Management Research Assignement Thanu

8/14/2019 Management Research Assignement Thanu

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Executive summary

The new product development and sustainable competitive advantage through portfoliomanagement based on Ansoffs product market matrix and BCG matrix the relative

market share of the company will be improved. The environment friendly value of

Heritage Lanka International creates goodwill and maximizes the shareholder wealth.

This report discusses about the new product development processes and case for the

selected strategic option. Assess the resource requirement of the process to be introducedand their sources. And planning and implementation steps are discussed.

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CONTENTS Page

Introduction. 3

Background information 4

New Product Development Process.5

The product life cycle and the product development

process 7

Feasibility study. 8

The cost and resources requirement for the proposed product development 9

Training and development requirement. 10

Plan and implement the product process 11

CONCLUSION. 13

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Introduction

The process of new product development includes research and development, trialproduct test, production flow planning, procure machinery and equipment, production

process, packaging, marketing and sales. Before introduce the product to the market there

have to be a pilot run and market research need to be done with regard to identifying thepotential of the market of the newly developed product.

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Background information

Heritage Lanka International is the newly born Export organizationwhich deals in the Textile handicrafts, Clay, Metal and Jewellery, Handknitted carpets ,Stone Crafts, Glass, Ceramic and Onyx, Camel andSnake skin products, Pottery, Costume dolls, Shell and bone productsand woodwork. The purpose of building such an export organization isdue to the fact that the handicrafts market has been largely ignored bythe Sri Lanka exporters.

Mission of Heritage Lanka International

The mission is to provide customers with the highest quality unique

products with antique Sri Lanka styles reflected and to provide themwith responsive and caringcustomer service. The online presence of Heritage Lanka Internationalis meant tofurther this mission.

Short- and long-term goals

The short-term goals of Heritage Lanka International are to generateenoughrevenue to keep the business running smoothly and to avoid fiscalcrisis along with taking care of customers in satisfying their needs anddemands. The longterm goals include fiscal planning, inventory turnover, variety andmagnitude ofgoods for sale, and attention to customer service, Sustain thecompetitive advantage the company has, and growth internally by newproduct development and customized service according to thecustomer preference. The main competitive advantage the companyhas over the others is uniqueness of its products (differentiation) Boththe short- and longterm goals are in keeping with Heritage LankaInternationals Mission Statement.

The Heritage Lanka International values that all of their processes areenvironment friendly.

Under these circumstances the Heritage Lanka International carriedout a detailed audit of the organization and some of the factors citedby them were downturn in retail sales in end of the 1990s with the

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economic changes, static sales over the years, reducing profit marginsetc. As recommendations for future strategies they suggested andfocused attention for the areas such as production orientation process,reactive managerial philosophy, long term product & marketingplanning, new product launching strategies and increasing the power

of brand name as well as strong promotional campaign etc. Moreoverthey cited their attention to the strategic importance of relationshipmarketing.

Against the background of the above findings, a strong marketingorientation, a far stronger and more effective planning culture for theorganization and a structured and proactive new product developmentprocess cited by the board as the key focused areas, the greatestpriority and the immediate attention needed.Gaining competitive advantage in marketing is a continuing process.An important part of this challenge is analyzing and strategically

responding to changing environment opportunities and threats.

New Product Development Process

New products are the future of any company, but new productdevelopment remains a risky and complicated process. A successfulproduct sets everything from product excellence to cost-effectiveproduction to compatible distribution channels and effectivemarketing. And while nothing can ensure product success, acomprehensive, interdisciplinary development process can help any

company to avoid some of the most common pitfalls.

As consumers needs and wants evolve as a result of changingattitudes, demographics and lifestyles, they actively seek out newproducts on the shelf. The time poor, cash rich consumer is placingunprecedented demands on manufacturers and retailers. The increasein the number of working women, the growth in single personhouseholds and the increased interest in and awareness of health,nutrition and the environment are to mention but a few of the distinctsegments that companies can target with new and innovativeproducts. These segments have distinct needs and requirements in

terms of the products and services they seek out. Manufacturers needto understand the changing consumer and develop products to fulfilltheir requirements in order to remain relevant and profitable.

Similarly, retailers are demanding innovation and proactive newproduct development programs from their suppliers as theycontinuously seek to differentiate themselves from their competitorsand be first to market with new and exciting products. With the advent

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of Efficient Consumer Response and Category Management, integratedworking relationships between retailers and their favored suppliersappear to be delivering results in terms of additional business.Suppliers need to invest heavily in these relationships throughdedicating staff resources towards meeting the innovation and new

products demands of their trade customers.

There are many reasons for new product development failure. It isimportant to examine the reasons for new product failure in order toprovide some direction, recommendations, and a model of bestpractice of the company. The main reasons for failure can be attributedto a variety of factors including:

-Poor marketing orientation and research and development-Lack of consumer and trade market research-Poor product performance

-High marketing costs, particularly for branded launches-Inadequate distribution, often reflecting weak links with retailers

Therefore is it important to carry out proper product developmentprocess in Heritage Lanka international. The need of the productdevelopment process is to controls the costs and time taken to developa new product. More importantly it helps to the organization to look onproduct development as investment rather than risk.The proposed new product will be antique style wooden furniture andthe target market will be big hotels which are 5 star graded.

When you examine companies such as 3M, Toyota, Sony, Black &Decker, Polaroid that succeed in product development have one thingin common, the development is divided into a number of stages. Theproper product development process should carry out the followingsteps.

CreativityHow do you continually come up with new ideas for your business?How do you develop new ways of attacking problems? How do you

capture and assess these ideas and distil them down to the ones thatare worth investing more time and effort in?Heritage Lanka international did a market research about its presentproducts. The survey includes the present and potential customers,who are hotels, restaurants and tourists resorts. The outcome of theresearch showed that there is a high demand for oriental woodenfurniture, doors and window frames with antique touch and carvingworks.

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Defining the ConceptHow do you turn an idea into a real business opportunity anddetermine the necessary investment and expected return? Thisrequires a number of questions to be answered. What is the market

potential? Is it technically feasible? What are the timescales? How willit effect existing products? How will the competition react? And so on.On this information the decision to go ahead and invest will be made.In this company already they are producing wood worked handicraft,the introduction of the new product will complement the present onesas well by joint promotions. And the reputation the company has willhelp them in marketing the new product in the existing market.

Developing the ConceptTypically the early part of this stage looks at defining the customerrequirements, followed by the translation into some form of prototype

or pilot service. The key is that perceived customer needs aretranslated into a possible solution to these needs. In reality the designor development of the product or service will continue into subsequentstages as the product or service is refined to the point that is releasedto the market.

Testing and Finalizing the ConceptThis is sometimes referred to as alpha and beta testing of products. Itis the controlled release of the product so that the sales, customer,manufacturing and support organizations can test and modify theproduct. One outcome of this stage could be that the concept was

wrong, there is no market, and the product should stop prior tocommitting to the expense of releasing it into the market.There could be pilot product acceptance survey amongst the top 25- 5star tourist hotels and restaurants.

Full Product LaunchThis is probably one of the most difficult and expensive stages. Itincludes developing the market, the correct sales channels, rampingup the volume of business and supporting the product.The production facilities and the expertise must be acquired and theproduction run have to be there. The strong marketing campaigns,

advertisements and promotions could help simplifying the process ofmarketing the new product.Managing the Life CycleManaging the decline of a product, or extending its life with a "mid lifekicker", is often not considered. Unfortunately when this activity is notplanned the need to develop new products is often triggered by fallingsales. At this point there may not be enough time for new products tobe developed.

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There are number of benefits associated with implementing a newproduct development system which can reduce the risks in financiallysupporting a new product too. They are

Faster new product introductions Higher success rates at launchEarlier detection of failures Being on time and on budgetGreater customer satisfaction Better launch plansCycle time reduction Less recycling/reworkImproved teamwork Improve market share in the longrun

The product life cycle and the product development process.

The concept of the industry life cycle can be used at the level of product offering andeven then can be used at a number of levels. For instance, we could consider the product

life cycle of the automobile, or the product life cycle of diesel power cars, or of leadedpetrol cars or convertibles. The model presents a generalized account of the stagesthrough which a product passes from its initial launch until its final withdrawal from the

market due to obsolescence.

The product life cycle can be used in a number of ways.

-To determine appropriate strategies for each product in the portfolio

-Each stage brings with it a number of strategic prescriptions.

One great strength of the product life cycle is that it encourages managers to look beyondpresent returns when deciding on product investment strategy.

To evaluate investment in products-Investment in products should be taken on the basisof the forecast net revenues of the product over the life of the investment asset. The stage

of the product life cycle gives an indication of whether these revenues may be expectedto grow or not and also the likely level of further investment needed.

To develop performance measures for each product-Traditional financial control

measures are of greatest use in the mature and decline stages where the most appropriatemanagement style is one of critical use of resources and maximization of cash flows.

During the introduction and growth stages, the factors that should be controlled are ones

related to the product's market success because these will determine its future financial

value.

Heritage Lanka international must maintain the product introduced in the growth phase

for a considerable period to yield more returns.

It can find outsource vendor companies for doing its marketing and promotional function

where they can acquire expertise and save on costs along with concentrating on their corebusiness activity.

Feasibility study

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The marketing research has to be conducted to find out the probability of success in

regard to the new product development. The research procedures would be as follows,

Developing the concepts, methods and design

Collection of data

Processing and editing of data

Production of estimates and projections Data Analysis-Interpretation

Review procedure

Information dissemination

The concept here is introducing new product of furniture targeting the high class market.

A questionnaire could be developed and tested for correctness and suitability by doing a

pilot survey using it and them it will be revised according to the suggestions made in thepilot survey and to provide complete details of market information what ever not

provided in the pilot survey. The corrected questionnaire could be circulated among the

interior developing companies of high class hotels, tourist attractions and homes. Thedetails will be collected with regard to the following factors,

Current trend and style preferences of the market will be assessed and the percentage ofantique wooden furniture requirement could be identified.The development and circulation of questionnaire could be done through a market

research firm, where they have the experience, expertise, staff ,detail statistics and

addresses, contacts of the targeted population of the survey.

Potential buyers identified- the questions can include a part like asking them if there is a

penetrating pricing strategy (still it will be high, since they are targeting high class

market) , which is offers a comparatively reduced price their potential forecasted value ofpurchasing .

The gathered data will be tabulated by the outsourced firm, where they have analyticalstaff experts and the final out come could be interpreted in order to assess the market

condition together with the qualitative data collected . The detail report of the market

condition will be shared with finance, designing, production, purchasing, marketing andhuman resources division enabling them to start planning the functions with regard to this

introduction of new product.

The secondary information will be the past trend analysis of the styles and fashion of theproduct category, the customer preference and demand for customized products and cost

of producing them.

The environment scanning could be done in order to identify the competitors and existing

players in the market and through a competitor analysis their strategies, strengths,weaknesses, promotional campaigns, potential direction of moving ahead etc could be

analyzed.The other market conditions such as political climate, spending pattern, cultural norms,

styles and trends of furniture market, substitutes to wooden furniture such as plastic and

synthetic material , fiber products, Granite products and the potential new entrants who

will copy the strategy of Heritage Lanka international could be identified.

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Since the production process involves cutting trees, the company should take care of the

environment by replanting the removed trees and maintaining forests as a good corporate

citizen of the society.

The cost and resources requirement for the proposed product development

Financial estimation resource-production for 6 months-projected

Description Amount

LKR

Staff costs( 6 months)900,00

0

Office and administration costs (6 months)600,00

0

Total Office costs1,500,00

0

Market research

500,00

0

Customer survey and group discussion50,0

00

Promotional campaigns1,000,00

0

Production facilities and machineries2,500,00

0

Consultancy charges for expert trend analystin designing

70,000

Raw materials2,000,00

0

Labor charges800,00

0

Environmental refurbishing activities 900,000

Total operational costs7,820,00

0

Total costs for projected production of 6months

9,320,000

Resources needed

-Financial resources needed to implement the whole product development process.

-Expertise in designing the furniture with wood carving and antique look.-Market research firm and expertise to outsource.

-Wood, timber and wood pulp which is preserved and protected from natural factors such

as sun light, water, air and insects.-processing plant with facilities such as cutter for large logs, crane to lift them,

ergonomically designed workspace to the creators of the actual wood carvings and a large

factory space, which has the easy accessibility and transport infrastructure to transportraw material and finished goods.

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- Distribution facilities, with electronic marketing platform , where the company can

display its product designs and choices. The computer aided designing technology could

be used in involving customer suggestions and ideas in to the designing process, whichwill satisfy the customer.

Training and development requirement

The staff who are working in wood work could develop their skills in wood carvings and

designing of antique furniture.The existing staff need to be trained in e marketing. The supply chain management

electronically needs training the staff in IT facilities. This could be outsourced to a IT

consultants with a cost of LKR 100,000.

The HR staff need to be trained in dealing with outsourced vendor companies.

Sources of resources required for the new product development.

-Financial institutions, bank loans and reserves carried forward of the company could be

the source of financial resources.- IT service providers to design, implement and train in the e marketing process.

-Raw material, mainly wood could be obtained from government timber corporationlicensed wood cutting contractors.

-Labor, skilled in furniture making wood carving, could be identified and recruited form

the vocational training institutions of handicraft and wooden furniture making.

-Designing and creativity- Designing people from arts university, who has a degree indesigning and arts.

-Market research facility- outsourced to the expert firm.

Plan and implement the product process.

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Market and product testing flow

Market survey, group discussions to identify market preferences

Sample designs and test product development

Identify suitable timber and corrective measures

For flaws in quality

Review trend analysis and style preferenceGlobally as well as locally

Production

Customer satisfaction surveys and modification to the

Product and process

Monitor and control the implementation steps

Even the planned strategy of product development adopted the company should watchout for the other opportunities arises in the market and exploit them immediately, beforethe others do.

Production flow

Computer designing of the product according to

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Customer preferences

Preparing wood for processing

Cutting and making of furniture

Wood carving and cutting the designs

Dyeing

Washing

Preventive measures from natural factors

Finishing coat of spraying the wood flavored die

Finishing

The product design adopted and the finished good produced with unique differentiated

features of customer preferences and designs. This will increase the margin of profit tothe company by creating a cushion of differentiation which is the competitive advantage

of the company.The Heritage Lanka international has the value of environmental friendly , which requiresa tree replanting expense and a firm to implement it or can donate funds periodically to

the timber corporation and forest ministry.

Even though it involves high costs it will increase the value of the company by increasingthe share value. The mission of satisfying the customers contributes towards achieving

the ultimate purpose of the existence of the company, which is generation of high profit

margins.

The implementation of the development process need to be reviewed and modified

periodically to avoid flanker attacks from the competitors through converting weakness

in to strengths and building on strengths.

Marketing and positioning strategies needs to be developed in detail in refining the

marketing mix of the offer. Heritage Lanka international can extensively advertise andpromote the product with discounts penetrating prices to capture the market and position

them selves firmly in the local as well as global market.

Positioning Strategy

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Heritage Lanka International will position it as a premier HandicraftsCompany, Who would create an image of Sri Lankan Heritage. Itsinnovative hand made crafts will really serve the purpose of real senseof satisfaction among the customers.Heritage Products are pure handmade, quality, natural, beautifulness,

creative and innovative handicrafts from Sri Lanka. And the newproduct also adds value to the portfolio.

Better relationships with international distributors and freight forwarding and shipping

companies by entering in to outsourcing vendor partnership agreements.

Adopt resource based view and build on core competencies and outsource the non core

activities, provided the staff and organizational structure facilities are capable in

managing and handling the core business activities without interruptions.

The throughput accounting helps in identifying bottlenecks of internal processes starting

from designing, ordering the raw materials and supply chain management, productionprocesses and sales and marketing.

And the secondary activities of the value chain could be developed and improved inhandling the challenges of the new product development process.

Human resources functions could be modified and empowered in recruiting, selecting,

training and orient new staff for the process.

Procurement functions could be developed and the staff involved could be trained in new

technology adoption and just in time systems could be introduced , where the stock

holding , lifting and transporting stocks from stores to factory will be reduced. Howeverin order to have an uninterrupted supply the links in the supply chain have to be strong

and reliable with regard to timely, quality supplies.

Finance functions could be trained in costing the customized products and provide

realistic estimates.

CONCLUSION

The successful new product development ensures the going concern of the company byadding value in to the product portfolio. Having wide range of products in the portfolio

boils down the risk of over dependent nature in few products and markets. The productdevelopment of Heritage Lanka international gives a sustainable competitive advantageof differentiation which is focused in to high class customers with comparatively high

prices. As a result the overall profitability increases. And by the corporate social

responsibility value it has it has a good image amongst the market players.

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Management Research Assignement Thanu