Question

Suppose your roommate just invented an electronic pencil that senses when a word being written is misspelled, beeps, and shows the correct spelling on a small screen on the side of the pencil. He figures the pencil can be manufactured for about $5, since the cost of computer chips has dropped so low.

Your roommate comes to you for advice and money. He will make you a 40% owner if you help manufacture and sell the pencils. He asks you to put up $500 for materials for the first 100 units. He asks that you help make and sell the pencils after classes.

Since your roommate is studying electronic engineering, he knows about as much about marketing as you know about electronics. You agree to study the possibilities. You make a list of questions that need to be answered before you commit your $500.

1.         What need does this product fill?

2.         What is the potential market for the product?

3.         What are the target markets for such a product?

4.         What type of consumer good is this product?

5.         How will you distribute the product?

6.         How could the consumer be convinced to purchase the product?

7.         What are the other questions that need to be answered before a decision is made?

Answer 1

1.         What need does this product fill?

This product would best suit the student who has poor spelling skills, this would help them to make sure they write correctly and improve them to spell better

2.         What is the potential market for the product?

This is potential for people who use pencils to write the content in daily life

3.         What are the target markets for such a product?

The Target market includes schools, students, authors, writer, and editors also corporates who use a pencil in their daily life

4.         What type of consumer good is this product?

It comes under stationary or a shopping good that it will compete with other pencils and pens of similar cost price

5.         How will you distribute the product?

As we need wide distribution we can start selling at school stationary stores, Campus stores, drug store counters, business supply stores, etc. initially we start selling at schools which include campus stores, business stores

6.         How could the consumer be convinced to purchase the product?

To launch a product initially we need to advertise our products

This can be done by

1. giving a sample for customers for free and get the feedback and request them to share the product to others

2. Also can demonstrate the product at school or campuses

Doing this will help you to grow business by word of mouth and also includes less cost

7.         What are the other questions that need to be answered before a decision is made?

1. What else can be done with $500?
2. Are there any products which are competitive with this concept?
3. How much should be the cost price?
4. Do we really need that pencil?
5. Where should I earn $500?