Establishing a pricing strategy for a new product or service is an important part of the development process. You should consider pricing the moment you decide to take an idea forward as it will determine how much you can afford to invest in the project.
You will need to take the following factors into account:The benefits - or value - to the customer of your product or service compared with what the competition has to offer. Will the price be one that customers are prepared to pay?,Whether or not you're first to market. Is your product or service revolutionary or are you following a market trend?,The selling channels you want to use, which will affect your promotional spend and distribution costs.
Match products and services to market needs:New products and services have to offer benefits that meet your customers' needs. You need to discover what these are.Market research, using techniques such as surveys and focus groups, will help you do this. See our guide on market research and market reports. Not only must you meet your customers' needs, you have to do so in a way that is better than the alternatives offered by the competition.Your new product or service needs a unique selling proposition - a feature or property that makes it stand out in the marketplace
Remember that although the end user of your product or service might be your most important customer, you may have to take the needs of other parties into account.For example, if you were planning a new DIY product, you would need to consider how retailers would stock it as well as how it would benefit professional decorators. If you're creating a toy, you should consider what parents as well as children will think of it.Your competition
Sunday, April 5, 2009
Investment and cost control
Developing new products and services is an inherently risky process. You must plan any investment carefully and strictly control your costs.You need to:factor any future investment in products and services into your strategic business plan ,plan exactly where this investment will be directed ,justify the expenditure on every project ,manage your costs .Before making investment decisions, consider how much your business stands to gain from a completed product or service. Weigh this against the risks you face.
Phasing new product development:One way to minimise your risks is to phase investments in projects. By reviewing a project at the end of each phase or stage of development, you can identify products or services that are unlikely to be successful before resources are wasted. If the product or service fails to meet established criteria, the project is ditched. If it meets them, resources sufficient to enable it to reach a next, predetermined, stage are allocated.
Finding support:A range of government grants and tax breaks is available for research and new product development. For further information, see our guides on innovation, research and development grants and tax reliefs and allowances for research and development.
Cost control:It's essential to keep a close eye on costs when you develop new products and services to avoid them spiralling out of control. You should:estimate development costs in advance, as described below,monitor expenditure throughout the development process,introduce phased investment.
Phasing new product development:One way to minimise your risks is to phase investments in projects. By reviewing a project at the end of each phase or stage of development, you can identify products or services that are unlikely to be successful before resources are wasted. If the product or service fails to meet established criteria, the project is ditched. If it meets them, resources sufficient to enable it to reach a next, predetermined, stage are allocated.
Finding support:A range of government grants and tax breaks is available for research and new product development. For further information, see our guides on innovation, research and development grants and tax reliefs and allowances for research and development.
Cost control:It's essential to keep a close eye on costs when you develop new products and services to avoid them spiralling out of control. You should:estimate development costs in advance, as described below,monitor expenditure throughout the development process,introduce phased investment.
Develop new products and services
Project managers are essential to ensure the successful development of new products or services. They'll be responsible forcontrolling costs and allocating resources - for further information, see the page in this guide on investment and cost control,drawing up the key parameters for the product or service's specification co-ordinating the product development team - for further information, see the page in this guide on creating a project team ,timetabling the development process ,troubleshooting .
Timetabling the development process:Your project manager should draw up a critical path for the completion of key tasks. SMART (specific, measurable, agreed, realistic and time-limited) objectives can help to control and co-ordinate the development team's advance along this path and stages can be used to monitor progress.
However, flexibility must be built into your plans. Any number of unknowns can come into play and result in, for example, a change in the project's specifications or expected completion date.For further information on managing your development project, see our guide on how to manage your research, design and development. The speed with which you want to establish your product or service.The expected lifecycle of your product or service.Whether you are covering your costs.
There are two main ways to estimate costs:a top-down approach where you consider previous comparable projects and use them as a benchmark,a bottom-up approach where all team members agree the costs they expect to incur with one project manager, who will then estimate the total cost,Remember that your costs could include staffing, materials, technology, product design, market research, prototyping and incremental overhead costs.
Timetabling the development process:Your project manager should draw up a critical path for the completion of key tasks. SMART (specific, measurable, agreed, realistic and time-limited) objectives can help to control and co-ordinate the development team's advance along this path and stages can be used to monitor progress.
However, flexibility must be built into your plans. Any number of unknowns can come into play and result in, for example, a change in the project's specifications or expected completion date.For further information on managing your development project, see our guide on how to manage your research, design and development. The speed with which you want to establish your product or service.The expected lifecycle of your product or service.Whether you are covering your costs.
There are two main ways to estimate costs:a top-down approach where you consider previous comparable projects and use them as a benchmark,a bottom-up approach where all team members agree the costs they expect to incur with one project manager, who will then estimate the total cost,Remember that your costs could include staffing, materials, technology, product design, market research, prototyping and incremental overhead costs.
An overview of the recreation, leisure goods and services sector
The recreation and leisure sector comprises a wide range of business activities, covering both goods and services. Goods include games, toys and sporting equipment, while services include activities from sports coaching to video game design.The UK market in this sector is well developed and growing strongly. Rising levels of disposable income and leisure expenditure in Western Europe and North America have created an increasing number of export opportunities for UK firms. The emergence of the middle classes in India, China, Russia and South East Asia has created a demand for high-end products and luxury goods.
There is some overlap with other business areas, particularly in the creative and media industries sector. The creative sector produces 8.2 per cent of Gross Domestic Profit (GDP) and its industry is growing twice as fast as the UK economy, at an average of 5 per cent a year between 1997 and 2004. Exports are growing even faster, averaging 11 per cent, and the sector now contributes 4.3 per cent of the UK's overseas sales (source: UK Trade & Investment, 2007). See our guide on the The sector has a good ability to deliver employment, attract revenue from abroad and drive domestic development. These circumstances have created the opportunity for UK companies in this sector to compete around the world.
The sector covers a wide spectrum of goods and services. There are export opportunities in:tourism consultancy,leisure, sports and play equipment,the garden sector,equestrianism,theme park and visitor attractionsThe multi-billion-dollar crafts market in the US remains particularly strong. However, high technology is increasingly important, with a wealth of new content channels and entertainment media competing for consumers' interest.
International trade in the sectorOverall, the UK imports more recreation and leisure goods and services than it exports. However, there's a sharp difference between the trade balance for goods and the balance for services.The combined exports of sporting goods, musical instruments, games and toys was £803 million in 2005. Imports of the same categories of goods were £6.6 billion in the same year.
There is some overlap with other business areas, particularly in the creative and media industries sector. The creative sector produces 8.2 per cent of Gross Domestic Profit (GDP) and its industry is growing twice as fast as the UK economy, at an average of 5 per cent a year between 1997 and 2004. Exports are growing even faster, averaging 11 per cent, and the sector now contributes 4.3 per cent of the UK's overseas sales (source: UK Trade & Investment, 2007). See our guide on the The sector has a good ability to deliver employment, attract revenue from abroad and drive domestic development. These circumstances have created the opportunity for UK companies in this sector to compete around the world.
The sector covers a wide spectrum of goods and services. There are export opportunities in:tourism consultancy,leisure, sports and play equipment,the garden sector,equestrianism,theme park and visitor attractionsThe multi-billion-dollar crafts market in the US remains particularly strong. However, high technology is increasingly important, with a wealth of new content channels and entertainment media competing for consumers' interest.
International trade in the sectorOverall, the UK imports more recreation and leisure goods and services than it exports. However, there's a sharp difference between the trade balance for goods and the balance for services.The combined exports of sporting goods, musical instruments, games and toys was £803 million in 2005. Imports of the same categories of goods were £6.6 billion in the same year.
Recreation and leisure goods and services
As an importer or exporter in the recreation, leisure goods and services sector, you can turn to a range of bodies for help and information.The government organisation with primary responsibility for providing trade support is UK Trade & Investment. You can find information on the services they offer to exporters on the UK Trade & Investment website - Opens in a new window.You can also find details of your local trade team using a postcode search on the UK Trade and Investment website - Opens in a new window.
Government sources of help and informationIn addition to UK Trade & Investment, other government bodies that provide business support in the recreation, leisure goods and services sector include.
Trade associations and other bodiesBecause the recreation and leisure sector covers many activities, there are numerous trade associations representing the interests of businesses in various sub-sectors. You can search for trade associations on the Trade Association Forum website - Opens in a new window.
Trade associations in the sector include::the Federation of Sports and Play Associations (FSPA) - get help and information on the FSPA website - Opens in a new window the British Association of Leisure Piers, Parks and Attractions (BALPPA) - read information about BALPPA on the BALPPA website - Opens in a new window the Themed Entertainment Association (TEA) - find information about TEA on the TEA website - Opens in a new window the British Toys and Hobbies Association variety of toys not covered specifically elsewhere including.
Government sources of help and informationIn addition to UK Trade & Investment, other government bodies that provide business support in the recreation, leisure goods and services sector include.
Trade associations and other bodiesBecause the recreation and leisure sector covers many activities, there are numerous trade associations representing the interests of businesses in various sub-sectors. You can search for trade associations on the Trade Association Forum website - Opens in a new window.
Trade associations in the sector include::the Federation of Sports and Play Associations (FSPA) - get help and information on the FSPA website - Opens in a new window the British Association of Leisure Piers, Parks and Attractions (BALPPA) - read information about BALPPA on the BALPPA website - Opens in a new window the Themed Entertainment Association (TEA) - find information about TEA on the TEA website - Opens in a new window the British Toys and Hobbies Association variety of toys not covered specifically elsewhere including.
General toys
Train sets, including trains, tracks and signals, along with scale model assembly kits, such as for planes, boats or vehicles are classified under heading code 9503 00 30. Construction kits, such as building blocks and the like are covered by heading code 9503 00 35. The key point of difference for these two classifications is that if the toy kit is designed to be permanently assembled - such as a model car or aeroplane kit - it'll be classified in the former heading code. If it's designed to be constructed and deconstructed, like plastic building blocks, it'll be classified under the latter category.
Toys and other play items representing non-human figures are covered by heading codes 9503 00 41 if they're stuffed, and 9503 00 49 if they're not stuffed. You should bear in mind that this will include fictional figures that may have some human characteristics, such as angels, devils, monsters or robots, for example. It also includes hand and finger puppets and figures used in marionette shows.
Toy musical instruments are classified under heading code 9503 00 55. These are distinguished from "full" musical instruments by having limited capabilities - an ability to produce a more limited range of notes than its adult counterpart. Electrically operated instruments, such as organs, are also classified here. Toy musical apparatus, such as children's-record players or CD players that play rigid plastic discs rather than standard records or CDs are also covered in this heading code, as are toy musical boxes and other items that have a wind-up mechanism and play a limited range of tunes.
Heading code 9503 00 61 covers puzzles of all types, including jigsaws, sliders or Rubik's cubes.Toy weapons, such as guns, rifles, swords and water pistols are under heading code 9503 00 81.Heading codes 9503 00 85, 9503 00 95 and 9503 00 99 cover a wide Sources of help and support in the recreation, leisure goods and services sector
Toys and other play items representing non-human figures are covered by heading codes 9503 00 41 if they're stuffed, and 9503 00 49 if they're not stuffed. You should bear in mind that this will include fictional figures that may have some human characteristics, such as angels, devils, monsters or robots, for example. It also includes hand and finger puppets and figures used in marionette shows.
Toy musical instruments are classified under heading code 9503 00 55. These are distinguished from "full" musical instruments by having limited capabilities - an ability to produce a more limited range of notes than its adult counterpart. Electrically operated instruments, such as organs, are also classified here. Toy musical apparatus, such as children's-record players or CD players that play rigid plastic discs rather than standard records or CDs are also covered in this heading code, as are toy musical boxes and other items that have a wind-up mechanism and play a limited range of tunes.
Heading code 9503 00 61 covers puzzles of all types, including jigsaws, sliders or Rubik's cubes.Toy weapons, such as guns, rifles, swords and water pistols are under heading code 9503 00 81.Heading codes 9503 00 85, 9503 00 95 and 9503 00 99 cover a wide Sources of help and support in the recreation, leisure goods and services sector
Classifying toys, games and sports equipment
Most toys, both for adults and children, are under subheadings of heading code 9503. Toys intended for animals, such as pets, are classified by their basic material.The classification listings are quite detailed to cover the majority of specific commodities.Tricycles, scooters, pedal cars and similar toys.
In classification terms, these are restricted to wheeled toys designed to be driven by children and powered or propelled by the children themselves using pedals, hand levers or motors. The key heading code for these items is 9503 10. This includes:Children's tricycles and similar items. Bear in mind however that bicycles for children are classified as bicycles, using heading code 8712.,Scooters.,Pedal- or hand-propelled wheeled toys in the form of animals.,Pedal cars or motorised cars, often in the form of miniature sports cars, jeeps or lorries.,Wheeled toys propelled by hand levers.,Other wheeled toys designed to be drawn or pushed and are large enough for children to ride in.
Dolls representing humans, their parts and accessories:Dolls are generally covered by two heading codes - 9503 00 21 for dolls themselves and 9503 00 29 for their parts and accessories. These heading codes cover dolls designed for use as toys by adults or children, but also include dolls used for decorative purposes, such as mascot dolls or boudouir dolls. Remember that dolls only representing humans are covered by these classification codes - dolls representing non-human figures, such as robots, devils or angels for example, are classified under heading codes 9503 00 41 or 9503 00 49, even if they have human characteristics. See "general toys" below for more details.
Parts and accessories covered by 9503 00 29 include:heads,bodies,limbs,eyes (other than those unmounted on the dolls and made of glass which are classified under heading code 7018),moving mechanisms and their parts,voice-producing mechanisms,wigs,dolls' clothing, shoes and hats,feeding bottles, rattles, handbags and any other articles of limited functionality and sized to be used in play scenarios alongside dolls
In classification terms, these are restricted to wheeled toys designed to be driven by children and powered or propelled by the children themselves using pedals, hand levers or motors. The key heading code for these items is 9503 10. This includes:Children's tricycles and similar items. Bear in mind however that bicycles for children are classified as bicycles, using heading code 8712.,Scooters.,Pedal- or hand-propelled wheeled toys in the form of animals.,Pedal cars or motorised cars, often in the form of miniature sports cars, jeeps or lorries.,Wheeled toys propelled by hand levers.,Other wheeled toys designed to be drawn or pushed and are large enough for children to ride in.
Dolls representing humans, their parts and accessories:Dolls are generally covered by two heading codes - 9503 00 21 for dolls themselves and 9503 00 29 for their parts and accessories. These heading codes cover dolls designed for use as toys by adults or children, but also include dolls used for decorative purposes, such as mascot dolls or boudouir dolls. Remember that dolls only representing humans are covered by these classification codes - dolls representing non-human figures, such as robots, devils or angels for example, are classified under heading codes 9503 00 41 or 9503 00 49, even if they have human characteristics. See "general toys" below for more details.
Parts and accessories covered by 9503 00 29 include:heads,bodies,limbs,eyes (other than those unmounted on the dolls and made of glass which are classified under heading code 7018),moving mechanisms and their parts,voice-producing mechanisms,wigs,dolls' clothing, shoes and hats,feeding bottles, rattles, handbags and any other articles of limited functionality and sized to be used in play scenarios alongside dolls
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