Term Paper Title:- New Product

Development Process

Southeast University Bachelor of Business Administration

Batch:- 39

Course Name:- Principles of Marketing

Course Code:- MKT2123

Section:- 02

Date:- 12/04/2016

Submitted to:-

Md. Ibnul Aziz

Lecturer

Southeast University

Submitted by:-

Group Name:- Lumen

Group Members:-

(1) Iffat-Ara

ID:- 2015010000447

(2) Moriom Islam Jannati

ID:- 2015010000417

(3) Farzana Islam

ID:- 2015010000449

(4) Ramjan Ali

ID:- 2015010000448

(5) Shakir Mahmud Shourav

ID:- 2015010000454

Table of Contents

1. Executive Summary

2. Background of the term Paper

3. Introduction

4. Growth Stage

4. Eight phases of new product development (NPD)

5. Conclusion

7. References

Executive Summary

We gladly present you our term paper on new product development process. We

prepared the report on the basis of the study in stages of new product development

process. This report is prepared on the basis of both primary and secondary data.

Primary data was collected by questioning the concerned people of the company

during the period of the working hour; while secondary data was collected from

various printed documents like annual report of the company.

Although the main purpose of the report is to Stages of new product development

process. We would like to express our gratitude to you for your tiresome effort for

us which provided the opportunity to complete this project.

Background of the Study

We want to market Coconut oil. We have prepared this feasibility plan on that

basis. We have assigned a name for the product as “Keya Oil”. Since the raw

materials are very much available in our country, we have decided to give the

product an indigenous image.

“Keya Oil” is a kind of oil that prepared by coconut oil in bottles. For the

marketing purpose of the product we have decided to launch three product lines.

The Keya oil would be launched in the market at 250 ml. 500 ml. and 1 Litre

bottle.

We have set a reasonable price for the product so that all kinds of people can

afford to buy this oil bottle. We have followed the target costing pricing approach.

We would gain a competitive advantage, as this is a first hit in the market.

We have targeted a huge market segment for the product. Bangladesh is a large

populated country. Lots of people are looking for such a product.

Our target market includes health conscious people (especially women), children

and many other consumers, which we have segmented from the Demographical,

Geographical, Psychographic Behavioral point of view.

Since this is a Coconut oil, once the product is well promoted, we hope that this

product will be sold well.

Introduction

‘Keya Oil’ is a product that serve different segment of customer. The product is

coconut oil, which has other competitors in the current market. The Keya oil will

be processed and sold in plastic bottle of convenient sizes of 250 ml, 500 ml and 1

liter. The oil bottle will be very much refreshing and provide great support to the

sick and health conscious people. Our target market is very large with different

segments. Our expected sales are very high. The development cost is tk.1.5 million

approx.

Picture:- A 250ml Keya Coconut Oil

Product Profile:

Name of the Product : Keya Oil.

Type of Product : Coconut Oil.

Ingredients : Pure natural coconut oil, Vitamin E, Vitamin K.

Container : Stylish Plastic bottle.

Container size : 250 ml, 500 ml, 1 Litre.

Product Price : 250 ml for Tk. 50.

500 ml for Tk. 90.

1 Litre for Tk. 180.

Estimated Durability : 12 Months from date of manufactured.

Machinery used : Advanced technology imported from

USA, UK and Netherlands.

Growth of the Product

The Growth stage is the second of stages in the product life cycle, and for many

manufacturers this is the key stage for establishing a product’s position in a

market, increasing sales, and improving profit margins. This is achieved by the

continued development of consumer demand through the use of marketing and

promotional activity, combined with the reduction of manufacturing costs. The

situation of our new product “Keya Oil” is appeared by these:

New competitors enter the market.

Price stability or decline to increase volume.

Consumer education.

Profits increase.

Promotion and manufacturing costs gain economies of scale.

Eight Phases of New Product

Development (NPD)

Companies will face a problem. So they must develop new products, but the odds

weigh heavily against success. In all, to create successful new products, a company

must understand its consumers, markets and competitors and develop products that

deliver superior value to customers. It must carry out strong new. Product planning

and set up a systematic, customer driven new product development process for

finding and growing new products. The eight major steps in this process are given

below:

Idea Generation:- For developing new product successfully, a company must

understand its consumers, markets and competitors and develop products that

delivers superior value to consumers and take plan. This is the first step that is

common in any product development process. People have to sit down in a group

(or sometimes individually) and brainstorm. The thought process involved here

deals with coming up with new ways of serving people better. It also involves

listing down the problems that people have when accessing goods and services.

Outlining these needs will go a long way in helping your team come up with ideas

that are aimed at providing solutions for the needs and problems that society faces.

When taken to its logical conclusion, this thought process might also lead to the

emergence of an entirely new business, instead of just a new product.

The systematic source for our products idea. We have developed our product by

using both sources-

Internal idea sources:

• R & D

External idea sources:

• Customers,

• Competitors,

• Distributors,

• Suppliers.

New products are important to both customers and the marketers who serve them.

For companies new products are a key source of growth. In this report we are

showing our new product development idea. Our new product development idea is

about a “Keya Coconut oil”.

SWOT Analysis:- The product existence in the future is depending on its

strengths, weakness, opportunities and threats analysis:

Strengths:

1. Available input materials.

2. Low production cost.

3. Technological and marketing knowledge.

4. Strong distribution channel.

5. Easy manufacturing process.

6. Reasonable price.

Weaknesses:

1. It is easy to copy the idea by others.

2. Fragrance differ from the natural coconut oil.

3. Various Competitors.

Opportunities:

1. Monopoly market.

2. Large market.

3. High demand.

4. Might have a chance to get subsidies by Govt. to export.

Threats:

1. High competition in future by copying the idea.

2. Entrance of new product.

3. Alternatives are avoidable in some segment.

4. Uncertainty of launching a new product.

Idea Screening:- After generating many ideas, the logical step to take is to

scrutinize and scan those ideas to see which ones could be feasible and which ones

should be shelved for later. It is important to realize that we live in a world of

scarcity. Money and time are scarce resources and it would not be wise to focus

both resources on ideas which will not come up with an effective solution to

problems that many people in society face. Otherwise, if this mantra is ignored,

you will end up creating products that only serve ten people in the market. The

business will not end up making a profit and the massive losses incurred in the

product development phase will cripple the entire company.

Concept Development and Testing:- After developing concept, natural coconut

oil needs for testing with a group of target consumers. The concept may be

presented to consumers symbolically or physically. We test this product concept

with consumers before attempting to turn it into actual this new product. As a

result, consumers then may be asked to react to it by answering questions such as

those in following-

Do you understand the advantages of using our oil?

What are its advantages compared with general insecticide?

Are the consumers becoming satisfied by using this product?

What would be a responsible price to charge for our coconut oil?

Are the coconut is healthy for ours?

Would you buy such this (definitely, probably, probably not, definitely

not)?

The answers of these questions will help the company to decide about the

potentiality of coconut oil.

Marketing Strategy:- Our company wants to develop and introduce a new

Product. So, we have gathered information through in-depth interviews. We

made a survey of the market to have a clear idea about our market, our customer

demand, needs and wants. This information helps us to know about the current

market and prospects of our new product.

Bangladesh is a country of about 150 million people. The total market size of the

coconut oil industry is about 20 million and day by day it is increasing. We have a

spread nationwide market of different convenient product. People are now-a-days

very much concerned about the market and product conditions. So we have a

growing prospect of customers of “Keya Oil”. Among the population we worked

out few segments of customers who will prefer our product most.

Market Segments:- We have observed and analyzed the market and based on the

nature of the market we segmented the market in the following sectors:

Geographic Segmentation:-

1. Dhaka

2. Sylhet

3. Rajshahi

4. Khulna & Barishal

5. Chittagong

Demographics Segmentation:-

1. Individuals

2. Family

3. Sportsman

4. Business buyer

Psychographics Segmentation:-

1. Higher class

2. Higher mid class

3. Middle class

Behavioral Segmentation:-

1. Sick people

2. Health conscious

3. Sophisticated who take the new product from the market

Target market and projections:- Analyzing all the segments, we decided our

target market according to our product category. The target customers of “Keya

Oil” are rural people, health conscious people, sportsmen and tourists. The

company decided to charge Tk. 50 for 250 ml bottles, Tk. 90 for 500 ml bottles and

Tk. 180 for 1 Litre bottles, if we consider price versus taste received then we can

see that taste received is more in value. Therefore charging the mentioned prices

are justified. The following graph gives a clear idea of our target market.

Target Market:-

1. Women - 55%

2. Youngers - 15%

3. Tourist - 5%

4. General people - 25%

A pie diagram on target market is given below:-

Our company wants to develop and introduce a new Product. So, we have gathered

information through in-depth interviews. We made a survey of the market to have

a clear idea about our market, our customer demand, needs and wants. This

information helps us to know about the current market and prospects of our new

product.

Our oil product wants to satisfy its customers need. That’s why it is important to

identify the market needs. Our first consideration is to provide the best product to

its customers. That’s why we offer three different sizes of bottle with different

prices for its different segment of customers.

Target Market

Women Youngers Tourist General People

250ml : The lowest price for the rural mid social class and individuals.

500ml : Its target the sick people and tourist.

1litre : For a small family.

Business Analysis:- In business analysis involves a review of the sales, costs and

profit projections for a new product to find out whether the satisfaction of the

company’s objective.

Product Development:- A focus group will have to be prepared to lay out all the

steps that are going to be taken to create the product that the idea has envisioned.

Suppliers of parts needed have to be contacted and dealt with in a timely manner.

Patents might have to be filed in order to protect the development process and the

product itself. All these are processes that take time. As such, planning for them in

advance will help the owners and financiers of the idea know how long the new

product development will take.

In product development step, our company’s technical department develops the

natural oil into a visible product and calls for a large jump in investment. After all,

it will show whether the natural usable oil can be turned into a workable product.

Test Marketing:- After producing the natural oil bottles, it is tested in real market

setting that gives us experience with marketing the product before going to the

great expense of all introductions. When introducing a new product like the natural

oil bottles requires a big investment, it will be risky, so we may do a lot of test

marketing. In this stage, we understand the possibility of coconut oil market.

Competitor Analysis:- The major soft drinks and juice companies of current

market are:- Parachute Oil, Kum-Kum oil, Navaratna Oil, Amla Hair Oil etc.

These companies can try to entrance our market by launching new product lines to

compete us. Yet, we have distinct competitive advantage. That is our product is

still brand new. The other companies will take sometimes to enter into the market.

Till then we can have a monopoly market condition. The other advantage that we

have is lower price. We will sell products in reasonably lower price than other

competitors do.

To compete with the major competitors we can adopt the following measures:

1. Providing the best service to create high customer satisfaction.

2. Reasonable and acceptable pricing.

3. Promising and providing top quality product.

4. Launching highly effective mass promotional activities.

5. Continuous innovation and modification of the products.

6. Creating and maintaining long term customer relationship.

7. Creating “Brand Loyalty” among the target consumers.

Picture:- Three types of test markets

Commercialization:- After test marketing, we collect the information about the

natural anti-insect and take a final decision about this product. Finally, we are

introducing the natural anti-insect into the market.

Goals:-

(a) To provide consumers 100% environment according to their full demand.

(b) To raise a global claim for “from poison to purity”.

(c) To reach 80% of sales within first 2 years.

(d) To develop product by improving company’s technicians and workers.

Conclusion

Ours is a manufacturing company and it is a profit making business organization.

So we developed a new product idea of ‘Natural Oil Bottle’.

Every person and organization has some responsibilities to the nation and the

country. Having these responsibilities we thought of such kind of product which

would be a useful product for the targeted consumers and profitable for the

company. That’s why from many ideas we have selected the idea of this new

product by developing financial situation of our country.

So, we can say that “Keya Coconut Oil” is a product by which we can earn a huge

profit and fulfill our national responsibility.

References

(1) Principles of Marketing by Philip Kotler

(2) https://www.boundless.com

(3) https://en.wikipedia.org/wiki/Coconut_oil

(4)https://www.google.com/imghp?hl=en&tab=wi&ei=K

KkLV_-nAYzF0gSHwrKQBw&ved=0EKouCBYoAQ