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A product that has survived the screening stage of development called the New Product Development or NPD stage needs a focused product market analysis next. The analysis of product market will not only reveal the demand that the market has for the product but also the expected profits in the future years along with a fair idea of survivability of the product. It will also assist you in determining the cost of proposed NPD. An analysis that has been carried out fairly will go a long way in helping you eliminate inappropriate ideas as well as unnecessary costs involved in product marketing.

The Benefits of Product Market Analysis

1. Estimation of product price There are three things that determine the product price namely market review, competitor research and customer feedback. Once the selling price is decided, you get a reasonable idea of the profits that you are going to make with introduction of the product in the market. 2. Identification of product’s market potential Such analysis involves a review of the sales performance of existing products in the genre of your product. The sales figures and current market activity enable you to identify user’s interest in products of the same line as yours. These statistics clearly reveal the product’s potential in the market. 3. Forecast sales volume The research into customer needs and the size of existing customer base and market allow you to estimate the volume of sales that you are expected to make. 4. Identification of break-even point With an estimation of the profitability of the product, product market analysis determines the break-even point. This gives you an estimation of how safe your new product launch is in terms of recovering your own costs that include electricity, rent and wages. 5. Determination of minimum sale price Market research projects the returns based on the discounted price that is expected during the off season. This enables you to identify the minimum sale price of your product thereby leading to a more accurate estimation of break-even point. 6. Forecast of the lifespan of the product Product market research also tells you the lifespan of your product. No product can rule the market forever. Every product has a certain lifespan beyond which it starts becoming irrelevant to the users; advancement in technology being one of the factors that causes such a shift. It is very beneficial to know whether the return on investment is a sound one or not besides knowing what market share percentage can the product gain. 7. Scope of marketing strategy Market research reveals one of the most important things that a product launch needs i.e. marketing strategy. The information gathered during product market research reveals the markets that should be targeted and how. This data becomes useful in shaping your marketing strategy by identifying approaches that shall be instrumental in your product marketing. Besides the ones mentioned above, product market analysis facilitates the renovation and modification of existing products to give them a competitive edge.


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James Mello
James is the Lead Author & Editor Product2Market of Blog. James writes for the Product2Market blog to create a source for news and discussion about some of the issues, challenges, news, and ideas relating to Product Marketing.