Question

Forecasting the success of the new product introductions is notoriously diffficult. Describe some macroexonomics and microeconomics factors that a firm might consider in forecasting sales for new body soap producy.

Answer 1

To forecast the success of a new product introduction, the macroeconomic factors include firstly the 4P's of marketing which are product, price, place and promotion. The product indicates the type of the product sold which is in this case a Fast Moving Consumer Good (FMCG) product, the price of the product i.e. whether the new product is highly priced and targets the high-end customers or it is low priced targeting the middle-income or low-income customers, the place where the product will be sold majorly i.e. whether it would target mainly the large cities such as New York or also low tier cities and villages and the type and budget of the promotion which it wants to incur so as to introduce the new product of body soap to the market. The age, income and education are also macroeconomic factors for forecasting the sales of the product. Given the overall age, income, substitutes there are in the soap industry, education level and occupation of the whole population, the firm needs to forecast whether the type of soap product they are launching will work for the market as a whole. Now, microeconomic factors means considering a market individually to study what type of market it is and then releasing its products accordingly. Factors such as skin types of people in different regions, the social and cultural factors in that particular region and the type of band preference the people has for the soap product are microeconomic factors. These are the factors through which we can predict whether the new product launched in the market would be a success or not.