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Abott Company: New Product Development

Executive Summary

The paper entails the process used in developing a new product. An analysis of the process that Abott Company would use in developing a new product is explained. The firm intends to introduce a new dairy drink. Need analysis is conducted by scanning the environment to identify the opportunity presented in the market. From market research, the idea to develop the new product is identified. This results from the realization of the fact that consumers are becoming more health-conscious.

In addition, consumers are increasing their demand for nutritional products. The idea is screened to determine the probability of success. Idea screening enables a firm to eliminate potential loss from developing a product that will not penetrate well in the market. A comprehensive idea screening for the new product is conducted by considering a number of issues. These include the consumers’ nutritional and health requirements. This will enable the product to succeed amongst the youth and elderly generations.

Market strategy development entails an analysis of the strategies that will be used in introducing the new product. This is conducted by analyzing a number of marketing mix strategies which include the product, pricing strategy, promotion, and distribution strategy. Product strategy gives a description of the characteristic of the product being developed. On the other hand, pricing strategy entails the identification and description of the strategy to be used in pricing the product. Penetration pricing strategy is considered. The promotion strategy outlines how to market awareness for the new product will be conducted.

This is attained by consideration of a number of market awareness mediums. To ensure that the product is accessible within the entire market, a distribution strategy is considered. Product development and testing are also conducted to determine whether the product will appeal to the customers. Product development gives a description of how the firm will ensure that the product meets the market demand sufficiently.

This will enable the product to effectively penetrate the market. The process of product development will ensure that there is continuous product innovation. The result will be increased customer satisfaction through the incorporation of changes in consumer consumption patterns. Innovation will entail the inclusion of different flavors to ensure that the product appeals to diverse individual tastes. The resultant effect is there will be an increment and maintenance in the level of customer loyalty in the long term.

Finally, test marketing and product commercialization are explained. Market testing will entail the distribution of the product in all the regions so as to identify a market response. On the other hand, commercialization will ensure that the product is extensively introduced into the entire market.

Company Description

Abott Nutrition was established in 1999 within the US food industry with its headquarters located at Marrietta, Georgia. However, the firm has integrated the concept of internationalization in an effort to attain its profit maximization objective. The firm deals with the processing of a wide range of food products. This is in line with the firm’s objective of attaining and sustaining relatively high growth and development compared to its competitors. According Kotelnikov (2001, p.5) attaining sustainable growth is a challenge that management teams of firms face. This arises from the fact that the business environment is dynamic in nature. In addition, both small and large enterprises are affected by external factors such as competition, politics, and change in consumer trend (Vadim, 2010, para. 4).

Since its inception, the firm has managed to establish a number of outlets within its domestic and foreign market. As a result of providing high quality products, the firm has attained a positive public image. In order to survive in the long term, the firm’s management team is committed at ensuring that the firm develops a high competitive advantage. This is attained through formulation of effective operational strategies. One of the strategies that the firm has incorporated entails New Product Development.

Need analysis

Idea generation

Over the past few years, the firm has noted that there were numerous comments on the need of firms in food industry to produce products that are of high nutritional value. In addition, the firm’s sales persons identified a trend whereby consumers are becoming more health conscious. According to Goliath (2005, para. 1), US consumers are increasingly becoming health conscious. Demand for organic foods with high nutritional value has also increased.

In an effort to increase the level of customer satisfaction from consumption of its products, the firm’s research and development team identified the need to develop a new product that would address these market demands. Armstrong and Kottler (2005, p.6) asserts that human needs are the most important core concepts of marketing. The management team decided to develop a new dairy product drink which has both nutritional and health benefits. The product will be marketed under the brand name Buss. The firms target market includes individual and institutional consumers.

Idea screening

Idea screening aids in determining the feasibility of the new product succeeding upon it being launched in the market. In addition, it serves in eliminating chances of a firm incurring a loss from developing a product which will not effectively penetrate the market (Ahonen, 2005, p.1). Considering the nutritional value of Buss, the product would be consumed by both the young and elderly. The product will provide the elderly and youngsters with the nutrients required to support their numerous energy requirement in their respective years. According to Bailey (2003, p. 3), it is vital for the firm’s management team to consider the relationship developed between the firm and its customers.

In the process of developing the new product, the firm’s management will ensure that it develops an intimate customer relationship by addressing customer product demands. For example, Buss will result into reduction of heart related diseases such as blood pressure. This results from the fact that the product will have low cholesterol levels. In addition, probiotics (living microorganism) will be incorporated in its development. According to Cho and Finocchiaro (2009, p.216), probiotics play a significant role in lowering cholesterol levels which is a major course of heart attack.

The product will face intense competition from the market from existing competitors such as Medical Nutrition USA and new entrants. According to Zimmerer and Scarborough (2005, p.2), increased integration of the concept of entrepreneurship has intensified competition amongst firms in different economic sectors. In order to cope with the competitive pressure, the firm will ensure that the new product is of high quality.

Penetration pricing strategy will be integrated in determining the price. This will enhance the products penetration in the market hence its profitability potential. According to Crow (2002, Para. 3), assessing a products technical feasibility is vital in its development. Over the years, the firm has managed to integrate current technologies related to production of dairy products. In addition, the firm has incorporated current supply chain technologies.

Marketing strategy development

A firm’s marketing strategy plays a significant role in the success of a firm (Smit, 2000, para. 4). The marketing strategy enables the firm’s management team to focus its resources towards developing and sustaining a high competitive advantage. By introducing the new product, it is the objective of the firm to increase its sales revenue with 30% within the first financial year upon launching the product.

The firm’s management team is committed at ensuring that the firm provides a high level of customer experience through development of the new product. This will enable the product to be effectively positioned in the market. According to Porter (1980, p.35), effective positioning acts as a defensive mechanism against market competition hence its long term success.

Positioning strategy

To position itself in the market, the management team of the firm will incorporate a high level of expertise in the process of producing the new product. In developing the new product, the management will ensure that quality control is integrated. For example, a comprehensive criterion will be used in selecting the suppliers to ensure that the firm obtains high quality raw materials. This will enable the firm to attain its mission of delivering quality products to the customers.

Pricing strategy

From the research, the management identified that consumers are price conscious. In its effort to enter the new market, the management of the firm will incorporate the concept of penetration pricing strategy. This will increase the probability of the product penetrating the market.

Promotion strategy

According to Kotler and Armstrong (2005, p. 19), the success every business establishment depends on the degree of market awareness. This is attained through incorporation of marketing communication. Shane (2003, p.45), asserts that market communication entails a set of activities which are linked together and controlled. In order to ensure that there is effective market awareness regarding the new product, the firm will incorporate the concept of Integrated Marketing Communication (IMC). Through the IMC, various market communication methods will be used.

These include advertising, sales promotion, personal selling and public relations. Various mediums such as television, print media and outdoor advertising will be used in creating market awareness. In addition, the firm will also utilize emerging Information Communication Technologies (ICT) through integration of electronic commerce. Some of these tools include the social communication networks such as Face Book, twitter and You Tube. To ensure store loyalty after launching Buss, various promotional incentives will be incorporated. These include price discounts and free prizes to individual and institutional customers.

Distribution strategy

The management team of the firm is committed at ensuring that new drink is accessible in the entire global nutritional drink market. To attain this, the management team of the firm has formulated a comprehensive distribution strategy. The strategy will integrate both direct and indirect forms of distribution. Direct distribution methods will be used within the local market. This will be attained by incorporating vertical distribution system in its supply chain. In addition, the management of the firm will open distribution outlets in all the regions of its domestic market.

Product development and testing

To ensure increased customer satisfaction, the management will conduct continuous innovation to the new dairy product so as to move with changes in consumer consumption pattern. For instance, different flavors will be used to ensure that the product appeals to diverse individual tastes. Value addition will contribute towards attaining a high level of customer satisfaction. Value addition will ensure that the drink meets the health demands of the customers. This will also ensure that the customers obtain a high level of utility hence increasing the degree of customer loyalty and maintaining it in the long term.

Current scientific knowledge will be incorporated in the process of developing the new dairy nutritional drink. Results of a series of tests conducted revealed that consuming a fermented milk products contain certain strains of Lactobacillus bulgaricus (LAB) which aid in reducing blood pressure. Through incorporation of the LAB, the new product will also enhance consumer’s immunity. This is due to the fact that LAB will aid in protecting infections which arise from various pathogens.

The product will also appeal mothers by eliminating acute diarrhea in children. In addition, consumption of the product will also minimize the probability of children suffering from dental carries. The bacteria in the product will also minimize occurrence of traveler’s diarrhea amongst adults. Consumption of the product will also enhance absorption rate of certain trace minerals especially those that are found in diets such as legumes, nuts and whole grains. This means that the probability of the product succeeding amongst consumers of diverse age groups is high.

Over the years that the firm has been in operation, it has managed to develop its human capital. This has been attained through inclusion of employee training program. The firm has a new product development department which is skilled in developing a new product. This increases the feasibility with which the new product will be developed. This is due to the fact that the firm will not be required to seek external expertise such as consultation. This means that the process will be conducted cost effectively.

Before producing the product in large volumes, a pilot study will be conducted. According to Jerrard, Barnes and Reid (2008, p.1), pilot study eliminates the chances of a project failing upon it being launched. The pilot study will involve identifying a sample of 100 consumers of different age. Selection of these parties will be based on the diverse product requirement in relation to nutritional drinks. This is due to differences in individual consumption behaviors. The pilot study will be conducted by producing sample products which will be issued to selected sample. The firm’s product development department will then collect the responses of the customers within the study.

Test marketing

Test marketing will be conducted prior to producing the product to meet the demand of the entire market. This will save the firm from producing a product that does not appeal the market. In the initial phase, a mock product will be produced and distributed in all the regions within the firm’s domestic market. From the responses of market testing, it will be possible for the firm to identify possible gaps in relation to the product. Some of the issues which the management will consider in test marketing include the products packaging. For instance, the consumers will be asked whether the product is well packed to ensure that there is no contamination.

Testing the product will be implemented through a number of strategies. One of these includes selection of a focus group. The group will include a number of customers who will be interviewed from time to time. The objective of these interviews will be to identify the response on how effective the product is upon consumption. Effectiveness of the product will be determined by considering two variables which include product’s nutritional and health values. This will increase the effectiveness with which product adjustments can be conducted. This will increase the probability of the product success.

Market testing will also be undertaken by conducting an umber of trade shows. The trade shows will be conducted in all the regions of its domestic market. This will enable the firm to interact with the customers directly thus increasing reliability of market feedback. Selling the initial run of the product in various geographical regions will enable the firm to obtain diverse market feedback in relation to the product developed.

In testing the market, the firm’s management team will consider various marketing variables. Some of issues that will be evaluated relate to product pricing and its market awareness strategies. With regard to pricing, a consumer market research will be conducted to determine the customers’ opinion of the products price. The research will enable the firm determine whether it is effective in ensuring that a large number of consumers can easily afford the product. Findings of the research will enable the firm to make adjustment in its pricing strategy. With regard to market communication strategies, the firm’s management team will be able to determine where there is effective awareness of the product in the market. As a result, Abott’s management team will identify the effectiveness of its marketing policies.


Upon identifying that the results of market testing are positive, the firm will officially launch the product. This is referred to as product commercialization. For product commercialization to be successful, it is vital for a firm’s management team to balance between its marketing strategies and the customers product demand (Creveling, Slutsky & Antis, 2003,p. 120). This results from the fact that consumers are the core stakeholders in marketing.

In addition, effective product commercialization is implemented by considering the scope of the firm’s market. This can either be an international or local market. Determination of the scope enables a firm to develop commercializing strategies that are effective in its target market. Commercializing the new product will be conducted by producing it in large volumes to meet the demands of its distribution channel. Evaluation of the effectiveness with which commercialization is being conducted will be done by setting a number of milestone with regard to the various commercialization processes considered.

Launching the product will be conducted through use of advertisements and other forms of product promotion. This will make it official that the product has been accepted by the entire market. In order to ensure effective product awareness in its introduction phase, the firm will develop a comprehensive promotion plan. The plan will ensure that market communication is well undertaken. Some of the elements which will be included in the promotion plan entail the frequency with which advertisements and other market awareness strategies will be undertaken.

In launching the product, Critical Path Method (CPM) will be used to determine the most effective schedule to be used in its marketing campaign. Effectiveness in planning its marketing campaign will enhance the firm’s product popularity. In addition, CPM analysis will contribute towards the firm incorporating the most effective sales channel. Commercialization will also be conducted by ensuring that the entire product is available in all the selected distribution channels. This will enable the firm to meet its distributional objective of ensuring ease of access of the product in the entire market. Both direct and indirect channels will be used in the process of commercializing the product. The firm will conduct analysis of the effectiveness of the selected channels of distribution.

The firm’s management team has realized that a significant cost will be incurred in commercializing the new product. As a result, it has set a certain amount of in its annual marketing budget to ensure that commercialization is smoothly conducted.

Reference List

Ahonen, M. (2005). Building an innovation system that facilitates learning and problem solving processes to support creativity. New York: University of Tampere. Web.

Bailey, C. (2003). Distinguishing Your Business through Excellent Customer Service A guide to help your business survive and thrive a tight economy. Web.

Creveling, Clyde, M. ,Slutsky, Jeff & Antis , Dave. (2003). Design for Six Sigma in technology and product development. London:.Prentice Hall.

Crow, K. (2002). Assessing the feasibility of a new product. New Jersey: DRM Associates. Web.

Cho, S. & Finocchiaro, T. (2009). Handbook of Prebiotics and Probiotics Ingredients: Health Benefits and Food Applications. New York: CRC Press. Web.

Goliath. (2005). US citizens are becoming more health conscious shoppers, FMI research shows. New York: Cengage Learning. Web.

Kotler, P. & Armstrong, G. (2005). Principles of Marketing. London: Oxford University.

Kotelnikov, V. (2001). Sustainable competitive advantage. Web.

Shane, Scott. (2003). A general theory of entrepreneurship: the individual-opportunity nexus..Northampton: Edward Elgar Publishing Incorporation. Web.

Smit, J. (2000). Strategic planning.New York: Juta and Company Limited. Web.

Vadim, K. (2010). Marketing strategy in the rapidly changing market place. Web.

Zimmerer, T. & Scarborough, N. M. (2005). Essentials of entrepreneurship and small business management. Upper Saddle River, NJ: Prentice Hall. Web.

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