Gibson Guitar company was in trouble. Gibson, perceived to be a high-quality but expensive electric guitar company (with models from \( \$ 1,300 \) to \( \$ 4,400 \) ), was losing market share to rival Fender Guitar company. Fender had expensive models in its prestigious Stratocaster line but had recently established a budget line (models for the beginning guitar player) under the brand name Squire by Fender. The Squire models began at \( \$ 150 \) and ranged to \( \$ 350 \). Research showed that players who began with Squire often upgraded to Stratocasters as they gained experience and interest. Gibson now has the opportunity to purchase Epiphone Guitar company and use their line of low-to mid-price guitars ( \( \$ 300-\$ 700 \) ) to counter Fender's strategy for first-time guitar players. Your job as marketing executive for Gibson is to recommend a new-product strategy for Gibson. Consider which phases of the new-product development process would apply and suggest a course of action for Gibson. Be sure to explain your decision ( \( \mathbf{1 0} \) points).

To recommend a new-product strategy for Gibson Guitar Company, we need to consider the following phases of the new-product development process: 1. **Idea Generation**: This phase involves generating ideas for new products. Gibson should consider the following ideas: - **Competitive Analysis**: Analyze the strengths and weaknesses of Fender's Squire line and Epiphone's low-to-mid-price guitars. - **Market Research**: Conduct market research to understand the needs and preferences of first-time guitar players. - **Customer Feedback**: Gather feedback from current Gibson customers and potential new customers to identify areas for improvement. 2. **Idea Screening**: Evaluate the generated ideas based on feasibility, market potential, and alignment with Gibson's brand and values. This phase helps in selecting the most promising ideas for further development. 3. **Concept Development and Testing**: Develop detailed concepts for the new product based on the selected ideas. Test these concepts with potential customers to gather feedback and refine the product idea. 4. **Business Analysis**: Conduct a thorough analysis of the new product's potential market, competition, and profitability. This includes pricing, distribution channels, and marketing strategies. 5. **Product Development**: Once the new product concept is finalized, Gibson should focus on the development phase. This includes designing the product, creating prototypes, and conducting rigorous testing to ensure quality and functionality. 6. **Market Testing**: Before a full-scale launch, Gibson should conduct market testing to gauge customer response and make any necessary adjustments to the product. 7. **Commercialization**: Once the new product is ready, Gibson should develop a comprehensive marketing plan to launch the product successfully. This includes pricing, promotion, distribution, and sales strategies. 8. **Post-Launch Analysis**: After the product launch, Gibson should monitor its performance in the market, gather customer feedback, and make necessary improvements based on the data collected. Based on the information provided, Gibson should consider the following course of action: 1. **Develop a Budget Line**: Create a budget line of guitars under a new brand name, similar to Fender's Squire line. This will attract first-time guitar players and provide a stepping stone to higher-end Gibson models. 2. **Focus on Quality and Value**: Ensure that the budget line offers high-quality guitars at affordable prices to compete with Fender's Squire line. 3. **Marketing Strategy**: Develop a targeted marketing strategy to reach first-time guitar players, emphasizing the value and quality of Gibson guitars. 4. **Customer Support and Education**: Provide customer support and education to help new guitar players make informed decisions and encourage them to upgrade to higher-end Gibson models as they progress. 5. **Collaboration with Epiphone**: Leverage Epiphone's expertise in low-to-mid-price guitars to enhance Gibson's budget line offerings. By following these steps and focusing on the needs of first-time guitar players, Gibson can effectively counter Fender's strategy and regain market share in the entry-level guitar market.