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Creating new product development strategy for beer

Chapter 1


Skopje Brewery, as a main player on domestic beer market with market share of over 75%, for many years was trying to create back up for its "cash cow" product, SKOPSKO beer. Following all researches done on the domestic market, the marketing team create long term strategy for entering in the upper, premium segments, introducing the beer "STAR LISEC", high quality domestic beer with premium price, and several years after, Amstel and Heineken, worldwide well known beer brands. The strategy was successfully completed, the premium segment was completely covered, and the customer's perception for Skopje Brewery's products was build on high level as a high quality products, but with premium price.

But the market forces were not moving in the same way with Skopje Brewery's strategy. Bad economical situation, increasing unemployment, instability, are all factors that influence in decreasing the purchasing power of the customers, that radically change the structure of the market segments. The economy segment becomes dominant on the market, and the quality and premium image that offer Skopje Brewery become irrelevant.

Although total domestic market was increasing, Skopje Brewery's market share starts to decrease. The main reason is the decrease of Skopsko Beer in packaging of 0,5 litters, due to the launching of competitors economy beers with lower price than Skopje Brewery's beers.

For that reasons, Skopje Brewery was planning to launch a new beer brand positioned at the economy segment in FYROM.

A whole new product and branding strategy should ensure the long-term profitable growth of the company. Whole branding implementation must deliver better financial performance, along with an increased Return on investment (ROI). Also by exploring brand equity, the assets of the brand should be identified as perceptual, attitudinal and behavioural. As these assets grow, so does the financial value of the brand.

The project will evaluate the new product and branding strategy, recently conducted by marketing team of Skopje Brewery in order to launch new beer brand , discuss the results and propose correction actions.

The literature part will be based on proposed strategies (Merle Crawford, New Product Management, Robert G Cooper, Wining at New Product Management,) and corporate strategies and procedures used by The Coca Cola Company and Heineken.

1.2. Aims and objectives

The aim and objective of the dissertation is to analyse the approaches and methodology of New Product Development. In order to accomplish this purpose, relevant literature is analysed and compared with actually conducted process. NPD process is difficult to manage, but at the same time so vital for the company's growth and prosperity. Cooper defines the product development process as a disciplined and a set of tasks and steps which a company convert ideas in to products or services. Many essential elements for a company's long-term survival are related to success in new product development. New product is the most important factor for the companies, because customer needs change rapidly. Competition increases faster between the companies at home and abroad. Competitive pressures forces us to bring new products to market faster, offer them at reduced costs and deliver the products with levels of quality.

The development of new products in a company not only opens new markets and attracts new customers, but also helps the company to enlarge its organization capabilities and to provide higher quality on the final products. This is difficult work to manage and many companies are seeing products development as a core capability of the business. New product development shows necessary stages and activities from idea to launch of new products and if there is no systematic approach to these phases in the company, the failure will be inevitable. The failure in the new product development for a company means additional costs, lost time and customers or markets which are the most essential competence tools for the company in a competitive world.

1.3. Methodology

This dissertation will mainly include qualitative research methods, from secondary sources of information such as academic journals, books, papers, which will help identify areas of best practices. The primary source of information will be collected through interviewing the members of the project team, marketing and sales managers, manufacturing and production managers and other employers who were involved in the process of NPD.

1.4. Expected Outcomes

The outcomes from the primary research will be used to compare with the literature presented and to find out how does the New Product Development process contribute in successful product.

Chapter 2

2. Literature review

The field of new product development is widely researched in a variety of organizations such as universities, consulting firms and manufacturing companies and is located in a wide range of disciplines, including technology management, business policy, marketing and engineering. Much of that research has specifically focused on discovering what organizational, strategic and process-related factors characterize successful new product developments. There is therefore, a wealth of knowledge regarding “successful” NPD, which has been the subject of several literature reviews. A parallel focus of research has been to develop conceptual models of new product development, which might be used by managers to conduct and organize their new product endeavors.

2.1. Types of NPD processes

Saren`s (1984) taxonomy, where he categorized new product development models into five types, is a useful basis upon which to examine the multifactor representation of the new product development process:

  1. Departmental-stage models,
  2. Activity-stage models,
  3. Decision-stage models,
  4. Conversion process models,
  5. Response models,

The “Departmental stage” models view the new product development process in terms of the departments or functions that hold responsibility for various tasks carried out. For example, in an industrial context, R&D department generate the ideas, the detailed design is then carried out by the design department, and engineering will then “make” the prototype after which production will become involved to work on the manufacturing problems. Finally, marketing department will become involved to plan and carry out the launch. It is now widely accepted that the departmental-stage model is deficient in several aspects: First, there is the likelihood that the prototype differs from the accepted design, the accepted design differs from ideas from R&D, and the prototype requires modification for manufacturing. Second, it is unnecessarily time consuming. Third, it does nothing to foster ownership of, or strategic responsibility for new products, and, finally, there is nothing in the way of market feedback, since marketing is presented with the product to market (Cooper, 1984)

Activity-stage models improve on departmental-stage models in that they focus on actual activities carried out, including various iteration of market testing.

Decision-stage models represent NPD process as a series of evaluation points, where the decision to carry on or abandon the projects is made. This approach underline feedback loops, which, although not impossible within the framework of activity-stage models, are not highlighted either. And yet, such feedback loops are critical, since the NPD process is one of continual refinement, until an ideal technical solution is produced.

Conversion process view NPD as a “black box” in an attempt to eschew the imposed rationality of departmental, activity and decision-based models.The alternative conversion process is a collection of unspecified tasks which may or may not be carried out, depending on the nature of the innovation (Cooper, 1882).Essentially, a series of inputs is envisaged, which, which may be composed of information on customer needs, design drawing or an alternative manufacturing procedure. Over the time, depending on a multiplicity of factors, including human, organization and resource-related, this input is converted into an output. Such a holistic view underlines the importance of information in the process, but has little else to commend it, given its lack of detail.

Response models take change at the beginning of the NPD as their focus, based on the work of Becker and Whistler (1967) who use the framework derived from behavioural psychologists, typified by the perception-search-evaluation-response iteration. These models focus on the individual's or organization's response to change such as a new product idea, or R&D project proposals in terms of acceptance or rejection of the idea or project. A number of factors influencing the decision to accept or reject the proposal are helpful to the extent that they provide a new angle on what might otherwise be called the screening stage of the NPD process.

2.2. The Stage gate process:

In the early ‘90's the stage-gate process became the standard framework or model for product development. The process defined the information flow, and the work flow for the identified elements of product development. Stage-gate implementation included, at a minimum, cross-functional teaming, concurrent engineering, and periodic business reviews. The Product Development and Management Association (PDMA)'' research on best practices in NPD shows that nearly 60% of firms in US were using a stage-gate type of process.

While the number of stages may range from four to seven, Cooper's five stage process provides a good example (Cooper 1991).


Gate 1: Initial screen

Stage 1: Preliminary assessment

Gate 2: Second screen

Stage 2: Detailed definition

Gate 3: Business plan review

Stage 3: Development

Gate 4: Post development review

Stage 4: Testing and validation

Gate 5: Pre-commercialization business analysis

Stage 5: Full production and market launch

The process begins with an idea for new product. Sometimes the new product idea is technology driven, derived from a new invention or process, sometimes it is customer driven, based on trends in the market place. It may be pure invention, may have been inspired by a competitive product, or may have been suggested by a lead user. Generally, there is a product champion who develops answers to questions such as these in preparation for Gate 1:

What will attract customers to the new product?

How will it improve upon competitive products?

How does the idea fit with company strategy?

Is the market a growing one? How large is the business opportunity?

How feasible is the product development?

Gate 1: Initial screen

When ready, the product champion makes his presentation to the “gate keepers”, who should include seasoned senior management with experience in the area of product development, business analysis, manufacturing and marketing. The possible outcomes of this gate-and the other gates as well-are Go, Kill, Hold, or Recycle. The gate keepers may also make suggestions for the refinement of the idea and will point out key issues that will be examined closely at the next gate.

Stage 1: Preliminary assessment

During this stage, the product champion, now supported by a small team, develops the product idea and its business possibilities in more detail:

Who are the customers?

What are their needs and problems?

What competitive products presently address these needs?

How will the new product improve upon the present ones?

What are the product's features, specifications, and appearance?

How might the product be implemented?

In the preparing for the second gate, the team should make a concerted effort to get to know its customers. It is a good time to carry out on site customer interviews. These interviews will give the team much more information, both tangible and intangible, about the form the product should take. After the interviews have been completed, the team will distill the material and identify key product requirements. With the completion of the list of key product requirements, the team can finally begin to formulate and compare various implementations of the product. This should give enough understanding of the required design work to complete the remaining deliverables at Gate 2.

Gate 2: Second screen

The gate keepers will now be presented with more detailed information, some of it provided by representatives from marketing, manufacturing and sales. If the company finds itself with many new ideas competing for consideration, the gate keepers will not only judge this particular product idea on its own merits, but will compare it to other proposals. They may use weighted scoring of the deliverables to facilitate comparisons. Receiving a Go at the second gate will move the product into a higher level of company commitment, where greater investments will be made. Because the gate keepers are senior management, they can immediately dedicate the necessary funds and resources as work begins on the next stage.

Stage 2: Detailed definition

The major activity of this stage is to define the product more thoroughly. The team will create a product specification covering all the key features and stating the required performance level. Deliverables of this stage include: Market research to improve the estimate of market size, Analysis of the competition and their products, Business plan covering development costs, projected costs of sales, and return on investment and manufacturing feasibility review.

Gate 3: Decision on the Business Case

At gate 3 the project is entering in the development stage. This gate involves a review of each of the activities in Stage 2 and checking that the activities were undertaken, the quality of execution was sound, and the results were positive. At this gate the full project team is appointed, headed by a leader with authority.

Stage 3: Development

This is the stage where development plan is executed and implemented, and as a final result there is a lab-tested prototype of the product. On the other side, detailed test plans, market launch plans, and production or operations plans are developed. An update financial analysis is prepared, while regulatory, legal and patent issues are resolved.

Gate 4: Postdevelopment Review

Post development review is following up the progress of the product and project. In this gate we receive confirmation that all development steps are undertaken, completed, and that the product has the original definitions stated in previous stages.

Stage 4: Testing and Validation

At this stage several tests are under taken in order to check the product itself, the production process, customer acceptance, and the economics of the project.

Gate 5: Precommercialization Business Analysis

This is the final gate prior to fully commercialization of the product. It is the final point at which the project can be killed. Criteria for passing the gate focus largely on expected return and appropriateness of the launch and operations start up plans.

Stage 5: Full Production and Market Launch

The final stage that involve market launch plan and production (Cooper, 1986).

The process divided development in to phases. There are review points at the end of each phase. If the certain prerequisites had been met then the next phase could be began. The method is more than a measurement and control methodology designed to ensure that the proceedings as it should and every activity of the phase was completed on time. The system brought discipline, reduces the technical risks and ensured the completion tasks. The stage gate process involves activities from many different departments in the cooperation. Any department does not own stages. Instead of it all departments are on the field of the process together and are active players on the project team.

2.3. General NPD model

2.3.1. Product Innovation charter

The Product innovation charter is the recent spin-off of the strategic planning process. From the strategic planing process have come approved directions for the established functions – marketing plans, production schedules, financing requirements and budget for specific R&D projects. The PIC is designed to guide the organizations cross functional subset of activities charged with developing new products, and to give clear direction to the diverse personnel involved in new products. The Product Innovation Charter, which larger and better managed medium and small firms use, contains the following sections:

  • The target business arenas that Product innovation is to take the firm into or keep it in.
  • The goals or objectives of product innovation activities,
  • The program of activities chosen to achieve the goals.

2.3.2. Concept generation

Finding the right people, training them and creating an environment where these people will work are some of the tasks that management has to undertake In order to prepare the organization for concept generation. In order to generate concepts for new products, two methods exist:

  • Acquiring ready made concept,
  • Tailor made concept.

The sources in both the ways of concept generation are technology, end users, team, other insiders and other outsiders (Crawford and Di Benedetoo, 2000). The most common approach in concept development is the Problem based one. The techniques which are commonly use in order a problem to be identifies are: Inputs from technical and marketing department, search of internal records from sales calls, product complaints, customers satisfaction, problem analysis and scenario analysis. In this method group creativity, brainstorming and disciplines panel techniques are also used.

Except from the problem-based method, other methods called analytical attribute approaches are used which capitalize on the concept that any future change in a product must involve one or more of its current attributes (Crawford and Di Benedeto, 2000). These market research techniques are used to analyze customer perceptions and tradeoffs and to generate promising product concepts.

Perceptual gap analysis is a quantitative technique with great power under certain circumstances. Its maps of the market are used to determine how various products are perceived by how they are positioned on the market map. On any map the items plotted tend to cluster here and there, with open space between them. These open spaces are gaps indicated an empty space for new product. Another quantitative technique is the trade-off (conjoint) analysis. It refers to the analysis of the process by which customers compare and evaluate brands based on their attributes or features. It is based on the idea that if somehow customer's preferences could get for each attribute separately, it could combine the best level of each attribute into an overall favorite product.

Except of quantitative techniques, exist qualitative techniques, which are: Dimensional analysis, which uses any and all features, not just measurements of dimensions. The task involves listing of all features of a product type. The mere listing of every such feature triggers product concept creativity because we instinctively think about how that feature could be changes. Relation ship analysis is carried out via the use of two-dimensional matrix and the morphological matrix. Both of them require respondent to find relationships among dimensions to generate new product concept.

2.3.3. Concept/Project evaluation

The next step is concept evaluation. It consists of concept testing which mean that new product development team has to identify if the concept is in conjunction with customer needs. Perceptual mapping and conjoint analysis are two pre-screening methods that are used in order to analyze the market needs and preferences, to segment the market according to benefits sought and to test how well the concept is accepted by the market (Crawford and Di Benedeto, 2000).

The second step, after concept testing, is full screening, which is the last low-risk evaluation. Its task is to help in deciding weather technical resources should be devoted to the project, to enforce cross-functional communication and to help manage the process. Usually used models are Profile sheet and Analytical Hierarchy Process (Crawford and Di Benedeto, 2000). If the concept scores well by whatever criteria each firm uses, it is sent into technical development.

Analyzing the financial outcomes is an issue too. Applying the net present value calculations using discounted cash flow could make financial analysis. A-T-A-R model could be used for constructing a sales or profit forecast.

2.3.4. Product protocol

The Product protocol is a tool that sets the standards about the required output or deliverables of a specific new product program among the functions. It communicates all the essentials to all players and gives to all players' targets to shoot for. It helps to shortening the process or cycle time and requirements in words the results of which can usually be measured. It makes the development process manageable. A protocol includes information about the target market, product positioning, product attributes, competitive comparisons and augmentation dimensions, marketing requirements and features such as timing, financials, regulatory requirements, and corporate strategy requirements.

2.3.5. Development

The next phase is development. In order this phases to meet its goals it is very important NPD project teams to operate well and to be well trained. There are two types of such teams. One is a higher level, multifunctional group, whose task is to manage the project teams. The other emerging team is a group of experienced new product people whose task is to assist project teams in developing appropriate process to follow.

The first process of this phase is the design process. Design blends form and function, quality and style art and engineering. A good design can play a big role in determining the degree of acceptance for a new product by the customers. Also the critical factor in the phase of development is the time that the product needs in order to reach the market. There are several tools that shortened the time needed the product to enter the market, for example readiness of the resources, avoiding over-engineering, exploring marketing efforts and computers usage.

When prototype comes out from technical development, in most of cases, it is sent to marketplace for a confirmatory concept test. This test is conducting until it is clear that the product fulfill all customers' needs. In this stage there are three methods:

  • Monadic test, where the respondents test single product for a period of time,
  • Paired comparison, where use of the test product is interspersed with that of a competitive product,
  • Triangular approach, in which the new product and two others are tested (Crawford and Di Benedetoo, 2000).

2.3.6. Launch

Within already prepared marketing plan, this is the stage where the team define the strategic action decisions defining to whom the new product will be sold and how, and tactical decisions defining how the strategic action decisions will be implemented. But in front of full commercialization of the new product, the company should conduct market testing. There are three types of market testing:

  • Pseudo sales, which asks potential buyers to do something such as say they would buy if the product were actually available,
  • Controlled sale, where the buyer must make a purchase,
  • Full scale where the firm decided to fully market the product in a limited basis first (Crawford and Di Benedetoo, 2000)

2.4. NPD procedures at Heineken NV

In order to guide new products towards a successful introduction, Heineken uses certain procedures, which describes the project approach of NPIs. NPI stands for New Product Introduction. NPI comprises the whole process surrounding a change in the product portfolio of a Marketing Sales Unit. The NPI coordination meeting determines whether a change in the product portfolio is an NPI and whether a dedicated project manager will be appointed. NPIs include different types of changes:

§ Promotional or permanent.

§ Product and/or packaging change.

The project team is responsible for execution of an NPI. The project team can give shape to the project activities, provided it takes into account the guidelines laid down in the NPI Procedure. There is an NPI Database in order to help and guide the project team in their activities. The Database consists of:

§ NPI General Database: Database in which all the relevant information relating to NPIs is available, e.g. the electronic version of the NPI procedure and related procedures, all standard NPI documents (templates), minutes of NPI meetings, etc. The NPI coordinator manages the NPI database.

§ NPI Project Database: A Database that is created for each project, which is used by the project team for communication and storing data related to a specific NPI project. The NPI project manager manages the NPI Project Database.

§ Product Portfolio Database: Consist of a list of all the packaging produced by Heineken. The NPI coordinator manages this database. The NPI project managers add new products.

The NPI coordinator and the NPI Management group manage the portfolio of outstanding NPI projects of a Marketing Sales Unit. The project manager keeps the NPI coordinator and the NPI Management group informed about the status of outstanding projects.

2.5. NPI Process

The NPI process comprises the phases described below.

2.5.1. Initiation phase

The Champion has an idea for a new product. If desired, the idea is discussed/reviewed in the NPI Knowledge Committee (general evaluation of technical possibilities/consequences for production). Next, the idea is submitted to the Market Supply Manager. A general feasibility study is carried out and submitted to the NPI Coordination meeting. Sometimes the meeting appoints a project manager already in this phase. The project manager records the result of the feasibility study in a Feasibility form, which is sent to the production location for approval. After receiving the approval, the Marketing Sales Unit can complete the business case. As a result out of this phase we have a Marketing introduction plan, which includes the business case of the new product, approved by the Management team of the Marketing Sales Unit. If approval is not given, the project either stops or need to be worked out in more detail.

2.5.2. Definition phase

After the approval of the Marketing Introduction Plan drawn up by the Champion, the Champion has an intake interview with his Market Supply Manager, the NPI coordinator and Project manager. Next, an intake form is drawn up that will be discussed in the NPI coordination meeting, where the definite appointment of a project manager will take place. The project manager informs the relevant brewery and the relevant Market Supply Manager and organizes kick off meeting with the project team. Next, the project manager draws up a Project Proposal in consultation with the project team, which has to be approved by Marketing Sales Unit. The Project proposal should make the intended result of the project and the manner in which this will be achieved clear to all parties involved. As a result in this phase, the project team has been established, the parties involved, including the relevant brewery, have been informed by the project manager, and a Project proposal, which includes the Activity plan, approved by Marketing Sales Unit has been completed.

2.5.3. Implementation phase

The project manager records all the information on the implementation of an NPI in a Detailed Design that has to be approved by Marketing Sales Unit. If desired, the project manager organizes a kick-off meeting at the production location. The implementation phase ends after the first production. Financial commitments towards external parties can only be entered into after Detailed Design has been approved. If required/desired these commitments can be entered into at an earlier stage after the written consent of the Champion. In all cases, financial commitments should be authorized by means of the investment approval procedure. As a result in this phase, all the agreements (e.g. on price, quality and timing) are laid down in the Detailed Design approved by Marketing Sales Unit. The first production could take place.

2.5.4. Evaluation phase

The project manager draws up the Evaluation report on the basis of the evaluation forms completed by the Marketing Sales Unit and the project team. Points that can be improved are registered and the necessary actions are taken leading to the transfer to regular production. The project manager adds the NPI to the Product Portfolio Database. The final result is transferring the NPI to the regular production.

2.5.5. Roles

Principal - the owner of the NPI who takes the decisions on the contents and result of the project. For many NPIs this is the Management Team of the Marketing Sales Unit that gave the assignment.

Champion - delegated principal of the NPI who can participate in the NPI project team for parts of the project. Together with the project manager the champion is the link with the principal.

Project manager - the project manager is appointed during the NPI coordination meeting and is responsible for the project result. The project manager is the contact for all questions related to the project and reports its status and issues to the NPI coordinator.

Project team - multifunctional group that has been assigned to realize the NPI

Market supply manager - contact within the company for the champion to initiate an NPI. In the event of small NPI projects, the Market supply manager can act as project manager.

NPI coordinator - Manager of the NPI portfolio and responsible for managing the resources within the company that are destined for NPI projects.

2.6. New Product development process at The Coca Cola Company

The Coca-Cola system is looking to accelerate profitable volume growth through the development and introduction of new products. New products represents an opportunity for the company to stimulate profitable growth in the Non Alcoholic ready to Drink category through the extension of the current beverage offerings of Coca Cola System products. For this to happen a culture of co-operation and innovation must pervade the entire system. Pivotal to this is the need for the company to adopt a process that encourages and harnesses the creative and innovative talent within each organization.

The following is a set of guidelines for the development and evaluation of new products. The objective of this process is to outline a consistent approach for the development and evaluation of new product initiatives. The process should:

§ Lead to clear assignment of responsibility for new product development, including delegation of specific tasks to project leaders and focused NPD teams,

§ Facilitate communication at all levels within the system for each NPD project, including learning and best practices,

§ Aid with the definition of, and agreement on, the criteria for the investment in a NPD and its post-launch evaluation,

§ Recognize the risk involved in NPD (including accountability and ownership for all associated capital expenditure decisions) and aim at an equitable sharing of risk and rewards within the system.

As most important, the outcome of this procedure should result in faster, more efficient and effective product launches.

2.7. Definition of a New Product

For the purpose of this procedure, “New Products” are:

§ New brand introductions and flavor extensions (own or toll-packed),

§ Extensions of existing brands,

§ Product initiatives launched previously under these guidelines requiring significant additional capital investment or new package extensions having significant economic changes, therefore necessitating revisions to the agreed sharing of risks and rewards with in the system.

2.8. Guide to Stages

The five-stage process is a simplified model that establishes certain criteria recommended for new product initiatives to proceed to the next stage. This process is not designed to specify an exhaustive list of criteria, only core requirements. The five stages or steps covered below are:

  1. Idea Generation,
  2. Initial Investment,
  3. Business Case,
  4. Launch,
  5. Review

2.8.1. Idea Generation

Idea generation is the first stage of the process, where ideas for potential new product initiatives are identified based on a variety of potential inputs/insights. Potential sources of inspiration are:

§ Analysis of Beverage Categories/Segments: growth rates, trends, size, profitability, competitive landscape,

§ Scanning of consumers trends and unmeet consumers needs,

§ Success stories with in System: Best practices, learning from market place, available brand options,

§ Success stories of competition: new categories, fast market share gains, successful launches and strategies etc.

§ Reports from consultants and other agencies,

§ Presentations from advertising agencies,

§ Internal “Idea Box” with suggestions from workforce,

§ Consumer research,

§ Technology review,

§ Supplier input,

§ New Product Database.

Idea generation should involve all members of the team, and become a structured, on going process, with measurable KBIs, Insights, ideas and learning's should come from top-down and bottom-up to cover both strategic and tactical needs. Rejected ideas should be captured and recorded into New Product database with brief description and reason why).

2.8.2. Initial Investigation

Potential ideas proceeding from stage 1 should be summarized and evaluated in a brief proposal by the local team. This includes:

§ Develop executive summary of idea generation stage,

§ Opportunity assessment: Category size, trends, potential, margins, competitive situation, existing capabilities, SWOT & PEST analysis, consumer's insights, restrictions and legal issues.

§ New product strategy and objectives,

§ Product concept, type of product,

§ Scan for what is available within System (propositions, brands, formulations, packaging options etc.)

§ SKU description: flavors, pack types and sizes,

§ Rough estimation on volume and share,

§ Investigation of sourcing and production options,

§ Rough investment figures: research, manufacturing, marketing and sales,

§ Rough estimate on product P&L, COGS, cost structure – System value chain,

§ KBIs and targets for new product,

§ Timing

The project team should agree to a common proposal/collect and validate data. Priority should be given to understanding and testing formulations (that meet the new product objectives) that already exist in the system in order to create efficiencies and cost savings in procurement and production. The management of each country should evaluate each project to decide if additional detailed research and planning is required. Rejected ideas should be captured and recorded in the New Product database.

2.8.3. Financial model and Business case

New product proposals/initiatives reaching this stage are to be examined in-depth and should include: a detailed financial model and assumptions with regard to financial principles, detailed manufacturing & capital plan, logistics, marketing plan (formulations, packs, design, positioning, communication and DME requirements), legal issues, etc. The integrated consumer proposition should be tested and validated. To ensure that all initiatives are cost competitive, consideration should be given to locating the lowest cost producer in each instance. Where the new initiative requires manufacturing technology that not exist in the specific country the project leaders should consult the Coca Cola Supply Point Committee to determine the most feasible supply point within its network for consideration in the analysis. From this point on, there is no going back (with rare exceptions).

2.8.4. Launch

The new product is readied and prepared for launch: investment in infrastructure completed, production and quality tests passed, final marketing plan ready, final operational plan fully developed and communicated including:

Route to Market

  1. Channel Identification & prioritization,
  2. Trading provisions: listing fees / pre-requisites per country,
  3. Wholesalers policy,
  4. Selected listings: Important customers “special treatment”
  5. Direct vs. indirect distribution evaluation (per region / channel / or outlet),
  6. Verification of agreed volume projections,
  7. Development of Merchandising standards per channel
  8. Verification of distribution targets through Merchandising standards “reality check”'
  9. Give specific merchandising instructions.

Portfolio management

  1. Market developer training,
  2. Sales kick-off meeting,
  3. Incentives for sales force,
  4. Market impact teams,
  5. Full, self standing Activity calendars,


1. Implementation of Assets Management.

Two major launch seasons, fall and spring should be targeted, although launch principles should not be compromised in order to meet this timing.

2.8.5. Review

New Product launches should be evaluated against agreed upon KBIs for the 1st four quarters of the first year of launch, then on a half yearly basis for the next two years. Remedial action should be taken if required.

It is vital that concepts be evaluated at each stage on a timely basis given that the timeline for new product launches may need to be accelerated. Any concept that has not been rejected outright must progress to the next level in the process no later than two months after it has achieved its current level.

2.9. Major Failure reasons in New Product Development

Cooper (1983) explains the causes of new product development failure as the marketing dominated:

  1. The companies underestimate competitive strength or competitive position in market,
  2. The companies overestimate number of potential users about product,
  3. The companies set the price of the new product too high and loose their competitive power in the markets,
  4. Companies have technical difficulties or deficiencies with the product in new product development processes.

Another research about the failure reasons give the new product failures because of the weak new development product process as follows (Hood, Lundy, Johnson, 1995):

  1. The product did not fit the corporate strategic needs for the company,
  2. The product couldn't be delivered to end-users on promises because of the launch problems in the process.
  3. Lack of competitive point of difference in the company,
  4. Products didn't manage minimum sales volume forecast at the beginning of the process,
  5. Product did not fill the consumer need in market,
  6. Insufficient planning in the process.
  7. The company made wrong timing about the market introduction,
  8. The new product development process doesn't have enough management support about the project.

2.10. Major Success factors in New Product development process

To bring a new product successfully to the market will be an important achievement for the companies. It is related to balance risk, time, money, resources and other factors in this process (Plunkett 1994). Mainly there are two fundamental methods of winning at new product development process (Cooper, 2000):

  1. Doing projects right: Employing true cross-functional teams, doing the up-front homework prior to the development stage, building in the voice of the customer, and getting early, sharp product definition have all been found to impact positively on new product incomes,
  2. Doing the right projects: The project selection is as important as project execution and a key to success.

The success factors described by Cooper (1983) are as follows:

  1. Company has to satisfy the market needs,
  2. Company must have internal and external effective communication channels during the process,
  3. Company has to be oriented to market,
  4. The top managers have to give importance about the key individuals in the process.

There are also activities that have been done as precondition in NPD process and these activities are identified as pre-conditional strategic variables for successful innovations (Poolton and Barclay, 1998):

  1. Strategic factor 1: It is very important to have top management support for new product development from beginning to the end of the process,
  2. Strategic factor 2: NPD process must be designed as a long-term strategy,
  3. Strategic factor 3: There must be long-term commitment to major projects in the company,
  4. Strategic factor 4: The NPD process must have flexibility and responsiveness to change. This will provide competitive advantages for the company in this environment.

2.11. NPD process in the beverage industry

An efficient new product development system is crucial in the beverage industry. New products need to be brought to the market quickly in order to capitalize on changing consumer preferences and competitive threats. New products must be developed tactically, and the products potential must be understood and analyzed before it rollout to the market.

The companies that are most capable to execute the whole NPD process will clearly have an advantage. This requires reducing time to market as well as making effective use of scarce internal recourses and improving collaboration with partners. Also, significant emphasizes must be paid to aligning the related marketing activities (advertising, sales promotions…) with the new product introduction.

NPD is one of the primary growth drivers for beverage companies, and it can involve changes to the products itself or to the products packaging:

  • Product innovation – focuses on providing new tastes and flavors to demanding consumers,
  • Packaging innovation – focuses on developing differentiated packaging according to the consumption situation. Very often, companies use packaging innovations to increase product shelf life.

To ensure new product success, beverage companies must oversee the integration, consolidation and reuse of knowledge from all involved parties, manufacturers, distributors, R&D, sales, marketing and financials.

By enforcing greater collaboration, beverage companies can reduce lead-time from concept to shelf by 25 – 40% and in the same time, better integrate safety controls into the development process.

Beverage companies can achieve an obvious competitive advantage by bringing products to market faster. However, improved process efficiency must not be accomplished at the expense of beverage quality and safety. Compromising safety within the product development cycle would not only cause customers to lose confidence in the new products, but it would also inflict serious and potentially permanent damage to the company's long term reputation.

The beer industry is the biggest sector of the Alcoholic Beverage industry, with global annual sales exceeding $300 billion USD. However, market saturation has been reached in much of the developed world, which is limiting the industry's growth potential. Companies that are operating in the industry face considerable competitive pressures. Consequently, they must streamline their processes in order to drive real, profitable growth – all while ensuring that they effectively meet the demands of booth customers and consumers.

In recent years, the beverage industry has been faced with new opportunities and challenges. Changing consumer demands and preferences require new ways of maintaining current customers and attracting new ones. While ever increasing competition, beverage companies must intensively chase customers, offer high quality products, efficiently distribute them, and keep price low, and in the same time to be quick enough to exploit new markets by launching new products.

In order to drive profitable growth and create value, there are several areas on which companies in the beer business need to focus:

  • New product development, packaging innovation, differentiated quality,
  • Cost reduction/margin improvement,
  • Improved asset utilization

Some of the market trends characteristically in today's environment that companies must consider and follow are:

  • Demographics and life style changes,
  • Fierce competition,

Increased awareness of caloric intake has hit the beer industry. This has caused an across the board decline in the consumption of beer, which is generally high in caloric content, versus consumption of spirits and wine, as well as non alcoholic beverages.

In the beer industry, competition is growing due to the following factors:

  • Falling consumption in mature markets,
  • Constant demand for new products and packaging,
  • Industry consolidation,
  • Growth of private label products.

These competitive pressures have led to:

  • SKU proliferation – Between 1991 and 2001, the number of SKUs in a typical beverage company doubled.
  • A large number of new products failures:
  • Only 20% are effective,
  • Only 10% generate significant revenue,
  • Most fail within the first two years.
  • Further consolidation and rationalization, driven by opportunities for cost-cutting through operational improvements,
  • The acquisition of small, high growth companies in emerging markets by industry leaders

To meet the industry challenges, Anheuser-Busch, leading Beer Company in USA, has embarked on a course to generate growth by enhancing the image of beer through new products, packaging, and new marketing initiatives. The company plans to give adult consumers new and exciting product choices that challenge the established perceptions of beer. Consumers have changing tastes, and Anheuser-Busch aims to satisfy their preferences by introducing a variety of new products designed to target a wide range of traditional and non-traditional adult consumers.

Anheuser-Busch is a company, which have committed itself to the continuous generation and internal dissemination of market intelligence relevant to the current and future needs of their customers, as well as to the continuous improvement of their responsiveness to such needs.

The key stages in the formulation of the NPD concept used by Anheuser-Busch are: need identification, idea development to fulfil the need, product development to substantiate the idea and the product's market introduction, communicating the fulfillment a need. In the center is the ability to “translate” the subjective consumers' needs (e.g. healthy, convenient) into objective product specifications, in order to, through the creation of the core product, substantiate the fulfillment of these needs. It is a widely spread opinion at Anheuser-Busch that such approach can greatly increase the likelihood of success of product development process.

The collection of appropriate information concerning consumers' needs and perceptions, from the beginning of development up to the product's market introduction, is an essential requirement of the NPD process. To understand the target consumers, and include their needs, views and problems at an early stage of the development process, is central in the concept.

The opportunity identification stage aims to define the target markets in which management expected the NPD efforts to be profitable and generate product ideas that can successfully compete on the market – idea generation. At these stage, company's management, based on a good understanding of its (and competitors') core competencies and unique strength's, make a strategic assessment of which technological platforms can provide a solid basis for NPD. If, based on such an assessment, potentially attractive markets and ideas are found, the decision to initiate the design process can be made.

The design stage aims to identify the key consumer's benefits the new product is to provide and the position of these benefits vs. competition. At the first design phase – opportunity definition, the potential rewarding ideas selected earlier are submitted to the target consumers' evaluation. This evaluation process is central because it allows an assessment of the market potential of the selected ideas before any considerable funds are committed to the NPD project.

At the refinement stage, the product, followed by a list of benefits and their relative importance, start to take shape. This is achieved through the careful analysis and measurement of the relationships between consumer preferences, perceptions or choices, on one hand, and the core and augmented product's features, on the other hand.

Finally, if the refinement phase has been successfully completed, (if it was possible to design a new product that fulfils the consumers needs in a superior and unique manner, an evaluation of the output takes place – opportunity evaluation. This consists in forecasting the sales of the new product, based on the aggregation of the probabilities of individual consumers' preferences and choices.

However, the European FMCG companies show lower R&D investments than many other industries. Innovations are rare (only 2.2% of the total product innovations), while a large number of products (an estimation of 77% of total product introductions), representing none or only minor incremental innovations relatively to existing products, is introduced to the market every year. In spite of this rather risk-averse attitude, many product introductions fail. Figures vary widely, but even the more conservative estimates show that 40 to 50% of new products introductions are out of the retailers' shelves within one year (Ernst & Young, 1999


3.1. Abstract

In the Chapter 3, after the short introduction of the company and the market, I will describe in details the New Product Development process that was conducted in our company in order to launch new product. The process that is a combination of corporate procedures then will be evaluated and analyzed by the participants in the project team in order to outline the factors that contribute in success or not success of the new product.

3.2. Introduction

Skopje Brewery was founded in 1924 as a joint stock company specialized for beer production, with production capacity of 36.000 hectoliters per year. Using the Czech beer production tradition, Skopje Brewery developed a quality beer. In 1977, Skopje Brewery expanded its product portfolio with its own program of carbonated soft drinks.

After numerous transformations of the brewery, before and after the World War Two, in 1988 the privatization process started in Macedonia. In this critical period of transition for the economy, Skopje Brewery manages to sustain at the level of the most stable and most successful companies in the country. The positive trend of the company had its peek in 1991, the last year of its privatization process, by becoming a licensed bottler of The Coca-Cola Company.

In 1998, Balkan brew Holding LTD, where strategic investors were Athenian Breweries and Hellenic Bottling Company, authorized bottlers of Heineken and Coca-Cola, became the dominant shareholder of Skopje Brewery with the total of 51% of the shares. This brought even greater credibility to the company, by becoming part of the two great corporations in the beverage industry, The Coca-Cola Company and Heineken NV.

According to the current technical specification, the capacity of Skopje Brewery is:

- Beer 1.100.000 hectolitres,

- Malt 5.000 tones,

- Coca Cola products 1.000.000 hectolitres,

- Vinegar 60.000 hectolitres.

Skopje Brewery is a company with 400 employees, and a highly developed net of small subsidiary companies, in the field of distribution, market development, maintenance, and etc, working as contractors with lots of benefits and responsibilities. By this the company contributes to the development of entrepreneurship of small firms, which overall stimulates the economy in the country. People development is one of the high priorities of the company in order to maintain the growth and implementing Total Quality Management.

The level of development of the Macedonian beverage market is extremely low. There are several factors contributing to this situation, but most significant are the extremely low purchasing power of the consumers and no firm state legislative for regulating economic conditions in the country. At this extremely low level of development of the market, Skopje Brewery can say that it is the dominant player on the beer and soft drinks market, working according to the high standards set by both corporations that the brewery is part of.

3.2.1. Market size

The consumer base for the Macedonian beer market encompasses 78% of the adult population above age 18. Per definition, it is the population segment, which consumes beer at least once a month. Primarily males consume Beer in Macedonia. Of all males, 88% are monthly drinkers. Among women, this segment is as large as 67%. Drinking beer is more customary in the younger and middle aged population. The consumer base among 18-29 year olds is extremely high with 83% and, therefore, a bit larger than the consumer base within the segment of the 30-49 years olds with 78%. Apparently, consumption of beer in Macedonia is tied to a certain social status as the consumer base increases significantly up from the level of primary education. When taking a look at the regions, the area around the capital city Skopje and the west of the country trail slightly behind in terms of beer consumption, because in the other regions the consumer base for beer exceeds 80%.

3.2.2. Consumption of beer within the context of other beverages

Mineral water (35%) and soft drinks (33%) are the number one beverages for daily consumption. Fruit juice (29%) is very big also being consumed by 29% on a daily basis. Beer has a daily consumption base of roughly one tenth (9%) of the population. Wine, spirits and mixed drinks are much smaller than beer with regard to daily consumption (2%, 4%, 1%).

The figures for monthly consumption show that the consumer base for beer (78%) is much larger than the consumer base for the other alcoholic beverages like wine, spirits or mixed drinks.

3.2.3. Drinking occasions

Beer is a very social beverage in Macedonia and therefore, it is mainly consumed in social settings together with friends or acquaintances. The main occasions, at which beer is consumed very frequently, are at home with guests or out of home in a café / bar / restaurants with friends. The “lonely beer drinker” is a “rare species” in Macedonia.

3.2.4. Purchase and packaging types

The beer market shows a balance between the purchase of beer in glass bottles and the purchase of beer in plastic bottles. One out of five beer drinkers goes for single glass bottles (75%). In contrast, 25% of the consumers buy beer in single can, or draft beer if occasion is a bar or restaurant.

3.2.5. Awareness of brands

In the Macedonian market, the portfolio brand Skopsko is the uncontested “synonym” for beer. Inquiry into awareness positions reveals an outstanding position of the brand: The TOM (top-of-mind) spontaneous brand awareness exhibits 54% and total spontaneous awareness adds up to an astounding 97%. Amstel, the number two brand in the TOM ranking trails with an awareness score of 19%. All other brands fail to reach a TOM score higher than 10%. In the total awareness hierarchy Zlaten Dab (81%) is in second position right behind Skopsko, but in front of Amstel (75%.). Bitolsko (61%) is trailing by a wide margin just as Krali Marko (58%), Heineken (51%) and Kenbach (37%).

3.2.6. Brand Image

Based on a multi-dimensional scaling (MDS), which narrows down the entire image criteria of brands to their differentiating essence, the key positioning of the brands in the Macedonian market can be summarized, from the viewpoint of those who know the brands at least by name, as follows:

The international Premium segment

This segment is characterized by a higher price level, high quality and the status of international brands as being reputable and (top) class. Amstel is the international brand with the most distinctive profile in the consumer's minds. It exhibits the highest brand strength (average value for all image items 32%) within the international segment. Heineken displays the same image as Amstel; however, the profile of the Dutch brand is weeker.

The other international brands are image-wise quite weak and lack a clear profile. No matter which brand, they are all judged as expensive, however, without displaying differentiating properties. Therefore, brands like Beck's, Carlsberg, Stella Artois, and others are me too of Amstel and Heineken.

Mainstream segment

The market leader Skopsko is image wise the strongest brand in Macedonia. Skopsko outscores the other mainstream brand Zlaten Dab by a clear margin. Skopsko is simply the best beer in Macedonia, backed by tradition and the highly appealing taste.

The image level of Zlaten Dab is clearly lower than that of Skopsko. It is a beer for ordinary people, available at a reasonable price and strongly advertised but certainly not as good as Skopsko.

Economy segment

This segment as a whole is lacking a strong image position. All the brands of this segment are clearly targeted and connected to common / ordinary people. The biggest advantage of these brands is their reasonable price. Krali Marko differs a bit from the other economy brands on account of its impactful advertising. Considering price image of the brands, Bitolsko is perceived as the most reasonably priced brand in Macedonia.

3.3. Introduction into the NPD process of Skopje Brewery

Developing a new product on the market is highly complex process that requests a lot of analysis and huge effort from the people involved in the project. The particular project in Skopje Brewery was in the hands of the commercial department, more specifically the marketing department. The beer brand manager, Todor Dimitrov, as project manager, in constant consultancy with the commercial manager, drew most of the essential moves for the product.

During the last 10 years the Balkans has been a turbulent place, with lots of changes happening in every segment of living. Inevitable, the beer market has changed during this past years, developing different consumer's preferences, and having a diversified offer on the market. Diversified consumer preferences do not necessary means more developed market. Very often in countries in the process of development the market has been devaluated due to the economic environment and the inability of the consumers to satisfy their essential needs.

This was the case of the Macedonian beer market. Due to the low purchasing power of the consumers, their preferences were focused towards economy brands. This caused a problem for Skopje Brewery because its anchor on the market, the standard brand Skopsko is a quality beer, which can not be devaluated by lowering its price to the low quality economy brands that started penetrating the market. This caused for Skopje Brewery's contingency plan, to gain the economy segment consumers.

After an in-depth analysis of the market, new product was developed and was ready for launching. Marketing strategy was set, in order to penetrate a market segment where competitive brands had the dominant role. But there were always Skopje Brewery's credentials that gave value to every brand in the portfolio coming out of the production line of the market leader.

But the problem was not solved only with the launch of the new product. There was a great market turnover that occurred, which totally changed the economy segment of the beer market. PET beer packaging was introduced on the market and significantly influenced the market position of the major market players.

In the following text, I describe in details the NPD process that was conducted in the Skopje Brewery, phase by phase, from the idea to the launch. The procedure for NPD is a mixture of the Coca-Cola and Heineken procedures, described in Literature review.

3.3.1. Phase I: Opportunity Identification

Skopje Brewery has made brand extension and expansion a priority in order to increase profits in a premium market. With our brand “Skopsko”, we dominate the market, and with recently launched brands, Heineken and Amstel, we conquer the premium market. The entire line of Skopje Brewery products is managed very efficiently in terms of life cycle management. For the most of the population Skopje Brewery's products are so well ingrained in the domestic cultural vocabulary and have been part of the “Macedonian” experience for over 80 years.

But in the same time, our competitors, Bitolska Pivara and Prilepska Pivara, were gaining considerable market share through theirs attack on the economy segment with launching cheep beers with low quality.

In order to maintain a steady overall growth rate, an internal mandate was establish to develop new product, and to enter the economy market.

Project Leader and Marketing Manager formulated the Product Innovation Charter as follows.

Focus Upper management mandates the R&D to identify segments of the beer market in which Skopje Brewery does not have a dominant position and exploit our manufacturing, marketing and distribution capabilities to rapidly develop and deploy new product to the marketplace. One such segment is the economy market.

Goals/objectives The primary objective of the project team is to enter the growing economy market in order to drive future growth of Skopje Brewery products at a moderate 8% per year. This project will gain value for Skopje Brewery by being bottled within the company-owned bottling system.

GuidelinesThis objective will be achieved through the introduction of a new beer product using the Skopsko formula and Skopje Brewery brand name. In terms of degree of innovativeness, the strategy will be to develop an adaptive product. Due to our expertise in product position, manufacturing and distribution, the development process will be accelerated allowing for quick penetration into the market, despite our lack of specific experience in economy market. Hopefully, this can be accomplished before more competitors enter the market.

3.3.2. Phase II: Concept Generation

Our first task after developing the PIC was to choose a project team responsible for developing the new product. The team is listed in the table bellow.

New Product Leader

Todor Dimitrovski


Igor Ilievski


Boris Temelkovski

Lead Engineering

Goran Stojkovski

Manufacturing Engineering

Kirco Stojanov

Industrial Engineering

Ljupco Krstevski


Mile Bundovski


Cvetko Todorov

The team was chosen for their high degree of motivation for the concept and their previous experience with successful product launches. Our innovation process was simple: we envisioned a beer that uses the distinctive brands of Skopje Brewery, than we modify our existing technology to manufacture the product, and lastly, we will make this product available to the consumers to see if it has value.

We knew that economy beer market commanded 2 million (EUR) in sales in 2002, and were likely to grow 200% over the next 6 years. This is based on figures generated by our consultant on the beer industry. The product team also understood that the market was shifting toward cheap, economy and low quality beers. Skopje Brewery, as the pioneer in bottling technology, certainly had the ability to make and distribute the product rapidly. Based on our experience, we generate a timeline with a launch deadline of 1st of May 2003.

Project Timeline












Opportunity Identification and selection










Concept generation


Concept/project evaluation

Product definition



Team selection



Budget researching



Development plan











Product Design







Financial plan/forecasting























Rollout 1st May





3.3.3. Research

We intend to launch a new beer brand that would be a solid choice for original quality Macedonian beer that refreshes people who like the simple ordinary things in life. The low price should create good value for money and it is the safe choice for high volume occasions (celebrations, social gatherings). The target audience would be male 30 years old and above, socioeconomic class. They mainly live in rural areas. They want to enjoy their beer as refreshment and also during their relaxation as a reward after their hard physical work. They are extrovert and down to earth (real people no pretending) and share the beer experience mainly with their friends but also alone in front of convenience store. They appreciate the simple ordinary things in life and therefore they just want to enjoy the beer moment as the escape from their daily routine problems. They are conservative and strongly defend their opinion. Their main concern is the political and economic situation. They want to serve the best beer that they can afford and their guests to be satisfied during celebrations and home gatherings.

The marketing team wants the consumers to do, think or feel after experiencing the new brand the following:

  • When I think of the new brand, I think of refreshment and relaxed moments after a hard day,
  • The new brand is my Macedonian beer, that's all about refreshment and relaxation. I feel closer to this brand, I can identify with it from more than one point of view (I can afford it, I can find it everywhere in my neighbourhood, and I can safely share it with my friends).

We want our consumers to belief that the new beer is an easy to drink, the new brand design and packaging is acceptable and the low price makes it attractive and a safe and good choice.

3.3.4. Segmenting the market

The bases for segmenting the market in order to develop profiles for each segment, and evaluate attractiveness of potential segment were:

  • Demographics: Age, gender, family size and life cycle, income.
  • Psychographics: Social class, Lifestyle, personality.
  • Behavioural Segmentation: Need/benefit based: Benefits sought, needs. Behavior based: Usage level, occasion, loyalty.

Indicators for lifestyle:

  • Values,
  • Attitudes,
  • Spare time.

Indicators for consumer's behaviour and characteristics:

  • Purchasing habits,
  • Attitudes towards Advertisement,
  • Brand Image.

3.3.5. Methodology / Research design / Description of methods

a. Overall beer image

In order to develop overall beer image among target group, the research agency implemented qualitative research techniques in the form of Focus Group Discussions.

The basic goals of the research were: Consumer behavior, main purchasing criteria, perception of the economy brands, taste preference, degree of advertising influence etc. The group discussions were conducted in several phases:

  • In the first stage, the participants were acknowledged with the group discussion procedure, conventions of tape recorder and observation etc.
  • The second stage was investigation of beer perception and consumption. The participants were asked what kind of words, images and feeling come to mind when they hear the word "beer". They should write all entries on a board, discuss briefly each entry after completing the list. Than they have to discuses about strengths and weaknesses of beer, how they feel when they drink beer, what is the filling when they have beer in their hands (exploration of physical, emotional and perceptive experience), when they start to drink beer and who influence on them to choose beer brand.
  • In the third stage, the participants were individually investigated about all domestic beer brands in more detail. The investigate brands were SKOPSKO, ZLATEN DAB, KRONENBEER, KRUNA, and BITOLSKO. Of major importance was to investigate the cheap brands.

b. Beer attributes

In order to examine the taste preferences through new beer brand, the research agency will proceed with a quantitative blind product testing in the form of face-to-face interviews in test centers, based on a structured questionnaire. The advantage of conducting the interviews in test centers is that the evaluation of the products is made on the spot and that the products to be tested are kept in condition very close to the ideal, i.e. degree of coolness. Each respondent will test blindly the two beers (new beer and the beer that regular drink) and will evaluate them monadic ally on a number of attributes. At the end of the interview the products will be comparatively assessed. The evaluation of the product will be in rotating order in order to avoid any potential bias. The procedure will be as follows:

Test new beer brand

Monadic evaluation on a number of attributes

Test competitive beer brand

Monadic evaluation on a number of attributes

Comparative evaluation on a number of attributes and overall

c. Investigation of alternative name and label proposition

The third research phase is needed to examine the name and label of new beer. In order to best meet the objectives of the study, qualitative approach will be employed (Focus group Discussions) in forms of:

  1. Monadic evaluation of each name,
  2. Monadic evaluation of each label,
  3. Comparison/purchase intent.


The research outline key questions related with the new beer. Through all research methods and actions, marketing team of Pivara Skopje acquire all necessary characteristics and features of the beer that the target population want and need. (Figure 5)

3.3.6. Phase III: Concept Evaluation

With our prototypes in hand, we created a simple concept statement for our product that summarized the PIC and served as the major points for evaluating the concept at the pre-screening level:

  • Here is a beer with a good taste and right amount of bitterness,
  • It offers individuals a tasty alternative to Bitolsko and Prilepsko beers,
  • It comes in the trademark Skopje Brewery, with the ex-factory price 58 den. And retail prices 65 den.

Management also asked the project team to answer four questions as an initial concept evaluation:

  • Does the idea require technology that our company does not have? Is the product being sold to customers the company has no knowledge of?
  • Does the product offer the wrong degree of innovation?
  • Is the product a poor fit for the company based on any other dimension?

The answer to these questions was NO. Skopje Brewery has the technological capabilities to produce this product. Although Skopje Brewery does not have recent direct marketing experience with economy segment, it does have experience with marketing the idea of refreshment. The degree of innovation while not high is a challenge for Skopje Brewery but certainly in a negative way. The product is an excellent fit for Skopje Brewery in terms of growth opportunity, manufacturing and marketing.

Using the concept statement, a phone and Internet survey was conducted among two thousand individuals between the age of 30-45 who regularly consumed beer. After being read the concept statement, individuals were asked to rate their likelihood to buy such product. There were five possible responses:

  • Definitely would buy,
  • Probably would buy,
  • Might or might not buy,
  • Probably would not buy,
  • Definitely would not buy.

76% of individuals surveyed had a response in the top two responses:

  • Definitely would buy - 52%
  • Probably would buy – 24%,
  • Might or might not buy – 12%,
  • Probably would not buy – 10%,
  • Definitely would not buy – 2%.

With the knowledge that our concept was sound and develops, we went back, and tested our three prototypes at the focus group level. There were 50 groups of 10 people each, all between 30-45 years old, for a total of 500 individuals. Participants were asked to rate all three drinks after sampling them and three known competitors in a blind taste test. The criteria were overall taste, the likelihood of buying, and how often and how many they would buy. One of the prototypes beer, called “GORSKO” rated extremely high, as did the other two prototypes. The competitor beers also fared reasonable well. Using the comments and results from the focus groups, it was decided to focus on developing GORSKO beer, and revisit other prototypes at a later date for possible line extensions, based on the success of GORSKO beer. We developed an A-T-A-R model based on market size, potential for growth, sales, and unit cost to determine potential profits.

The market size is estimated at 0,4 million adult drinkers between 30 – 45 years old in 2003. Through an aggressive marketing campaign, 60% should be aware of our product, 50% would buy the product if it were available to them, 75% of intended users should have the product available to them, 30% will repeat their purchase at a rate of 32 units per year.

3.3.7. Phase IV: Development

The fourth phase of new product development involves three processes that occur concurrently. The product itself is developed, the marketing plan is gradually developed, and the financial plan is finalized.

The product in this case is a Skopje Brewery beer that is similar to its mainstream beer Skopsko. In order to achieve the desired low price, the percentage of alcohol at the new beer is three percentages lower than on Skopsko beer. According to local regulations, the tax is related to percentage of alcohol in 1 litter beer. Three and a half percentage alcohol in the new Gorsko beer manages its competitive ex factory price of 58 denars.

While the product was being developed, the marketing plan began to take shape. The situation analysis identified Gorsko as a brand extension of Skopsko beer, which offers a great quality. The marketing team was looking to bring the quality of the Skopje Brewery products to the economy market.

The strength of Skopje Brewery name has led to the adoption of a rapid marketing approach. We utilize rollouts rather than test markets. Marketing relied heavily on a Brewery's reputation and immediate market awareness. In order to attain this level of awareness the existing sales force was utilized and a substantial amount of money was dedicated to advertising.

In order to market this product a great deal of efforts was put into examining the market. We identified our target market as a heavily beer drinkers ages 30 – 45. Currently the number of people in this age group is approximately 0, 5 million. Research has shown that this age group will continue to grow substantially to about 0, 8 million to the year 2006. Through extensive market research it was shown that individuals who consume economy beer tend to have several common characteristics. Most of these individuals are family people, with a mean household income of 6 000 – 8 000 denars. Using psychographic data we were able to assess that a person who drink economy beer enjoy personal interaction and truly values their social life.

The pricing of the product was an issue that needed to be addressed. While we wonted the beer to be perceived as although cheap, but with a good quality from original receipt from Skopje Brewery, we realize that with so many other options available pricing the beer higher than others could adversely effect sales.

A SWOT analysis was conducted to identify strength, weaknesses, opportunities, and threats:

Strenghts Weaknesses Opportunities Threats

1. Skopje Brewery name and reputation,

2. Strong existing sales force

1. Not first to market,

2. Significant competition,

1. Growth in target market,

2. Ability to steal market share

1. Change in consumer taste,

2. Lowering of competition price

Skopje Brewery name and reputation will be a great asset when introducing the new product. There is already a familiarity that others companies would have to develop from scratch. Our sales force has a substantial rapport with customers, giving us a foot in the door with this product.

Gorsko will joint many other domestic and imported economy beers. They are currently close to 10 economy beers that pose a significant level of competition. This competition and the fact that we are entering this market late could be viewed with some concern.

The target market of alcohol drinkers ages 30 – 45 will grow substantially from 0,4 million to 0,8 million by 2007. This offers Skopje Brewery the opportunity to increase sales but also increase market share. In the past, Skopje Brewery has shown its ability to successfully steal market share.

There were several keys to successful marketing of Gorsko beer. The Skopje Brewery name and reputation had to be exploited. The current sales force had to be used efficiently. Retaining customers and encouraging repeat business was a priority.

The total marketing and advertising budget for Gorsko was 0,5 million denars. These 0,5 million denars were split out into 30% for television advertisement, 50% in print and 20% in other areas.

Boris Temelkovski did the five years financial forecast, taking into account the investment, development and launch expenses.









Gross Profit
















Operating costs


Total expenses



Net income































Net income


Free cash flow

















Working capital












NPV at 10%


Profitability Index




This model assumed a conservative annual growth rate of 35% based on past launches as well as analysis of competing products currently on the market and future market potential. The NPV of this project out to be approximately 265 million denars. With this forecast several goals were set:

  • Sales of 78 million denars by year 2007,
  • Gross revenue of 47 million by 2007,
  • 50% market share

3.3.8. Phase V: Launch

The process of launching the product caused us to make many strategic platform decisions. The first involved the question of permanence. Was Gorsko a product we would stand by regardless of its success? Would we stay only if we meet our goals? Are we only in the market temporarily?

Gorsko was never meant to be a temporarily product. Certainly, the investment in Gorsko indicated a long-term commitment to this line of expansion. However, we would not continue with a product that immediately proved to be a failure. Skopje Brewery had a similar situation when we introduce dark beer few years ago, and after short period on the market, we have to withdraw it. Gorsko was to be supported for as long as it met the performance goals that were set, allowing for some level of modification.

The other question we need to answer was how aggressive we were going to be. Based on our marketing plan, we were extremely aggressive in the months prior to launch. We attempted to receive a great deal of attention early on. Our goal was also to capture selective demand by taking market share from the competitors. We need to gain competitive advantage. By using Skopje Brewery and Skopsko recognition and marketing savvy, we hoped to differentiate Gorsko from other brands on the market.

In order to monitor the progress of Gorsko beer, weekly sales data was utilized. It helped assess whether or not we were hitting our target markets. The data enabled us to monitor month to month sales figures as well as regional trends.

3.3.9. Post launch results

Six months after the initial rollout, the sales figures were not what we had predicted. For only one month, we succeed to capture the total market universe, due to our strong sales and distribution forces, and good relationship with our customers. We put it on very good positions on the point of sales and emphasize its competitive price. More than 50 sales people across the whole market were working on positioning and pre selling of the new beer. But the final consumer doesn't wont to buy Gorsko beer. Only six months after launching we had beer quantities returned from the market due to the expired date.

3.4. Research methodology and research question

It was very clear that the new product doesn't pass on the market. The question that was deriving from the situation was, does the project team miss some phase in the NPD process, or there are some other reasons for failing. To find out, I conduct qualitative research by unstructured, in-depth interviews with the Project leader, Todor Dimitrovski, Marketing manager, Igor Ilievski, and Sales manager, Aleksandar Popovski, in order to gather valid and reliable data. I don't have any predetermined list of questions to work through, although my idea was to explore the reasons why the new product doesn't success on the market. I give the interviewee the opportunity to speak freely about the process, the product, and everything that they consider that is important, and have any relations with the product. The interviews were conducted on a one-to one basis, between a single participant and me (face to face). I used open and probing questions in order to encourage the interviewee to provide extensive and developmental answers, to reveal attitudes or obtain facts and to seek an explanation where I do not understand meaning of something.

3.4.1. Keynotes from the interview with the Project Leader, Todor Dimitrovski

General Characteristics

An economy prone brand, which is seen as a decent proposition. A blonde lighters beer in alcohol and texture (according to the perceptions) that allows for more consumption and/or bulk purchasing. The main issue that came out regarding Gorsko at this point of the study was that most people believed that the brand was the new replacement of recently deleted beer Star Lisec. This was mainly due to two factors:

  • The fox's paw, that connects the two brands, was the mainly responsible element for this perception
  • The bottle of Gorsko, although as we will see is not considered as being cutting-edge, it still looks more modern and improved over the Star Lisec one.

Emotional Experience

Gorsko is about being effectively non-demanding, thus mostly promoting an easier going and socially opens character that has to do with larger gatherings (meeting new people or more people). On the other hand it is also connected with more ‘normative' occasions for people that view home consumption under a more functional ‘light'. The lighter taste and alcohol also promotes a more free consumption rate mentality on the behalf of the drinker, which enhances moods and guides connotations towards more special events (not having necessary to do with occasion but just the sense of splurging and removing ‘barriers').

The perception of the low price along with the one about fair and decent quality, make Gorsko an accessible and likable easy-going character that is more activated within the context of having a good time.

Respondents appreciated the economic aspects of the brand when it came to bulk purchase, but the accessible character of Gorsko is what made it more appealing for people that like to get a balanced medium of quantity and quality either by necessity or by choice.

The only criticism made on the brand was by some younger Skopje respondents, that had the image of Gorsko being a very poor in quality and taste beer, trying to imitate and copy some of the Skopje Brewery other brands (of which really they did not have a clear perception).

The main driver behind the above was Gorsko's potential for a more ‘lighter' or ‘feminine' projection based on fortitude of the beer itself, something that was not inspirational for younger people that are searching.


The bottle of Gorsko was thought of as being simple and basic in terms of structure (as others), but also in terms of label.

The packaging was found to be more or less complimentary to the respondents' expectations for this brand and its projected role.

Still younger respondents said that without becoming very luxurious or flashy, the label at least could change in becoming more modern, while maintaining the element of the fox's paw on it, since it was thought of as a nice touch that was differentiating the brand in a meaningful manner according to its name.

The call for changing the bottle under this brand was not as potent as in the case of Skopsko, but still the desire for this was very evident.

(Proposed) DNA

Value = In being a smart choice that will offer a decent quality beer for less money that normal. This was the value most associated with Gorsko.

Conviviality = A beer that is also reminiscent of larger gatherings due to its potential for bulk purchasing, but also due to its lighter taste and alcoholic content that allows for an more carefree and open disposition towards drinking and your environment.

Stability = In terms of quality and expectations out of the brand. This is an important value for the economy segment, since it can make the difference between a ‘value for money' brand and a ‘cheap' one in the perceptions of the respondents.

For all people = this value promotes the brand's potential in being an easy choice for more homely and undemanding occasions and moods within the daily drinking patterns of the Macedonians.

Optimistic = Once more the lightness of the brand in both taste and alcohol, allow for this brand to claim a more uplifting spirit deriving primarily from the social interaction that it connotes, but also from enjoying simple moments in everyday life, in simple ways.

Familiar = This value will need to become an important element of the total mix, since it will promote the brand's local origin and indirectly draw from collateral values such as pride and homeliness, which can be too strong or too passive in order to be used directly by Gorsko.

Gorsko affects the:

The Casuals: A brand that can be a major part within the everyday consumption of this motivational group, not only with the more normative occasions, such as family meals, but as well as for unofficial and easy-going gatherings with friends under a lighter mood. Gorsko can convince this public by being straight-forward in its communication as a good-quality value for money brand that is not frivolous but caring for its consumer. This can also be done by simultaneously satisfying the need for sociability that this group possesses under its more ‘controlled' and/or practical mentality.

The Escapists: Gorsko can tap onto this group by offering a mix that is based on locality, clear communication of a brand that is honest and simple in its offer to its drinker – something ordinary but decent. Familiarity will need to be accented for this motivational group in order to connote safety and stability that is greatly appreciated by them.

This brand has a lot of potential to re-claim lost market share through its value for money character. This is derived by the quality that it offers (decent, honest), as well as by its lighter in alcohol content character that is related to more easy-going and undemanding occasions with the Macedonian drinkers. All around a positive and even optimistic brand personality.

Gorsko will need to be promoted more, under a context of the beer that cares for the quality that it provides to its drinkers, at a very affordable price, meaning a brand that is not about being cheap and functional but being decent and realistic towards the needs of today's living.

A marketing support that will enhance and reinforce the above perception will need to be a first step. A second one will need to be a small redesign of the label (ideally) that will boost the quality side of the brand (since Macedonian are currently susceptible to extrinsic qualities), assuring the value for money mentality that is key for this brand's potential.

Finally and most importantly, Gorsko will need to introduce a line extension of PET. The PET bottle will need to communicate the principles of the brand which would be based on the triangle of economy (that is offered by the inherent values of PET itself), quality (the bottle's structural design and label will have to be aesthetically better and more contemporary than existing competitors' propositions) and nationality (by tone of voice in the communicational efforts as well as elements of label design). A balanced combination of the above three values will create a strong and convincing case for Gorkso that is a brand that cares, a brand that is a smart choice for normative and bulk-related occasions, but also possessing satisfying quality.

Let us not forget also the convenience that PET offers as a packaging format, as well as the initial sense of innovation (if the bottle and label are perceived as contemporary and qualitative, which is key) that will further ‘educate' consumers' perceptions about plastic, something that will not be hard, as the study has shown high levels of acceptance within the Macedonian market.

3.4.2. Keynotes from the interview with the Marketing manager, Igor Ilievski

Most of the benefits stated from the cheap brand consumers are those of economy, product characteristics and availability:

Economy (Price)

Lower % of carbonation and alcohol

Offers prolonged time for consumption without being drunk implicating longer time for socializing, discussion, chatting

Lower bitterness in the taste


Very few participants know the percentage of alcohol and extract of the beer. They are usually followed by the taste when estimate the % of alcohol “I never read on the back label to see the % of alcohol”. Greater awareness is shown for the % of extract (in a range of 11 and 12% of extract) of beers.

Preferred product characteristics of new brand:

Lower % of alcohol

Lower carbonation

Lower bitterness

Other characteristics/attributes:

Reasonable price (mostly 25 Denars, although in some regions Bitola the reasonable was considered to be 20-22 Denars). On the Figure 6, we can see comparison of different beers with the new Gorsko beer on several bases.

Launching as a cheap beer this brand will very soon fall into commodity market where the only criteria for purchasing will be its price and availability. In this manner the sales of the beer will be mostly retailers driven.

Negative perception on Pivara Skopje as a company, which is loosing the market share so, that is why, it is launching a cheap brand (comments in FGDs)

In order to proceed with the brand launching several adjustments in the beer characteristics should be made. Especially, adjustments are needed in discovered factors of the new beer as non-sufficient plausible for the consumers when tested against competitive beers. Although in the blind test procedure the image attributes were not tested (and these attributes will have great impact in recruiting consumers), still the product attributes of the new beer should close up to the competitive beer/s esp. in the phase of early adoption of the beer. Avoiding this will necessary lead to quick abandon of the beer by consumers.

These were not decisions based on experience and marketing knowledge. There were extensive researches conducted on the market in several stages, concerning every phase of the project. Local research agency was appointed to conduct the researches. The agency has already made several researches of the beer market and has the necessary knowledge to analyze the beer market. The research had a segmented regional approach and was covering the areas where the competitors were gaining share through their economy brands. The research agency was briefed to focus on the targeted group with the following characteristics:

- male, heavy beer drinkers at the age of 35+

- low socio-economic status,

- mainly living in rural areas,

The researches that were enforced gave important guidelines for further decisions regarding the development of the brand. Apart from the research findings, important role in the decision making process played the feedback from the market, presented by Skopje Brewery's extensive sales force. After 6 months of devoted work from the project team inside the commercial department of the brewery and the agencies involved in the process (one research agency and one marketing agency), the product was ready for launching. And the timing happened to be perfect, since the launch was about to happen immediately before the season.

Out of the 4P's the new product definitely had the price defined in advance. This was the case because of the targeted market where a product can penetrate only with a low price. All the other elements were additionally created and adjusted to the needs of the market.

The product was based on the positive experience of the mainstream brand Skopsko, with small adjustments in order to cut the final cost and to be able to meet the recommended price from the very beginning. In reference of cost efficiency the primary (Returnable Glass Bottle) and secondary (crate) packaging of Skopsko was used. This was also in favor of Skopsko, which according to the business plan for 2004 should re-launched in new packaging.

There was huge dilemma regarding the placement of the product. The initial idea was to have a segmented distribution, only in the areas where the competitors are gaining share with their economy brands. Why segmented distribution? Namely, there were three different economy brands from the remaining two breweries in Macedonia and each of them were penetrating different region of the country. So, we can not generalize the conclusion that the competition is gaining all over the country. Therefore limited distribution looked like the safe solution.

The promotion of the new economy brand was solely at the point of sales. Why was that? … Primarily because the price was the most valuable thing to be communicated because of the specific segment that has been targeted. On the other hand ATL communications doesn't really have any effect having in mind the target group and the selective distribution in certain regions. Namely, the population that is the target of the new product is mainly gathering in front of the convenient stores (point of sales) and consumes the beer on premise. Therefore, brand promotion at the point of sales is the most important in order to introduce the product to the consumers.

Main objective was to create a quality product that will comply with the low pricing policy and be competitive in the market, but on the other hand will create quality standards that will give the competition a hard time to meet the benchmark. Using the already proven recipe for "Skopsko" is a quality guarantee, but also means that the costs will remain approximately the same. Therefore, the contingency plan was to reduce the level of alcohol in the beer, because the beer is considered to be excise duty commodity, which is burdened according to the percentage of alcohol in the beer. This way the brewery managed to maintain the product quality and in the same time decrease the final price at the required level.

The launch of the new economy beer brand was considered to be successful. But the brand was never given a chance to prove itself on the market. Immediately after the launch of "Gorsko", one of the other two domestic market players, Bitola Brewery, started creating a totally different segment of the beer market, which until recently seemed absurd and impossible to happen on that particular market. They have launched beer in a PET packaging in for extremely low price. Namely, the market was devaluated enough with the economy brands that were creating a whole new segment in the market, but now with the prices of the PET packaging it has been thrown to the lowest level. Just for a reference, for the price of two 0.5l "Skopsko" bottles customers can buy one 1.5l beer in PET packaging. The introduction of 1.5l PET packaging was supported with increased import of this type of product from the surrounding countries. This is direct consequence of the liberalization of beer imports at the Macedonian market, without any custom duties, putting in a difficult position the domestic beer producers, due to the custom duties for the raw materials imported from other countries. The trend of PET packaging on the market is taking wider range. Small and traditional neighbourhood outlets are filled with considerable stock of PET packed beer. Market experiences showed that after a while, not only price oriented consumers buy the product. More often consumers with higher socio-economic status buy the beer out of convenience. The dynamics of living is doing its part into the beer market.

Where does "Gorsko" fit into this story? …. "Gorsko" was an extensive project for covering a certain segment of the market. A segment that found alternative way to satisfy the need with less money spent for this satisfaction.

According to the latest developments, the beer market is changing drastically. The Opportunity stands for further expansion of the economy segment. Skopje Brewery must be the player that will set the trends in this segment. Developing a strategy for beer in PET packaging doesn't means only launching of a PET product, but also thinking for further developments of the market.

3.4.3. Keynotes from the interview with the Sales manager, Aleksandar Popovski

New Product Development was a project of great importance for the company. Project, that can freely be said, was managed almost "by the book", with all the necessary element of developing a new brand. But there are always unpredictable factors that can influence the final outcome.

I would say that it is very difficult to create a product for the market out of nothing, if you do not set your targets before you even start the process. Second, in a process of development of any kind of product, always, a broader surrounding environment that can influence the project must be taken into consideration.

Why do I say this? … Beer in PET already existed in two of the neighboring countries, and took a significant market share, maybe up to 30%. Skopje Brewery as the market leader must be able to set the market trends and to be one step in front of the competition.

Would this late launch of PET packaging might reflect to the sales volumes, market shares, or even to the main driver, the profits, time will show. We have to predict the upcoming trends in the beer market, and to see if the PET is only short-term trend, or permanent market restructuring.

At the end, I would conclude that the theoretical marketing principles must be obeyed and taken into consideration in every step of the managerial process, but particular local circumstances can sometimes manifest contradictory outcomes.


4.1. Analysis of the findings from primary and secondary research and comparison with literature review

The final goal of the dissertation work is to outline the benefits of the New Product Development Process by comparing the findings from Literature review and the real conducted process for launching the new Gorsko beer. Can the process or procedures for New Products contribute in success of a product on the market and to what extend?

As we can see from the interviews with project team members, the New Product Development process was conducted “by the book”, but at the end the team faced failure with the product on the market. The critical mistakes were done during the research phases where they underestimated or misjudged the needs and criteria of our customers. The Project team was following their goals, and forgot what the goals of our customers were. More specifically, the product-specific front end activities that should clarify the product concept, define product and market requirements, and develop plans, were not developed in details. The product concept, that is preliminary identification of customers needs, market segments, competitive situations, business prospects and alignment with existing business and technology plans, was not as clear as it should be in order the managers can sense whether the newly defined opportunity seems worth exploring. They didn't understand consumer's needs, so they can not understand the trade-offs among customer requirements, technology, and resource / cost constraints, what result with producing a product for a completely deferent target group.

Market research is about understanding consumers and their needs and should be a core competence at the heart of any company with a strategic vision. Differentiating products and services is becoming harder and product life cycles are becoming shorter. Thus, intuitive decision –making is riskier and increasingly companies are turning to market research to provide the key input to more effective and efficient strategic and tactical planning.

Very important is to note that a comprehensive market research and competitive analysis should be the starting point for a brand positioning strategy. Moreover, pre-testing is an essential step that is often neglected in the implementation phase. A thorough test helps to avoid costly blunders that could otherwise reduce the chance of success of the new brand. In the case of Gorsko beer, the success of the brand lies in the ability of the company to cope within the local, specific identified segment.

NPD process requires very careful and detailed management through the whole life of the product. All stages and sub-processes within NPD process should be harmonized and carefully projected and conducted. Project teams in many cases while launching products (beer or soft drinks) do not often do this, due to lack of professional skills and knowledge in NPD process. Beside the NPD process, also very important part of success of the product is branding strategy. Branding is an effective weapon to win consumer's heart and mind (Aaker, 1996; Arnold, 1992). The importance of building a brand name for a product should be taken seriously by NPD team attempting to sell its product on domestic or export market.

The company should see the NPD process as an organizational process in which information about the market and its actors is gathered, assimilated, processed and returned in the shape of a new product. Therefore, the company's approach on NPD process should be based on understanding of:

  1. The fact that both technical and market knowledge and information are necessary to run effective development process,
  2. The way market information can be gathered, spread and combined with technical information's to develop successful product.

The main principles of NPD process are:

  1. Consumers' needs should be the starting point of the NPD process,
  2. The goal of NPD process should be the fulfilment of consumer needs and the realization of consumer value, rather then the development of products,
  3. Sales and satisfactory returns on investment can only be achieved by anticipating, identifying and satisfying needs. Thus the NPD process's measure of success should be the degree of fit between the new or improved product and consumer needs.

From the conducted interviewees with the key persons in the New Product Development project we can derive several conclusions and reasons for the new beer failure.

According to the Project coordinator, the people were not differentiating Gorsko beer from the other Skopje Brewery beers. The store displays and other promotions looked too much like those for Skopsko or already withdrawn beer Star Lisec. While we were, at some, point successful in differentiating from competitors, we failed to differentiate among Skopje Brewery products.

The major disantvantage of the rapid marketing approach is that they did not do market testing in terms of brand perception. There are people who typically purchase beer or other products respected the Skopje Brewery name, and also there are many early adopters primarily due to its initial novelty. However they did not know how many people purchased Gorsko based solely on the Skopje Brewery origin, although some had confused Gorsko beer with Star Lisec due to the fox's paw on its front label. The Star Lisec similarity was the primary source of confusion. What they meant to be an advantage, turn on as a disadvantage. During all research, the team had focused on the product, not the brand.

The primary goal in constructing the new economy Gorsko beer was achieving competitive price. That means a price equal or lower than the price of other competitive beers in the segment. For that reason, the project team undertakes several steps, by which success to manage a lower price. The first step was decreasing the percentage of alcohol in one litter beer. According to the local legislative, the tax for beer is calculated depending on the percentage of alcohol containing in one litter beer. In order to lower the tax that we have to pay for production and selling of beer, we decide to decrease the percentage of alcohol what effect the final price of the product. That was one of the radical mistakes that our team undertake in order to approaches to the economy market. The results from research shown that very few participants know the percentage of alcohol and extract of the beer. They are usually followed by the taste when estimate the % of alcohol “I never read on the back label to see the % of alcohol”. Greater awareness is shown for the % of extract (in a range of 11 and 12% of extract) of beers.

Preferred product characteristics of new brand:

Lower % of alcohol

Lower carbonation

Lower bitterness.

Now, the research showed us that actually ordinary people are not as well familiar with context of the beer, or at least with the text on the back label of the beer.

The first comments after first taste of the new beer from the consumers were that Gorsko is a beer for women. And it was immediately abandon from heavy-beer drinkers.

Our strivings for achieving lower price continues with choosing same old primary and secondary packaging materials. The bottles, although recently purchased, were with the oldest shape and design, and we were using them for decades. Skopsko beer and previously mentioned Star Lisec were bottled in those bottles. Considering the creates, we use the same one as we use for Skopsko beer. A lot of negative comments were appointed for the Label. It was cheap and with low quality.

Considering the strategy for launching and distributing on the market, we can see that the first plan was to have selected distribution, only in the rural areas were the positions of Skopsko beer were affected. But very soon, after bad overall results, and in order to compensate sales, we forgot our starting strategy, and distribute the beer all over the market, through all segments. So, the new economy beer could be found in all outlets, supermarkets, kiosks, groceries etc. The reaction from the consumers were that Skopje Brewery as a company, is loosing the market share so, that is why, it is launching a cheap brand. The image that the company was building through many years by launching top premium beers like Heineken, Amstel, was put in a dangerous situation. The un-success of the Gorsko beer can influence on Skopsko by lowering its brand image and equity.

On the other hand, the period for launching our economy beer overlaps with the period of launching economy packaging from the competitor's side. Beer in 1, 5 litter plastic bottle was a pure innovation on our market, which forever change the paths in the beer industry development. Both, Marketing and Sales manager, emphasize launching the 1, 5 litter plastic bottle as a significant innovation on a beer market, especially on an economy beer market. According to the Marketing manager, for the price of two 0.5l "Skopsko" bottles customers can buy one 1.5l beer in PET packaging.


5.1. Recommended solutions for further actions

The new brand did not really meet the expectations of its target customers. The research showed that taste is the most important factor affecting consumer's choice in buying beer, instead of project team's opinion that price is fundamental in making decision about buying beer. The second most important attribute was the alcohol content.

TV advertisement is the most effective way of getting consumer's awareness. During research phase, a lot of prospects state that they heard about competitive economy brands from TV advertisement. However, TV advertising cost on prime time is most expensive. In that case, the recommendation is not to use the popular and expensive channels to advertise the new beer, but local and cheaper ones.

Based on the conducted interviews with project managers, and considering that NPD process was conducted in a right way, the recommended actions will be connected with branding adjustments. The project team should prepare for re-launch the brand by giving Gorsko a new look.

First of all the design of Gorsko bottle should be significantly changed to become more colourful and appealing. For example, a transparent yellow colour instead of dark red will better embellish Gorsko labels. The bright yellows colour presents a golden quality of beer, something that is very important on the market. In addition, the decision to increase the alcohol level equal or higher than 4,5% is to meet the preference taste of the target consumers. After all, one would expect to quickly have a relaxed feeling after getting behind a hard working day. And lasts but not least, a lot of prospect comment that Gorsko, due to the low percentage of alcohol in it, is a beer for ladies.

Skopje Brewery has three well-established brands that are Skopsko, Amstel and Heineken. Although all three brands belong to premium and mainstream category, Skopsko brand is intentionally positioned to serve a class lower. By adding Gorsko to our business portfolio, Skopje Brewery has hoped that the new brand would be a booster bringing new markets to compensate for the loss incurred by Skopsko in recent years, due to increasing competition in this segment. From the beginning, the new brand mission was to attack the unfilled segments, and should not pose any threats to other existing brands of the company. But in reality, there were customers switching from Skopsko beer to Gorsko. That is one other reason for necessity of changing and differentiating the packaging from other beer brands.

Changing the label by adding for example a bucket of malt, and of-course, removing the fox paw that associate on already deleted beer Star Lisec.

According to findings from literature review, the NPD process should be managed in that way as to be quick enough to capitalize on the new product opportunity before competitors do so. In the case of Skopje Brewery, the competitors already launch new product on the market, and the pressure from loosing market share and sales was so big that our team's priority goal was as soon as possible to launch a new product, without taking into consideration all factors that can influence in success of the product on the market. And in the future, more and more, the companies will try to shorten the NPD process in order for less money and shorter time to have product on the market. Due to that, a strict assignment to the project leader should be to monitor if project team is following NPD process on effective and efficient way. The Project leader should facilitate the NPD process and coordinate the Project team.

The NPD process should include several check points where all past activities will be evaluated in order to confirm if the project team is on right way. For moving on from stage in to next stage, a decision gate should exist. At this point, the NPD team should present findings, insights and recommendations from the project to the NPD process gatekeeper. The gatekeeper should be decision maker, member of senior management, authorized to review the recommendations of new product team at key decision points. Based on project importance and project achievements, and the risk and uncertainness that remain the gatekeeper should decide about the future of the project.

Understanding customer satisfaction is a key factor for loyal customer retention and growth. With good understanding of what drives customer satisfaction, companies can continue to refine and market their products and services to maintain and grow a loyal customer base.

Product team should be directly involved in understanding customers needs, which should involve visiting or meeting with customers, observing customers using our products, participating in focus groups or rotating development personnel through marketing, sales or customer support functions. The direct involvement provides a better understanding of customer's needs, the customer's environment and product use.

A recommendation to all companies is to design an internal, formal NPD process with regular review of all phases of development, a stage gate decision model that capture information's and decisions output at each stage. Technical and marketing information's should be both accurate and timely and must be constantly reworked in the light of changing circumstances during the course of development.

5.2. Gorsko prospect

The chance for Gorsko to survive is more than possible, especially if Skopje Brewery's management team decide to make several adjustments. The following arguments will justify the case:

Being a product of Skopje Brewery can be ensured of an excellent and consistent quality. It can also take the advantage of the good reputation of its brother brands and enjoy the effective support of the existing marketing organization and distribution network.

Gorsko was Skopje Brewery's response to the declining trend in the economy segment of the beer market. The research shows that the growth rate in the economy segment continues to be high, while that in the mainstream and premium segment remain moderate.

Gorsko is the first economy brand launched by international company. (Skopje Brewery is a Heineken and Coca-Cola joint venture). It had to compete only with domestic brands of Macedonian brewery's that often lack of financial and human recourses and marketing effectiveness.

All further adjustments on Gorsko beer should be based on previous research and consumers' feedback.

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