Marketing strategy of new product

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Abstract

Implementing a new product development and demonstrating the managerial skills of planning, organising, directing, staffing and controlling.

Introduction

In business the term new product development (NPD) is used to describe the complete process of bringing a new product or service to market. The following steps to be taken in developing a new product. Idea generation, Idea screening, concept development and testing, marketing strategy, financial analysis, product development, market testing and commercialization.

Develop a case for a new product, service or process built upon recent research.

Case of New product development

This is the case study for the Unilever product development process , of designing and launching into the market, products that are original, improved modified or new brands by means of research and development activities. Strengths and weaknesses are internal factors. For example, strength could be your team specialist in marketing the product. A weakness could be the low quality of a new product Opportunities and threats are external factors.For example, an opportunity to develop business using the new technology like internet. A threat from new competitor already existing in market. To each factor increases the validity of the analysis.

Strengths

We consider a organization technological skills and leading brands, distribution channels, customer relationships, scale and management.

Weaknesses

In this mainly consider weaknesses of the organizations like absence of impotent skills and weak brands, poor access to distribution, low customer retention, unreliable product/services, sub-scale, and management.

Opportunities

The analysis search for the opportunities in the market like changing customer testes, technological advances, lower personal taxes, and change in population age and new distribution channels.

Threads

This is the most important factor of the swot analysis. This will gives most effect on the business. The threads are like changing customer base, closing of geographic markets. Technological advances, changing in government politics and tax increases.

Review current theoretical debate that supports this business case.

UNILEVER'S BUSINESSES AND BRAND PORTFOLIO.

The foods division, known as Unilever Best- foods following the 2000 acquisition and integration of Best foods, was organized around six product categories: spreads, culinary, and cooking products; savoury (soups and sauces) and dressings; beverages; health and wellness; frozen foods; and ice cream. The foods division, which had consistently generated 50-52 percent of Unilever's corporate-wide revenues from 1992 to 2000, accounted for 55 percent of revenues in 2001 and 56 percent in 2002-chiefly because of the Best foods acquisition. The Home and Personal Care (H PC) division consisted of eight categories: deodorants, hair care, household care, laundry, mass skin care, oral care, personal wash, and fragrances and cosmetics. HPC generated about 43 percent of Unilever's corporate wide revenues.

  • Improving the company's focus on foods and 1-IPC activities regionally and globally.
  • Accelerating decision making and execution through tighter alignment of brand strategy with operations.
  • Strengthening innovation capability through more effective integration of R&D into
    the divisional structure and the creation of global innovation centers.

THE BEN & JERRY'S ACQUISITION

After considering offers from Unilever, Diageo (at the time the parent company of archrival HaagenDazs), Nestle, Roncadin (an Italian company). And Dreyer's (a rival maker of superpremiumi ice cream products and a longtime distributor of Ben & Jerry's products) the board of directors of Ben & Jerry's Homemade, Inc... In April 2000 agreed to accept Unilever's offer of $43.60 a share for all of the company's 7.48 million shares, resulting in an acquisition price of $326 million. The $43.60 price represented a premium of 23 percent over the closing price the day prior to the announcement of the agreement and was well above the $15.80 to $20.00 range the stock traded in prior to the five buyout offers becoming public knowledge in December 1999. Exhibit 7 shows Ben & Jerry's financial highlights for years prior to the acquisition.

Developments Following the Acquisition

To win approval for the acquisition from Ben & Jerry's cofounders and the board, Unilever agreed to keep the company's headquarters in Vermont. to operate it separately from Unilever for a period of time, to maintain employment at Current levels for at least two years, to hold employee benefits at current levels for at least live years, and to contribute 7.5 percent of pretax income annually to the Ben & Jerry's Foundation. Unilever further agreed to form an independent 11-member board of directors for Ben & Jerry's to monitor how well these conditions were being met, with eight of the board members to be named by Ben & Jerry's management, one by Unilever, and two by Meadowbrook Lane Capital. Ben Cohen and Jerry Greenfield were also to continue to have active roles in management.

THE BESTFOODS ACQUISITION

At the time of its acquisition by Unilever in mid- 2000, Best foods was a global company engaged in manufacturing and marketing consumer foods. The company had offices and manufacturing operations in 60 countries and marketed its products in I 10 countries. About 60 percent of Best foods' $8.6 billion in sales in 1999 came from outside the United Slates. Best foods employed approximately 44,000 people, of whom about 28,000 were at non-U.S. locations. Food industry analysts considered Bestfoods to be one of the best managed American food companies, and it was one of the 10 largest U.S.-based food products companies.

Bestfoods' corporate strategy in 2000 had four core elements:

  • Globalization of the company's core consumer, businesses the Knorr product line,
    salad dressings and food-service operations.
  • Continual improvement in cost effectiveness.
  • Seeking out and exploiting new ,market opportunities (via both new product
    introductions and extending sales of existing products to additional country markets).
  • Using free cash flow to make strategic acquisitions. Since the 1 980s, Bestloods had
    made over 60 acquisitions to expand its lineup of products and brands and to position
    the company in new geographic markets.

Benefits with the Acquisition

By year-end 2003, Unilever management believed that it had successfully integrated the operations of Bestfoods with those of Unilever. Businesses of the two companies had been merged in 63 countries across 5 regions of the world. producing €790 million in cost-saving synergies and efficiencies and leading to increased operating margins (15.7 percent for the first nine months of 2003 versus 14.8 percent in 2002 and 14.4 percent in 2001). Unilever's entire food division was operating under the name Unilever Bestfoods (UBF).

Weaknesses

Noted several of these weaknesses in the organization have the dual leadership. And not connected with the costumers. Unilever have more than 1600 brands in sales and marketing efforts in 88 countries but so many brands low performances. The following are the main weaknesses

Unilever have the dual leadership and not connecting with the costumers. And the inefficient of brand management. Reduced spending for R&D inability to maximize acquisitions.

Incorporate into this business case information on market competition and analysis of marketing environment.

market factors

Opportunities

The company observe the more opportunities in the global market . particularly in opening new markets and attractive advantages of the recent trade in the developing countries. Unilever star new business a chain of tea houses and Myhome , laundry and home cleaning services test market stating in Britain in 2000 and in the united states and India in 2001 (c-480). In other nations the labor costs are lower this is the opportunity to cut the operational costs and get chance to expand to other Ares. And also increase the needs of the healthy products. The following are the opportunities of the organization.

Changing consumer preferences and increasing need for healthy products.

Threats

Unilever had sales per employee of around $160,000 in 2000 compared with the competitors like $205,000 for Nestle, $360,000 for P&G, 458,000 for kellogg's, and $605,000 for general milks (c-470). Comparing with the all the competitors Unilever revenues decrease. And also take care of the money exchange rates. Money exchange rates also give the effect on the organization.

The following are the main threats of the Unilever

Unilever revenues decrease and strong competition and also store brands are increasing. Tougher business climate. Money exchange rates.

In 2000, there was a wave of mega mergers involving high-profile food and household products companies (Exhibit 4 from the case study). Three factors were driving consolidation pressures in the food industry slower growth rates in the food sector, rapid consolidation among retail grocery chains (which enhanced the buying power of the major supermarket chains and enhanced their ability to demand and receive lucrative "slotting fees" for allocating manufacturers favorable shelf space on their grocery aisles), and fierce competition between branded food manufacturers and private-label manufacturers.

Growth prospects for many food companies had been bleak for several years, and the trend was expected to continue. In the United States, for example, sales of food and household products were, on average, growing 1 to 2 percent annually, just slightly higher than the 1 percent population growth. More women working outside the home, decreasing household sizes, and greater numbers of single-person and one-parent households were causing a shift of food and beverage dollars from at-home outlays to away from-home outlays. The growth rate for food and household products across the industrialized countries of Europe was in the 2 percent range, with many of the same growth-slowing factors at work as iii the United States. Food industry growth rates in emerging or less-developed countries were more attractive in the 3 to 4 percent range prompting most growth-minded food companies to focus their efforts on markets in Latin America, Asia, Eastern Europe, and Africa, where about 85 percent of the world's population was concentrated. The household and personal care business (excluding food products) was a €21 billion market, with sales of €5 billion in North America, €6 billion in Europe. €5 billion in lie Asia-Pacific region. €3 billion in Latin America, and €2 billion in Africa and the Middle East.

Strategies and Activities of Competitors

The comparisons of competitors with Unilever are Kraft, Nestle and P&G. Unilever had sales per employee of around $I 60,000 in 2000. compared with $205,000 for Nestle, $360.00O for Procter & Gamble. $458.000 for Kellogg's. and $605,000 for General Mills.

Identify the resources required to develop the new product, service or process. These resources may include but not limited to financial resources, human resources, sales and marketing resources, R & D resources.

Importance of new product development

  • Is necessary for growth of enterprises.
  • All products decline with time i.e. life cycle.
  • The market is dynamic.
  • Technical innovation is permanent.

Idea generation

  • Systematic searches of idea.
  • Brainstorming.
  • 55% of ideas are generated internally.
  • 28% comes from consumers.
  • 30% are obtained analyzing the competition.
  • Remaining ideas come from distribution system.

Idea screening

  • Ideas are taken to a standard format (product,competition, market,market size,price
    and profitability).
  • These are evaluated with predetermined criteria (real benefits,enterprise fit,know
    how).
  • Several screening cycles.

Concept development and testing

  • Product area.
  • Product concept: detailed version of the idea defined in terms that have a meaning for
    clients or consumers.
  • Product image: the way in which the client perceives the product.
  • Concept test: with text or drawing.

If you have a core range of products, you may want to grow your business by developing new products to add to the range. These new products may simply be modifications to existing products or a completely new product for a new market.

You may have seen a gap in the market and are trying to target it. If this is the case,ensure that you have done your exploratory research before embarking on a potentially costly product development programme. Make sure that you have looked at relevant market data and,have then, undertaken sound market research to find out if there is a demand for your new product.

One of your customers may have approached you and asked you to develop a new product. If this is the case, the need for market research is less important as you are, generally, meeting a real market demand.

Critical path

Once the business has decided that a new product needs to be developed, the first thing for you to do is devise a critical path. This summarises all key tasks involved in the process, relevant timings and, most importantly, who is responsible for completing each one. The critical path should include the following key functions :

  • Development
  • Technical
  • Purchasing
  • Engineering
  • Sales
  • Marketing
  • Planning
  • Production
  • Finance

Attached is an example of a simple critical path format. It is often useful to get the people who have responsibilities in the process together for an initial start-up meeting. At this you can brief the team on the background to the project, what it is aiming to achieve and why it is important to the business.

This session should act as a means of creating a common understanding and team approach to the project. A particularly complex, or long, development process may also require team status sessions as it progresses.

The brief

The next step is to produce a brief for the development team. The brief should contain information under the following headings:

Detailed description of the product, container and packaging.

Who the product is for? How they may use it? Where they will buy/consume it?

The market you are targeting e.g. competing products/companies, key trade customers, price
brands, etc.

The volumes required - at least indicative at this stage.

Initial costings i.e. price and margin benchmarks.

The product brief should be signed off by someone of authority in the company who can ensure that it meets the company's aims and objectives.

The development team

Larger, established food and drink companies will probably have a Product Development Manager or,even, an entire New Product Development Team. However, this is not necessary. What is important is that you have people focussed on developing your new product and their roles and responsibilities areclearly defined. .To best ensure new product development success, ensure buy-in from all aspects of the company (production, technical, sales & marketing, etc.).

Concept samples

At this stage you will have a concept sample of the product which you should test on your internal team to get to the ideal product to take to the customer or consumer (if you are doing research). If you receive positive feedback you will be able to progress to the next stage taking into consideration any customer and/or consumer suggestions or recommendations.. However if there were significant negatives with the product at the concept stage it would be unwise to take the development any further.

Manufacturing specification

Putting a manufacturing specification together is the next logical step. This will ensure that you know where and how you are going to make the product and that everyone involved in the manufacturing process is aware of these details. Basic information in this specification will include the name of the product, the production process, the list of raw ingredients and the quantities, temperatures for cooking and net weight of the product.At this stage you should give consideration to HACCP (Hazardous and Critical Control Points) and put together a process flow chart with easy to follow steps. Your product development system should meet stringent safety procedures and quality control procedures. If you have clearly laid-out procedures you will minimise any problems and ensure that everyone is working to the same specification.

Analysis

Your product will have to undergo a variety of checks. Depending on the product, this could include shelf-life analysis, microbiological testing, heat penetration tests, etc. These tests will probably be out-sourced to laboratories or food analysts.

Legislation&Technical

Make sure that you have checked all the necessary legislation required for your product. For example if you are producing a kosher or organic product, have you got the necessary approval or accreditation from the relevant bodies?Packaging guidelines need to be followed in terms of nutritional information and formats, product description, quantitative ingredient declaration, warnings for food intolerance e.g. contains nuts.Ingredient specifications and accredited supplier assurances will verify these and others such as GMstatus, natural or artificial, etc. The Technical Manager, or whoever is responsible for technical issues within your company, will manage all these elements and should be included in the packaging approval process to ensure compliance.

Financial analysis

Review sales, cost and profit projections.

Include marketing, R&D, Production, accounting and financial costs.

Throughout the process, costings will be refined until a final costing is ready to be signed off by senior management as part of the approval process. The final costing will include recipe costs; labour,packaging and distribution costs; sales margin; and, an allowance for marketing support.

Sales and marketing

Your Sales and Marketing Manager/team need to secure the product distribution; agree the customer selling price and margin; and, ensure compliance with their systems. They will tend to manage any customer interface throughout the process.

Sales and Marketing also need to ensure the product has a sound market and consumer rationale,develop the visual packaging and any effective support programme for launch and beyond.Sales and marketing should work together to develop the volume forecasts for the product. These will be agreed with production planning and the factory will produce to these levels. Forecasting can be difficult with new products but regular reviews should be undertaken in the initial weeks and months to keep refining their accuracy.

Product life style strategies

Plc is the course followed by sales and profits during the products life time.

Plc has five stages.

  • Product development.
  • Introduction.
  • Growth.
  • Maturity.
  • Decline.

Identify the sources of all resources required

On Outsourcing and Business-Level Strategies

Looking in its outsourcing scheme, the firm's great demand from its suppliers in terms of control, efficiency and quality sinks well to operate under integrated cost leadership/ differentiation strategy. Because of the outsourcing structure, new products could adapt quickly to environmental changes as the local supplier has sample knowledge and wide experience base that can provide optimal inputs and enhance legal adherence of the firm in ht locality. Second, this could prevent the firm to learn new skills and develop new technologies just to meet the local demand because the supplier already developed facilities to blend with local preference and issues. Lastly, outsourcing can effectively leverage core competencies for the firm while competing against rivals. This last rationale in outsourcing made the firm focus its capabilities to other activities in order to excel in quality, cost or product line which can be difficult to develop when it has several tasks to perform.

In addition, communication network with suppliers is maintained and improved. This can address both operational and relational partnerships of the firm and create communication technology, establish mutually-beneficial contract and sustain long-term business with them. This strengthening of partnership is done to link the organization not only to suppliers but also to distributors and customers for another source of strategic flexibility. When the firm and distributors are closely operating, delivery and order requisition is done harmoniously, thus, preventing distribution and collection delays that can disrupt cost effectiveness, worse, results to disbandment of contract.

Acquisitions, Vertical Integration and Diversification

With acquisitions of differentiated companies, the firm also avoids the cost of new-product development and adheres to the importance of speed to market For example, developing the chocolate product can include significant investments, time and periods of sacrificing profitable returns. Its success can also be unpredictable and vague especially when the firm is new to developing product, thus, creating huge risks.

As a result, market power should not be exclusively attributed through internalization of activities especially when diversification connotes adjustment of operations based on the requirements of the subsidiary. Rather, market power should be a balance between outsourcing and internalization to uphold strategic flexibility of operations. It means that the firm, even though could not secure all possible leakages of company information that could lead to imitation, has the sole knowledge on how to operate the balance and make competitive advantage over it. This is concretized by its half century old contracting and in memoriam internal efficiency enhancement operating through its unique company goals and human resources attitudes towards innovation and excellence.

Recommendation

Its balancing strategy between internalization and outsourcing should be designed as to prevent occurrence of stifled innovation or inefficiencies because a supplier produces a product at a lower cost.

Further, maintaining the cost leadership and differentiation strategy at the same time could drown the firm and can be "stuck in the middle". To prevent this, it should keep its first mover advantage with that of the close rival, Unilever, and other niche competitors especially in pharmaceutical and pet products. Its sustainable development that includes the whole stakeholders intensify its first mover advantage, at least being a diversified food company, that can provide it the conducive environment to improve operations to protect its historic reputation.

Acquisitions and diversification strategies of the firm should also be controlled and monitored to avoid it to resort to greater levels of diversification because of low performance Ineffectiveness or inefficiency should be regarded as a multi-option of divestures, restructuring or internal and external improvements not just simply an option to release a lot of money to buy new firms or subsidiaries in different business. Economies of scale and scope might not be realized rather reflect the opportunistic behaviours of managers to retain their positions of increased their salary due to increased responsibility. As a result, Board of Directors awareness and knowledge of company operations and evaluation of managers are necessary to identify the culprit in the organization. Transparency should be adhered while directors should convene regularly to have in depth grasps of the logical cause of a proposed diversification.

Finally, market research should be conducted in regions with varying preferences on packaging or product itself for effective multi-domestic strategy.

Plan and develop an appropriate marketing strategy for this implementation.

Direct Marketing

All sales of new products were through distributors. By using distributors, the company will believed it could develop new markets for new products more cost-effectively and quickly. The company believed that small distributors could also generate sales quickly by using direct marketing. Direct marketing aims to improve the effectiveness of the company's marketing campaign by recording and measuring the personal details of the customers and their behaviour. Direct marketing is the most cost-effective form of marketing. It allows the company to target customers with greater accuracy than any other method.

Direct Response Television (DRTV)

The focus of sales strategy switched from developing local distributors to securing more DR television opportunities. Intensive research was undertaken to identify infomercial opportunities around the globe. Direct Response Television is a media activity that permits or requests consumers to directly respond to the advertiser. DRTV is a medium that can show products actually in use. It combines the power of television with the precision of direct marketing techniques. By using this television technique we can directly approach the customers. This works most efficiently in getting clear attention towards our new product.

Customer Feedback

Attitudes regarding the sensitive nature of the purchase were revealed in a focus group of comments or feedback given by the customers. Some of the comments reflected initial doubt about the efficiency of the product but subsequent satisfaction. The research also revealed generally low long-term use of the product. Most consumers thought that the advertisement was very effective in explaining the product. Some found the TV presentation interesting and even entertaining. Customer feedback was an important marketing strategy of the company. Customer feedback is important in order to meet the needs of the customers. One of the best ways to find out what customers want is to ask them, like. The company also have to use of focus groups. Focus groups are usually 8-10 people that you gather to get their impressions of a product or service or idea. Customer feedback is a valuable source of information; essential for continuous improvement of the product.

Intensive media campaigns

The salon business in Ireland experienced a big revival in the mid-1990s. The extensive marketing for home use products helped create new or renewed awareness among salon users of EMS treatments and the Slender tone brand. Intensive media campaigns in Ireland were run to promote the salon products. In conjunction with salons, the company placed full-page feature advertisements in papers such as the Sunday Independent. The increased competition due to the salon revival, led to the company's greater promotional activity, which increased the demand for salon EMS treatments. In 1996, Biomedical Research promoted the fact that slender tone had been in existence for 30 years. A special thirtieth-anniversary logo was featured on the promotional literature for the professional market. This was done to give buyers the assurance of long-term company marketing support and technical backup in the face of many new entrants into the market.

Product Development

  • A material version of the product concept is created
  • The prototype should be attractive, easy to produce, and in agreement with costs
  • Laboratory and field testing

Market testing

  • Stage in which the product and the marketing program are tested under real market
    conditions
  • Permits problem identification
  • Useful for improving sales and profit forecasts
  • Market testing is optional, depending on level of investment and product advantages
  • The product is introduced to part of the total market.

Develop appropriate measures to monitor and evaluate the progress.

Measures to manage the marketing strategy

Business units with a performance measurement focus that complements their market strategy are generally perceived to be superior performers by senior management. This is not to say that only one of those perspectives should be recognized in a given strategic context. Instead, one perspective should dominate, with lesser attention being given to the other two.

Control systems are the significant connection between strategy execution and strategy adjustment. It is naive to believe a strategy can be successfully executed consistently without adjustments or corrections, both minor and major. Business managers must monitor customer needs and preferences, competitors' actions, technology development, and the performance of internal processes, as well as the overall financial condition of the business. The fundamental reason we measure anything in a business is to determine when and how we should shift behavior.

A multidimensional performance measurement and analysis system is the heart of an effective strategic control system. It provides the basis for organizational learning from an analysis of the results of the firm's actions. But a control system that only measures a single performance (example: financial performance) is not enough, even if it measures several dimensions of it. Financial performance is an outcome. By the time that information is available, the game, or at least the inning, is probably over. The multidimensional approach should include leading indicators so that there is an opportunity to influence the final results.

One of the most popular multidimensional approaches to performance measurement is the recent work by Robert Kaplan and David Norton on the "Balanced Scorecard". It is also the most popular one among managers. The balanced scorecard presents managers with four different perspectives on performance from which to choose the strategy-specific measures that become the centerpiece of the strategic control system. They are the perspectives on financial, customer focused, internally analytical and innovative.

Concerns on the identification of the key financial drivers in creating shareholder wealth are what the financial perspective is all about. Shareholder wealth is created when the business earns a rate of return on invested capital that exceeds its cost of capital. Growth amplifies this effect. A common analytical approach is to decompose return on equity, a common representation of return on capital, into its component ratios. The major component ratios are profit margin, asset turnover, and leverage; these should be the core of the financial perspective. Other important measures may be concerned with cash flow or working capital management.

The customer perspective covers measures regarding corporate or brand awareness and image, customer satisfaction, customer retention, and customer profitability. They may be leading indicators of what the financial measures will subsequently reveal. This is despite of the fact that these measures lack mathematically precise relationship with creating shareholder value, unlike the financial measures. For example, increases in brand awareness typically precede increases in preference, which leads to sales growth.

The internal perspective, on the other hand, is primarily concerned with the efficiency of the entire business system. It will be most effective when it views the firm as a system of business processes, all of which must be coordinated for the purpose of creating customer value. Compared to focusing narrowly on a metric such as inventory level, it may be more informative to analyze manufacturing cycle time with its implications for cost and reliability. Even if inventory level is critical, other internal processes or external demands may likely have influence on it. Order-to-delivery cycle time, response time for dealing with customer complaints, and total labor content are among the probable business processes considered to be important. Time is a key influence on many of these internal processes.

And lastly, concerns on the adaptation effectiveness of the business to changing conditions are the primary interest of the innovation perspective. In other words, it tells you how well the firm can learn to create customer value more effectively with new products and services, and more efficiently based on new internal processes. Whereas the internal perspective focuses on continuous improvement exemplified by the learning curve or experience effects, and the customer perspective on learning about the business' competitive position directly from the market, the innovation perspective requires a willingness to learn through experimentation and exploration. The key here is to learn from those experiences and improve on the central innovation processes. Important metrics include time from concept to market introduction, design for manufacturability, and value as a platform for future offerings.

Performance measures define the limits placed on vehicle configurations and loadings. These limits provide the set of constraints under which vehicle designers/ manufacturers and transport operators will seek to maximize the fleet productivity involved in any particular task. Generally, this can be done by increasing the mass of goods carried per trip and/or the volume of goods carried per trip. It can also be done by decreasing the average travel time per trip, the average travel distance per trip, the number of trips required to complete the task, the average rate of fuel consumption of the vehicles and/or the vehicle loading and unloading times.

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