Although a regular Dimmeys shopper, he doubted that his purchasing habits would change, particularly since he did not know the price point at which the new cookware would be offered. He also questioned the value of having house brands, hinting that even if they succeed, they will simply cannibalize sales of existing products rather than drive new business to the store.
The third potential customer, a single female in her early twenties, was the most impressed. She valued the Dimmeys brand and related a history of positive experiences with the stores. She viewed other store brands as being a positive contribution and felt that the positive associations she has with the Dimmeys brand would carry over to the cookware. She felt that cookware alone would not be compelling, but that a full line of Dimmeys good might be a better proposition. She did, however, seem enthusiastic about the prospect of receiving an even better bargain if the house brand was competitively priced and of good, name brand quality. When asked if she would support the brand if quality was merely equivalent to name brands she indicated that she would, but seemed less enthusiastic. When specifically asked if she would purchase the brand before seeing the reaction of her peers to the brand, she said she would likely wait to see their reaction first.
The fourth potential customer, a college-aged single female, was not favorable to the idea. She felt that the prices were fairly good to begin with, such that house-branded items would probably cost the same as the regular stock at Dimmeys and therefore would not be something she would consider good value. When questioned as to what would compel her to adopt Dimmeys branded goods, she postulated that if her friends vouched for them, she might be willing to give them a try. She was not at any point during the interview enthusiastic about the brands and seemed to equate the idea with a poor product.
Overall, the group's disparate responses suggest a generally lukewarm attitude to the idea. Only one respondent genuinely felt that the idea had strong merit and could fill a need. All who favored the idea did so only with qualifications, such as low price and high quality, or positive reviews from peers. There were no obvious candidates for early adoption. In general, it was felt that the product did not fill an existing need for consumers. Dimmeys generally carries a good range of products, even if the particular products are ever-changing and sometimes subject to limited availability. The forth respondent seemed to suggest that perhaps the move could backfire if the typical Dimmeys sales were seen as a loss leader for the house-branded, always-in-stock items.
There are significant implications of these findings for Dimmeys. The prevailing literature indicates that finding early adopters is a critical part of the product launch cycle. None of the interviewees seemed like a good candidate for early adoption. Many were outright skeptical of the idea. The Bass Model shows that because the general target market is imitators, they need somebody to imitate and in this case that looks unlikely.
The lay literature on the subject highlights the importance of proper planning and gaining an acute understanding of the target market. The interviewees indicated that the new product did not fill a need of theirs. If this is the case, then consumer response can be expected to be tepid. Dimmeys does not appear to have a strong enough understanding of what its target market needs from new products. Indeed, the main benefits of the house-branded cookware appear to be to the company in terms of brand-building rather than to the customers. If customer needs are not met, however, the brand-building will not occur either, so it is important that Dimmeys take the time to better understand its target market.
Part IV: Dimmeys should not offer the branded cookware. The product does not appear to meet the needs of the target market. Either Dimmeys has not understood the target market's needs or they need to cultivate a different target market. They have, however, an established customer base. The new product appeals to that customer base but also runs the risk of cannibalizing existing products. In addition, Dimmeys already offers bargain-priced goods, which is often the appeal of house-branded wares. Thus, the new product is essentially meeting a need that it already being met, by and large, with the current product offerings. Dimmeys should instead focus its efforts on the development of a broader product range, rather than new lines of the same products.
However, the branded cookware was merely a trial balloon. If the company is serious about launching a full range of branded goods, then the trial will be used to assess the potential success of the strategy. Management will most likely give the project its full organizational and financial commitment, which increases the likelihood of success. Moreover, branded goods may as yet undercut the prices of the current product lines, which gives them an even greater change of success.
That said, the lack of early adopters among the existing clientele seems to be the most difficult hurdle to overcome. The company can invest significant amounts of money into awareness, but may not see strong sales if some of the target market can be convinced to become early adopters. In this instance, there is no evidence that such a group exists among the existing target market. The product is simply not unique enough, and there is a risk that the branded cookware will not be perceived as offering a substantial enough value proposition to overcome the consumers' natural tendency towards risk aversion.
A better choice for house-branded wares is Myer. That chain markets name brand goods and is not a discounter. Thus, it is reasonable to expect that house-branded goods would be more of a complement to the existing product line than they would be at Dimmeys. The store also has a more high-end image, which would make cookware a more logical starting point than it would be at Dimmeys. The target market at Myer is more likely to have early adopters among its ranks as well, given that they are more fashionable and upwardly mobile.
In order to successfully launch house-branded cookware at Myer, a number of steps must be undertaken. The first is that the launch must be conducted with strong knowledge of the target. It is suspected that the Myer market is better for a slightly discounted house brand line, but that needs to be confirmed with extensive market research. The company has room in its offering for something that is high quality but priced slightly lower (but with higher margins) than the regular brands they currently sell. However, these suspicions should be confirmed with extensive research.
The second step in the launch is to cultivate the early adopter. According to the Bass model, these "innovators" are the key to a successful new product launch. Combine this with the need for extensive target market research and Myer must therefore focus on understanding the specific psychographic of the early adopters within its target market. Then, the company must hit successfully on the other two key success factors -- price and advertising.
Advertising the new line is critical for two reasons. One is that Myer must create awareness for the new product line. There is intense competition in the Australian department store industry and the firms involved must find ways to differentiate themselves. In this case, heavy advertising is already undertaken by Myer, so they need only shift the focus of the advertising towards its own brand. This is the high level of organizational and financial support that is demanded for a successful new product launch. The second reason heavy advertising is critical is because the company needs to signal support for the new line. The reason why most consumers are hesitant to adopt new brands is because they are inherently risk averse. As such, successful new product adoption demands that this natural risk aversion be mitigated. Early adopters play this role in a new product launch, but even early adopters needs organizational support. They need it so that they will adopt the product and they need the organization to reinforce the message they are sending by adopting the new line.
The target market therefore is expected to be the everyday Myer customer, but with the early adopter market being the more value conscious version of that target customer. This is likely the more fashion-forward twenty and thirty-something crowd (in other words, the ones who have less money but still value a higher-end product). This target market is the key to broad-based adoption of the house-brand line of cookware.
The marketing approach therefore should be primarily geared towards gaining acceptance among that group, with the assumption that following the Bass model adoption among members of…