Introduction of New Fresh Fruit Drinks for Health Conscious Customers - Research Paper Example

Lecturer Research Report on the Introduction of New Fresh Fruit Drinks for Health Conscious s TASK New Product DevelopmentNew product development entails the entire process of introducing a new product in the market. A product entails benefits offered by an organization, like the LJBC. The New product development process comprises two main methods; the first method involves idea initiation, product design, and product engineering (Juran & Godfrey, 1999, 31). The second method illustrates market research and analysis. The new product that LJBC intends to produce involves fresh fruit products. The fresh fruit product is meant to satisfy the needs of health conscious customers. Fresh fruits products have been scientifically proven to have minerals which have medicinal values. The Fresh fruit idea was generated by the management of LJBC, following strong media campaigns by health professionals on the importance of fruits and fresh fruit drinks. The fresh fruit drinks have been made possible through recopies prepared by a team of food and beverage experts. Existing production technology can be improved to effectively produce the fresh fruit drinks. Market research on the effectiveness of this new product has been conducted in the entire United Kingdom. Both primary and secondary research processes are employed. Collected market data are analyzed through statistical techniques (Hair, 2008, 19). Health conscious customers in the fresh drinks sector are spread out in all areas of the United Kingdom. However, our first market concentration will be our existing Landon market. The expansion stages and strategies of the company will thereafter cater for need of the other potential customers residing outside London. Emerging Trends in the Fresh Fruit Drink Sector The Fresh fruit drinks sector has emerging opportunities in the United Kingdom. Innovations in the fresh juices have been influenced by increased demand of soft drinks which are 100% fruit juices. Increased consumer demand has created an opportunity for juice companies to introduce superior fruits with strong health characteristics into fruit drinks and exotic fruit blends that deliver adequate luxury or indulgence (Karl & Steven, 2004, 23). The United Kingdom is considered an emerging market for the fresh fruit juices; and juice producers who are able to appropriate opening price point commodities will take advantage of growth in these fresh fruit market. Premiumization of fresh fruit juices is increasing the value growth. In the United Kingdom, and London specifically, there is an increasing market for fresh juices that give indulgence which attract customers who want to treat themselves. The emerging luxury fruit juices market is developing; and it targets consumers who require new and exotic drink sensations. Superfruits are currently being used in producing novel functional juices. Example of the superfruits is pomegranate, mangosteen and acerola. The superfruits have been significant in the production of new juice products. The market trends indicate that the new novel fruits continuously drive innovations in the fresh juice market. The health trend dominates the innovation in the fruit juice market, because many customers require healthier alternatives to the carbonated juices. The market trends ensure product differentiation which ensures good taste of juice products and general health benefits (Kotler & Kevin, 2009, 28). Market Potential Analysis Market potential explains the maximum capacity of a given market for specific products in defined time duration. In this aspect the market entails total potential customers with a unique desire, who are able and willing to satisfy this need by purchasing the product. The sales potential is derived from market analysis studies. Market potential illustrates the upper end of total demand. In this research paper, market potential and ultimately sales potential, of the fresh fruit drink market, is discussed. The analysis will take duration of one year; and it will provide information on the maximum total demand projections (Wong & Tong, 2012, 117). The most appropriate market potential analysis procedure entails; exploring the potential market, evaluating market ideas, forecasting the market locations and identifying the sales zones. The potential fresh fruit juice market was explored through primary and secondary research methods. Interviews were conducted on potential customers, and also questionnaires were administered. The findings from the research enabled us to understand the fruit juice market; that indeed the majority of the potential customers prefer juices that have additional health benefits. Secondary research also enabled us to explore the potential market. Literary materials on health matters like health journals were studied; this provided data on the benefits of the 100% fruit drinks. The fresh fruit juice market ideas were generated through management’s discussions, media discussions and customer feedback. The discussions of the media dwelt mainly on the importance of the fresh fruit juice on the health and wellbeing of the consumers. Customer feedbacks entailed the value additions of the juice products; this value addition involves making the juices as natural as possible. Marketing location forecasting was done though secondary and primary research. Internet articles concerning the fresh fruit juice sector were studied, to determine where the products are mostly required; for example in the urban centers in the United Kingdom. Potential customers, health experts, and fresh drink experts were also interviewed on the most suitable location for the fresh fruit drinks manufacturing plants. Sales zone was readily identified through the market location information. A suitable market location directly determines increased volume of sales (Wong & Tong, 2012, 120). Financial Viability of the New Fresh Fruit Drinks Analyzing the financial viability of a new product entails calculating the expected revenue that the product will generate; to the direct and indirect costs incurred in delivering the new product. The main purpose of the financial viability is to enable the organization to refine and review the product features before it is launched to ensure sustainability. Break even analysis illustrate the sales volume of the product that generates acceptable percentage of the fixed cost. Market research Market research can be divided into two broad groups; primary market research and secondary market research. Market research uses several data collection instruments. The primary research method uses interview data collection method, and questionnaire data collection method. The secondary research method utilizes existing information sources like the internet, journals, magazines, books and periodicals (Hair, 2008, 34). Primary Research on the Fresh Fruit Juice Market Primary research entails collection of original data. In this research paper original market data was collected through two primary research data collection instruments; these instruments are interviews and questionnaires. Primary research is important when conducting market research because; the market researcher studies both the qualitative aspects and quantitative aspects of the fresh fruit juice business, it studies specific research aspects like introducing new products, and it enables the researchers to greater control on the information collection process (Hair, 2008, 40). On the other hand primary research; is relatively expensive, it requires proper execution of research plan, some information are unreachable and low response rate must be expected. Primary market research employs interviews in the data collection process. Interviews entail the researcher asking questions to the potential customer of the fresh fruit juices. The interviews were conducted by the Product development Coordinator; through face to face method and social media networks chats. Answers provided from the interviews were then recorded for future references and further analysis. Interview method for data collection is very effective because; it investigates fresh fruit market in a detailed manner. For example it seeks to answer the question on the health benefits of the fresh fruit products. Interviews inform decision making and strategic planning for the management of the LJBC; for example providing information on the most appropriate market location. Interviews enable the researcher to understand how individuals think concerning a given market topic; for example understanding the opinions of the potential customers on value addition strategies. On the other hand interviewers experience several challenges in the research process. The process of interview data collection method is time consuming. Therefore the Product Development Coordinator utilized more research time at this stage (Lewis-Beck, 1995, 39). Interview is an expensive exercise; the face to face interviews require the researcher to travel long distances so as to meet the respondents. This increases the travelling cost by a huge margin. The Product development Coordinator also applied the questionnaire method in collecting primary data. The questionnaire consists of many related questions or prompts, which are used in gathering data from the respondents. The potential consumers of the fresh fruit drinks are responsible for answering the questions; thereby providing valuable fresh fruit juice market information. The main advantage of the questionnaire method is that large data amounts can be collected from many respondents in a short period of time and efficiently. The questionnaire can also be administered by different researchers, with minimal effect on research validity and reliability. The results or findings of the questionnaires are easily quantified by the researchers or the statistical software package. The shortcomings of the questionnaire data collection method are several. Firstly is difficult to understand the truth levels of the respondents. Secondly, respondents normally answer or interpret the same questions differently, what is good to one person may be bad for another person, therefore subjectivity is realized. Thirdly, researcher imposition is experienced; the researcher makes his or her own assumptions and decisions during development of the questionnaire (Lewis-Beck, 1995, 11). In the interview session, the researcher sought five main responses. The respondents were encouraged to provide basic bio data, their position on the new fresh fruit juice was sought, their attitude towards the company was sought, and their buying patterns established. The interview schedule had the following questions: 1. Kindly provide personal details; name, age, residential city, religion, gender and literacy level. 2. What is your opinion on the fresh fruit juices? 3. What impact do you think the London Juice Bottling Company will have on consumers when they introduce the fresh fruit juice in the market? 4. How often do you buy juice products? 5. Will your buying pattern change when the health drinks are brought in the market? The questionnaires had questions which aimed at providing information on the fruit drinks market. These market questions are: 1. What is the market size for the fresh fruit drinks? 2. What is the market structure of the fresh fruit drinks sector? 3. Who are the main competitors in the fresh fruit drink markets? 4. What is the market share of the key competitors? 5. What are the market entry strategies that London juice Bottling Company will employ? Sampling Techniques In market research, sampling entails selecting representative individuals from a statistical population in order to understand the features of the whole population. The sampling process utilized in this research involves defining the population, specifying the sampling frame, understanding the sampling method, coming up with the sample size, implementing sampling plan, sampling and data collecting process, and outlining the collected data. The stratified sampling method is employed in this research. The population of 1000 potential customers was divided based on the distinct characteristics of gender, age group, residential city, literacy level, and religion. The 1000 respondents were divided into five groups based on residential city; therefore each city had 200 respondents. The cities under study are; London and Manchester in England, Belfast in Northern Ireland, Glasgow in Scotland, and Cardiff in Wales. Each city stratum is treated as an independent population; and their other characteristics are studied independently. This ensures the research process is time and cost efficient. The opinions of the 200 respondents were therefore sought based on gender, age, literacy levels and religion. The main challenge experienced through this sampling technique is that the research criteria employed differs from one stratum to another. Secondary Research on the Fresh Fruit Juice Market Secondary research entails the study or analysis of existing information. There are so many current information on the fresh fruit juice markets in the United Kingdom and also globally. Secondary research employs the primary research of other people in the form of reports, articles journals, textbooks, periodical, and other research publications. In market research, secondary research can even reuse the data collected by the first and original researcher on a given topic. One important area in secondary research is to completely cite original information sources. In this research paper, professional journals were mostly used. The main advantage of this research type is that information is easily and cheaply available in the internet, library and professional meetings. The major disadvantage is that secondary research collects data from data source which are not original, therefore the researcher is expected to acknowledge the original researcher through in text citations. TASK 2 Research findings All the respondents provided their personal information. This personal information is summarized in the table and graphs below (Francis, 2003, 20). London Manchester Belfast Glasgow Cardiff Total Age (Years) Below 18 28 40 32 17 41 158 18 - 40 102 98 126 113 117 556 Above 40 70 62 42 70 42 286 Religion Christian 120 106 131 109 111 577 Moslem 46 30 32 23 17 148 Other 34 64 37 68 72 275 Gender Male 83 141 104 93 97 518 Female 117 59 96 107 103 482 Literacy level High school 35 53 38 23 56 205 College 165 147 162 177 144 795 Some respondents preferred introduction of the new fresh fruit juice (indicated as yes); other respondents saw no need of introducing the product (indicated as no). Range was the method of dispersion employed the tabled data. The literacy range employed in the study was 795 – 205 = 590. The college educated respondents exceed high school educated respondents by 590. The literacy range represents 59% of the total population (590/1000*100 = 59%). Also, male respondents exceed their female counterparts by 66 (518 – 482 = 66). This gender range represents 6.6% of the population (66/1000*100 = 66%). Table showing customer preference level London Manchester Belfast Glasgow Cardiff Total Yes 170 193 181 179 186 909 No 30 7 19 21 14 91 The second quartile and the 50th percentile, both of which represent the mean, of the customer preference level on the new product is calculated as follows. (170+193+181+179+186)/5 = 909/5 = 181.8 (approximately equal to 182 respondents who prefer the new product). Bar graph showing customer preference level TASK 3 Discussions of the Findings In the research study, the respondents belonged to various age groups. This is because the fresh fruit juice products are consumed by all people. Children, people below 18 years of age, were 158 which represent 15.8% of the population. Middle aged respondents, 18 to 40 years old, were the majority at 556 which represents 55.6% of the population. Older respondents, over 40 year, were 286 which represent 28.6% of the population. Christianity is the dominant religion in the United Kingdom; therefore the Christian respondents were the majority at 577, which represents 57.7 % of the total population. Fresh fruit drinks are consumed by all people in the United Kingdom, regardless of their religious backgrounds (Richard, 1984, 26). In terms of gender, the respondents comprised 518 males and 482 females; which represents 51.8% and 48.2% of the population respectively. The overall literacy levels in the United Kingdom are high; this explains why the majority, 795 people or 79.5%, of the respondents are college educated. The remaining 20.5% are mostly the high school students who participated in this research process. A literate population is better able to understand the positive aspects of using a product, like fresh fruit juice products. The preference level for the natural and healthy juice products is very high. This indicates that the attitude of the potential consumers towards the new fresh fruit drinks is very positive. 909 respondents have a positive attitude towards the fresh fruit drinks; this represents 90.9% of the population. The positive attitude is because the respondents understand the health benefits of the fresh fruit drinks. The media usually engages in aggressive campaigns on the importance of health drinks and food in general. Findings from the secondary research have given us necessary market details (Lewis-Beck, 1995, 29). The five major cities in the United Kingdom have a huge population. Our research indicates that all the 1000 respondents consume fruit juice products; therefore, it can be assumed that all people in the United Kingdom use the fruit juice products. This indicates that the population of all the cities discussed in this research is potential customers. The main competitors of the London Juice Bottling Company (LJBC) are; Innocent Drinks, Refresco Gerber, Fruitapeel, Oranka fruit Juices, James White Drinks, and Orchards House foods. These companies are well established in the market; therefore, LJBC must adopt effective market penetration strategies. These key players in the fresh fruit juice sector control approximately 50% of the market. The main aim of the LJBC is to offer fresh juice products to the remaining 50% of the market. The market structure favors all social classes or aspects. Fresh fruit juice products are for everybody. Therefore, our marketing campaigns will mostly concentrate on the family, because everybody in the family consumes fresh fruit drinks. Data Analysis Techniques The dispersion technique employed is the range. The numbers of respondents who prefer the new fresh juice product are 909, while those against the new product are 91. Range = 909-91 = 818. This range is very large and favors introduction of new product. The 50th percentile (average) respondents employed in the study are 100. (100+100+100+100+100)/5 = 100. The demand for health drinks will increase because of the correlation between health drinks demand and improved health and wellbeing of consumers. The correlation is strong and positive, according to Pearson correlation (Cohen, J. et al, 2002, 11). TASK 4 Project Plan The purpose of this project plan is to guide the introduction of new fresh fruit juice products, by the LJBC in the United Kingdom market. The objectives of this project entails; producing juice products that improves the health and wellbeing of customers, expanding the market share of LJBC to other cities in the United Kingdom, and increasing profitability of the company (Keller, 2012, 26). The project scope entails; identification of the potential market, aggressive marketing, production of adequate fresh fruit drinks, and satisfying the health conscious market needs. The most pressing constraints in this project in time and costs; the company has only one years to implement this project, and available financial resources will be utilized based on a very strict budget. Business analysis in this project utilizes the SWOT analysis. The Strength of the LJBC lies with its competent and motivated staffs. The staffs have adequate expertise in the juice production process, and they are perfectly capable of handling improvements and business expansion. The weakness of the LJBC involves limited financial resources; this is because it is a medium sized company, and business expansion requires huge financial resources. The opportunities for the LJBC are the inadequately exploited fresh fruit juice market. Therefore, it has formulated strategies for entering this market. The threats likely to be faced by LJBC are the stiff competition by the well established juice companies. Project costing method will be applied in the full cycle of the project. This costing is done in four stages; planning cost, estimating cost, determining budget and controlling cost. One technique of project cost management is the Earned Value Management (EVM). Project costs are tracked with EVM as shown in monthly trend line below: This trend line forecasts future spending pattern of the project. In June 2014, $20,000 will be used in purchasing project materials. In July $14,000 will be added to the publicity budget, and $7,000 will be added for social media campaigns $10,000 in September will be used for hiring additional staffs for the projects duration. $8,000, $6,000 and %10,000 will be employed in improving production technology of the LJBC for three months. Financial Viability of the Project Financial vitality illustrates expected sales revenue, and the payback period for the invested amount. The total project cost for one year has been budgeted as $150,000. The project sales volume per month is $50,000. Break Even period = 150,000/50,000 = 3 months (Tabachnick & Fidell, 2007, 16). Conclusion This research project has been prepared by the Product Development Coordinator of the LJBC. The main purpose of the research project is to convince the management of the company to support the new product development project; so that the customers of LJBC derive health benefits from the nutrients found in the products. The health products will also lead to increased profitability of the company because their demand in the market is very high and the production costs is relatively lower. The project also has a short investments payback period of 3 months. Appendix Questionnaire The information provided in this questionnaire will be handled with high standards of confidentiality. The information provided will also be used by only the London Juice Bottling Company (LJBC), and specifically for market research and product development. 1. Kindly provide personal details; name, age, residential city, religion, gender and literacy level. 2. What is your opinion on the fresh fruit juices? 3. What impact do you think the London Juice Bottling Company will have on consumers when they introduce the fresh fruit juice in the market? 4. How often do you buy juice products? 5. Will your buying pattern change when the health drinks are brought in the market? 6. Where do you buy your fruit juices? 7. What is your favorite juice product, and which company produces it? Bibliography Cohen, J. et al (2002). Applied multiple regression/correlation analysis for the behavioral sciences. Psychology Press. Donald G. (2003). Developing Products in Half the Time. 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