Analyzing New Product Paper

¶ … product name? Describe the product

The product discussed in this essay is "drone delivery'. This service, as the name suggests, achieves delivery of packages and bought goods through a drone in a span of about half an hour. The consumer, through this prospect, uses geographical position system (GPS) data and information from the mobile device, such as phone or iPad; the drone tracks it and delivers the package to the desired or designated location (Marsh, 2015). In addition, subsequent to placing an order for delivery, the consumer is not obligated to remain in one location. The package delivery system can be designated to a particular location, not obligatory to the location of the client. The packages to be delivered will have an average weight of 86 pounds, which is basically the normal weight of products that are delivered to households (Marsh, 2015).

Identify and explain which market segmentation variable you are using. Why did you choose this method of customer segmentation? Be specific

The product will use variables for market segmentation for its consumer markets. These variables are geographic, behavioral, psychographic and demographic variables. The main reasons for choosing these variables are as follows:

1. Drone delivery purposed to serve customers from dissimilar geographical expanses has to place deliberation and thought into the variability of the geographic requirements and necessities. Therefore, the company will think through factors such as remoteness and location of the neighborhood. The accent is on reaching places where deploying normal delivery trucks is an economic strain.

2. Based on the packages being delivered and distributed by the company to the consumer. Consideration will be placed on behavioral factors such as the pursuit of benefits, which the consumers stand to profit from. This segmentation is selected owing to the fact that the consumers have several means of distribution but this will offer more speed, efficacy and cost saving.

3. Third, the company will also take into consideration the different psychographic attributes of the clients, for instance the order size of the package that the consumer wants delivered. For instance, there are consumers who will want basic packages such as those wrapped in envelopes while others will desire a bit heavier packages such as those wrapped in boxes.

4. Another important consideration is the human interface that often leads to a certain factor of unreliability. Drones can be monitored and directed automatically. The device follows the path assigned to it accurately without any delay. It can repeat jobs without tiring during its life-span (battery/power).

Who is the target market? Be detailed and specific

The target market encompasses individuals who have an urgency to get packages delivered immediately and cannot wait for the usual three or four-day delivery period. The target market also encompasses the consumers who are too busy to visit delivery shops or establishments for their requirements. In addition, the other market segment that will be targeted will be consumers who live in far distances or neighborhood. The drones will offer a much faster option compared to surface transportation.

What are your product's benefits to the target market?

The product will have remarkable benefits to the target market. To start with, the target market will experience an increase in the level of efficiency with regard to package delivery. The consumers will be able to receive their purchased products to a location of their own desire in less than half an hour compared to the three day or two-day period that it usually takes. Secondly, the product offers a much more economical option for the consumers as they will be able to deliver products at a much cheaper rate compared to before. Effectiveness is the third benefit. All this product delivery will be done at the location specified by the consumer. This will eliminate going to delivery offices such as before, which can be tedious and time consuming.

At what price will your product be introduced? Why?

The product will be priced at $1.50 only. The reason why the product will be lowly priced is that, the product invention itself enables the company to have cost savings. It costs much less to undertake the operation of aerial transport means compared to transportation on the ground. It will cost just 15 cents to deliver a package weighing 5 pounds to a distance of over 6 miles by means of a drone. This is significantly cheaper compared to the expense of $2.5 to around $8 when ground transportation is used (Smith and BI Intelligence, 2015).

What new product pricing strategy are you using? Why?

The product pricing strategy used for this product is the cost plus strategy. The price set will be the cost incurred plus a markup centered on the predetermined profit. In particular, the markup is 90%. In this case, expense incurred is 15 cents. The markup of 90% brings the price up to $1.50. This gives the company a competitive advantage. The second pricing strategy is cost based. This is owing to the fact that the price is set on the price incurred for delivering the packages to the consumers.

What objectives will be accomplished by using this strategy? Be specific

One of the main objectives accomplished by using this strategy is that the production or operational costs will be covered. The strategy takes into consideration the costs that the supplier will incur in delivering the costs. In addition, this strategy will set an economic, competitive price compared to the prevailing price in the market. This will bring about a competitive edge for the distributions. Another objective accomplished is that it will provide a price that is significantly lower than the initial one and therefore, will, appeal to consumers.

Why is the product worth this price?

The product is certainly worth the price. To begin with, it offers a much faster option for delivery compared to conventional means of transport and distribution of vehicles and motorcycles. The drone will be able to deliver the packages to the consumer within 30 minutes from the time such an order is placed. Secondly, it is worth the price because the consumer will not have to bear the hassle of finding an office point for placing such orders. All these activities will be undertaken right through the mobile device. This offers much more convenience. In addition, the consumers are able to select their own desired location for distribution.