New Product Development Issues - Term Paper Example

INTRODUCTION New product development is the process of designing, developing and bringing a new product in the market. New product development is a process that is generally referred to the original products or modified or improved versions of the existing product. New product allows an organisation to have the benefits of enticing the customers with a different taste and if the customers are not attracted with one of the variations or product then it gives the organisation a chance to attract them and satisfy their needs with the new product (Borden, 1964). New products are not only important from the organisational perspective but they are important from the customer point of view as well. It allows the organisation a platform to expand and grow its offerings and at the same time expand its markets (Haberberg, and Rieple, 2008). On the other hand, new product gives the customers a chance to fulfil their needs. Although, introduction of new a product is a risky thing as there are high chances of failures. Almost 90 percent of the new products introduced are failed in the American market. Every year different organisations in American market losses $20 billion to $30 billion because of failure of food products only (Kotler, and Keller, 2009). This shows how important it is for the management of the organisation to critically and carefully evaluate the market and product and then introduce it particularly if the new product is related to food industry (Lovelock, and Wirtz, 2011). There can be different reasons for the failure of a new product and some of the most important reasons would include: The organisations might have overestimated the market size The management might have overstated the expected sales of the product The product might have been introduced at a wrong time. The price of the product might be higher than the customer would like to pay Company might have not promoted the product in the right manner Positioning of the company might be incorrect (Anderson, 1982). The packaging of the product might not entice the customers to buy the product Too many existing competitors in the industry could also be one of the reasons for the failure of the product. At times the product is liked by only few segments in the market whereas the company might have expected larger segments to like the product (East, Vanhuele, & Wright, 2008). One of the examples is of Dane Foods limited that introduced Danish cookies in Pakistan. At the time when the product was introduced in Pakistan, there were already big names operating in the country and the market had a lot of potential so Dane Foods started offering the cookies in Pakistan and they positioned themselves as a popular cookies brand in Europe and United States. Considering the temperature of Pakistan, the company had to revise their packaging in order to make sure that the quality of the biscuits is not hurt. However the revised packaging cost more and the company charged 20% more prices than the price of other biscuits in the Pakistan market. But the higher prices of biscuits were not welcomed by people in Pakistan and they felt that they do not get the value for their money. Despite of several efforts from the management, the company failed to make an impact on the market. And finally in the early 2000s the company took off the market (Kotler, and Keller, 2009). The report analyses how feasible it is to introduce a new product in the food industry and the product that has been selected is a vegetable soup. The product would be different from the other soups that are already available in the market and the point of differentiation would be the ingredients used in the product that would improve their quality and taste. The name of the soup would be MAA Golden Age Product. This report analyses the product, ingredients, how the team has worked to prepare the product and a model that is used in new product development. Product MAA Golden Age Product would be a new and an improved soup in the market. The soup would be available at different retailers and wholesalers and people could purchase them. The company would be keeping the price relatively low in comparison to the soups that are available in the market in order to attract people. Besides the price, the customers would be attracted because of natural ingredients used in the product that would improve their diet as well. Ingredients used in the product The main ingredients that would be used in the product are Barley, lentil, carrot, water, salt and pepper, plum and lemon juice. All these ingredients are natural and therefore it would allow the company to offer a meal that is natural, healthy and tasty. Benefits of using these ingredients One of the major benefits of all these ingredients used in the soup is that all these ingredients are natural and therefore it offers better quality, more natural foods and is healthier for people of all ages. However because of all ingredients being natural vegetables, therefore it would be helpful for people of older ages and it would give them the kind of diet they are looking for. In addition to this, vegetables are beneficial for everyone and particularly those who are looking to lose weight and the soup would be an attractive meal for such people as well. Purpose of the product The purpose of this product is to offer people a new variety in the soup market. This soup would be made from natural and fresh vegetables therefore it would be healthy for everyone particularly people of old ages. Target Market The target market of the soup offered by the company would be the mainly old people aging in the 60s. However soup is something that is liked by people of all ages however as the product would be made from natural vegetables mainly therefore it would entice and attract people in the age of mid 60s more in comparison to younger people. In addition to this, people who are looking to lose weight would also be benefitted from MAA Golden Age Product as it would help them in losing weight fast. Key Customers of the product The most important customers of the company would be the people in the age of 60s and mid 60s and above as these people are looking for healthy and natural food and MAA Golden Age Product would meet their needs. Other key customer segment of the product would be people who are looking to lose their weight. As MAA Golden Age Product is made from natural and fresh vegetables therefore it would help them in losing weight at a better pace as they can take this soup in place of proper meal. In addition to this, soup is liked by people of all ages and therefore MAA Golden Age Product could attract other people as well. Competitors MAA Golden Age Product would be facing competition from different restaurants and hotels offering soup. In addition to this, the other soup available in the market would also be the competing products. Texture The soup would be in liquid form and it would be packaged in a can to make sure that the quality of the soup is not affected. Size and Shape Each can would have 500 ml of soup and it would be packaged in such a way that its quality would not be hurt within one week. The shape of the can would be easy for everyone so that it can be grabbed easily. Cost and Price of the product Cost is one of the important factors because of which many products have failed. Therefore keeping the history in mind, the management would keep the price of the product within the reach of the customers as well as the product price would be determined keeping the price offered by competing restaurants as well. Hygiene And Safety One of the main focuses of the company is to offer high quality product to its clients and therefore the management would be keeping an eye on the hygiene and safety of the product. The product would be prepared keeping in mind all the precautionary measures and in a safe manner. Packaging The packaging of the MAA Golden Age Product would be easy to handle and it would be packed in a can such that the quality of the soup is not distorted for days. The packaging would not only describe the main ingredients that are being used in manufacturing of soup, but it would also display their ratio and benefits of having MAA Golden Age Product. In addition to this, the packaging would be in a shape so that it is easy to handle and people can easily grab the can of the product. Storage and Shelf Life The management of the company has conducted a research in microbiological laboratory and it has been found that the quality and taste of the product would not be changed in a week therefore the storage and shelf life of the soup would be one week. Manufacturer The team would be manufacturing the product in-house. The details of composition of different ingredients used have been mentioned in the final product specification section. TEAMWORKING and YOUR ROLE The role assigned in the team to me was of a formulator. Therefore being the formula it was my duty to found out ingredients that would not only improve the quality of the soup but would make the healthy and delicious. The other members had the role of leader, quality manager, technologist and commercial manager and each member of the team had their own roles and duties. The main responsibility of the leader is to manage all the process and help every team member in their duties. The leader also has been the main motivator to motivate every team member to accomplish their tasks. The quality manager has been assigned the task of making sure that the quality of the products is good and every product has the same taste so that the expectations of the customers are met. Also quality manager would be testing the quality of the ingredients used in manufacturing the soup. Technologist would be making use of technology to improve the productivity of the product. In order to lower the cost and make the most of technology, the technologist would be using technology to help other members as well. Commercial manager would be responsible for introducing the product in the market and managing the marketing strategies and marketing performance of the company. As I have been assigned the role of a formulator and therefore my responsibilities include to find the ingredients and find the composition of these ingredients to be used while preparing the soup and how much time the soup should be cooked. EVIDENCE OF TEAM MEETINGS Team Members Present Leader Present Formulator Present Quality Manager Present Technologist Present Commercial Manager Present The following discussions took place in different meetings that our group has conducted ACTION First meeting Dated: 12th March 2012 Minutes of meeting: 60 minutes Our team discussed the whole theme of the report and then discussed how to go about the report. Our team gave the responsibility to everyone to come up with different ideas for the report during this meeting Second meeting Dated: 19th March 2012 Minutes of meeting: 75 minutes Every team member came up with different ideas and then we discussed each idea and then we evaluated the pros and cons of the ideas. Then the team shortlisted the ideas then two ideas were selected after short listing Third meeting Dated: 22th March 2012 Minutes of meeting: 60 minutes Our team selected the idea and then started working on the idea. Also during this stage, the jobs were assigned to different group members Forth meeting Dated: 26th March 2012 Minutes of meeting: 30 minutes As I was assigned the job of a formulator therefore I started working on the ingredients that would be required and their composition. Fifth meeting Dated: 2nd April 2012 Minutes of meeting: 120 minutes The feasibility of the product was prepared and the product was approved. Also the team worked on the marketing mix and objectives of the company Sixth meeting Dated: 5nd April 2012 Minutes of meeting: 120 minutes The team discussed the promotional and marketing strategies and different aspects of the product like the target market, positioning of the product, promotional and advertising strategies, branding, packaging, etc were discussed Next meeting is scheduled on 10th April 2012 Expected Minutes of meeting: 60 minutes In the next meeting, the team has decided how to commercialise the product and how to launch the product in the market. DEVELOPMENT OF THE PRODUCT MAA Golden Age Product would be cooked with the ingredients that have been mentioned. The product has been tested and the quality of the product is high as well as its taste is delicious. In order to manufacture the product, fresh ingredients would be used and the team would be keeping an eye on the quality of the ingredients used as the team would be focusing on offering high quality meal to the clients. The composition of the ingredients used has been mentioned in the section below. All these ingredients would be used and put in while the soup is being cooked and the time required to prepare the soup is approximately 2 hours. FINAL PRODUCT SPECIFICATION – agreed by the Group All the ingredients used in developing the product would be natural vegetables and the company would try to gain competitive advantage because of its natural ingredients. As mentioned earlier the ingredients used in the product would be Barley, lentil, carrot, water, salt and pepper, plum and lemon juice. The quantity of these ingredients in one bottle of can would be as follows: Ingredients Quantity Barley 3 grams Lentil 5 grams Carrot 30 grams Water 100 ml Salt and pepper 1 table spoon each Plum 25 grams Lemon juice 150 ml The above table represent the amount of ingredients that would be used in a single can. The quantity of a single can would be 500 ml of soup. AN INFORMED MODEL OF THE NPD PROCESS New product development should be managed and handled correctly as there are high chances of the failure of a new product. Philip Kotler (2009) in his book marketing management has presented a model that has 8 major steps of new product development. These steps have been shown in the following image: The above image shows the eight major steps that are in the new product development. This section of the report would now analyse the idea of introducing a new soup, MAA Golden Age Product in the market of United Kingdom using the above eight steps. Idea Generation: Idea generation is the first step in the new product development stage and during this stage the team systematically searches for different ideas to launch and introduce a new product in the market. Internal as well as external sources have been used to gather the idea by the team. Similar process has been conducted by our team as initially every team member contributed and ideas from internal as well as external sources. Different ideas were collected like introducing a new flavoured milk and protein drink, introducing a vegetable soup, introducing a new kind of cold coffee that had a chocolate flavour as well as coffee flavour and many others. Idea Screening The second major step as described in the model is about idea screening and during this stage, the company evaluates and shortlists different ideas that have been collected in the first stage (Zenker, & Martin, 2011). The positives and negatives of each of the collected ideas are evaluated and then the poor ideas are dropped by the management and profitable and good ideas are used and selected. Two ideas were shortlisted during the idea screening stage by the group and the shortlisted ideas were new flavoured milk and protein drink and introducing a vegetable soup and these product ideas were then taken to the third step to develop the product concept and test the product idea. Concept Development And Testing The third stage is of concept development and concept testing. During this stage the management develops the concept and then tests the product concept. Product concept is where the product is described and the detailed version of the product is defined and then some people from the target market or target consumer are selected and the product is tested on these people to analyse how much the product is appealing and about the reaction of the target market. The group analysed the two ideas that were screened during the second stage and then these shortlisted product ideas were tested on the some people from the target market. The introduction of a new flavoured milk and protein drink got mixed response from the audience and they believed that there were already number of flavoured milk and protein juices available in the market of high quality whereas the reaction of the other product, vegetable soup was more welcomed and some of the people in the target market were excited about this new product. Considering the response of the target market, the team decided that they would be interested in going for the vegetable soup rather than introducing a flavoured milk and protein drink. Market Strategy and Development During the fourth stage of the new product development process, the team formulated and developed marketing and promotional strategies to introduce and market the product. Strategies were devised regarding the marketing mix; product, price, placement, and promote the product (Smith, and Reinertsen, 1998). The marketing strategies, long term as well as short term objectives, marketing budget, distribution strategies were formulated during this stage for the MAA Golden Age Product. Also the team analysed how they would try to differentiate the product in the market from competing products and how they would add value to the product. Business Analysis The other stage in the new product development is of business analysis. During this stage, the management of the company that is planning to introduce a new product in the market evaluates the feasibility and profitability of introducing a new product and evaluates whether introducing a new product would not only meet the needs of the customers but it would help the company in improving its profitability and giving the shareholders or investors the return they are looking for. During this stage, all the costs are projected and the sales of the product are forecasted. The cost to benefit ratio of the product is analysed and then decision is taken whether the product should be introduced in the market or not. The team analyse the costs that are associated with introducing the new product, MAA Golden Age Product. Also the sales forecasting of the product has been done by the team in order to analyse the demand and revenue of the product. After analysing the revenue and cost of the product, it has been analysed that the product would be profitable for the company and the company would be able to make profits from the second year and this profit would increase with the passage of time and therefore the product, MAA Golden Age Product has passed the business analysis stage and it would not go to the product development stage. Product Development The product development stage is the one as the product has passed the business analysis stage and it looks profitable to start the product, then during this stage the company practically prepares the product idea into a tangible product that could be shown to the target market (Cooper, 1998). During this stage, it is important for the management of the company to make sure that they produce different variations of the product and these variations are similar and the features or characteristics of one product is similar to all the other products produced. The team produced the product and in order to test the difference in the product, number of products was produced. The quality of the products was the same. Afterwards, our team conducted research in the microbiological laboratory and it was identified that the quality of the soup would not be hurt within one week. Test Marketing The next stage in the new product development is of test marketing. During the test marketing stage, the company tests the product and the marketing strategies before they are actually introduced in the market. The company evaluates the product with the target market and it evaluates the marketing campaign including targeting, positioning, pricing, placement, distribution, promotion and advertising, branding and packaging. As the company evaluates it analyses where it could further improve the product in order to have a better response from the target market. Products that are innovative and require heavy investments need more time and investment during this stage however products that are line extension of already existing products might not require such high cost and time. Once the product was ready, the team evaluated the product and analysed the marketing strategies of the company and then started the plan to commercialise the product. This stage is critical as it defines the management whether they should introduce the product or not. Commercialisation The last stage in the new product development is of commercialisation and in this stage; the management of company introduces the product in the market if the test marketing stage of the product is passed (Ulrich, and Eppinger, 2004). It is stage that would require the highest advertising and marketing costs and therefore it is important for the company to evaluate their marketing budget and money that would be spent on the marketing activities. The company needs to make sure that they brand the product properly so that the target market is made aware in the right way and could be enticed and tempted to buy the product. ORGANISATION and APPEARANCE OF THE PORTFOLIO The company would be working to make sure that the product is positioned in the right way because positioning of the company could hurt the demand of the product and how consumer behaves once the product is in the market. In addition to this, the company would be branding and promoting different benefits of the ingredients that have been used in manufacturing of product and therefore customers would be attracted on these bases as well. Also the product, soup itself is already present in the market and MAA Golden Age Product is another variation and therefore people who like soup would be tempted to taste another flavour of the product. CONCLUSION MAA Golden Age Product is the new product that has been developed by the team and the marketing and promotional strategies have been defined. In addition to this, the analysis says that the product would be very attractive for people in the mid 60s as well as people who are looking for natural and fresh meal as the ingredients used in preparing MAA Golden Age Product are all fresh and natural vegetables. Therefore after analysing the opportunities in the market and the response of some of the targeted people, it has been found that the product would do well once it has been introduced but it is important for the company to manage the overall new product development process in the right way. Reference list Anderson, P 1982, ‘Marketing, Strategic Planning and the Theory of the Firm’, The Journal of Marketing, vol. 46, no. 2, pp. 15- 26. Borden, N 1964, The concept of marketing mix, Journal of Advertising Research. Available at [Accessed 29 March 2012] Cooper, R 1998, ‘Predevelopment activities determine new product success’, Industrial Marketing Management,vol.17, no. 2, pp. 237-248 East, R, Vanhuele, M, & Wright, M 2008, Consumer Behaviour: Application in Marketing, The Cromwell Press Ltd, Trowbridge, Wiltshire, Great Britain. Haberberg, A, and Rieple, A 2008, Strategic Management: Theory and application, Oxford University Press: New York. 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