Economics Assignment

Analyze marketing factors that can contribute the success or failure of a product for a company such as Vanda-Laye.

An organization should asses the market structure that the new product falls within. The organization should begin by analyzing the number of competitors (incumbent and potential) and buyers, pricing, production input (labor, capital, raw materials, etc.), product differentiation, and advertising (Brickley, Smith, Zimmerman, 2016). To gain a thorough understanding of its competitors, the organization needs to know if the competitors offer a comparable product, the competitors’ plans to market this product, and exactly how similar this product may be to its own. The organization must identify and evaluate the appropriate customer base, decide how to market their product to differentiate themselves from the competitors, and possibly set up a focus group to better understanding what features consumers want to see in the new product. When conducting a market analysis, an enterprise must be sure to select a price point that is acceptable for its consumers. A price point that is set too high can drive consumers out of the market or, worse, to the company’s competitors. The organization must also be mindful of production input. The relationship between a company’s inputs and outputs needs to be one that will help a company attain an ideal output target while still maintaining as little input as possible. (Brickley et al. 2016). Vanda-Laye should also focus on product differentiation efforts with a new product. Product differentiation is a vital marketing strategy. It is very important to demonstrate how one company’s product is different, better, more unique, and worthier of being chosen over the competitors’ product as well as being worthy of its price tag. Proper marketing is another important area in which Vanda-Laye must make a significant impact. Regardless of what features are a part of the new product, Vanda-Laye must also make its product stand out via its marketing efforts. By focusing the product’s media exposure within the necessary target demographic and utilizing the best marketing message, Vanda-Laye will gain increased amounts of attention from the desired audience (Lorette, 2019). These focal points clearly show why a market analysis is just as necessary as a capital budget when considering releasing a new product.

Evaluate the role capital budgeting can play in the recommendation of a new product.

Capital budgeting is a formal planning process in which an organization takes the time to assess whether it will investment in long term projects that require significant amounts of capital (EduPristine, 2015). Capital budgeting is a methodical way for a company to evaluate the risk and rate of return that would be associated with taking on a new product. The capital budgeting process would allow the company to take a look at the short-term and long-term effects of the project such as how it would fund the new product using its capital structure, if the new product is the right fit for its strategic goals, it would predict the future cash outflows and inflows the new product would generate, it helps to create to cohesiveness within the organization so that the decision makers are able to be on the same page when assessing the viability of the new product, and it helps to make the process of coming to a final decision a lot quicker and smoother (EduPristine, 2015). By understanding how much of, and in what capacity, its capital structure will be tied into this one new product, the company will have a clearer understanding of what other potential products or expenditures it may be able to partake in. The capital budgeting process not only gives an organization the opportunity to evaluate the potential success financial of a single product but it also allows for the company to compare multiple projects to one another. The process is a great tool because it provides a chance for the company to decide if they should back out of an idea before actually investing any funds. Any organization that handles their business wisely and leans on organizational accountability as a measure of potential longevity will always go through the capital budgeting process when evaluating a new project.

Explain how government intervention can impact a new product such as the one you chose.

The government has the ability to impact markets across locally, as well as globally, simply by way of implementing new policies and regulations at any given moment. The government’s intervention could easily influence Vanda-Laye’s strategic approach to introducing a new product to its consumers through changes in interest rates, tariffs, increased government spending, corporate tax rates, or regulation compliance (Williams, 2018). Increased interest rates set in place by the Federal Reserve would mean that the cost of borrowing to fund the company’s new product would also be increased. The increased cost of borrowing would need to be accounted for in the capital budgeting process. The possibility of the government imposing more taxes on a specific sector is a reality that organizations must be ready for at all times. If Vanda-Laye is developing a new steel outdoor skillet with a special technology feature, Vanda-Laye would need to be mindful of tariffs that are placed on imported steel. These tariffs could potentially take a toll on Vanda-Laye’s profits or they could even cause Vanda-Laye to decide to scrap the new product all together. Another factor that could affect Vanda-Laye’s new product would be the government’s spending. Increased government spending comes at the cost of increased taxes which are paid by tax payers, including companies. Increased taxes are likely to discourage new investments. The corporate tax rate is another way the government can squeeze more money out of companies which might also discourage investment into a new product. The final government influential factor from the list is government regulations compliance. As a company that produces goods such as outdoor cooking supplies, Vanda-Laye is, more than likely, obligated to comply with certain regulations for the sake of the consumers’ health. However, adhering to these regulations can cost companies time and money.