New Product Development - Coca-Cola Company - Assignment Example

New Product Development. Case Study: Coca-Cola Company Name Institution Date Table of Contents Table of Contents 2 Executive summary 3 Current market situation of coca-cola company 5 Objectives of new product development in the chosen organisation 6 An outline of the New Product Development project and the expected outcome 8 Stages of the New Product Development project plan 11 Pre-Launch marketing 11 Launch Dates and Venues 11 Launch Execution 12 Post-Launch Promotion Campaign 12 Monitoring and Re-execution 13 Specification of the NPD project including projected cost, time scale and the required resources 14 The marketing budget for TV and distribution costs is main expenditures that coca-cola company expects to incur in launching the new product. Since the main competitor of localime is Nestle juices whose advertisements increases during summer time when the juice season is considered to be at its peak, it means that the localime will need to follow the same model. This will involve advertising so heavily during summer period on TV channels and at distinctive timings. The allocated total advertisement expense for the TV channels will be Kshs. 752, 226 for 3 days based on the channel timing and number of ads. On the other hand, coca-cola company will incur costs in paying its distributors who will carry out the selling of localime together with other Coke products. As a result, high-end retailers will be selected initially so as to develop an exclusive image of the localime brand in order to position it as a healthy product within the minds of consumers. Initial launch of the product will be followed by its expansion so as to cover extra cities that can cater for a large customer base as well as involve in marketing in order to generate more revenues. In addition, distributors will offered with incentives to enable them place the localime product at strategic locations so as to catch the eye attention of the customers. Therefore, the estimated cost for distribution of localime for a period of one year will be Kshs. 740,000,000. Other costs will be incurred on newspapers and billboards as optional advertisement media with a cost estimate of Kshs. 120,000,000 for a period one year (McGrath, 2004). 14 Implementation of the Project Plan 15 Project monitoring methods 16 Evaluation of the project and future recommendations 16 References 17 Executive summary Over centuries Coca-Cola Company has acquired a distinctive privilege in operating as a premier organization within the beverage industry. Through its consistent market research alignment, Coca-Cola Company has persistently discovered solutions to both bridge and mitigates any gap between what its consumers yearn for in relation to the things that seem to be available to them. Due to its ability to find the best way to fill the void, coca-cola company been able to manage its brands amongst the few elite who still hold a very special impenetrable bond with all their customers. Essential to all products and services is the idea of birth, growth, maturation and ultimate demise. On the other hand, most of organizations have taken keen interest in creating, launching new products or services so as to ensure their long-term viability within the marketplace. In this case, coca-cola company has decided to create, launch as well as establish its new product referred to as localine. In the project the company has focused on showing how challenging it is to launch the new juice known as Localime in Kenya and how it is expected to market it so as to make the launch successful. The main aim of diversification is maintain the consumer relevancy as well as the never ending investigation to achieve growth targets. Therefore, Localine aims are expected to embody the marketing strategy for coca-cola through the following ways: To formulate and construct an ideal image that relates localime with a healthier and positive way of living, To make use of the residual benefits achieved from localime such as health factor, sports or athletes in order to expand and broaden the Coca-colas’ brand recognition. In this report, the current market situation of the coca-cola company is described in detail. An extensive discussion on the marketing strategies that are put in place so as to successfully launch the new product is also provided. Furthermore, the goals of launching localime product as well as issues that coca-cola company might face while in the process of achieving its set out targets are discussed. There is also deliberation on the exact method through which the company will apply in launching and monitoring its new product. Since there is no project taken without a cost, a focus is also paid on the cost side of price setting based on the company’s both long-term and short-term objectives taking note of revenue generation from the localime product. Therefore, there is a thoroughly laid out plan for the coca-cola company so as to make the launch of localime successful (Gerwin & Ferris, 2004). Current market situation of coca-cola company Coca-cola enterprise was established in 1986 and currently provides more than 400 brands in about 312 countries. It is one of the leading manufacturers, distributors as well as marketers of the non-alcoholic beverages syrups and concentrates across the globe with brand equity of about 48 to 50 US dollars. The company with its branch in Kenya plans to join the fruit juice marketing which is mainly dominated by Nestle that holds the highest juice share within the market. Coca-cola Company operating in the processed food and beverages industry is highly considered as one among the largest industrial sectors which accounts for about 27% of the aggregate production and approximately 16% of the total employment within the manufacturing sector. The company intends to launch the new fruit juice under the unique name Localime that is a lemon-flavoured juice. This decision to introduce a lemon-flavoured juice was made after carrying out a market research that portrayed the preference of a majority of people for the juice that has lemon taste as illustrated in the figure below (Aaron & Lord, 2000). Objectives of new product development in the chosen organisation Coca-cola is the company’s brand name that especially in Kenya has developed through its popular fizzy drinks, for instance, coke, Sprite and Fanta. After carrying out market research, it has been discovered that majority of the people are more concerned about their health. These people have become doubtful of the products that are launched under the brand name Coca-cola which has made the company to view the idea of investing in development of a healthier brand image to be of great importance. However, the general unhealthy image perceived of the fizzy drinks has made coca-cola to develop as a potential health risk within the minds of people who are conscious about health. Therefore, to launch the localime juice in Kenya is one of the objectives of coca-cola company so as to promote its brand image that appeals to the entire public as a healthy and refresher product. In addition, the promotion of the brand image is focused on achieving a higher market share in Kenya as well as contributes to an increase in the general brand loyalty of the company (Kim & Wilemon, 2002). Capturing juice market is also another objective for coca-cola launching the localime product. This is in order for it to become a leading brand name within the juice industry in Kenya. Based on the market research carried out, it has been established that the juice industry in Kenya is dominated by various quality brands that are competing for the juice market share. Thus, in order for the coca-cola to operate as a big company within the juice industry it is required to come up with an idea of supreme quality that can lead to a unique offer in the market, hence, expected of localime. However, coca-cola company should not totally rely on the localime brand name so as to maintain its competitive edge, despite its advantage of having an accepted brand name. Furthermore, capturing the market by launching a new product may be comparatively easier in proving the market with something new that is absolutely vital for the company in achieving its goal. The provision of new product is required to be the focal point of the coca-cola company so as to attract a number of people to have higher preference for the localime over other juice company both in Kenya and across the globe (Keizer, Vos & Halman, 2005). Achieving wider brand recognition is another objective of the coca-cola company. Since most of the people in Kenya, though, link the brand name coca-cola to the company’s drink, they are not aware of the various products that coca-cola company offers in the world. Therefore, with the introduction of localime, it is believed that there will be additional dimension of diversity in positioning the brand name within the minds of the company’s customers and determine how they will associate with the brand coca-cola. In this case, the main goal would be to reach a point where individuals would consider coca-cola as the leading brand name within the fizzy drinks and juice industries. In addition, the company’s higher brand loyalty and healthier image will contribute to the brand acceptance among the vast number of people. The ultimate objective of offering a healthy juice that represents the brand would mean changing people’s perception on the products of coca-cola company and the brand at large. This suggests that change would be aimed at improving the image within the minds of consumers as well as making a country wide acceptance as one of the main goals (Jayaram & Narasimhan, 2007). The coca-cola company’s concern would be expanding the juice product line through the introduction of new flavours. This becomes important for the company to remain competitive in the market since the product line would be totally distinctive from the rest of other juices that are launched by the coca-cola company so as to indicate the main focus on the product line is to promote a healthier image of the brand in Kenya (Ulrich & Eppinger, 2004). An outline of the New Product Development project and the expected outcome Outline of the NPD Outcomes from the project Capturing the juice market through unique selling proposition(USP) The ability for the coca-cola company to get people in Kenya switch from their current and most preferred juice company will result from unique selling proposition (USP). Through unique selling proposition of the localime product, coca-cola company will emerge out as an extensive marketing company. However, the initial absence of diversified flavours may hinder the company from capturing the big market share. Changing a brand image and increasing its healthier recognition Achieve a brand image that appeals to the entire public as a healthy and refresher product. The promotion of the brand image is focused on achieving a higher market share in Kenya and will contribute to an increase in the general brand loyalty of the company. Higher brand loyalty and healthier image will contribute to the brand acceptance among the vast number of people. Offering a healthy juice that represents the brand will change people’s perception on the products of coca-cola company and the brand at large. However, Changing the brand image will take more time. Thus in the short-run the localime juice product may become not appealing to the highly considered health conscious segment. Expanding the Product Achieve an expanded juice product line by the added flavors, staying competitive within the market. Unique Product line from the rest of other juices launched by the Coca-Cola brand so as to have a healthier image of the brand in Kenya. From the above outline, it can be examined that through the brand extension strategy companies with existing brands such as coca-cola can easily introduce new products under such brand names to their marketplaces. Taking note of this idea in mind, Coca Cola Company, therefore, has taken the task of launching its first non-carbonated and lemon-based juice drink. This is licensed under the new of ‘Localime’. The launch of this new brand will ensure the continued viability as well as market relevancy of coca-cola, particularly in Kenya. Furthermore, it can be analyzed that Coca Cola’s primary objective is to create, gain market share, and set the ‘Localime ‘brand with the definitive goal of establishing another billion dollar brand within their existing variety of brands. Stages of the New Product Development project plan The action plan on how the coca-cola company will carry out in launching the new product is divided based on the following broad categories and succession. Pre-Launch marketing The pre-launch marketing will include making advertisements through the print media and TV. This will be played in various channels that are popular in Kenya and across the globe, though, with reasonable frequency. Coca-cola Company will be able to raise interest in their audiences through the pre-launch ads will in addition, increase awareness among the general public about the new product expected in the market. As a result, the company will be able to cultivate the general public’s anticipation about Localime, particularly in Kenya where it is expected. Advertisements within the print media as well as billboards will be created in a manner that raises curiosity among the consumers about the localime product (Cooper, 2001). Launch Dates and Venues The launching of localime product will be done in the final week of 2012. The initial launch will be targeted in some selected and major cities in Kenya such Nairobi, Mombasa, Eldoret, Kisumu, Thika and Kitale. This is in order to assess the various responses from consumers as well as make judgement on the potential growth of the localime product. The satisfaction obtained from the initial reaction will determine the expansion of the area that is covered by the coca-cola company with the initiation of localime. This is focused on gaining Kenya wide recognition and acceptance of the new product. Launch Execution The selected cities will be launched with localime product which will take place in the final week of 2012. In its initial launch, localime will be distributed in various supermarkets within those cities. Exclusive vending standards will be set up under the support of coca-cola representative sales personnel and gather feedback from the consumers. This will take place for about one week in the entire cities and later launch the localime product in the whole city to cover all the retail shops across the city. From the TV Commercials and the print media ads feedbacks will be collected from consumers and the celebrities of the coca-cola brand. Therefore, through the celebrity endorsement the company will be able to achieve an enhanced awareness and acceptance of the localime product among the vast and general population in Kenya. Post-Launch Promotion Campaign In this stage there will be breakage of the localime product image. Creation of the ads that will last for a month and can be played on frequent basis and on the popular channels will be taken into consideration. Successful launching of the product in the market will increase its awareness through sponsoring sport events at city levels and campaign in the major universities and multinational offices within the cities. The micromarketing of the coca-cola company will undertake the provision of free samples to university students and the office workers. However, in the post-launch promotion, the company will make use of the Coke Studio so as to endorse the localime as a way of pitching it to the fans of Coke Studio. Continuous search for potential ventures which can expand the customer base as well as increase the recognition of localime will be taken into consideration. Monitoring and Re-execution Once the localime product is in the market for a significant amount of time of about 3 to 6 months, the company will pay attention on matching its goals of launching the localime product with the outcomes achieved within a given time frame. At this time, continuous assessment of how the product has been accepted in Kenya which is the company’s marketplace will be implemented. In addition, there will be location of where and how the coca-cola company’s marketing and promotion strategies worked and in which areas that may need improvements. This suggests that after receiving all the feedback, the company will either revisit marketing the localime or expand in other cities by increasing the amount of flavour contents in the product. For coca-cola company to stay in competition with the rest of other juice brands, it is expected to launch the new flavors with same ambitions that are associated to such brands as in the case with Localime. On the other hand, if the Localime decline to perform as expected in the juice market, then the company’s focus will change to revisiting the market strategy of its new product. As a result, coca-cola company will modify its marketing framework for localime (Khurana & Rosenthal, 1998). Specification of the NPD project including projected cost, time scale and the required resources The marketing budget for TV and distribution costs is main expenditures that coca-cola company expects to incur in launching the new product. Since the main competitor of localime is Nestle juices whose advertisements increases during summer time when the juice season is considered to be at its peak, it means that the localime will need to follow the same model. This will involve advertising so heavily during summer period on TV channels and at distinctive timings. The allocated total advertisement expense for the TV channels will be Kshs. 752, 226 for 3 days based on the channel timing and number of ads. On the other hand, coca-cola company will incur costs in paying its distributors who will carry out the selling of localime together with other Coke products. As a result, high-end retailers will be selected initially so as to develop an exclusive image of the localime brand in order to position it as a healthy product within the minds of consumers. Initial launch of the product will be followed by its expansion so as to cover extra cities that can cater for a large customer base as well as involve in marketing in order to generate more revenues. In addition, distributors will offered with incentives to enable them place the localime product at strategic locations so as to catch the eye attention of the customers. Therefore, the estimated cost for distribution of localime for a period of one year will be Kshs. 740,000,000. Other costs will be incurred on newspapers and billboards as optional advertisement media with a cost estimate of Kshs. 120,000,000 for a period one year (McGrath, 2004). Implementation of the Project Plan Once localime achieves the market sustainability in Kenya, coca-cola company will implement its brand extension strategy so as to expand its product life cycle. This will achieved through the marketing Mix of four Ps (Product, Price, Place and Promotion). The new product which is set for launching is basically a refreshing and fresh lemon juice drink that is offered in the market under the new brand name localime. It is distinctive within the market because of its non-carbonated drink content. It will be packed in the 250 ml, 500 ml and 1.5 litre both glass and plastic bottles so as to keep with the industry standards. Coca-cola Company will use pre-existing industry benchmarks as its pricing strategy. Although inflated prices are considered to be detrimental to the general sales volume of the localime, through intense and well channelled marketing messages, the price of the product will have to be compensated for because of its added benefits such as health benefits and as a drink athlete. In placing the localime, coca-cola will initially distribute the product with the three main cities of Kenya, Nairobi, Mombasa and Kisumu. Coca-cola Company’s philosophy of using geographies of brand viability is to ensure that primary test outcomes are examined without necessarily incurring heavy monetary costs on its supply chain. The promotional strategy undertakes independent and con-currently operating campaigns. Through celebrity endorsement, coca-cola company will spontaneously capture the video footage of people who travel around the city while tagging beaten down and the damaged neighbourhoods of Kenya with the coca-cola themed designs (Rosenau & Milton, 1996). Project monitoring methods Statistical reports, market research, test marketing, pricing and promotion strategies are key project monitoring methods. Market research will be suitable for collecting and analyzing data so as to assess whether or not localime is meeting the customer needs in Kenya. This should implemented by coca-cola company through carrying out product testing. As a result, the company will be able to know if its customers are satisfied with the product as well as find the best alternative of improving it through changing the packaging pattern (Kim & Wilemon, 2002). Evaluation of the project and future recommendations Through unique selling proposition of the localime product, coca-cola company has become an extensive marketing company. The promotion of brand image has enabled coca-cola company to achieve a higher market share in Kenya which has contributed to an increase in the general brand loyalty of the company. Furthermore, higher brand loyalty and healthier image has led to the brand acceptance among the vast number of people. The ability of the company to offer a healthy juice that represents the brand has changed people’s perception on the products of coca-cola company and the brand image at large, making the project successful. However, changing the brand image will take more time. Thus in the short-run the localime juice product may become not appealing to the highly considered health conscious segment. In order for coca-cola company to stay in competition with the rest of other juice brands, it will be required to launch the new flavors with similar ambitions that are linked to such brands as in the case with Localime. On the other hand, if the Localime decline to perform as expected in the juice market, then the company’s focus should change to revisiting its market strategy for the new or future products. Accordingly, coca-cola company should modify its marketing framework for localime (Cooper, 1998). References Aaron, L. B & Lord, B.J. (2000).Developing new food products for a changing marketplace. Pennsylvania: Technomic Publishing Company. Cooper, R.G. (1998). Product Leadership. Reading, MA: Perseus Books. Cooper, R.G. (2001). Winning at New Products - Accelerating the Process from Idea to Launch, Third Edition, Product Development Institute. Gerwin, D & Ferris, J.S. (2004). Organizing New Product Development Projects in Strategic Alliances. Organization Science. 15(1), 22-37. Jayaram, J & Narasimhan, R. (2007).The Influence of New Product Development Competitive Capabilities on Project Performance. Engineering Management. 54(2), 241 – 256. Keizer, J.A., Vos, J & Halman, J.M. (2005). Risks in New Product Development: Devising a Reference Tool. R&D Management. 35(3), 297-309. Kim, J & Wilemon, D. (2002). Sources and assessment of complexity in NPD projects. R&D Management, 33 (1), 16-30. Khurana, A & Rosenthal, S.R. (1998).Towards Holistic "Front Ends" in New Product Development. Journal of Product Innovation Management. 15 (1), 57–75. McGrath, M.E. (2004). Next Generation Product Development: How to Increase Productivity, Cut Costs, and Reduce Cycle Times. New York. McGraw-Hill. Rosenau, J & Milton, D. (ed.) (1996). The PDMA Handbook of New Product Development. New York: John Wiley & Sons. Ulrich, K. T. & Eppinger, S.D. (2004). Product Design and Development, 3rd Edition, New York. McGraw-Hill. Read More