast cereals already meet those needs and wants. In other words - is there a gap in the market for a new product? A market mapping exercise that positioned existing cereals based on dimensions such as healthy ingredients / energy would be useful additional research to help position a new product more effectively. Also, the data in Appendix B suggests that the opportunity for new cereals is becoming less attractive, particularly those positioned as a budget or value product. The volume of sales is forecast to fall by 5% by 2023, although market sales are forecast to rise, which indicates greater demand for premium cereals, but less demand for value products. Finally, Kellogg’s might question the validity of the research. Appendix C and D are both based on a sample of 1,762 cereal-eating internet users. A new product might be more successful if it is able to attract people who don’t normally eat breakfast cereals - the qualitative research from such customers might produce quite different results to this research.
Overall, therefore, whilst the research is going to be quite useful to Kellogg’s, it seems quite limited in terms of whether it will help the product achieve high sales. Higher sales of the product seem more likely, though not guaranteed, if it is positioned to meet the stated qualities in Appendices C & D, and high sales are even more likely given that the product will have the Kellogg’s brand attached. However, in a crowded market where volume sales are forecast to fall overall, it will be tough for any new cereal to “break-through” and capture sufficient market share to achieve high sales. On its own, the research doesn’t really help Kellogg’s achieve that objective.
An excellent response which is fully focused on the demands of the question. The response considers a range of issues which considers different elements of the market research. The response is balanced and judgements have been made throughout and have a clear focus on the question.