IGCSE, A Level Business Student Forum

Desto is an electronics company manufacturing a wide range of products. The company operates in a highly competitive and fast changing market. The management of Desto believe that the company is ‘market orientated’.

08 Desto wants to spend more on developing new products. In order to do this it will have to spend less on market research. Do you think Deco should do this? Justify your answer. [12]

Please read the answer of the previous student & if the answer seems well developed don't use the same KN in your answer, try to give new one.

If Desto spend more on developing new products it can help the business stay competitive in a fast changing electornics market. For example, Desto could desing improved smartphones and laptops. This can attract customers who want the latest techonolgy. It may allow Desto to match or beat rival products, helping them avoid losing market share. Developing new products can also allow Desto to charge higher prices, increasing their revenue.

On the other hand if Desto has to spend less on market research, it can lead to poor decision making. For example with less research, Desto may launch a product without knowing whether customers actually want it. This increases risk of producing items that may not sell, wasting money on development and manufacturing. Desto also may miss changes in customer trends, which is risky in the electronic market as preferences can change quickly. Spending less on research may also reduce Desto's understanding of their competitors, making it harder to respond to their actions.

Overall, Desto should be cautious about reducing market research. Although developing new products is important, cutting research can lead to many mistakes and products that fail to meet customer demands. Since Desto is in a fast changing market, understanding customer preferences is very important. Desto should take a more balanced approach, investing in product development while maintaining research.

Desto operates in a highly competitive and fast-changing electronics market and claims to be market-orientated which means that it aims to identify and meet customer needs better than competitors.
[KN]In a fast-changing electronics market, products can quickly become outdated.
[APP]Therefore Spending more on developing new products may help Desto keep up with technological change and competitors’ innovations.
[AN]New and improved products can attract customers, increase sales, and give Desto a competitive advantage. Also if Desto already has strong existing market knowledge, it may be able to rely on past research and customer feedback. In this case, reallocating some funds from market research to product development could lead to faster innovation without significantly increasing risk.
[KN]However, cutting market research spending could undermine Desto’s claim of being market-orientated.
[APP]Without sufficient research, Desto risks developing products that customers do not want or that are incorrectly priced, leading to wasted resources and failed product launches.
[AN]Hence in a highly competitive market, competitors may use market research to better understand consumers and respond more effectively. Reducing research spending could therefore weaken Desto’s ability to adapt and reduce its long-term competitiveness.
[EVALUATION]Overall, while investing more in new product development is important in the electronics industry, Desto should not significantly reduce its spending on market research. As a market-orientated company, research is essential to ensure that new products meet customer needs. A better approach would be to improve the efficiency of market research or use targeted, lower-cost research methods while still increasing development spending.