i PRODUCT (DPM 30033) CHAPTER 2: NEW PRODUCT ROSLINA BT AB RAHMAN POLITEKNIK KOTA BHARU
ii Published and printed by: Department of Commerce Politeknik Kota Bharu KM.24, Kok Lanas, 16450 Ketereh Kelantan PRODUCT (DPM 30033) CHAPTER 2: NEW PRODUCT Published Edition 2023 © Roslina bt Ab Rahman All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, photocopying, recording or otherwise without the prior written permission of the Department of Commerce, Politeknik Kota Bharu. PRODUCT (DPM 30033) CHAPTER 2: NEW PRODUCT/ Roslina bt Ab Rahman
iii Thank you to Allah S.W.T because with His blessing and permission, I have been able to prepare an electronic book (eBook) for the DPM30033- Product course. This electronic book is a digital reading material, is hopefully able to give lecturers and students an alternative instrument to empower teaching and learning activities. It can help lecturers and student to gain knowledge in more interesting way, easy and in line with current technology. The writing of this eBook is only emphasizing at the topic of "New Product", which cover in Chapter Two (2) of DPM30033- Product course. God willing, this eBook will provide many benefits to students, because it not only contains brief notes, but also includes appropriate examples, diagrams, tables, and exercise questions that can help improve students' knowledge and understanding regarding "New Product" topic. At this opportunity, i would like to thank the Commerce Department, Kota Bharu Polytechnic for giving me the opportunity to write this ebook. I would also like to thank the members of the e-learning committee for the information, guidance and sharing that have been given to me during the ebook writing workshop, until the process of completing it. It is my hope that this ebook is best used by students to improve their understanding of the topic, and then be used as a reference in completing any related assignments. ACKNOWLEDGEMENT
iv The topic of "New Product" is one of the chapters which are included in the DPM30033-Product course. The topic in this chapter is divided into 3 subtopics, which are new product categories, new product development organizational structure and new product development process. Overall, this eBook will widen student’s understanding regarding varies categories of new products, who can play a role in the company effort to develop a new product, and finally what are the steps that need to be taken to develop a new product. The use of brief notes with appropriate examples, are combined well in delivering the course content. Meanwhile, the exercise questions are designed in the form of multiple choice, matching and structure which is placed at the end of the chapter to assessthe level of student understanding toward topic. ABSTRACT
v Topik “Produk Baru” merupakan salah satu bab yang terdapat dalam kursus DPM30033- Produk. Topik di dalam bab ini terbahagi kepada 3 subtopik, iaitu kategori produk baru, struktur organisasi pembangunan produk baru dan proses pembangunan produk baru. Secara keseluruhannya, eBook ini akan mengembangkan kefahaman kita berkenaan pelbagai kategori produk baru, siapa yang boleh memainkan peranan di dalam usaha syarikat untuk membangunkan produk baru, dan akhir sekali apakah langkah yang perlu diambil untuk membangunkan produk baru. Penggunaan nota ringkas dengan contoh yang bersesuaian, digabungkan dengan baik dalam menyampaikan kandungan kursus. Sementara itu, soalan latihan dirangka di dalam bentuk aneka pilihan, padanan dan struktur yang mana diletakkan pada bahagian akhir bab untuk menguji tahap kefahaman pelajar berkenaan topik. ABSTRAK
vi ABOUT THE AUTHOR Roslina bt Ab Rahman is a lecturer at Commerce Department, Politeknik Kota Bharu. She has 10 years’ experience in teaching DPM30033- PRODUCT course.
vii ACKNOWLEDGEMENT............................................................................................................................ iii ABSTRACT............................................................................................................................................... iv 2.1: CATEGORIES OF NEW PRODUCTS ....................................................................................................4 2.2: NEW PRODUCT DEVELOPMENT ORGANIZATION STRUCTURE.......................................................14 2.3: NEW PRODUCT DEVELOPMENT PROCESS .....................................................................................17 QUICK EXERCISE:...................................................................................................................................29 REFERENCES..........................................................................................................................................45 TABLE OF CONTENTS
1 Previewing the chapter: EXAMPLE 1: ( Sources from: www.shoeeffect.com /how-are-nike-shoes-made/ ) Nike shoes are among the most popular and recognizable shoes in the world. Every pair of Nike shoes are designed with expertise and crafted with care. The production process of Nike shoes is a lengthy and complex one, as each shoe is crafted to exact standards. Design and development The production process starts with the design and development of the shoe. Designers create a concept and sketch out the shoe, then the shoe is tested to ensure that it meets the highest performance standards. All Nike shoes undergo rigorous testing to How Nike shoes are made Learning outcome After studying this chapter, students should be able to: CLO 1: Write the concept of product and its decisions in marketing for business purpose.
2 ensure the quality and durability of the shoe. The shoes are tested for fit, cushioning, traction, and stability. The shoes are also tested for comfort and performance, to ensure that the shoes are suitable for the intended use. Once the design is finalized, the materials and components necessary for the shoe are sourced. Cutting and sewing Once the materials are sourced, they are cut and sewn together to form the shoe’s upper. This process is done by machines and monitored by trained personnel. The upper is then attached to the midsole, which is the cushioning material that provides the shoe with its comfort. The midsole is usually made of foam and is designed to absorb shock and provide support for the foot. Outsole and finishing The outsole is the bottom portion of the shoe that comes into contact with the ground. It is usually made of rubber and provides traction and durability. Once the outsole is attached, the shoe is inspected for any defects and then given a final polish. The finished product is then packaged and shipped to retailers.
3 Conclusion Nike shoes are made with expert craftmanship and attention to detail. The production process is a lengthy and complex one that involves sourcing materials, cutting and sewing, and attching the outsole and giving a final polish. The result is a high-quality shoe that is designed to last. EXAMPLE 2: ( Sources from: www.astroawani.com) Astro in collaboration with the Ministry of Economy and the Ministry of Science, Technology & Innovation (MOSTI) has organized a reality competition based on science, technology and innovation called INNOVATHON. INNOVATHON is a reality program shown every Saturday starting 15 July 2023, at 9.00 pm exclusively on Astro Ria (Channel 104). This reality program which has successfully gathered the participation of 1,033 individuals from all over the country focuses on solving socioeconomic issues. It aims to unearth innovative ideas among Malaysians to empower their talents and provide opportunities to be competitive in developing each other's ideas. The INNOVATHON program offers cash prizes and business development support of up to RM1 million to winners to improve and commercialize their innovative products. This First Season INNOVATHON has crowned NACOTS as the champion. This product is a smart medical device that can detect the genetic presence of cancer by just checking the blood. NACOTS is the result of a collaboration of related experts (engineers, IT experts, medical doctors) from the International Islamic University and the Malaysian Institute of Medicine, KKM, led by Associate Prof Dr Zainiharyati Mohd Zain. She is a chemistry lecturer at UITM and has served for 25 years. NACOTS- WINNER INNOVATHON SEASON 1
4 There are SIX (6) categories of new products. (David L., Louis E., 2006) Let discover the reason why each of them is consider as “new product”. • These products are inventions that create a whole new market. • No one knows about its function. Marketer need to share the knowledge about the product to potential customers. 2.1: CATEGORIES OF NEW PRODUCTS NEW TO THE WORLD PRODUCT DO YOU KNOW: On 30 January 2020, the WHO Director General declares the outbreak of novel coronavirus 2019 to be a Public Health Emergency of International Concern. On 11 March, WHO confirms that COVID-19 is a pandemic. In December 2020, just 1 year after the first case of COVID-19 was detected, the first COVID-19 vaccine doses are administered.
5 The introduction of 3D food printers revolutionizes the way food is prepared and decorated, providing chefs with ease and flexibility. This innovative technology enables chefs to create a replicate dish (food with the same physical characteristics as original products) or cater customize orders from affordable consumers. The 3D food printer opens a new platform for culinary creativity, allowing chefs to craft individualized dishes that precisely meet the unique requirements of their customers. • Products that take a firm into a category new to it. • The products are not new to the world but are new to the firm. And requires the new products process. 3D food printing is the process of manufacturing food products using a variety of additive manufacturing techniques. NEW PRODUCT LINES
6 McDonald's made its debut in Malaysia back in 1982, and ever since its launched, it has been renowned for its delicious burgers and fries. To cater to the local taste, McDonald's took a thoughtful approach and introduced special menus that quickly became beloved favorites among Malaysians. One such menu item is the McD's Chicken Porridge, introduced in 2002, which won the hearts of many. Additionally, in 2019, McDonald's introduced another local delight, the McD's Nasi Lemak, further establish its place in the hearts of Malaysians. McCafe just released two new ice blended MILO drinks on 25 March 2021 DO YOU KNOW: Acson aircond is a Malaysian brand that produces air conditioners that have innovative technology and provide comfort to users. But this brand is not the pioneer in the air conditioner industry. Before this, Panasonic and Mitsubishi have already entered the market with the same kind of product.
7 In 2012, McDonald's expanded its product lines, by offering beverages and desserts, including delightful cakes, through the establishment of the McCafe restaurant. This addition became a hit among customers, giving them even more reasons to enjoy their McDonald's experience. The success of these menus in Malaysia is also attributed to the fact that other marketers had previously introduced similar concepts, making these choices feel familiar and welcoming to consumers across the country. • Different variations of the basic product. Companies use this approach in order to attract more customers and to keep competitors from gaining an edge. • These are flanker brands, or line extension. Designed to flesh out the product line as offered to the firm’s current markets. ADDITIONS TO EXISTING PRODUCT LINES DO YOU KNOW: Pringles are available in several flavors. The standard flavors are including original, sour cream and onion, hot and spicy and many more. In Malaysia, additional flavors like potato crisps pizza and potato crisps zesty lime and chili is also available in the market to cater different preferences from variety group of customers.
8 Fraser & Neave Holdings Bhd (F&N) stands as one of the largest beverage manufacturers and distributors in the region, famously known with a leading brand such as 100PLUS, F&N Fun Flavours, F&N SEASONS, F&N NutriSoy, F&N ICE MOUNTAIN, OYOSHI, and several others. The F&N Fun Flavours product range has been categorized into three distinctive types: carbonated soft drinks, F&N sparkling beverages, and cordials. Understanding the diverse preferences of their customers, F&N continually enhance their product offerings. For instance, they are dedicated to expanding their variety of flavors for carbonated soft drinks, ensuring there's something to suit everyone's taste. The customer has the freedom to choose from the 12 flavors, including orange, sarsi, strawberry, grape, and many more. Moreover, recognizing that different occasions will need different beverage sizes, F&N has ensured that their carbonated soft drinks are available in various sizes. Ranging from 325ml to 1.5L, customers can conveniently select the most suitable size based on their needs and preferences. This strategy has contributed to F&N Fun Flavours' popularity and success in the market. Fraser & Neave Holdings Bhd is among the most established food and beverage companies, successfully owned 11 different product categories.
9 • Current products are made better. • Company restudiestheir product in order to provide improved performance or greater perceived value of new product. IMPROVEMENT AND REVISIONS TO EXISTING PRODUCT LINES DO YOU KNOW: This multi-purpose VEHICLE (MPV) from Perodua has attracted a lot of attention. Fans of this second national automaker, apparently increased in number when it introduced the refreshed Alza in July 2022. The second generation Alza replaces the previous Alza after 13 years in Malaysia market.
10 In contrast to the previous version, Bawal hijab has undergone notable changes and evolution in its material/fabric type, pattern, embellishments, and accessories. In the past, Bawal hijab had a more simplistic and basic appearance. However, nowadays, they have transformed into more elaborate and exclusive pieces. The current versions of Bawal hijab showcase various improvements and value added: the use of jewelry like diamonds, beads, sequins, embroidery, and patchwork. These additions contribute to a more luxurious and exclusive looks of the hijabs. • Product that is retargeted for a new use or application. • Targeted to new markets or market segments Voile is a lightweight, breathable, semisheer, plain woven fabric usually made from 100% cotton or cotton blend. REPOSITIONING
11 Cornflakes, also known as corn flakes, represent a breakfast cereal originating from toasted corn (maize) flakes. Traditionally consumed cold with milk, they were initially devised as a remedy for indigestion, subsequently evolving into a widespread staple in the American diet. Beyond their role as a breakfast cereal, the crushed flakes function adeptly as a replacement for breadcrumbs in various recipes, seamlessly integrating into an array of baked goods such as biscuits and cakes. Corn flakes is one of cereal products produced by Kellogg's, suitable at anytime, all the day. DO YOU KNOW: Baking soda is a leavening agent used in many baked goods. It also can be used as a pot and pan cleaner, laundry freshener, and for various health-related purposes such as easing heartburn and treating bug bites.
12 Cornflakes have gained popularity as a favored alternative to breadcrumbs, adding a satisfying crispness to baked dishes like meatloaf and breaded meats. To utilize cornflakes in lieu of breadcrumbs, the process involves crushing them. This can be easily achieved by placing cornflakes inside a ziplock bag and applying pressure externally. (cotting) Another notable culinary application for cornflakes centers around a delightful creation known as "Honey Joys." This delectable treat entails combining cornflakes with honey, butter, and sugar before baking the mixture in patty cases or muffin cups. In Malaysia, Honey Joys are also recognized as Corn Flakes Honey Biscuits, often gracing the table during festive occasions such as Hari Raya Puasa. • New productssimply replace existing products in the line, providing the customer with similar performance but at a lower cost. • The same product can be made at lower cost and thus its price can also be reduced. HONEY JOYS CORN FLAKES CRUMBS COST REDUCTIONS
13 Over the last 25 years, there has been a consistent trend in the tech industry towards reducing the size of various gadgets. Significant advancements have been made in the compactification of phones, computers, and watches. In the past, phones were as large as bricks and served limited functions, mainly focused on making calls. Personal computers used to consist of a box on a desk with a bulky monitor, and 32-inch TVs were considered massive and heavy, often needing their own dedicated furniture. However, this tech trend has brought about a revolutionary change in the industry. Today, powerful, and feature-rich devices have become more accessible and convenient for everyday use. Not only are they smaller in size, but they have also become much more affordable, TVs grew lighter yet bigger, as well as more affordable than ever before. DO YOU KNOW: Wood tends to be the most expensive window frame material. Thus, it has been changed by aluminium since it is the most low-maintenance and durable window frame material.
14 making them accessible to a broader range of consumers. This reduction in size and increase in affordability have contributed to the widespread adoption of these technologies, enriching people's lives and transforming the way we interact with modern gadgets. A firm needs to be organized in such a way that its personnel can stimulate and coordinate new product development. Some companies contract with independent design firms to develop new products. (David L., Louis E., 2006) New product committees are a temporary cross-functional management team, comprised of experts from various fields including marketing, finance, manufacturing, engineering, research, and accounting, is responsible for evaluating new product proposals. This committee has the capacity to assess concepts originating from engineering and design teams, as well as those suggested by marketers and salespeople who maintain ongoing interactions with customers. 2.2: NEW PRODUCT DEVELOPMENT ORGANIZATION STRUCTURE New Product Committees
15 Every organisation is made up of different departments. Each department contributes to the running of the business. The most common departments are Production, Marketing & Sales, Finance and Human resources. Department Functions Human resource Department • The role of Human resource department is to in charge of recruiting, training, and the dismissal of employees in an organization. Marketing department • Responsible for the sales and distribution of the products to the different regions. • Decides on the type of promotion method for the products, arranges advertisements and the advertising media used. Finance Department • Bookkeeping procedures • Preparing Final Accounts • Management of wages New product department is established to generate and refine new product ideas. This department takes charge for all phases of a development project within the firm, including generates and evaluates new product ideas, screening decisions, developing product specifications and coordinating product testing. New Product Department
16 The person who is responsible for lead the advancement of a new product within a particular product category, and for formulating strategic decisions regarding its marketing mix (Product, Price, Place, Promotion) throughout all phases of its lifecycle, is known as a Product Manager. In addition to this, the responsibilities of product managers encompass establishing procedural frameworks, crafting advertising and sales promotion initiatives, and collaborating with field sales representatives. A group of knowledgeable people that is engineered for some specific tasks. Their functions are to view the new project whether get help and support offered by various department. Temporary position because it focused more on specific task and will be terminated. Characteristics of a task force: • Project-oriented. A task force is established with the purpose of completing a specific project and achieving a distinct outcome. • Concise. Comprising essential personnel, a task force includes only those deemed essential for accomplishing the task, minimizing unnecessary staff. • Temporary. Task forces dissolve upon project culmination • Interdisciplinary. Business task forces often assemble professionals from varied organizational segments, promoting cross-functional collaboration. Product Managers New Product Task Force
17 • Consists of person who managing line extensions • Plan, organize, implement, and control new product development. • Need specific skills and knowledge to develop and critique new products. 2.3: NEW PRODUCT DEVELOPMENT PROCESS New product development process (refer Figure 2.3: New Product Development Process) is a time-consuming endeavor, taking nearly a year for minor revisions and over three years to complete for major breakthroughs. At each stage, management faces crucial decisions: whether to proceed to the next stage, abandon the product, or gather more information. Halting the development of a proposed product early and accurately can lead to substantial cost and labor savings. The first three stages hold particular significance as they deal with ideas and are relatively less expensive. As marketers progress to later stages, the costs escalate significantly, both in terms of financial resources and human effort required to carry out necessary tasks. (Michael J., Bruce J., William J., 2007) Due to fierce competition and rapid technological advancements, companies aim to shorten the new product development process to months rather than years. Some organizations achieve this by skipping certain stages in the development process. However, a formal development approach offers several advantages compared to unstructured methods, such New Product Manager
18 as improved teamwork, reduced rework, earlier detection of potential failures, shorter development times, and, most importantly, higher success rates. Figure 2.3: New Product Development Process • Formulate an idea for a new product or service. • Marketers need many ideas that could survive idea screening. IDEA GENERATION IDEA SCREENING CONCEPT DEVELOPMENT & TESTING MARKETING STRATEGY DEVELOPMENT BUSINESS ANALYSIS PRODUCT DEVELOPMENT TEST MARKETING COMMERCIALIZATION 1. IDEA GENERATION
19 SOURCES OF INFORMATION FOR NEW PRODUCT IDEAS i) INTERNAL INFORMATION Within the company, the potential for idea generation exists across all levels, making it crucial to incorporate the knowledge and suggestions of every employee into the initial search for new ideas. All major functions of the organization, including research and development, marketing and sales/ customer and technical services, as well as production and engineering, serve as valuable sources of information. These different departments possess unique perspectives and insights that can contribute to the generation of innovative ideas and solutions. By tapping into the collective expertise of the entire organization, the company can foster a culture of creativity and ensure a comprehensive and diverse approach to idea generation. (Michael. B and Susan. H, 2007) Production and Engineering •The involvement of production and angineering team is necessary to speed up development cycles, to provide the capability to produce larger varieties of new products and to launch new product that are competitively priced and reliable starting from early stage of product life cycle. Marketing and sales/customer and technical services •More in touch with customer •Customer and technical services personnel are frequently involved with the actual use of the product, in situ, and are therefore exposed to problems and opportunities which might be solved or exploited by new or modified products. Research and development •To develop, improve or integrate technologies specifically for new product
20 ii) External sources of information The company leverages external sources to discover new ideas, primarily by closely observing and actively listening to customers. Engaging with customers through meetings, conversations, and surveys enables the company to understand their needs and preferences, gaining valuable insights and suggestions for potential new products. Furthermore, competitors serve as another valuable external source for new-product ideas. By monitoring their product offerings and analyzing customer acceptance, the company can identify opportunities and make informed decisions about their own product development strategies. In addition to customers and competitors, distributors, agents, and suppliers also play a crucial role in providing valuable information about market trends, customer preferences, and emerging technologies. This knowledge can be utilized to shape the development of new products that align with market demands. External sources such as scientists, universities, patents, exhibitions, and technological consultants also contribute to idea generation. These sources provide access to cutting-edge research, innovative technologies, and potential collaborations that can inspire and enhance the creation of new products. By harnessing insights from these diverse external sources, the company can fuel its innovation process and stay at the forefront of delivering products that meet the evolving needs of customers and the market.
21 Review the idea to ensure that it has a market potential which is meets the customer wants and consistent with company capabilities and goals. The screening process serves as a vital step in distinguishing ideas with commercial potential from those that may not align with the company's objectives. This process enables the company to identify ideas that can be developed into concrete concepts and subsequently assess their technical feasibility and market potential. Many organizations use a checklist during the screening process to determine whether a project should be pursued further or abandoned. This checklist typically includes crucial factors such as the uniqueness of the product, the availability of raw materials, and the proposed product's compatibility with the company's current product offerings, existing facilities, and present capabilities. By employing such a checklist, the company can make informed decisions about which ideas warrant further investment and development, ensuring that resources are allocated to Customers Suppliers Scientists, universities, patents exhibitions, technological consultants Distributors, agents Competitors 2. IDEA SCREENING
22 projects with the highest likelihood of success and alignment with the company's overall objectives. In the process of concept development, a marketer is tasked with articulating the notion of a novel product, encompassing its features and the advantages it can offer to customers. These features are articulated in relation to factors such as convenience, usability, quality, functionality, price, and more. Upon the completion of the product concept formulation, a strict assessment with the target audience becomes necessary to gauge its potential. Concept testing involves subjecting the product idea to thorough scrutiny prior to its actualization. Throughout the concept testing phase, various methodologies are employed to present the concepts to potential customers, including: • Verbal exposition • Monochromatic line depiction • Colored line illustration • Photographic representation • Storyboarding • Computer-generated simulation 3. CONCEPT DEVELOPMENT & TESTING
23 Once the product development phase is complete, the company will allocate resources towards crafting an effective marketing strategy. This strategy will address the following key elements: 1) The initial part: focuses on the market that is going to be targeted, the projected value proposition, sales, market share, and profit objectives for the first few years. 2) The second part: outline of the product's estimated expenses for the first year in terms of price, distribution, and marketing. 3) The third part: long-term sales goals, profit targets, and marketing mix strategy. 4. MARKETING STRATEGY
24 Conducting a thorough business analysis holds significant importance within the framework of new product development. It should be carried out prior to any substantial engagement in the physical product creation phase. This analysis holds immense significance as it employs existing data to ascertain whether the product's costs, sales projections, and profit goals align with the company's financial prerequisites, thus determining the viability of the project in terms of profitability. Year 1 Year 2 Year 3 Net sales value 1500 2000 3000 Fixed costs 900 300 100 Variable costs 500 750 1000 Marketing costs 500 300 350 Forecast profit (400) 650 1550 Cumulative profit/ loss contribution (400) 250 1800 5. BUSINESS ANALYSIS
25 The company creates product prototypes intended for test marketing, which could undergo multiple revisions before the initial model transforms into the ultimate product version. Technical assessments are conducted to assess the feasibility of product manufacturing. Collaborative efforts are essential, exemplified by the cooperation between engineers and marketing executives. Engineers are tasked with translating the initial concept into a tangible product, while simultaneously, marketing executives must offer insights regarding consumer responses to the physical attributes of the product. Test marketing provides crucial insights for management to decide whether to proceed with the introduction of a new product or not. This final determination is a pivotal "go or no-go" verdict, as test marketing outcomes portray the level of product acceptance among its intended consumer bases. There are THREE (3) types of test market: a) STANDARD TEST MARKETS • Select a small number of cities, conduct a full campaign and measure performance. b) CONTROLLED TEST MARKETS • Appoint a few stores to be as company’s panel and track the behaviour of customer in the store. c) SIMULATED TEST MARKETS 6. PRODUCT DEVELOPMENT 7. TEST MARKETING
26 • Create a simulated shopping environment. Products that test poorly are pulled back and reconceptualized or discarded. For example, the design of packaging and marketing strategies of the product might be altered based on the revelations from these tests. Launch the new product in the marketplace. In this stage, full-scale production and marketing programs are planned and then implemented. The level of investment and risk are highest at this stage. Consumer adoption rates, timing decisions for introduction, and coordinating efforts with production, distribution, and marketing should be considered. (Michael. L, 2012) Case Application: XYZ Milk Sdn Bhd, operating under the brand name Joy Fresh, is a renowned company that specializes in producing dairy and beverage products. Among their successful product lines 8. COMMERCIALIZATION TEST MARKET RESULT (-) (+) PULLED BACK TO PREVIOUS STAGE PROCEED TO LATER STAGE
27 are milk, fruit juices, yogurt, and other offerings. In their continuous efforts to expand their product range and cater to their customers' diverse preferences, Joy Fresh's marketing team embarked on introducing a new addition to their fruit juices line. Currently, the fruit juices line already features a delightful and refreshing item known as "Sweet and Sour Fresh," which is available in five delightful flavors: apple, guava, mango, soursop, and orange. To explore new possibilities and seize a promising opportunity, Joy Fresh followed a traditional product development process. Idea generation: Based on market research, it was evident that mango flavor resonated the most with consumers, while soursop flavor received the least favorable response. In response to this feedback, the new product department at Joy Fresh, in collaboration with other departments within XYZ Milk Sdn Bhd, brainstormed and generated a total of 20 new product ideas. These ideas were aimed at fulfilling the company's plan to introduce a new flavor option for their sweet and sour product line. Idea screening: In order to progress through the screening stage, the new product ideas needed to align with specific company goals and demonstrate considerable market potential. Out of the initial pool of 20 ideas generated, only 7 of them successfully met these criteria and advanced to the next stage of consideration. Concept development and testing: Among the various ideas, the most promising one involves a combination of passion fruit with cucumber and lychee. This product stands out due to its high antioxidant content, significant fiber content, and its ability to provide essential nutrients such as vitamin A and vitamin C. Passion fruit plays a vital role in enhancing the nutritional profile of the product. Marketing strategy: Joy Fresh marketers come out with several product strategy options: Would a new type of packaging and labeling design be more appealing? What are the suitable product sizes? Business analysis: Joy Fresh marketer needed to ensure the new product would meet business requirements. The overall financial impact of the new portfolio was reviewed.
28 Product development: To find the perfect combination of taste, color, and other essential attributes, multiple versions of prototypes were created. Marketers diligently sampled these batches and relied on their expertise and judgment to progressively narrow down the number of prototypes. The iterative process aimed to refine the product and ensure that it met the desired criteria before finalizing the best version for production. Test marketing: All the prototypes underwent testing through a standard test market approach. For this purpose, two cities, namely Georgetown and Alor Star, were chosen as the testing grounds. The marketer carried out a comprehensive campaign in both cities to gauge the performance of the prototypes thoroughly. Through this process, valuable data and feedback were collected to assess how well the product resonated with consumers in realmarket conditions. Commercialization: Due to the positive outcomes from the test market, Joy Fresh proceeded with the official launch of the mixed passion fruit with cucumber and lychee product nationwide. The launch included two different sizes, 300ml and 1 liter, to cater to a wider range of consumers across the country. This strategic move aimed to capitalize on the product's popularity and ensure its availability to customers in various markets and regions throughout the nation.
29 QUICK EXERCISE: 1. Match the following pictures with the CORRECT categories of new products. A new flavour of instant noodle: Tomyam Improvement and revisions to existing product Variety use of margarine: beside baking, it also can be use for cooking. New product lines The invention of robot as a waiter to serve an order at restaurant. Additions to existing product lines A plastic drawer which change existing wood drawer New to the world product A new version of car which focus on bumper and skirting which replace the basic version. Repositioning Launch the same kind of loose powder from other company. Cost reductions
30 2. Identify the suitable structural organizational base on description below Description Structural Organizational A person, who responsible to set a marketing mix strategy for a product such as develop advertising and sales promotion programs and work with sales representatives in the field. A group of expertise within the company is assign to review new product’s proposal This department is responsible for converting the idea into physical product through the stages of production processes. A knowledgeable staff from different job scope, team together due to company latest project, and will be terminate after the project complete. 3. State the new product development process in particular order. STEP 1 STEP 2
31 4. NESTLE plan to produce a new item for their ice cream line. To develop as many as possible ideas, acquire suitable sources of new product idea to be discover by the management. INTERNAL SOURCES EXTERNAL SOURCES STEP 3 STEP 4 STEP 5 STEP 6 STEP 7 STEP 8
32 5. In which stage marketer will reduce numbers of ideas into a few good ones? A. Idea screening B. Product development C. Concept development and testing D. Idea generation 6. Drop error happen when? A. Management deliberately rejects good idea. B. Company chooses poor idea C. Company accidentally rejects good idea D. Management deliberately selects good idea. 7. Which of the following statements is TRUE about the categories of new product? A. New to the world product is the new product that introduce a new usage of product B. New product lines are the new product that allows a company to enter a new market for the first time C. Repositioning is related to new products that provide improved performance or greater perceived value and replace existing products. D. Addition to existing product line relates to the new products that supplement a company’s established product lines in terms of package sizes and flavours 8. ____________________ is a category of new product that allows a company to enter an established market for the first time A. New-to-the-world B. New product lines C. Repositioning D. Cost reduction
33 9. Internal sources of idea generation are______________________ i Competitor ii Sales officer iii Supplier iv Scientist A. i, ii B. ii, iii C. iii, iv D. ii, iv 10. Test marketing takes place when __________________ A. The product concept has presented to potential customers. B. Prototypes are available. C. Business analysis has figure out the profit projection. D. Firm launch the product. 11. Which of the following would be the MOST aspect to be explained during concept testing? A. Warranty B. Functionality of a product C. Promotion tools D. Retail display 12. ____________ involves a test of how a consumers & dealer’s reaction on handling, using, and repurchasing the product.
34 A. Concept testing B. Business analysis C. Product development D. Test market Structure Session: Past Year Collection: June 2016 a) New products are goods and services that differ significantly in their characteristics or intended uses from products previously produced by the firm. Describe FIVE (5) categories of new products (10marks) b) New product development process is a process of developing a new product or service for the market i. Identify the steps in the new product development process (8 marks) ii. Explain any (TWO) steps from the process. (7 marks) Past Year Collection: December 2015 a) New products must begin with ideas. Explain FOUR (4) resources for a firm to generate ideas in creating new product. Include suitable examples (12 marks) b) List THREE (3) sources of idea (3 marks)
35 Answer scheme: Formative Assessment: 1. Match the following pictures with the CORRECT categories of new products. A new flavour of instant noodle: Tomyam Improvement and revisions to existing product Variety use of margarine: beside baking, it also can be use for cooking. New product lines The invention of robot as a waiter to serve an order at restaurant. Additions to existing product lines A plastic drawer which change existing wood drawer New to the world product A new version of car which focus on bumper and skirting which replace the basic version. Repositioning Launch the same kind of loose powder from other company. . Cost reductions
36 2. Identify the suitable structural organizational base on description below Description Structural Organizational A person, who needs to set process, develop advertising and sales promotion programs and work with sales representatives in the field. Product Manager A group of expertise within the company is assign to review new product’s proposal New Product Committee This department is responsible for converting the idea into physical product through the stages of production processes. New Product Department A knowledgeable staff from different job scope, team together due to company latest project, and will be terminate after the project complete. New Product Taskforce
37 3. State the new product development process in particular order. 4. NESTLE plan to produce a new item for their ice cream line. To develop as many as possible ideas, acquire the suitable sources of new product idea to be discover by the management INTERNAL SOURCES EXTERNAL SOURCES Top management Customer Product Manager Channel member New Product manager Competitors Scientist Supplier STEP 1 IDEA GENERATION STEP 2 IDEA SCREENING STEP 3 CONCEPT DEVELOPMENT & TESTING STEP 4 MARKETING STRATEGY STEP 5 BUSINESS ANALYSIS STEP 6 PRODUCT INNOVATION STEP 7 TEST MARKET STEP 8 COMMERCIALIZATION
38 5. In which stage marketer will reduce numbers of ideas into a few good ones? A. Idea screening B. Product development C. Concept development and testing D. Idea generation 6. Drop error happen when? A. Management deliberately rejects good idea. B. Company chooses poor idea C. Company accidentally rejects good idea D. Management deliberately selects good idea. 7. Which of the following statements is TRUE about the categories of new product? A. New to the world product is the new product that introduce a new usage of product B. New product lines are the new product that allows a company to enter a new market for the first time C. Repositioning is related to new products that provide improved performance or greater perceived value and replace existing products. D. Addition to existing product line relates to the new products that supplement a company’s established product lines in terms of package sizes and flavours
39 8. ____________________ is a category of new product that allows a company to enter an established market for the first time. A. New-to-the-world B. New product lines C. Repositioning D. Cost reduction 9. Internal sources of idea generation are______________________ (C2) i Competitor ii Sales officer iii supplier iv Scientist A. i, ii B. ii, iii C. iii, iv D. ii, iv 10. Test marketing takes place when __________________ A. The product concept has presented to potential customers. B. Prototypes are available. C. Business analysis has figure out the profit projection. D. Firm launch the product. 11. Which of the following would be the MOST aspect to be explained during concept testing?
40 A. Warranty B. Functionality of a product C. Promotion tools D. Retail display 12. ____________ involves a test of how a consumers & dealer’s reaction on handling, using, and repurchasing the product. A. Concept testing B. Business analysis C. Product development D. Test market Structure Session: Past Year Collection: June 2016 a) New products are goods and services that differ significantly in their characteristics or intended uses from products previously produced by the firm. Describe FIVE (5) categories of new products (10marks) ANSWERS: 1) New-to-the-world products (1m) –Products that have just been invented and create totally new market. (1m) 2) New product lines (1m) – New products that allow a company to enter an established market for the first time. (1m)
41 3) Additions to existing product lines (1m) – New products that supplement established product lines (package sizes, flavors & so on) (1m) 4) Improvements & revisions of existing products (1m) – New products that provide improved performance or greater perceived value & replace existing products. (1m) 5) Repositioning (1m) – Existing products that are targeted to new markets or market segments/ valuable for other usage. (1m) 6) Cost reductions (1m) – New products that provide similar performance at lower cost, thus its price can also be reduced. (1m) b) New product development process is a process of developing a new product or service for the market. Identify the steps in the new product development process (8 marks) ANSWERS: 1. Idea generation (1m)
42 2. Idea screening (1m) 3. Concept development & testing (1m) 4. Marketing strategy (1m) 5. Business Analysis (1m) 6. Product Development (1m) 7. Test Market (1m) 8. Commercialization (1m) iii. Explain any (TWO) steps from the process. (7 marks) ANSWERS: 1) Idea generation • Formulate an idea for a new product or service. • Sources of idea: internal (employees, top management) and external (customer, competitor) 2) Idea screening • Review the idea to ensure that it has a market potential which is meets the customer wants and consistent with company capabilities and goals. • Go -Error, Drop- Error 3) Concept development & testing • Marketer is tasked with articulating the information of a novel product, encompassing its features and the advantages it can offer to customers.