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Creatingnewproductdevelopmentstrategyfor
beer
Chapter1
1.1.Introduction
SkopjeBrewery,asamainplayerondomesticbeermarketwithmarketshareofover75%,formanyyearswastrying
tocreatebackupforits"cashcow"product,SKOPSKObeer.Followingallresearchesdoneonthedomesticmarket,the
marketingteamcreatelongtermstrategyforenteringintheupper,premiumsegments,introducingthebeer"STAR
LISEC",highqualitydomesticbeerwithpremiumprice,andseveralyearsafter,AmstelandHeineken,worldwidewell
knownbeerbrands.Thestrategywassuccessfullycompleted,thepremiumsegmentwascompletelycovered,andthe
customer'sperceptionforSkopjeBrewery'sproductswasbuildonhighlevelasahighqualityproducts,butwithpremium
price.
ButthemarketforceswerenotmovinginthesamewaywithSkopjeBrewery'sstrategy.Badeconomicalsituation,
increasingunemployment,instability,areallfactorsthatinfluenceindecreasingthepurchasingpowerofthecustomers,
thatradicallychangethestructureofthemarketsegments.Theeconomysegmentbecomesdominantonthemarket,and
thequalityandpremiumimagethatofferSkopjeBrewerybecomeirrelevant.
Althoughtotaldomesticmarketwasincreasing,SkopjeBrewery'smarketsharestartstodecrease.Themainreasonis
thedecreaseofSkopskoBeerinpackagingof0,5litters,duetothelaunchingofcompetitorseconomybeerswithlower
pricethanSkopjeBrewery'sbeers.
Forthatreasons,SkopjeBrewerywasplanningtolaunchanewbeerbrandpositionedattheeconomysegmentin
FYROM.
Awholenewproductandbrandingstrategyshouldensurethelongtermprofitablegrowthofthecompany.Whole
brandingimplementationmustdeliverbetterfinancialperformance,alongwithanincreasedReturnoninvestment(ROI).
Alsobyexploringbrandequity,theassetsofthebrandshouldbeidentifiedasperceptual,attitudinalandbehavioural.As
theseassetsgrow,sodoesthefinancialvalueofthebrand.
Theprojectwillevaluatethenewproductandbrandingstrategy,recentlyconductedbymarketingteamofSkopje
Breweryinordertolaunchnewbeerbrand,discusstheresultsandproposecorrectionactions.
Theliteraturepartwillbebasedonproposedstrategies(MerleCrawford,NewProductManagement,RobertGCooper,
WiningatNewProductManagement,)andcorporatestrategiesandproceduresusedbyTheCocaColaCompanyand
Heineken.

1.2.Aimsandobjectives
TheaimandobjectiveofthedissertationistoanalysetheapproachesandmethodologyofNewProductDevelopment.In
ordertoaccomplishthispurpose,relevantliteratureisanalysedandcomparedwithactuallyconductedprocess.NPD
processisdifficulttomanage,butatthesametimesovitalforthecompany'sgrowthandprosperity.Cooperdefinesthe
productdevelopmentprocessasadisciplinedandasetoftasksandstepswhichacompanyconvertideasintoproducts
orservices.Manyessentialelementsforacompany'slongtermsurvivalarerelatedtosuccessinnewproduct
development.Newproductisthemostimportantfactorforthecompanies,becausecustomerneedschangerapidly.
Competitionincreasesfasterbetweenthecompaniesathomeandabroad.Competitivepressuresforcesustobringnew
productstomarketfaster,offerthematreducedcostsanddelivertheproductswithlevelsofquality.
Thedevelopmentofnewproductsinacompanynotonlyopensnewmarketsandattractsnewcustomers,butalsohelps
thecompanytoenlargeitsorganizationcapabilitiesandtoprovidehigherqualityonthefinalproducts.Thisisdifficult
worktomanageandmanycompaniesareseeingproductsdevelopmentasacorecapabilityofthebusiness.Newproduct
developmentshowsnecessarystagesandactivitiesfromideatolaunchofnewproductsandifthereisnosystematic
approachtothesephasesinthecompany,thefailurewillbeinevitable.Thefailureinthenewproductdevelopmentfora
companymeansadditionalcosts,losttimeandcustomersormarketswhicharethemostessentialcompetencetoolsfor
thecompanyinacompetitiveworld.

1.3.Methodology
Thisdissertationwillmainlyincludequalitativeresearchmethods,fromsecondarysourcesofinformationsuchas
academicjournals,books,papers,whichwillhelpidentifyareasofbestpractices.Theprimarysourceofinformationwill
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becollectedthroughinterviewingthemembersoftheprojectteam,marketingandsalesmanagers,manufacturingand
productionmanagersandotheremployerswhowereinvolvedintheprocessofNPD.

1.4.ExpectedOutcomes
Theoutcomesfromtheprimaryresearchwillbeusedtocomparewiththeliteraturepresentedandtofindouthowdoes
theNewProductDevelopmentprocesscontributeinsuccessfulproduct.

Chapter2
2.Literaturereview
Thefieldofnewproductdevelopmentiswidelyresearchedinavarietyoforganizationssuchasuniversities,consulting
firmsandmanufacturingcompaniesandislocatedinawiderangeofdisciplines,includingtechnologymanagement,
businesspolicy,marketingandengineering.Muchofthatresearchhasspecificallyfocusedondiscoveringwhat
organizational,strategicandprocessrelatedfactorscharacterizesuccessfulnewproductdevelopments.Thereis
therefore,awealthofknowledgeregardingsuccessfulNPD,whichhasbeenthesubjectofseveralliteraturereviews.A
parallelfocusofresearchhasbeentodevelopconceptualmodelsofnewproductdevelopment,whichmightbeusedby
managerstoconductandorganizetheirnewproductendeavors.

2.1.TypesofNPDprocesses
Saren`s(1984)taxonomy,wherehecategorizednewproductdevelopmentmodelsintofivetypes,isausefulbasisupon
whichtoexaminethemultifactorrepresentationofthenewproductdevelopmentprocess:
1.Departmentalstagemodels,
2.Activitystagemodels,
3.Decisionstagemodels,
4.Conversionprocessmodels,
5.Responsemodels,
TheDepartmentalstagemodelsviewthenewproductdevelopmentprocessintermsofthedepartmentsorfunctions
thatholdresponsibilityforvarioustaskscarriedout.Forexample,inanindustrialcontext,R&Ddepartmentgeneratethe
ideas,thedetaileddesignisthencarriedoutbythedesigndepartment,andengineeringwillthenmaketheprototype
afterwhichproductionwillbecomeinvolvedtoworkonthemanufacturingproblems.Finally,marketingdepartmentwill
becomeinvolvedtoplanandcarryoutthelaunch.Itisnowwidelyacceptedthatthedepartmentalstagemodelis
deficientinseveralaspects:First,thereisthelikelihoodthattheprototypediffersfromtheaccepteddesign,theaccepted
designdiffersfromideasfromR&D,andtheprototyperequiresmodificationformanufacturing.Second,itisunnecessarily
timeconsuming.Third,itdoesnothingtofosterownershipof,orstrategicresponsibilityfornewproducts,and,finally,
thereisnothinginthewayofmarketfeedback,sincemarketingispresentedwiththeproducttomarket(Cooper,1984)
Activitystagemodelsimproveondepartmentalstagemodelsinthattheyfocusonactualactivitiescarriedout,including
variousiterationofmarkettesting.
DecisionstagemodelsrepresentNPDprocessasaseriesofevaluationpoints,wherethedecisiontocarryonorabandon
theprojectsismade.Thisapproachunderlinefeedbackloops,which,althoughnotimpossiblewithintheframeworkof
activitystagemodels,arenothighlightedeither.Andyet,suchfeedbackloopsarecritical,sincetheNPDprocessisone
ofcontinualrefinement,untilanidealtechnicalsolutionisproduced.
ConversionprocessviewNPDasablackboxinanattempttoeschewtheimposedrationalityofdepartmental,activity
anddecisionbasedmodels.Thealternativeconversionprocessisacollectionofunspecifiedtaskswhichmayormaynot
becarriedout,dependingonthenatureoftheinnovation(Cooper,1882).Essentially,aseriesofinputsisenvisaged,
which,whichmaybecomposedofinformationoncustomerneeds,designdrawingoranalternativemanufacturing
procedure.Overthetime,dependingonamultiplicityoffactors,includinghuman,organizationandresourcerelated,this
inputisconvertedintoanoutput.Suchaholisticviewunderlinestheimportanceofinformationintheprocess,buthas
littleelsetocommendit,givenitslackofdetail.
ResponsemodelstakechangeatthebeginningoftheNPDastheirfocus,basedontheworkofBeckerandWhistler
(1967)whousetheframeworkderivedfrombehaviouralpsychologists,typifiedbytheperceptionsearchevaluation
responseiteration.Thesemodelsfocusontheindividual'sororganization'sresponsetochangesuchasanewproduct
idea,orR&Dprojectproposalsintermsofacceptanceorrejectionoftheideaorproject.Anumberoffactorsinfluencing
thedecisiontoacceptorrejecttheproposalarehelpfultotheextentthattheyprovideanewangleonwhatmight
otherwisebecalledthescreeningstageoftheNPDprocess.

2.2.TheStagegateprocess:
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Intheearly90'sthestagegateprocessbecamethestandardframeworkormodelforproductdevelopment.Theprocess
definedtheinformationflow,andtheworkflowfortheidentifiedelementsofproductdevelopment.Stagegate
implementationincluded,ataminimum,crossfunctionalteaming,concurrentengineering,andperiodicbusinessreviews.
TheProductDevelopmentandManagementAssociation(PDMA)''researchonbestpracticesinNPDshowsthatnearly
60%offirmsinUSwereusingastagegatetypeofprocess.
Whilethenumberofstagesmayrangefromfourtoseven,Cooper'sfivestageprocessprovidesagoodexample(Cooper
1991).
Gate1:Initialscreen
Stage1:Preliminaryassessment
Gate2:Secondscreen
Stage2:Detaileddefinition
Gate3:Businessplanreview
Stage3:Development
Gate4:Postdevelopmentreview
Stage4:Testingandvalidation
Gate5:Precommercializationbusinessanalysis
Stage5:Fullproductionandmarketlaunch
Theprocessbeginswithanideafornewproduct.Sometimesthenewproductideaistechnologydriven,derivedfroma
newinventionorprocess,sometimesitiscustomerdriven,basedontrendsinthemarketplace.Itmaybepure
invention,mayhavebeeninspiredbyacompetitiveproduct,ormayhavebeensuggestedbyaleaduser.Generally,
thereisaproductchampionwhodevelopsanswerstoquestionssuchastheseinpreparationforGate1:
Whatwillattractcustomerstothenewproduct?
Howwillitimproveuponcompetitiveproducts?
Howdoestheideafitwithcompanystrategy?
Isthemarketagrowingone?Howlargeisthebusinessopportunity?
Howfeasibleistheproductdevelopment?

Gate1:Initialscreen
Whenready,theproductchampionmakeshispresentationtothegatekeepers,whoshouldincludeseasonedsenior
managementwithexperienceintheareaofproductdevelopment,businessanalysis,manufacturingandmarketing.The
possibleoutcomesofthisgateandtheothergatesaswellareGo,Kill,Hold,orRecycle.Thegatekeepersmayalso
makesuggestionsfortherefinementoftheideaandwillpointoutkeyissuesthatwillbeexaminedcloselyatthenext
gate.

Stage1:Preliminaryassessment
Duringthisstage,theproductchampion,nowsupportedbyasmallteam,developstheproductideaanditsbusiness
possibilitiesinmoredetail:
Whoarethecustomers?
Whataretheirneedsandproblems?
Whatcompetitiveproductspresentlyaddresstheseneeds?
Howwillthenewproductimproveuponthepresentones?
Whataretheproduct'sfeatures,specifications,andappearance?
Howmighttheproductbeimplemented?
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Inthepreparingforthesecondgate,theteamshouldmakeaconcertedefforttogettoknowitscustomers.Itisagood
timetocarryoutonsitecustomerinterviews.Theseinterviewswillgivetheteammuchmoreinformation,bothtangible
andintangible,abouttheformtheproductshouldtake.Aftertheinterviewshavebeencompleted,theteamwilldistillthe
materialandidentifykeyproductrequirements.Withthecompletionofthelistofkeyproductrequirements,theteamcan
finallybegintoformulateandcomparevariousimplementationsoftheproduct.Thisshouldgiveenoughunderstandingof
therequireddesignworktocompletetheremainingdeliverablesatGate2.

Gate2:Secondscreen
Thegatekeeperswillnowbepresentedwithmoredetailedinformation,someofitprovidedbyrepresentativesfrom
marketing,manufacturingandsales.Ifthecompanyfindsitselfwithmanynewideascompetingforconsideration,the
gatekeeperswillnotonlyjudgethisparticularproductideaonitsownmerits,butwillcompareittootherproposals.
Theymayuseweightedscoringofthedeliverablestofacilitatecomparisons.ReceivingaGoatthesecondgatewillmove
theproductintoahigherlevelofcompanycommitment,wheregreaterinvestmentswillbemade.Becausethegate
keepersareseniormanagement,theycanimmediatelydedicatethenecessaryfundsandresourcesasworkbeginson
thenextstage.

Stage2:Detaileddefinition
Themajoractivityofthisstageistodefinetheproductmorethoroughly.Theteamwillcreateaproductspecification
coveringallthekeyfeaturesandstatingtherequiredperformancelevel.Deliverablesofthisstageinclude:Market
researchtoimprovetheestimateofmarketsize,Analysisofthecompetitionandtheirproducts,Businessplancovering
developmentcosts,projectedcostsofsales,andreturnoninvestmentandmanufacturingfeasibilityreview.

Gate3:DecisionontheBusinessCase
Atgate3theprojectisenteringinthedevelopmentstage.ThisgateinvolvesareviewofeachoftheactivitiesinStage2
andcheckingthattheactivitieswereundertaken,thequalityofexecutionwassound,andtheresultswerepositive.At
thisgatethefullprojectteamisappointed,headedbyaleaderwithauthority.

Stage3:Development
Thisisthestagewheredevelopmentplanisexecutedandimplemented,andasafinalresultthereisalabtested
prototypeoftheproduct.Ontheotherside,detailedtestplans,marketlaunchplans,andproductionoroperationsplans
aredeveloped.Anupdatefinancialanalysisisprepared,whileregulatory,legalandpatentissuesareresolved.

Gate4:PostdevelopmentReview
Postdevelopmentreviewisfollowinguptheprogressoftheproductandproject.Inthisgatewereceiveconfirmationthat
alldevelopmentstepsareundertaken,completed,andthattheproducthastheoriginaldefinitionsstatedinprevious
stages.

Stage4:TestingandValidation
Atthisstageseveraltestsareundertakeninordertochecktheproductitself,theproductionprocess,customer
acceptance,andtheeconomicsoftheproject.

Gate5:PrecommercializationBusinessAnalysis
Thisisthefinalgatepriortofullycommercializationoftheproduct.Itisthefinalpointatwhichtheprojectcanbekilled.
Criteriaforpassingthegatefocuslargelyonexpectedreturnandappropriatenessofthelaunchandoperationsstartup
plans.

Stage5:FullProductionandMarketLaunch
Thefinalstagethatinvolvemarketlaunchplanandproduction(Cooper,1986).
Theprocessdivideddevelopmentintophases.Therearereviewpointsattheendofeachphase.Ifthecertain
prerequisiteshadbeenmetthenthenextphasecouldbebegan.Themethodismorethanameasurementandcontrol
methodologydesignedtoensurethattheproceedingsasitshouldandeveryactivityofthephasewascompletedontime.
Thesystembroughtdiscipline,reducesthetechnicalrisksandensuredthecompletiontasks.Thestagegateprocess
involvesactivitiesfrommanydifferentdepartmentsinthecooperation.Anydepartmentdoesnotownstages.Insteadofit
alldepartmentsareonthefieldoftheprocesstogetherandareactiveplayersontheprojectteam.
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2.3.GeneralNPDmodel
2.3.1.ProductInnovationcharter
TheProductinnovationcharteristherecentspinoffofthestrategicplanningprocess.Fromthestrategicplaningprocess
havecomeapproveddirectionsfortheestablishedfunctionsmarketingplans,productionschedules,financing
requirementsandbudgetforspecificR&Dprojects.ThePICisdesignedtoguidetheorganizationscrossfunctionalsubset
ofactivitieschargedwithdevelopingnewproducts,andtogivecleardirectiontothediversepersonnelinvolvedinnew
products.TheProductInnovationCharter,whichlargerandbettermanagedmediumandsmallfirmsuse,containsthe
followingsections:
ThetargetbusinessarenasthatProductinnovationistotakethefirmintoorkeepitin.
Thegoalsorobjectivesofproductinnovationactivities,
Theprogramofactivitieschosentoachievethegoals.

2.3.2.Conceptgeneration
Findingtherightpeople,trainingthemandcreatinganenvironmentwherethesepeoplewillworkaresomeofthetasks
thatmanagementhastoundertakeInordertopreparetheorganizationforconceptgeneration.Inordertogenerate
conceptsfornewproducts,twomethodsexist:
Acquiringreadymadeconcept,
Tailormadeconcept.
Thesourcesinboththewaysofconceptgenerationaretechnology,endusers,team,otherinsidersandotheroutsiders
(CrawfordandDiBenedetoo,2000).ThemostcommonapproachinconceptdevelopmentistheProblembasedone.The
techniqueswhicharecommonlyuseinorderaproblemtobeidentifiesare:Inputsfromtechnicalandmarketing
department,searchofinternalrecordsfromsalescalls,productcomplaints,customerssatisfaction,problemanalysisand
scenarioanalysis.Inthismethodgroupcreativity,brainstorminganddisciplinespaneltechniquesarealsoused.
Exceptfromtheproblembasedmethod,othermethodscalledanalyticalattributeapproachesareusedwhichcapitalizeon
theconceptthatanyfuturechangeinaproductmustinvolveoneormoreofitscurrentattributes(CrawfordandDi
Benedeto,2000).Thesemarketresearchtechniquesareusedtoanalyzecustomerperceptionsandtradeoffsandto
generatepromisingproductconcepts.
Perceptualgapanalysisisaquantitativetechniquewithgreatpowerundercertaincircumstances.Itsmapsofthemarket
areusedtodeterminehowvariousproductsareperceivedbyhowtheyarepositionedonthemarketmap.Onanymap
theitemsplottedtendtoclusterhereandthere,withopenspacebetweenthem.Theseopenspacesaregapsindicated
anemptyspacefornewproduct.Anotherquantitativetechniqueisthetradeoff(conjoint)analysis.Itreferstothe
analysisoftheprocessbywhichcustomerscompareandevaluatebrandsbasedontheirattributesorfeatures.Itis
basedontheideathatifsomehowcustomer'spreferencescouldgetforeachattributeseparately,itcouldcombinethe
bestlevelofeachattributeintoanoverallfavoriteproduct.
Exceptofquantitativetechniques,existqualitativetechniques,whichare:Dimensionalanalysis,whichusesanyandall
features,notjustmeasurementsofdimensions.Thetaskinvolveslistingofallfeaturesofaproducttype.Themerelisting
ofeverysuchfeaturetriggersproductconceptcreativitybecauseweinstinctivelythinkabouthowthatfeaturecouldbe
changes.Relationshipanalysisiscarriedoutviatheuseoftwodimensionalmatrixandthemorphologicalmatrix.Bothof
themrequirerespondenttofindrelationshipsamongdimensionstogeneratenewproductconcept.

2.3.3.Concept/Projectevaluation
Thenextstepisconceptevaluation.Itconsistsofconcepttestingwhichmeanthatnewproductdevelopmentteamhasto
identifyiftheconceptisinconjunctionwithcustomerneeds.Perceptualmappingandconjointanalysisaretwopre
screeningmethodsthatareusedinordertoanalyzethemarketneedsandpreferences,tosegmentthemarketaccording
tobenefitssoughtandtotesthowwelltheconceptisacceptedbythemarket(CrawfordandDiBenedeto,2000).
Thesecondstep,afterconcepttesting,isfullscreening,whichisthelastlowriskevaluation.Itstaskistohelpindeciding
weathertechnicalresourcesshouldbedevotedtotheproject,toenforcecrossfunctionalcommunicationandtohelp
managetheprocess.UsuallyusedmodelsareProfilesheetandAnalyticalHierarchyProcess(CrawfordandDiBenedeto,
2000).Iftheconceptscoreswellbywhatevercriteriaeachfirmuses,itissentintotechnicaldevelopment.
Analyzingthefinancialoutcomesisanissuetoo.Applyingthenetpresentvaluecalculationsusingdiscountedcashflow
couldmakefinancialanalysis.ATARmodelcouldbeusedforconstructingasalesorprofitforecast.

2.3.4.Productprotocol
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TheProductprotocolisatoolthatsetsthestandardsabouttherequiredoutputordeliverablesofaspecificnewproduct
programamongthefunctions.Itcommunicatesalltheessentialstoallplayersandgivestoallplayers'targetstoshoot
for.Ithelpstoshorteningtheprocessorcycletimeandrequirementsinwordstheresultsofwhichcanusuallybe
measured.Itmakesthedevelopmentprocessmanageable.Aprotocolincludesinformationaboutthetargetmarket,
productpositioning,productattributes,competitivecomparisonsandaugmentationdimensions,marketingrequirements
andfeaturessuchastiming,financials,regulatoryrequirements,andcorporatestrategyrequirements.

2.3.5.Development
Thenextphaseisdevelopment.InorderthisphasestomeetitsgoalsitisveryimportantNPDprojectteamstooperate
wellandtobewelltrained.Therearetwotypesofsuchteams.Oneisahigherlevel,multifunctionalgroup,whosetaskis
tomanagetheprojectteams.Theotheremergingteamisagroupofexperiencednewproductpeoplewhosetaskisto
assistprojectteamsindevelopingappropriateprocesstofollow.
Thefirstprocessofthisphaseisthedesignprocess.Designblendsformandfunction,qualityandstyleartand
engineering.Agooddesigncanplayabigroleindeterminingthedegreeofacceptanceforanewproductbythe
customers.Alsothecriticalfactorinthephaseofdevelopmentisthetimethattheproductneedsinordertoreachthe
market.Thereareseveraltoolsthatshortenedthetimeneededtheproducttoenterthemarket,forexamplereadiness
oftheresources,avoidingoverengineering,exploringmarketingeffortsandcomputersusage.
Whenprototypecomesoutfromtechnicaldevelopment,inmostofcases,itissenttomarketplaceforaconfirmatory
concepttest.Thistestisconductinguntilitisclearthattheproductfulfillallcustomers'needs.Inthisstagethereare
threemethods:
Monadictest,wheretherespondentstestsingleproductforaperiodoftime,
Pairedcomparison,whereuseofthetestproductisinterspersedwiththatofacompetitiveproduct,
Triangularapproach,inwhichthenewproductandtwoothersaretested(CrawfordandDiBenedetoo,2000).

2.3.6.Launch
Withinalreadypreparedmarketingplan,thisisthestagewheretheteamdefinethestrategicactiondecisionsdefiningto
whomthenewproductwillbesoldandhow,andtacticaldecisionsdefininghowthestrategicactiondecisionswillbe
implemented.Butinfrontoffullcommercializationofthenewproduct,thecompanyshouldconductmarkettesting.There
arethreetypesofmarkettesting:
Pseudosales,whichaskspotentialbuyerstodosomethingsuchassaytheywouldbuyiftheproductwereactually
available,
Controlledsale,wherethebuyermustmakeapurchase,
Fullscalewherethefirmdecidedtofullymarkettheproductinalimitedbasisfirst(CrawfordandDiBenedetoo,
2000)

2.4.NPDproceduresatHeinekenNV
Inordertoguidenewproductstowardsasuccessfulintroduction,Heinekenusescertainprocedures,whichdescribesthe
projectapproachofNPIs.NPIstandsforNewProductIntroduction.NPIcomprisesthewholeprocesssurroundinga
changeintheproductportfolioofaMarketingSalesUnit.TheNPIcoordinationmeetingdetermineswhetherachangein
theproductportfolioisanNPIandwhetheradedicatedprojectmanagerwillbeappointed.NPIsincludedifferenttypesof
changes:
Promotionalorpermanent.
Productand/orpackagingchange.
TheprojectteamisresponsibleforexecutionofanNPI.Theprojectteamcangiveshapetotheprojectactivities,
providedittakesintoaccounttheguidelineslaiddownintheNPIProcedure.ThereisanNPIDatabaseinordertohelp
andguidetheprojectteamintheiractivities.TheDatabaseconsistsof:
NPIGeneralDatabase:DatabaseinwhichalltherelevantinformationrelatingtoNPIsisavailable,e.g.theelectronic
versionoftheNPIprocedureandrelatedprocedures,allstandardNPIdocuments(templates),minutesofNPImeetings,
etc.TheNPIcoordinatormanagestheNPIdatabase.
NPIProjectDatabase:ADatabasethatiscreatedforeachproject,whichisusedbytheprojectteamforcommunication
andstoringdatarelatedtoaspecificNPIproject.TheNPIprojectmanagermanagestheNPIProjectDatabase.
ProductPortfolioDatabase:ConsistofalistofallthepackagingproducedbyHeineken.TheNPIcoordinatormanages
thisdatabase.TheNPIprojectmanagersaddnewproducts.
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TheNPIcoordinatorandtheNPIManagementgroupmanagetheportfolioofoutstandingNPIprojectsofaMarketing
SalesUnit.TheprojectmanagerkeepstheNPIcoordinatorandtheNPIManagementgroupinformedaboutthestatusof
outstandingprojects.

2.5.NPIProcess
TheNPIprocesscomprisesthephasesdescribedbelow.

2.5.1.Initiationphase
TheChampionhasanideaforanewproduct.Ifdesired,theideaisdiscussed/reviewedintheNPIKnowledgeCommittee
(generalevaluationoftechnicalpossibilities/consequencesforproduction).Next,theideaissubmittedtotheMarket
SupplyManager.AgeneralfeasibilitystudyiscarriedoutandsubmittedtotheNPICoordinationmeeting.Sometimesthe
meetingappointsaprojectmanageralreadyinthisphase.Theprojectmanagerrecordstheresultofthefeasibilitystudy
inaFeasibilityform,whichissenttotheproductionlocationforapproval.Afterreceivingtheapproval,theMarketing
SalesUnitcancompletethebusinesscase.AsaresultoutofthisphasewehaveaMarketingintroductionplan,which
includesthebusinesscaseofthenewproduct,approvedbytheManagementteamoftheMarketingSalesUnit.If
approvalisnotgiven,theprojecteitherstopsorneedtobeworkedoutinmoredetail.

2.5.2.Definitionphase
AftertheapprovaloftheMarketingIntroductionPlandrawnupbytheChampion,theChampionhasanintakeinterview
withhisMarketSupplyManager,theNPIcoordinatorandProjectmanager.Next,anintakeformisdrawnupthatwillbe
discussedintheNPIcoordinationmeeting,wherethedefiniteappointmentofaprojectmanagerwilltakeplace.The
projectmanagerinformstherelevantbreweryandtherelevantMarketSupplyManagerandorganizeskickoffmeeting
withtheprojectteam.Next,theprojectmanagerdrawsupaProjectProposalinconsultationwiththeprojectteam,which
hastobeapprovedbyMarketingSalesUnit.TheProjectproposalshouldmaketheintendedresultoftheprojectandthe
mannerinwhichthiswillbeachievedcleartoallpartiesinvolved.Asaresultinthisphase,theprojectteamhasbeen
established,thepartiesinvolved,includingtherelevantbrewery,havebeeninformedbytheprojectmanager,anda
Projectproposal,whichincludestheActivityplan,approvedbyMarketingSalesUnithasbeencompleted.

2.5.3.Implementationphase
TheprojectmanagerrecordsalltheinformationontheimplementationofanNPIinaDetailedDesignthathastobe
approvedbyMarketingSalesUnit.Ifdesired,theprojectmanagerorganizesakickoffmeetingattheproductionlocation.
Theimplementationphaseendsafterthefirstproduction.Financialcommitmentstowardsexternalpartiescanonlybe
enteredintoafterDetailedDesignhasbeenapproved.Ifrequired/desiredthesecommitmentscanbeenteredintoatan
earlierstageafterthewrittenconsentoftheChampion.Inallcases,financialcommitmentsshouldbeauthorizedby
meansoftheinvestmentapprovalprocedure.Asaresultinthisphase,alltheagreements(e.g.onprice,qualityand
timing)arelaiddownintheDetailedDesignapprovedbyMarketingSalesUnit.Thefirstproductioncouldtakeplace.

2.5.4.Evaluationphase
TheprojectmanagerdrawsuptheEvaluationreportonthebasisoftheevaluationformscompletedbytheMarketing
SalesUnitandtheprojectteam.Pointsthatcanbeimprovedareregisteredandthenecessaryactionsaretakenleading
tothetransfertoregularproduction.TheprojectmanageraddstheNPItotheProductPortfolioDatabase.Thefinalresult
istransferringtheNPItotheregularproduction.

2.5.5.Roles
PrincipaltheowneroftheNPIwhotakesthedecisionsonthecontentsandresultoftheproject.FormanyNPIsthisis
theManagementTeamoftheMarketingSalesUnitthatgavetheassignment.
ChampiondelegatedprincipaloftheNPIwhocanparticipateintheNPIprojectteamforpartsoftheproject.Together
withtheprojectmanagerthechampionisthelinkwiththeprincipal.
ProjectmanagertheprojectmanagerisappointedduringtheNPIcoordinationmeetingandisresponsiblefortheproject
result.Theprojectmanageristhecontactforallquestionsrelatedtotheprojectandreportsitsstatusandissuestothe
NPIcoordinator.
ProjectteammultifunctionalgroupthathasbeenassignedtorealizetheNPI
MarketsupplymanagercontactwithinthecompanyforthechampiontoinitiateanNPI.IntheeventofsmallNPI
projects,theMarketsupplymanagercanactasprojectmanager.
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NPIcoordinatorManageroftheNPIportfolioandresponsibleformanagingtheresourceswithinthecompanythatare
destinedforNPIprojects.

2.6.NewProductdevelopmentprocessatTheCocaColaCompany
TheCocaColasystemislookingtoaccelerateprofitablevolumegrowththroughthedevelopmentandintroductionofnew
products.NewproductsrepresentsanopportunityforthecompanytostimulateprofitablegrowthintheNonAlcoholic
readytoDrinkcategorythroughtheextensionofthecurrentbeverageofferingsofCocaColaSystemproducts.Forthisto
happenacultureofcooperationandinnovationmustpervadetheentiresystem.Pivotaltothisistheneedforthe
companytoadoptaprocessthatencouragesandharnessesthecreativeandinnovativetalentwithineachorganization.
Thefollowingisasetofguidelinesforthedevelopmentandevaluationofnewproducts.Theobjectiveofthisprocessis
tooutlineaconsistentapproachforthedevelopmentandevaluationofnewproductinitiatives.Theprocessshould:
Leadtoclearassignmentofresponsibilityfornewproductdevelopment,includingdelegationofspecifictaskstoproject
leadersandfocusedNPDteams,
FacilitatecommunicationatalllevelswithinthesystemforeachNPDproject,includinglearningandbestpractices,
Aidwiththedefinitionof,andagreementon,thecriteriafortheinvestmentinaNPDanditspostlaunchevaluation,
RecognizetheriskinvolvedinNPD(includingaccountabilityandownershipforallassociatedcapitalexpenditure
decisions)andaimatanequitablesharingofriskandrewardswithinthesystem.
Asmostimportant,theoutcomeofthisprocedureshouldresultinfaster,moreefficientandeffectiveproductlaunches.

2.7.DefinitionofaNewProduct
Forthepurposeofthisprocedure,NewProductsare:
Newbrandintroductionsandflavorextensions(ownortollpacked),
Extensionsofexistingbrands,
Productinitiativeslaunchedpreviouslyundertheseguidelinesrequiringsignificantadditionalcapitalinvestmentornew
packageextensionshavingsignificanteconomicchanges,thereforenecessitatingrevisionstotheagreedsharingofrisks
andrewardswithinthesystem.

2.8.GuidetoStages
Thefivestageprocessisasimplifiedmodelthatestablishescertaincriteriarecommendedfornewproductinitiativesto
proceedtothenextstage.Thisprocessisnotdesignedtospecifyanexhaustivelistofcriteria,onlycorerequirements.
Thefivestagesorstepscoveredbeloware:
1.IdeaGeneration,
2.InitialInvestment,
3.BusinessCase,
4.Launch,
5.Review

2.8.1.IdeaGeneration
Ideagenerationisthefirststageoftheprocess,whereideasforpotentialnewproductinitiativesareidentifiedbasedona
varietyofpotentialinputs/insights.Potentialsourcesofinspirationare:
AnalysisofBeverageCategories/Segments:growthrates,trends,size,profitability,competitivelandscape,
Scanningofconsumerstrendsandunmeetconsumersneeds,
SuccessstorieswithinSystem:Bestpractices,learningfrommarketplace,availablebrandoptions,
Successstoriesofcompetition:newcategories,fastmarketsharegains,successfullaunchesandstrategiesetc.
Reportsfromconsultantsandotheragencies,
Presentationsfromadvertisingagencies,
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InternalIdeaBoxwithsuggestionsfromworkforce,
Consumerresearch,
Technologyreview,
Supplierinput,
NewProductDatabase.
Ideagenerationshouldinvolveallmembersoftheteam,andbecomeastructured,ongoingprocess,withmeasurable
KBIs,Insights,ideasandlearning'sshouldcomefromtopdownandbottomuptocoverbothstrategicandtacticalneeds.
RejectedideasshouldbecapturedandrecordedintoNewProductdatabasewithbriefdescriptionandreasonwhy).

2.8.2.InitialInvestigation
Potentialideasproceedingfromstage1shouldbesummarizedandevaluatedinabriefproposalbythelocalteam.This
includes:
Developexecutivesummaryofideagenerationstage,
Opportunityassessment:Categorysize,trends,potential,margins,competitivesituation,existingcapabilities,SWOT&
PESTanalysis,consumer'sinsights,restrictionsandlegalissues.
Newproductstrategyandobjectives,
Productconcept,typeofproduct,
ScanforwhatisavailablewithinSystem(propositions,brands,formulations,packagingoptionsetc.)
SKUdescription:flavors,packtypesandsizes,
Roughestimationonvolumeandshare,
Investigationofsourcingandproductionoptions,
Roughinvestmentfigures:research,manufacturing,marketingandsales,
RoughestimateonproductP&L,COGS,coststructureSystemvaluechain,
KBIsandtargetsfornewproduct,
Timing
Theprojectteamshouldagreetoacommonproposal/collectandvalidatedata.Priorityshouldbegiventounderstanding
andtestingformulations(thatmeetthenewproductobjectives)thatalreadyexistinthesysteminordertocreate
efficienciesandcostsavingsinprocurementandproduction.Themanagementofeachcountryshouldevaluateeach
projecttodecideifadditionaldetailedresearchandplanningisrequired.Rejectedideasshouldbecapturedandrecorded
intheNewProductdatabase.

2.8.3.FinancialmodelandBusinesscase
Newproductproposals/initiativesreachingthisstagearetobeexaminedindepthandshouldinclude:adetailedfinancial
modelandassumptionswithregardtofinancialprinciples,detailedmanufacturing&capitalplan,logistics,marketingplan
(formulations,packs,design,positioning,communicationandDMErequirements),legalissues,etc.Theintegrated
consumerpropositionshouldbetestedandvalidated.Toensurethatallinitiativesarecostcompetitive,consideration
shouldbegiventolocatingthelowestcostproducerineachinstance.Wherethenewinitiativerequiresmanufacturing
technologythatnotexistinthespecificcountrytheprojectleadersshouldconsulttheCocaColaSupplyPointCommittee
todeterminethemostfeasiblesupplypointwithinitsnetworkforconsiderationintheanalysis.Fromthispointon,there
isnogoingback(withrareexceptions).

2.8.4.Launch
Thenewproductisreadiedandpreparedforlaunch:investmentininfrastructurecompleted,productionandqualitytests
passed,finalmarketingplanready,finaloperationalplanfullydevelopedandcommunicatedincluding:
RoutetoMarket
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1.ChannelIdentification&prioritization,
2.Tradingprovisions:listingfees/prerequisitespercountry,
3.Wholesalerspolicy,
4.Selectedlistings:Importantcustomersspecialtreatment
5.Directvs.indirectdistributionevaluation(perregion/channel/oroutlet),
6.Verificationofagreedvolumeprojections,
7.DevelopmentofMerchandisingstandardsperchannel
8.VerificationofdistributiontargetsthroughMerchandisingstandardsrealitycheck'
9.Givespecificmerchandisinginstructions.
Portfoliomanagement
1.Marketdevelopertraining,
2.Saleskickoffmeeting,
3.Incentivesforsalesforce,
4.Marketimpactteams,
5.Full,selfstandingActivitycalendars,
Assets
1.ImplementationofAssetsManagement.
Twomajorlaunchseasons,fallandspringshouldbetargeted,althoughlaunchprinciplesshouldnotbecompromisedin
ordertomeetthistiming.

2.8.5.Review
NewProductlaunchesshouldbeevaluatedagainstagreeduponKBIsforthe1stfourquartersofthefirstyearoflaunch,
thenonahalfyearlybasisforthenexttwoyears.Remedialactionshouldbetakenifrequired.
Itisvitalthatconceptsbeevaluatedateachstageonatimelybasisgiventhatthetimelinefornewproductlaunchesmay
needtobeaccelerated.Anyconceptthathasnotbeenrejectedoutrightmustprogresstothenextlevelintheprocessno
laterthantwomonthsafterithasachieveditscurrentlevel.

2.9.MajorFailurereasonsinNewProductDevelopment
Cooper(1983)explainsthecausesofnewproductdevelopmentfailureasthemarketingdominated:
1.Thecompaniesunderestimatecompetitivestrengthorcompetitivepositioninmarket,
2.Thecompaniesoverestimatenumberofpotentialusersaboutproduct,
3.Thecompaniessetthepriceofthenewproducttoohighandloosetheircompetitivepowerinthemarkets,
4.Companieshavetechnicaldifficultiesordeficiencieswiththeproductinnewproductdevelopmentprocesses.
Anotherresearchaboutthefailurereasonsgivethenewproductfailuresbecauseoftheweaknewdevelopmentproduct
processasfollows(Hood,Lundy,Johnson,1995):
1.Theproductdidnotfitthecorporatestrategicneedsforthecompany,
2.Theproductcouldn'tbedeliveredtoendusersonpromisesbecauseofthelaunchproblemsintheprocess.
3.Lackofcompetitivepointofdifferenceinthecompany,
4.Productsdidn'tmanageminimumsalesvolumeforecastatthebeginningoftheprocess,
5.Productdidnotfilltheconsumerneedinmarket,
6.Insufficientplanningintheprocess.
7.Thecompanymadewrongtimingaboutthemarketintroduction,
8.Thenewproductdevelopmentprocessdoesn'thaveenoughmanagementsupportabouttheproject.

2.10.MajorSuccessfactorsinNewProductdevelopmentprocess
Tobringanewproductsuccessfullytothemarketwillbeanimportantachievementforthecompanies.Itisrelatedto
balancerisk,time,money,resourcesandotherfactorsinthisprocess(Plunkett1994).Mainlytherearetwofundamental
methodsofwinningatnewproductdevelopmentprocess(Cooper,2000):
1.Doingprojectsright:Employingtruecrossfunctionalteams,doingtheupfronthomeworkpriortothe
developmentstage,buildinginthevoiceofthecustomer,andgettingearly,sharpproductdefinitionhaveallbeen
foundtoimpactpositivelyonnewproductincomes,
2.Doingtherightprojects:Theprojectselectionisasimportantasprojectexecutionandakeytosuccess.
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ThesuccessfactorsdescribedbyCooper(1983)areasfollows:
1.Companyhastosatisfythemarketneeds,
2.Companymusthaveinternalandexternaleffectivecommunicationchannelsduringtheprocess,
3.Companyhastobeorientedtomarket,
4.Thetopmanagershavetogiveimportanceaboutthekeyindividualsintheprocess.
TherearealsoactivitiesthathavebeendoneaspreconditioninNPDprocessandtheseactivitiesareidentifiedaspre
conditionalstrategicvariablesforsuccessfulinnovations(PooltonandBarclay,1998):
1.Strategicfactor1:Itisveryimportanttohavetopmanagementsupportfornewproductdevelopmentfrom
beginningtotheendoftheprocess,
2.Strategicfactor2:NPDprocessmustbedesignedasalongtermstrategy,
3.Strategicfactor3:Theremustbelongtermcommitmenttomajorprojectsinthecompany,
4.Strategicfactor4:TheNPDprocessmusthaveflexibilityandresponsivenesstochange.Thiswillprovide
competitiveadvantagesforthecompanyinthisenvironment.

2.11.NPDprocessinthebeverageindustry
Anefficientnewproductdevelopmentsystemiscrucialinthebeverageindustry.Newproductsneedtobebroughttothe
marketquicklyinordertocapitalizeonchangingconsumerpreferencesandcompetitivethreats.Newproductsmustbe
developedtactically,andtheproductspotentialmustbeunderstoodandanalyzedbeforeitrollouttothemarket.
ThecompaniesthataremostcapabletoexecutethewholeNPDprocesswillclearlyhaveanadvantage.Thisrequires
reducingtimetomarketaswellasmakingeffectiveuseofscarceinternalrecoursesandimprovingcollaborationwith
partners.Also,significantemphasizesmustbepaidtoaligningtherelatedmarketingactivities(advertising,sales
promotions)withthenewproductintroduction.
NPDisoneoftheprimarygrowthdriversforbeveragecompanies,anditcaninvolvechangestotheproductsitselforto
theproductspackaging:
Productinnovationfocusesonprovidingnewtastesandflavorstodemandingconsumers,
Packaginginnovationfocusesondevelopingdifferentiatedpackagingaccordingtotheconsumptionsituation.
Veryoften,companiesusepackaginginnovationstoincreaseproductshelflife.
Toensurenewproductsuccess,beveragecompaniesmustoverseetheintegration,consolidationandreuseofknowledge
fromallinvolvedparties,manufacturers,distributors,R&D,sales,marketingandfinancials.
Byenforcinggreatercollaboration,beveragecompaniescanreduceleadtimefromconcepttoshelfby2540%andin
thesametime,betterintegratesafetycontrolsintothedevelopmentprocess.
Beveragecompaniescanachieveanobviouscompetitiveadvantagebybringingproductstomarketfaster.However,
improvedprocessefficiencymustnotbeaccomplishedattheexpenseofbeveragequalityandsafety.Compromising
safetywithintheproductdevelopmentcyclewouldnotonlycausecustomerstoloseconfidenceinthenewproducts,butit
wouldalsoinflictseriousandpotentiallypermanentdamagetothecompany'slongtermreputation.
ThebeerindustryisthebiggestsectoroftheAlcoholicBeverageindustry,withglobalannualsalesexceeding$300billion
USD.However,marketsaturationhasbeenreachedinmuchofthedevelopedworld,whichislimitingtheindustry's
growthpotential.Companiesthatareoperatingintheindustryfaceconsiderablecompetitivepressures.Consequently,
theymuststreamlinetheirprocessesinordertodrivereal,profitablegrowthallwhileensuringthattheyeffectively
meetthedemandsofboothcustomersandconsumers.
Inrecentyears,thebeverageindustryhasbeenfacedwithnewopportunitiesandchallenges.Changingconsumer
demandsandpreferencesrequirenewwaysofmaintainingcurrentcustomersandattractingnewones.Whileever
increasingcompetition,beveragecompaniesmustintensivelychasecustomers,offerhighqualityproducts,efficiently
distributethem,andkeeppricelow,andinthesametimetobequickenoughtoexploitnewmarketsbylaunchingnew
products.
Inordertodriveprofitablegrowthandcreatevalue,thereareseveralareasonwhichcompaniesinthebeerbusiness
needtofocus:
Newproductdevelopment,packaginginnovation,differentiatedquality,
Costreduction/marginimprovement,
Improvedassetutilization
Someofthemarkettrendscharacteristicallyintoday'senvironmentthatcompaniesmustconsiderandfolloware:
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Demographicsandlifestylechanges,
Fiercecompetition,
Increasedawarenessofcaloricintakehashitthebeerindustry.Thishascausedanacrosstheboarddeclineinthe
consumptionofbeer,whichisgenerallyhighincaloriccontent,versusconsumptionofspiritsandwine,aswellasnon
alcoholicbeverages.
Inthebeerindustry,competitionisgrowingduetothefollowingfactors:
Fallingconsumptioninmaturemarkets,
Constantdemandfornewproductsandpackaging,
Industryconsolidation,
Growthofprivatelabelproducts.
Thesecompetitivepressureshaveledto:
SKUproliferationBetween1991and2001,thenumberofSKUsinatypicalbeveragecompanydoubled.
Alargenumberofnewproductsfailures:
Only20%areeffective,
Only10%generatesignificantrevenue,
Mostfailwithinthefirsttwoyears.
Furtherconsolidationandrationalization,drivenbyopportunitiesforcostcuttingthroughoperational
improvements,
Theacquisitionofsmall,highgrowthcompaniesinemergingmarketsbyindustryleaders
Tomeettheindustrychallenges,AnheuserBusch,leadingBeerCompanyinUSA,hasembarkedonacoursetogenerate
growthbyenhancingtheimageofbeerthroughnewproducts,packaging,andnewmarketinginitiatives.Thecompany
planstogiveadultconsumersnewandexcitingproductchoicesthatchallengetheestablishedperceptionsofbeer.
Consumershavechangingtastes,andAnheuserBuschaimstosatisfytheirpreferencesbyintroducingavarietyofnew
productsdesignedtotargetawiderangeoftraditionalandnontraditionaladultconsumers.
AnheuserBuschisacompany,whichhavecommitteditselftothecontinuousgenerationandinternaldisseminationof
marketintelligencerelevanttothecurrentandfutureneedsoftheircustomers,aswellastothecontinuousimprovement
oftheirresponsivenesstosuchneeds.
ThekeystagesintheformulationoftheNPDconceptusedbyAnheuserBuschare:needidentification,ideadevelopment
tofulfiltheneed,productdevelopmenttosubstantiatetheideaandtheproduct'smarketintroduction,communicatingthe
fulfillmentaneed.Inthecenteristheabilitytotranslatethesubjectiveconsumers'needs(e.g.healthy,convenient)into
objectiveproductspecifications,inorderto,throughthecreationofthecoreproduct,substantiatethefulfillmentofthese
needs.ItisawidelyspreadopinionatAnheuserBuschthatsuchapproachcangreatlyincreasethelikelihoodofsuccess
ofproductdevelopmentprocess.
Thecollectionofappropriateinformationconcerningconsumers'needsandperceptions,fromthebeginningof
developmentuptotheproduct'smarketintroduction,isanessentialrequirementoftheNPDprocess.Tounderstandthe
targetconsumers,andincludetheirneeds,viewsandproblemsatanearlystageofthedevelopmentprocess,iscentralin
theconcept.
TheopportunityidentificationstageaimstodefinethetargetmarketsinwhichmanagementexpectedtheNPDeffortsto
beprofitableandgenerateproductideasthatcansuccessfullycompeteonthemarketideageneration.Atthesestage,
company'smanagement,basedonagoodunderstandingofits(andcompetitors')corecompetenciesandunique
strength's,makeastrategicassessmentofwhichtechnologicalplatformscanprovideasolidbasisforNPD.If,basedon
suchanassessment,potentiallyattractivemarketsandideasarefound,thedecisiontoinitiatethedesignprocesscanbe
made.
Thedesignstageaimstoidentifythekeyconsumer'sbenefitsthenewproductistoprovideandthepositionofthese
benefitsvs.competition.Atthefirstdesignphaseopportunitydefinition,thepotentialrewardingideasselectedearlier
aresubmittedtothetargetconsumers'evaluation.Thisevaluationprocessiscentralbecauseitallowsanassessmentof
themarketpotentialoftheselectedideasbeforeanyconsiderablefundsarecommittedtotheNPDproject.
Attherefinementstage,theproduct,followedbyalistofbenefitsandtheirrelativeimportance,starttotakeshape.This
isachievedthroughthecarefulanalysisandmeasurementoftherelationshipsbetweenconsumerpreferences,
perceptionsorchoices,ononehand,andthecoreandaugmentedproduct'sfeatures,ontheotherhand.
Finally,iftherefinementphasehasbeensuccessfullycompleted,(ifitwaspossibletodesignanewproductthatfulfilsthe
consumersneedsinasuperioranduniquemanner,anevaluationoftheoutputtakesplaceopportunityevaluation.This
consistsinforecastingthesalesofthenewproduct,basedontheaggregationoftheprobabilitiesofindividualconsumers'
preferencesandchoices.
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However,theEuropeanFMCGcompaniesshowlowerR&Dinvestmentsthanmanyotherindustries.Innovationsarerare
(only2.2%ofthetotalproductinnovations),whilealargenumberofproducts(anestimationof77%oftotalproduct
introductions),representingnoneoronlyminorincrementalinnovationsrelativelytoexistingproducts,isintroducedtothe
marketeveryyear.Inspiteofthisratherriskaverseattitude,manyproductintroductionsfail.Figuresvarywidely,but
eventhemoreconservativeestimatesshowthat40to50%ofnewproductsintroductionsareoutoftheretailers'shelves
withinoneyear(Ernst&Young,1999

CHAPTER3
3.1.Abstract
IntheChapter3,aftertheshortintroductionofthecompanyandthemarket,IwilldescribeindetailstheNewProduct
Developmentprocessthatwasconductedinourcompanyinordertolaunchnewproduct.Theprocessthatisa
combinationofcorporateproceduresthenwillbeevaluatedandanalyzedbytheparticipantsintheprojectteaminorder
tooutlinethefactorsthatcontributeinsuccessornotsuccessofthenewproduct.

3.2.Introduction
SkopjeBrewerywasfoundedin1924asajointstockcompanyspecializedforbeerproduction,withproductioncapacity
of36.000hectolitersperyear.UsingtheCzechbeerproductiontradition,SkopjeBrewerydevelopedaqualitybeer.In
1977,SkopjeBreweryexpandeditsproductportfoliowithitsownprogramofcarbonatedsoftdrinks.
Afternumeroustransformationsofthebrewery,beforeandaftertheWorldWarTwo,in1988theprivatizationprocess
startedinMacedonia.Inthiscriticalperiodoftransitionfortheeconomy,SkopjeBrewerymanagestosustainatthelevel
ofthemoststableandmostsuccessfulcompaniesinthecountry.Thepositivetrendofthecompanyhaditspeekin1991,
thelastyearofitsprivatizationprocess,bybecomingalicensedbottlerofTheCocaColaCompany.
In1998,BalkanbrewHoldingLTD,wherestrategicinvestorswereAthenianBreweriesandHellenicBottlingCompany,
authorizedbottlersofHeinekenandCocaCola,becamethedominantshareholderofSkopjeBrewerywiththetotalof
51%oftheshares.Thisbroughtevengreatercredibilitytothecompany,bybecomingpartofthetwogreatcorporations
inthebeverageindustry,TheCocaColaCompanyandHeinekenNV.
Accordingtothecurrenttechnicalspecification,thecapacityofSkopjeBreweryis:
Beer1.100.000hectolitres,
Malt5.000tones,
CocaColaproducts1.000.000hectolitres,
Vinegar60.000hectolitres.
SkopjeBreweryisacompanywith400employees,andahighlydevelopednetofsmallsubsidiarycompanies,inthefield
ofdistribution,marketdevelopment,maintenance,andetc,workingascontractorswithlotsofbenefitsand
responsibilities.Bythisthecompanycontributestothedevelopmentofentrepreneurshipofsmallfirms,whichoverall
stimulatestheeconomyinthecountry.Peopledevelopmentisoneofthehighprioritiesofthecompanyinorderto
maintainthegrowthandimplementingTotalQualityManagement.
ThelevelofdevelopmentoftheMacedonianbeveragemarketisextremelylow.Thereareseveralfactorscontributingto
thissituation,butmostsignificantaretheextremelylowpurchasingpoweroftheconsumersandnofirmstatelegislative
forregulatingeconomicconditionsinthecountry.Atthisextremelylowlevelofdevelopmentofthemarket,Skopje
Brewerycansaythatitisthedominantplayeronthebeerandsoftdrinksmarket,workingaccordingtothehigh
standardssetbybothcorporationsthatthebreweryispartof.

3.2.1.Marketsize
TheconsumerbasefortheMacedonianbeermarketencompasses78%oftheadultpopulationaboveage18.Per
definition,itisthepopulationsegment,whichconsumesbeeratleastonceamonth.PrimarilymalesconsumeBeerin
Macedonia.Ofallmales,88%aremonthlydrinkers.Amongwomen,thissegmentisaslargeas67%.Drinkingbeeris
morecustomaryintheyoungerandmiddleagedpopulation.Theconsumerbaseamong1829yearoldsisextremely
highwith83%and,therefore,abitlargerthantheconsumerbasewithinthesegmentofthe3049yearsoldswith78%.
Apparently,consumptionofbeerinMacedoniaistiedtoacertainsocialstatusastheconsumerbaseincreases
significantlyupfromthelevelofprimaryeducation.Whentakingalookattheregions,theareaaroundthecapitalcity
Skopjeandthewestofthecountrytrailslightlybehindintermsofbeerconsumption,becauseintheotherregionsthe
consumerbaseforbeerexceeds80%.
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3.2.2.Consumptionofbeerwithinthecontextofotherbeverages
Mineralwater(35%)andsoftdrinks(33%)arethenumberonebeveragesfordailyconsumption.Fruitjuice(29%)is
verybigalsobeingconsumedby29%onadailybasis.Beerhasadailyconsumptionbaseofroughlyonetenth(9%)of
thepopulation.Wine,spiritsandmixeddrinksaremuchsmallerthanbeerwithregardtodailyconsumption(2%,4%,
1%).
Thefiguresformonthlyconsumptionshowthattheconsumerbaseforbeer(78%)ismuchlargerthantheconsumer
basefortheotheralcoholicbeverageslikewine,spiritsormixeddrinks.

3.2.3.Drinkingoccasions
BeerisaverysocialbeverageinMacedoniaandtherefore,itismainlyconsumedinsocialsettingstogetherwithfriends
oracquaintances.Themainoccasions,atwhichbeerisconsumedveryfrequently,areathomewithguestsoroutof
homeinacaf/bar/restaurantswithfriends.ThelonelybeerdrinkerisararespeciesinMacedonia.

3.2.4.Purchaseandpackagingtypes
Thebeermarketshowsabalancebetweenthepurchaseofbeeringlassbottlesandthepurchaseofbeerinplastic
bottles.Oneoutoffivebeerdrinkersgoesforsingleglassbottles(75%).Incontrast,25%oftheconsumersbuybeerin
singlecan,ordraftbeerifoccasionisabarorrestaurant.

3.2.5.Awarenessofbrands
IntheMacedonianmarket,theportfoliobrandSkopskoistheuncontestedsynonymforbeer.Inquiryintoawareness
positionsrevealsanoutstandingpositionofthebrand:TheTOM(topofmind)spontaneousbrandawarenessexhibits
54%andtotalspontaneousawarenessaddsuptoanastounding97%.Amstel,thenumbertwobrandintheTOMranking
trailswithanawarenessscoreof19%.AllotherbrandsfailtoreachaTOMscorehigherthan10%.Inthetotal
awarenesshierarchyZlatenDab(81%)isinsecondpositionrightbehindSkopsko,butinfrontofAmstel(75%.).Bitolsko
(61%)istrailingbyawidemarginjustasKraliMarko(58%),Heineken(51%)andKenbach(37%).

3.2.6.BrandImage
Basedonamultidimensionalscaling(MDS),whichnarrowsdowntheentireimagecriteriaofbrandstotheir
differentiatingessence,thekeypositioningofthebrandsintheMacedonianmarketcanbesummarized,fromthe
viewpointofthosewhoknowthebrandsatleastbyname,asfollows:

TheinternationalPremiumsegment
Thissegmentischaracterizedbyahigherpricelevel,highqualityandthestatusofinternationalbrandsasbeing
reputableand(top)class.Amstelistheinternationalbrandwiththemostdistinctiveprofileintheconsumer'sminds.It
exhibitsthehighestbrandstrength(averagevalueforallimageitems32%)withintheinternationalsegment.Heineken
displaysthesameimageasAmstelhowever,theprofileoftheDutchbrandisweeker.
Theotherinternationalbrandsareimagewisequiteweakandlackaclearprofile.Nomatterwhichbrand,theyareall
judgedasexpensive,however,withoutdisplayingdifferentiatingproperties.Therefore,brandslikeBeck's,Carlsberg,
StellaArtois,andothersaremetooofAmstelandHeineken.

Mainstreamsegment
ThemarketleaderSkopskoisimagewisethestrongestbrandinMacedonia.Skopskooutscorestheothermainstream
brandZlatenDabbyaclearmargin.SkopskoissimplythebestbeerinMacedonia,backedbytraditionandthehighly
appealingtaste.
TheimagelevelofZlatenDabisclearlylowerthanthatofSkopsko.Itisabeerforordinarypeople,availableata
reasonablepriceandstronglyadvertisedbutcertainlynotasgoodasSkopsko.

Economysegment
Thissegmentasawholeislackingastrongimageposition.Allthebrandsofthissegmentareclearlytargetedand
connectedtocommon/ordinarypeople.Thebiggestadvantageofthesebrandsistheirreasonableprice.KraliMarko
differsabitfromtheothereconomybrandsonaccountofitsimpactfuladvertising.Consideringpriceimageofthebrands,
BitolskoisperceivedasthemostreasonablypricedbrandinMacedonia.

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3.3.IntroductionintotheNPDprocessofSkopjeBrewery
Developinganewproductonthemarketishighlycomplexprocessthatrequestsalotofanalysisandhugeeffortfrom
thepeopleinvolvedintheproject.TheparticularprojectinSkopjeBrewerywasinthehandsofthecommercial
department,morespecificallythemarketingdepartment.Thebeerbrandmanager,TodorDimitrov,asprojectmanager,
inconstantconsultancywiththecommercialmanager,drewmostoftheessentialmovesfortheproduct.
Duringthelast10yearstheBalkanshasbeenaturbulentplace,withlotsofchangeshappeningineverysegmentof
living.Inevitable,thebeermarkethaschangedduringthispastyears,developingdifferentconsumer'spreferences,and
havingadiversifiedofferonthemarket.Diversifiedconsumerpreferencesdonotnecessarymeansmoredeveloped
market.Veryoftenincountriesintheprocessofdevelopmentthemarkethasbeendevaluatedduetotheeconomic
environmentandtheinabilityoftheconsumerstosatisfytheiressentialneeds.
ThiswasthecaseoftheMacedonianbeermarket.Duetothelowpurchasingpoweroftheconsumers,theirpreferences
werefocusedtowardseconomybrands.ThiscausedaproblemforSkopjeBrewerybecauseitsanchoronthemarket,the
standardbrandSkopskoisaqualitybeer,whichcannotbedevaluatedbyloweringitspricetothelowqualityeconomy
brandsthatstartedpenetratingthemarket.ThiscausedforSkopjeBrewery'scontingencyplan,togaintheeconomy
segmentconsumers.
Afteranindepthanalysisofthemarket,newproductwasdevelopedandwasreadyforlaunching.Marketingstrategy
wasset,inordertopenetrateamarketsegmentwherecompetitivebrandshadthedominantrole.Buttherewerealways
SkopjeBrewery'scredentialsthatgavevaluetoeverybrandintheportfoliocomingoutoftheproductionlineofthe
marketleader.
Buttheproblemwasnotsolvedonlywiththelaunchofthenewproduct.Therewasagreatmarketturnoverthat
occurred,whichtotallychangedtheeconomysegmentofthebeermarket.PETbeerpackagingwasintroducedonthe
marketandsignificantlyinfluencedthemarketpositionofthemajormarketplayers.
Inthefollowingtext,IdescribeindetailstheNPDprocessthatwasconductedintheSkopjeBrewery,phasebyphase,
fromtheideatothelaunch.TheprocedureforNPDisamixtureoftheCocaColaandHeinekenprocedures,describedin
Literaturereview.

3.3.1.PhaseI:OpportunityIdentification
SkopjeBreweryhasmadebrandextensionandexpansionapriorityinordertoincreaseprofitsinapremiummarket.
WithourbrandSkopsko,wedominatethemarket,andwithrecentlylaunchedbrands,HeinekenandAmstel,we
conquerthepremiummarket.TheentirelineofSkopjeBreweryproductsismanagedveryefficientlyintermsoflifecycle
management.ForthemostofthepopulationSkopjeBrewery'sproductsaresowellingrainedinthedomesticcultural
vocabularyandhavebeenpartoftheMacedonianexperienceforover80years.
Butinthesametime,ourcompetitors,BitolskaPivaraandPrilepskaPivara,weregainingconsiderablemarketshare
throughtheirsattackontheeconomysegmentwithlaunchingcheepbeerswithlowquality.
Inordertomaintainasteadyoverallgrowthrate,aninternalmandatewasestablishtodevelopnewproduct,andto
entertheeconomymarket.
ProjectLeaderandMarketingManagerformulatedtheProductInnovationCharterasfollows.
FocusUppermanagementmandatestheR&DtoidentifysegmentsofthebeermarketinwhichSkopjeBrewerydoesnot
haveadominantpositionandexploitourmanufacturing,marketinganddistributioncapabilitiestorapidlydevelopand
deploynewproducttothemarketplace.Onesuchsegmentistheeconomymarket.
Goals/objectivesTheprimaryobjectiveoftheprojectteamistoenterthegrowingeconomymarketinordertodrive
futuregrowthofSkopjeBreweryproductsatamoderate8%peryear.ThisprojectwillgainvalueforSkopjeBreweryby
beingbottledwithinthecompanyownedbottlingsystem.
GuidelinesThisobjectivewillbeachievedthroughtheintroductionofanewbeerproductusingtheSkopskoformulaand
SkopjeBrewerybrandname.Intermsofdegreeofinnovativeness,thestrategywillbetodevelopanadaptiveproduct.
Duetoourexpertiseinproductposition,manufacturinganddistribution,thedevelopmentprocesswillbeaccelerated
allowingforquickpenetrationintothemarket,despiteourlackofspecificexperienceineconomymarket.Hopefully,this
canbeaccomplishedbeforemorecompetitorsenterthemarket.

3.3.2.PhaseII:ConceptGeneration
OurfirsttaskafterdevelopingthePICwastochooseaprojectteamresponsiblefordevelopingthenewproduct.The
teamislistedinthetablebellow.
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NewProductLeader

TodorDimitrovski

Marketing

IgorIlievski

Accountant

BorisTemelkovski

LeadEngineering

GoranStojkovski

ManufacturingEngineering KircoStojanov
IndustrialEngineering

LjupcoKrstevski

Legal

MileBundovski

Consultant

CvetkoTodorov

Theteamwaschosenfortheirhighdegreeofmotivationfortheconceptandtheirpreviousexperiencewithsuccessful
productlaunches.Ourinnovationprocesswassimple:weenvisionedabeerthatusesthedistinctivebrandsofSkopje
Brewery,thanwemodifyourexistingtechnologytomanufacturetheproduct,andlastly,wewillmakethisproduct
availabletotheconsumerstoseeifithasvalue.
Weknewthateconomybeermarketcommanded2million(EUR)insalesin2002,andwerelikelytogrow200%overthe
next6years.Thisisbasedonfiguresgeneratedbyourconsultantonthebeerindustry.Theproductteamalso
understoodthatthemarketwasshiftingtowardcheap,economyandlowqualitybeers.SkopjeBrewery,asthepioneerin
bottlingtechnology,certainlyhadtheabilitytomakeanddistributetheproductrapidly.Basedonourexperience,we
generateatimelinewithalaunchdeadlineof1stofMay2003.

ProjectTimeline
OpportunityIdentificationandselection
Research
Evaluate
Validate

Conceptgeneration
Concept/projectevaluation
Productdefinition
Teamselection
Budgetresearching
Developmentplan

Development
Marketing
ProductDesign
Financialplan/forecasting

Launch
Distribution/sale
Manufacturing
Commercialization
Rollout1stMay
Management

3.3.3.Research
WeintendtolaunchanewbeerbrandthatwouldbeasolidchoicefororiginalqualityMacedonianbeerthatrefreshes
peoplewholikethesimpleordinarythingsinlife.Thelowpriceshouldcreategoodvalueformoneyanditisthesafe
choiceforhighvolumeoccasions(celebrations,socialgatherings).Thetargetaudiencewouldbemale30yearsoldand
above,socioeconomicclass.Theymainlyliveinruralareas.Theywanttoenjoytheirbeerasrefreshmentandalso
duringtheirrelaxationasarewardaftertheirhardphysicalwork.Theyareextrovertanddowntoearth(realpeopleno
pretending)andsharethebeerexperiencemainlywiththeirfriendsbutalsoaloneinfrontofconveniencestore.They
appreciatethesimpleordinarythingsinlifeandthereforetheyjustwanttoenjoythebeermomentastheescapefrom
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theirdailyroutineproblems.Theyareconservativeandstronglydefendtheiropinion.Theirmainconcernisthepolitical
andeconomicsituation.Theywanttoservethebestbeerthattheycanaffordandtheirgueststobesatisfiedduring
celebrationsandhomegatherings.
Themarketingteamwantstheconsumerstodo,thinkorfeelafterexperiencingthenewbrandthefollowing:
WhenIthinkofthenewbrand,Ithinkofrefreshmentandrelaxedmomentsafterahardday,
ThenewbrandismyMacedonianbeer,that'sallaboutrefreshmentandrelaxation.Ifeelclosertothisbrand,I
canidentifywithitfrommorethanonepointofview(Icanaffordit,Icanfinditeverywhereinmy
neighbourhood,andIcansafelyshareitwithmyfriends).
Wewantourconsumerstobeliefthatthenewbeerisaneasytodrink,thenewbranddesignandpackagingis
acceptableandthelowpricemakesitattractiveandasafeandgoodchoice.

3.3.4.Segmentingthemarket
Thebasesforsegmentingthemarketinordertodevelopprofilesforeachsegment,andevaluateattractivenessof
potentialsegmentwere:
Demographics:Age,gender,familysizeandlifecycle,income.
Psychographics:Socialclass,Lifestyle,personality.
BehaviouralSegmentation:Need/benefitbased:Benefitssought,needs.Behaviorbased:Usagelevel,occasion,
loyalty.
Indicatorsforlifestyle:
Values,
Attitudes,
Sparetime.
Indicatorsforconsumer'sbehaviourandcharacteristics:
Purchasinghabits,
AttitudestowardsAdvertisement,
BrandImage.

3.3.5.Methodology/Researchdesign/Descriptionofmethods
a.Overallbeerimage
Inordertodevelopoverallbeerimageamongtargetgroup,theresearchagencyimplementedqualitativeresearch
techniquesintheformofFocusGroupDiscussions.
Thebasicgoalsoftheresearchwere:Consumerbehavior,mainpurchasingcriteria,perceptionoftheeconomybrands,
tastepreference,degreeofadvertisinginfluenceetc.Thegroupdiscussionswereconductedinseveralphases:
Inthefirststage,theparticipantswereacknowledgedwiththegroupdiscussionprocedure,conventionsoftape
recorderandobservationetc.
Thesecondstagewasinvestigationofbeerperceptionandconsumption.Theparticipantswereaskedwhatkindof
words,imagesandfeelingcometomindwhentheyheartheword"beer".Theyshouldwriteallentriesona
board,discussbrieflyeachentryaftercompletingthelist.Thantheyhavetodiscusesaboutstrengthsand
weaknessesofbeer,howtheyfeelwhentheydrinkbeer,whatisthefillingwhentheyhavebeerintheirhands
(explorationofphysical,emotionalandperceptiveexperience),whentheystarttodrinkbeerandwhoinfluenceon
themtochoosebeerbrand.
Inthethirdstage,theparticipantswereindividuallyinvestigatedaboutalldomesticbeerbrandsinmoredetail.
TheinvestigatebrandswereSKOPSKO,ZLATENDAB,KRONENBEER,KRUNA,andBITOLSKO.Ofmajor
importancewastoinvestigatethecheapbrands.

b.Beerattributes
Inordertoexaminethetastepreferencesthroughnewbeerbrand,theresearchagencywillproceedwithaquantitative
blindproducttestingintheformoffacetofaceinterviewsintestcenters,basedonastructuredquestionnaire.The
advantageofconductingtheinterviewsintestcentersisthattheevaluationoftheproductsismadeonthespotandthat
theproductstobetestedarekeptinconditionveryclosetotheideal,i.e.degreeofcoolness.Eachrespondentwilltest
blindlythetwobeers(newbeerandthebeerthatregulardrink)andwillevaluatethemmonadicallyonanumberof
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attributes.Attheendoftheinterviewtheproductswillbecomparativelyassessed.Theevaluationoftheproductwillbe
inrotatingorderinordertoavoidanypotentialbias.Theprocedurewillbeasfollows:
Testnewbeerbrand
Monadicevaluationonanumberofattributes
Testcompetitivebeerbrand
Monadicevaluationonanumberofattributes
Comparativeevaluationonanumberofattributesandoverall

c.Investigationofalternativenameandlabelproposition
Thethirdresearchphaseisneededtoexaminethenameandlabelofnewbeer.Inordertobestmeettheobjectivesof
thestudy,qualitativeapproachwillbeemployed(FocusgroupDiscussions)informsof:
1.Monadicevaluationofeachname,
2.Monadicevaluationofeachlabel,
3.Comparison/purchaseintent.

Outcomes
Theresearchoutlinekeyquestionsrelatedwiththenewbeer.Throughallresearchmethodsandactions,marketingteam
ofPivaraSkopjeacquireallnecessarycharacteristicsandfeaturesofthebeerthatthetargetpopulationwantandneed.
(Figure5)

3.3.6.PhaseIII:ConceptEvaluation
Withourprototypesinhand,wecreatedasimpleconceptstatementforourproductthatsummarizedthePICandserved
asthemajorpointsforevaluatingtheconceptattheprescreeninglevel:
Hereisabeerwithagoodtasteandrightamountofbitterness,
ItoffersindividualsatastyalternativetoBitolskoandPrilepskobeers,
ItcomesinthetrademarkSkopjeBrewery,withtheexfactoryprice58den.Andretailprices65den.
Managementalsoaskedtheprojectteamtoanswerfourquestionsasaninitialconceptevaluation:
Doestheidearequiretechnologythatourcompanydoesnothave?Istheproductbeingsoldtocustomersthe
companyhasnoknowledgeof?
Doestheproductofferthewrongdegreeofinnovation?
Istheproductapoorfitforthecompanybasedonanyotherdimension?
TheanswertothesequestionswasNO.SkopjeBreweryhasthetechnologicalcapabilitiestoproducethisproduct.
AlthoughSkopjeBrewerydoesnothaverecentdirectmarketingexperiencewitheconomysegment,itdoeshave
experiencewithmarketingtheideaofrefreshment.ThedegreeofinnovationwhilenothighisachallengeforSkopje
Brewerybutcertainlyinanegativeway.TheproductisanexcellentfitforSkopjeBreweryintermsofgrowth
opportunity,manufacturingandmarketing.
Usingtheconceptstatement,aphoneandInternetsurveywasconductedamongtwothousandindividualsbetweenthe
ageof3045whoregularlyconsumedbeer.Afterbeingreadtheconceptstatement,individualswereaskedtoratetheir
likelihoodtobuysuchproduct.Therewerefivepossibleresponses:
Definitelywouldbuy,
Probablywouldbuy,
Mightormightnotbuy,
Probablywouldnotbuy,
Definitelywouldnotbuy.
76%ofindividualssurveyedhadaresponseinthetoptworesponses:
Definitelywouldbuy52%
Probablywouldbuy24%,
Mightormightnotbuy12%,
Probablywouldnotbuy10%,
Definitelywouldnotbuy2%.
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Withtheknowledgethatourconceptwassoundanddevelops,wewentback,andtestedourthreeprototypesatthe
focusgrouplevel.Therewere50groupsof10peopleeach,allbetween3045yearsold,foratotalof500individuals.
Participantswereaskedtorateallthreedrinksaftersamplingthemandthreeknowncompetitorsinablindtastetest.
Thecriteriawereoveralltaste,thelikelihoodofbuying,andhowoftenandhowmanytheywouldbuy.Oneofthe
prototypesbeer,calledGORSKOratedextremelyhigh,asdidtheothertwoprototypes.Thecompetitorbeersalsofared
reasonablewell.Usingthecommentsandresultsfromthefocusgroups,itwasdecidedtofocusondevelopingGORSKO
beer,andrevisitotherprototypesatalaterdateforpossiblelineextensions,basedonthesuccessofGORSKObeer.We
developedanATARmodelbasedonmarketsize,potentialforgrowth,sales,andunitcosttodeterminepotential
profits.
Themarketsizeisestimatedat0,4millionadultdrinkersbetween3045yearsoldin2003.Throughanaggressive
marketingcampaign,60%shouldbeawareofourproduct,50%wouldbuytheproductifitwereavailabletothem,75%
ofintendedusersshouldhavetheproductavailabletothem,30%willrepeattheirpurchaseatarateof32unitsper
year.

3.3.7.PhaseIV:Development
Thefourthphaseofnewproductdevelopmentinvolvesthreeprocessesthatoccurconcurrently.Theproductitselfis
developed,themarketingplanisgraduallydeveloped,andthefinancialplanisfinalized.
TheproductinthiscaseisaSkopjeBrewerybeerthatissimilartoitsmainstreambeerSkopsko.Inordertoachievethe
desiredlowprice,thepercentageofalcoholatthenewbeeristhreepercentageslowerthanonSkopskobeer.According
tolocalregulations,thetaxisrelatedtopercentageofalcoholin1litterbeer.Threeandahalfpercentagealcoholinthe
newGorskobeermanagesitscompetitiveexfactorypriceof58denars.
Whiletheproductwasbeingdeveloped,themarketingplanbegantotakeshape.ThesituationanalysisidentifiedGorsko
asabrandextensionofSkopskobeer,whichoffersagreatquality.Themarketingteamwaslookingtobringthequality
oftheSkopjeBreweryproductstotheeconomymarket.
ThestrengthofSkopjeBrewerynamehasledtotheadoptionofarapidmarketingapproach.Weutilizerolloutsrather
thantestmarkets.MarketingreliedheavilyonaBrewery'sreputationandimmediatemarketawareness.Inorderto
attainthislevelofawarenesstheexistingsalesforcewasutilizedandasubstantialamountofmoneywasdedicatedto
advertising.
Inordertomarketthisproductagreatdealofeffortswasputintoexaminingthemarket.Weidentifiedourtargetmarket
asaheavilybeerdrinkersages3045.Currentlythenumberofpeopleinthisagegroupisapproximately0,5million.
Researchhasshownthatthisagegroupwillcontinuetogrowsubstantiallytoabout0,8milliontotheyear2006.Through
extensivemarketresearchitwasshownthatindividualswhoconsumeeconomybeertendtohaveseveralcommon
characteristics.Mostoftheseindividualsarefamilypeople,withameanhouseholdincomeof60008000denars.Using
psychographicdatawewereabletoassessthatapersonwhodrinkeconomybeerenjoypersonalinteractionandtruly
valuestheirsociallife.
Thepricingoftheproductwasanissuethatneededtobeaddressed.Whilewewontedthebeertobeperceivedas
althoughcheap,butwithagoodqualityfromoriginalreceiptfromSkopjeBrewery,werealizethatwithsomanyother
optionsavailablepricingthebeerhigherthanotherscouldadverselyeffectsales.
ASWOTanalysiswasconductedtoidentifystrength,weaknesses,opportunities,andthreats:

StrenghtsWeaknessesOpportunitiesThreats
1.SkopjeBrewerynameand
reputation,
2.Strongexistingsalesforce

1.Notfirsttomarket,

1.Growthintargetmarket, 1.Changeinconsumertaste,

2.Significant
competition,

2.Abilitytostealmarket
share

2.Loweringofcompetition
price

SkopjeBrewerynameandreputationwillbeagreatassetwhenintroducingthenewproduct.Thereisalreadya
familiaritythatotherscompanieswouldhavetodevelopfromscratch.Oursalesforcehasasubstantialrapportwith
customers,givingusafootinthedoorwiththisproduct.
Gorskowilljointmanyotherdomesticandimportedeconomybeers.Theyarecurrentlycloseto10economybeersthat
poseasignificantlevelofcompetition.Thiscompetitionandthefactthatweareenteringthismarketlatecouldbeviewed
withsomeconcern.
Thetargetmarketofalcoholdrinkersages3045willgrowsubstantiallyfrom0,4millionto0,8millionby2007.This
offersSkopjeBrewerytheopportunitytoincreasesalesbutalsoincreasemarketshare.Inthepast,SkopjeBreweryhas
shownitsabilitytosuccessfullystealmarketshare.
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TherewereseveralkeystosuccessfulmarketingofGorskobeer.TheSkopjeBrewerynameandreputationhadtobe
exploited.Thecurrentsalesforcehadtobeusedefficiently.Retainingcustomersandencouragingrepeatbusinesswasa
priority.
ThetotalmarketingandadvertisingbudgetforGorskowas0,5milliondenars.These0,5milliondenarsweresplitoutinto
30%fortelevisionadvertisement,50%inprintand20%inotherareas.
BorisTemelkovskididthefiveyearsfinancialforecast,takingintoaccounttheinvestment,developmentandlaunch
expenses.
15.000.000 32.000.000 43.200.000 58.320.000 78.732.000

Sales

2.500.000

GrossProfit

12.800.000 17.280.000 23.328.000 31.492.800

12.500.000 19.200.000 34.920.000 34.992.000 47.239.200

15.000.000 20.000.000 20.000.000 22.000.000 27.556.200

Operatingcosts

300.000

Depreciation

15.300.000 20.640.000 20.864.000 23.166.400 29.130.840

Totalexpenses

(2.800.000) (1.440.000) 5.056.000 11.825.600 18.108.360

Netincome

(980.000)

Netincome
Depreciation

31.000.000

Freecashflow
Workingcapital
NPVat10%
ProfitabilityIndex

640.000

(504.000)

864.000

1.166.400 1.574.640

1.769.600 4.138.960 6.337.926

(1.820.000) (936.000)

3.286.400 7.686.640 11.770.434

(1.820.000) (936.000)

3.286.400 7.686.640 11.770.434

300.000

864.000

640.000

(1.520.000) (296.000)
(1.520.000) (296.000)

4.150.400

(31.000.000) (1.381.818) (244.628)

1.166.400 1.574.640

4.150.400 8.853.040 13.345.074

8.853.040 13.345.074
3.118.256 6.046.745

8.286.241

264.485.431

Thismodelassumedaconservativeannualgrowthrateof35%basedonpastlaunchesaswellasanalysisofcompeting
productscurrentlyonthemarketandfuturemarketpotential.TheNPVofthisprojectouttobeapproximately265million
denars.Withthisforecastseveralgoalswereset:
Salesof78milliondenarsbyyear2007,
Grossrevenueof47millionby2007,
50%marketshare

3.3.8.PhaseV:Launch
Theprocessoflaunchingtheproductcausedustomakemanystrategicplatformdecisions.Thefirstinvolvedthe
questionofpermanence.WasGorskoaproductwewouldstandbyregardlessofitssuccess?Wouldwestayonlyifwe
meetourgoals?Areweonlyinthemarkettemporarily?
Gorskowasnevermeanttobeatemporarilyproduct.Certainly,theinvestmentinGorskoindicatedalongterm
commitmenttothislineofexpansion.However,wewouldnotcontinuewithaproductthatimmediatelyprovedtobea
failure.SkopjeBreweryhadasimilarsituationwhenweintroducedarkbeerfewyearsago,andaftershortperiodonthe
market,wehavetowithdrawit.Gorskowastobesupportedforaslongasitmettheperformancegoalsthatwereset,
allowingforsomelevelofmodification.
Theotherquestionweneedtoanswerwashowaggressiveweweregoingtobe.Basedonourmarketingplan,wewere
extremelyaggressiveinthemonthspriortolaunch.Weattemptedtoreceiveagreatdealofattentionearlyon.Ourgoal
wasalsotocaptureselectivedemandbytakingmarketsharefromthecompetitors.Weneedtogaincompetitive
advantage.ByusingSkopjeBreweryandSkopskorecognitionandmarketingsavvy,wehopedtodifferentiateGorsko
fromotherbrandsonthemarket.
InordertomonitortheprogressofGorskobeer,weeklysalesdatawasutilized.Ithelpedassesswhetherornotwewere
hittingourtargetmarkets.Thedataenabledustomonitormonthtomonthsalesfiguresaswellasregionaltrends.
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3.3.9.Postlaunchresults
Sixmonthsaftertheinitialrollout,thesalesfigureswerenotwhatwehadpredicted.Foronlyonemonth,wesucceedto
capturethetotalmarketuniverse,duetoourstrongsalesanddistributionforces,andgoodrelationshipwithour
customers.Weputitonverygoodpositionsonthepointofsalesandemphasizeitscompetitiveprice.Morethan50sales
peopleacrossthewholemarketwereworkingonpositioningandpresellingofthenewbeer.Butthefinalconsumer
doesn'twonttobuyGorskobeer.Onlysixmonthsafterlaunchingwehadbeerquantitiesreturnedfromthemarketdue
totheexpireddate.

3.4.Researchmethodologyandresearchquestion
Itwasveryclearthatthenewproductdoesn'tpassonthemarket.Thequestionthatwasderivingfromthesituationwas,
doestheprojectteammisssomephaseintheNPDprocess,ortherearesomeotherreasonsforfailing.Tofindout,I
conductqualitativeresearchbyunstructured,indepthinterviewswiththeProjectleader,TodorDimitrovski,Marketing
manager,IgorIlievski,andSalesmanager,AleksandarPopovski,inordertogathervalidandreliabledata.Idon'thave
anypredeterminedlistofquestionstoworkthrough,althoughmyideawastoexplorethereasonswhythenewproduct
doesn'tsuccessonthemarket.Igivetheintervieweetheopportunitytospeakfreelyabouttheprocess,theproduct,and
everythingthattheyconsiderthatisimportant,andhaveanyrelationswiththeproduct.Theinterviewswereconducted
onaonetoonebasis,betweenasingleparticipantandme(facetoface).Iusedopenandprobingquestionsinorderto
encouragetheintervieweetoprovideextensiveanddevelopmentalanswers,torevealattitudesorobtainfactsandto
seekanexplanationwhereIdonotunderstandmeaningofsomething.

3.4.1.KeynotesfromtheinterviewwiththeProjectLeader,TodorDimitrovski
GeneralCharacteristics
Aneconomypronebrand,whichisseenasadecentproposition.Ablondelightersbeerinalcoholandtexture(according
totheperceptions)thatallowsformoreconsumptionand/orbulkpurchasing.Themainissuethatcameoutregarding
Gorskoatthispointofthestudywasthatmostpeoplebelievedthatthebrandwasthenewreplacementofrecently
deletedbeerStarLisec.Thiswasmainlyduetotwofactors:
Thefox'spaw,thatconnectsthetwobrands,wasthemainlyresponsibleelementforthisperception
ThebottleofGorsko,althoughaswewillseeisnotconsideredasbeingcuttingedge,itstilllooksmoremodern
andimprovedovertheStarLisecone.
EmotionalExperience
Gorskoisaboutbeingeffectivelynondemanding,thusmostlypromotinganeasiergoingandsociallyopenscharacterthat
hastodowithlargergatherings(meetingnewpeopleormorepeople).Ontheotherhanditisalsoconnectedwithmore
normative'occasionsforpeoplethatviewhomeconsumptionunderamorefunctionallight'.Thelightertasteandalcohol
alsopromotesamorefreeconsumptionratementalityonthebehalfofthedrinker,whichenhancesmoodsandguides
connotationstowardsmorespecialevents(nothavingnecessarytodowithoccasionbutjustthesenseofsplurgingand
removingbarriers').
Theperceptionofthelowpricealongwiththeoneaboutfairanddecentquality,makeGorskoanaccessibleandlikable
easygoingcharacterthatismoreactivatedwithinthecontextofhavingagoodtime.
Respondentsappreciatedtheeconomicaspectsofthebrandwhenitcametobulkpurchase,buttheaccessiblecharacter
ofGorskoiswhatmadeitmoreappealingforpeoplethatliketogetabalancedmediumofquantityandqualityeitherby
necessityorbychoice.
TheonlycriticismmadeonthebrandwasbysomeyoungerSkopjerespondents,thathadtheimageofGorskobeinga
verypoorinqualityandtastebeer,tryingtoimitateandcopysomeoftheSkopjeBreweryotherbrands(ofwhichreally
theydidnothaveaclearperception).
ThemaindriverbehindtheabovewasGorsko'spotentialforamorelighter'orfeminine'projectionbasedonfortitudeof
thebeeritself,somethingthatwasnotinspirationalforyoungerpeoplethataresearching.
Packaging
ThebottleofGorskowasthoughtofasbeingsimpleandbasicintermsofstructure(asothers),butalsointermsoflabel.
Thepackagingwasfoundtobemoreorlesscomplimentarytotherespondents'expectationsforthisbrandandits
projectedrole.

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Stillyoungerrespondentssaidthatwithoutbecomingveryluxuriousorflashy,thelabelatleastcouldchangeinbecoming
moremodern,whilemaintainingtheelementofthefox'spawonit,sinceitwasthoughtofasanicetouchthatwas
differentiatingthebrandinameaningfulmanneraccordingtoitsname.
ThecallforchangingthebottleunderthisbrandwasnotaspotentasinthecaseofSkopsko,butstillthedesireforthis
wasveryevident.
(Proposed)DNA
Value=Inbeingasmartchoicethatwillofferadecentqualitybeerforlessmoneythatnormal.Thiswasthevaluemost
associatedwithGorsko.
Conviviality=Abeerthatisalsoreminiscentoflargergatheringsduetoitspotentialforbulkpurchasing,butalsodueto
itslightertasteandalcoholiccontentthatallowsforanmorecarefreeandopendispositiontowardsdrinkingandyour
environment.
Stability=Intermsofqualityandexpectationsoutofthebrand.Thisisanimportantvaluefortheeconomysegment,
sinceitcanmakethedifferencebetweenavalueformoney'brandandacheap'oneintheperceptionsofthe
respondents.
Forallpeople=thisvaluepromotesthebrand'spotentialinbeinganeasychoiceformorehomelyandundemanding
occasionsandmoodswithinthedailydrinkingpatternsoftheMacedonians.
Optimistic=Oncemorethelightnessofthebrandinbothtasteandalcohol,allowforthisbrandtoclaimamoreuplifting
spiritderivingprimarilyfromthesocialinteractionthatitconnotes,butalsofromenjoyingsimplemomentsineveryday
life,insimpleways.
Familiar=Thisvaluewillneedtobecomeanimportantelementofthetotalmix,sinceitwillpromotethebrand'slocal
originandindirectlydrawfromcollateralvaluessuchasprideandhomeliness,whichcanbetoostrongortoopassivein
ordertobeuseddirectlybyGorsko.
Gorskoaffectsthe:
TheCasuals:Abrandthatcanbeamajorpartwithintheeverydayconsumptionofthismotivationalgroup,notonlywith
themorenormativeoccasions,suchasfamilymeals,butaswellasforunofficialandeasygoinggatheringswithfriends
underalightermood.Gorskocanconvincethispublicbybeingstraightforwardinitscommunicationasagoodquality
valueformoneybrandthatisnotfrivolousbutcaringforitsconsumer.Thiscanalsobedonebysimultaneouslysatisfying
theneedforsociabilitythatthisgrouppossessesunderitsmorecontrolled'and/orpracticalmentality.
TheEscapists:Gorskocantapontothisgroupbyofferingamixthatisbasedonlocality,clearcommunicationofabrand
thatishonestandsimpleinitsoffertoitsdrinkersomethingordinarybutdecent.Familiaritywillneedtobeaccented
forthismotivationalgroupinordertoconnotesafetyandstabilitythatisgreatlyappreciatedbythem.
Thisbrandhasalotofpotentialtoreclaimlostmarketsharethroughitsvalueformoneycharacter.Thisisderivedby
thequalitythatitoffers(decent,honest),aswellasbyitslighterinalcoholcontentcharacterthatisrelatedtomoreeasy
goingandundemandingoccasionswiththeMacedoniandrinkers.Allaroundapositiveandevenoptimisticbrand
personality.
Gorskowillneedtobepromotedmore,underacontextofthebeerthatcaresforthequalitythatitprovidestoits
drinkers,ataveryaffordableprice,meaningabrandthatisnotaboutbeingcheapandfunctionalbutbeingdecentand
realistictowardstheneedsoftoday'sliving.
Amarketingsupportthatwillenhanceandreinforcetheaboveperceptionwillneedtobeafirststep.Asecondonewill
needtobeasmallredesignofthelabel(ideally)thatwillboostthequalitysideofthebrand(sinceMacedonianare
currentlysusceptibletoextrinsicqualities),assuringthevalueformoneymentalitythatiskeyforthisbrand'spotential.
Finallyandmostimportantly,GorskowillneedtointroducealineextensionofPET.ThePETbottlewillneedto
communicatetheprinciplesofthebrandwhichwouldbebasedonthetriangleofeconomy(thatisofferedbytheinherent
valuesofPETitself),quality(thebottle'sstructuraldesignandlabelwillhavetobeaestheticallybetterandmore
contemporarythanexistingcompetitors'propositions)andnationality(bytoneofvoiceinthecommunicationaleffortsas
wellaselementsoflabeldesign).Abalancedcombinationoftheabovethreevalueswillcreateastrongandconvincing
caseforGorksothatisabrandthatcares,abrandthatisasmartchoicefornormativeandbulkrelatedoccasions,but
alsopossessingsatisfyingquality.
LetusnotforgetalsotheconveniencethatPEToffersasapackagingformat,aswellastheinitialsenseofinnovation(if
thebottleandlabelareperceivedascontemporaryandqualitative,whichiskey)thatwillfurthereducate'consumers'

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perceptionsaboutplastic,somethingthatwillnotbehard,asthestudyhasshownhighlevelsofacceptancewithinthe
Macedonianmarket.

3.4.2.KeynotesfromtheinterviewwiththeMarketingmanager,IgorIlievski
Mostofthebenefitsstatedfromthecheapbrandconsumersarethoseofeconomy,productcharacteristicsand
availability:
Economy(Price)
Lower%ofcarbonationandalcohol
Offersprolongedtimeforconsumptionwithoutbeingdrunkimplicatinglongertimeforsocializing,discussion,chatting
Lowerbitternessinthetaste
Available
Veryfewparticipantsknowthepercentageofalcoholandextractofthebeer.Theyareusuallyfollowedbythetaste
whenestimatethe%ofalcoholIneverreadonthebacklabeltoseethe%ofalcohol.Greaterawarenessisshownfor
the%ofextract(inarangeof11and12%ofextract)ofbeers.
Preferredproductcharacteristicsofnewbrand:
Lower%ofalcohol
Lowercarbonation
Lowerbitterness
Othercharacteristics/attributes:
Reasonableprice(mostly25Denars,althoughinsomeregionsBitolathereasonablewasconsideredtobe2022Denars).
OntheFigure6,wecanseecomparisonofdifferentbeerswiththenewGorskobeeronseveralbases.
Launchingasacheapbeerthisbrandwillverysoonfallintocommoditymarketwheretheonlycriteriaforpurchasingwill
beitspriceandavailability.Inthismannerthesalesofthebeerwillbemostlyretailersdriven.
NegativeperceptiononPivaraSkopjeasacompany,whichisloosingthemarketshareso,thatiswhy,itislaunchinga
cheapbrand(commentsinFGDs)
Inordertoproceedwiththebrandlaunchingseveraladjustmentsinthebeercharacteristicsshouldbemade.Especially,
adjustmentsareneededindiscoveredfactorsofthenewbeerasnonsufficientplausiblefortheconsumerswhentested
againstcompetitivebeers.Althoughintheblindtestproceduretheimageattributeswerenottested(andtheseattributes
willhavegreatimpactinrecruitingconsumers),stilltheproductattributesofthenewbeershouldcloseuptothe
competitivebeer/sesp.inthephaseofearlyadoptionofthebeer.Avoidingthiswillnecessaryleadtoquickabandonof
thebeerbyconsumers.
Thesewerenotdecisionsbasedonexperienceandmarketingknowledge.Therewereextensiveresearchesconducted
onthemarketinseveralstages,concerningeveryphaseoftheproject.Localresearchagencywasappointedtoconduct
theresearches.Theagencyhasalreadymadeseveralresearchesofthebeermarketandhasthenecessaryknowledge
toanalyzethebeermarket.Theresearchhadasegmentedregionalapproachandwascoveringtheareaswherethe
competitorsweregainingsharethroughtheireconomybrands.Theresearchagencywasbriefedtofocusonthetargeted
groupwiththefollowingcharacteristics:
male,heavybeerdrinkersattheageof35+
lowsocioeconomicstatus,
mainlylivinginruralareas,
Theresearchesthatwereenforcedgaveimportantguidelinesforfurtherdecisionsregardingthedevelopmentofthe
brand.Apartfromtheresearchfindings,importantroleinthedecisionmakingprocessplayedthefeedbackfromthe
market,presentedbySkopjeBrewery'sextensivesalesforce.After6monthsofdevotedworkfromtheprojectteam
insidethecommercialdepartmentofthebreweryandtheagenciesinvolvedintheprocess(oneresearchagencyandone
marketingagency),theproductwasreadyforlaunching.Andthetiminghappenedtobeperfect,sincethelaunchwas
abouttohappenimmediatelybeforetheseason.
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Outofthe4P'sthenewproductdefinitelyhadthepricedefinedinadvance.Thiswasthecasebecauseofthetargeted
marketwhereaproductcanpenetrateonlywithalowprice.Alltheotherelementswereadditionallycreatedand
adjustedtotheneedsofthemarket.
TheproductwasbasedonthepositiveexperienceofthemainstreambrandSkopsko,withsmalladjustmentsinorderto
cutthefinalcostandtobeabletomeettherecommendedpricefromtheverybeginning.Inreferenceofcostefficiency
theprimary(ReturnableGlassBottle)andsecondary(crate)packagingofSkopskowasused.Thiswasalsoinfavorof
Skopsko,whichaccordingtothebusinessplanfor2004shouldrelaunchedinnewpackaging.
Therewashugedilemmaregardingtheplacementoftheproduct.Theinitialideawastohaveasegmenteddistribution,
onlyintheareaswherethecompetitorsaregainingsharewiththeireconomybrands.Whysegmenteddistribution?
Namely,therewerethreedifferenteconomybrandsfromtheremainingtwobreweriesinMacedoniaandeachofthem
werepenetratingdifferentregionofthecountry.So,wecannotgeneralizetheconclusionthatthecompetitionisgaining
alloverthecountry.Thereforelimiteddistributionlookedlikethesafesolution.
Thepromotionoftheneweconomybrandwassolelyatthepointofsales.Whywasthat?Primarilybecausetheprice
wasthemostvaluablethingtobecommunicatedbecauseofthespecificsegmentthathasbeentargeted.Ontheother
handATLcommunicationsdoesn'treallyhaveanyeffecthavinginmindthetargetgroupandtheselectivedistributionin
certainregions.Namely,thepopulationthatisthetargetofthenewproductismainlygatheringinfrontoftheconvenient
stores(pointofsales)andconsumesthebeeronpremise.Therefore,brandpromotionatthepointofsalesisthemost
importantinordertointroducetheproducttotheconsumers.
Mainobjectivewastocreateaqualityproductthatwillcomplywiththelowpricingpolicyandbecompetitiveinthe
market,butontheotherhandwillcreatequalitystandardsthatwillgivethecompetitionahardtimetomeetthe
benchmark.Usingthealreadyprovenrecipefor"Skopsko"isaqualityguarantee,butalsomeansthatthecostswill
remainapproximatelythesame.Therefore,thecontingencyplanwastoreducethelevelofalcoholinthebeer,because
thebeerisconsideredtobeexcisedutycommodity,whichisburdenedaccordingtothepercentageofalcoholinthebeer.
Thiswaythebrewerymanagedtomaintaintheproductqualityandinthesametimedecreasethefinalpriceatthe
requiredlevel.
Thelaunchoftheneweconomybeerbrandwasconsideredtobesuccessful.Butthebrandwasnevergivenachanceto
proveitselfonthemarket.Immediatelyafterthelaunchof"Gorsko",oneoftheothertwodomesticmarketplayers,
BitolaBrewery,startedcreatingatotallydifferentsegmentofthebeermarket,whichuntilrecentlyseemedabsurdand
impossibletohappenonthatparticularmarket.TheyhavelaunchedbeerinaPETpackaginginforextremelylowprice.
Namely,themarketwasdevaluatedenoughwiththeeconomybrandsthatwerecreatingawholenewsegmentinthe
market,butnowwiththepricesofthePETpackagingithasbeenthrowntothelowestlevel.Justforareference,forthe
priceoftwo0.5l"Skopsko"bottlescustomerscanbuyone1.5lbeerinPETpackaging.Theintroductionof1.5lPET
packagingwassupportedwithincreasedimportofthistypeofproductfromthesurroundingcountries.Thisisdirect
consequenceoftheliberalizationofbeerimportsattheMacedonianmarket,withoutanycustomduties,puttingina
difficultpositionthedomesticbeerproducers,duetothecustomdutiesfortherawmaterialsimportedfromother
countries.ThetrendofPETpackagingonthemarketistakingwiderrange.Smallandtraditionalneighbourhoodoutlets
arefilledwithconsiderablestockofPETpackedbeer.Marketexperiencesshowedthatafterawhile,notonlyprice
orientedconsumersbuytheproduct.Moreoftenconsumerswithhighersocioeconomicstatusbuythebeeroutof
convenience.Thedynamicsoflivingisdoingitspartintothebeermarket.
Wheredoes"Gorsko"fitintothisstory?."Gorsko"wasanextensiveprojectforcoveringacertainsegmentofthe
market.Asegmentthatfoundalternativewaytosatisfytheneedwithlessmoneyspentforthissatisfaction.
Accordingtothelatestdevelopments,thebeermarketischangingdrastically.TheOpportunitystandsforfurther
expansionoftheeconomysegment.SkopjeBrewerymustbetheplayerthatwillsetthetrendsinthissegment.
DevelopingastrategyforbeerinPETpackagingdoesn'tmeansonlylaunchingofaPETproduct,butalsothinkingfor
furtherdevelopmentsofthemarket.

3.4.3.KeynotesfromtheinterviewwiththeSalesmanager,AleksandarPopovski
NewProductDevelopmentwasaprojectofgreatimportanceforthecompany.Project,thatcanfreelybesaid,was
managedalmost"bythebook",withallthenecessaryelementofdevelopinganewbrand.Buttherearealways
unpredictablefactorsthatcaninfluencethefinaloutcome.
Iwouldsaythatitisverydifficulttocreateaproductforthemarketoutofnothing,ifyoudonotsetyourtargetsbefore
youevenstarttheprocess.Second,inaprocessofdevelopmentofanykindofproduct,always,abroadersurrounding
environmentthatcaninfluencetheprojectmustbetakenintoconsideration.
WhydoIsaythis?BeerinPETalreadyexistedintwooftheneighboringcountries,andtookasignificantmarket
share,maybeupto30%.SkopjeBreweryasthemarketleadermustbeabletosetthemarkettrendsandtobeonestep
infrontofthecompetition.
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WouldthislatelaunchofPETpackagingmightreflecttothesalesvolumes,marketshares,oreventothemaindriver,
theprofits,timewillshow.Wehavetopredicttheupcomingtrendsinthebeermarket,andtoseeifthePETisonly
shorttermtrend,orpermanentmarketrestructuring.
Attheend,Iwouldconcludethatthetheoreticalmarketingprinciplesmustbeobeyedandtakenintoconsiderationin
everystepofthemanagerialprocess,butparticularlocalcircumstancescansometimesmanifestcontradictoryoutcomes.

CHAPTER4
4.1.Analysisofthefindingsfromprimaryandsecondaryresearchandcomparisonwith
literaturereview
ThefinalgoalofthedissertationworkistooutlinethebenefitsoftheNewProductDevelopmentProcessbycomparing
thefindingsfromLiteraturereviewandtherealconductedprocessforlaunchingthenewGorskobeer.Cantheprocessor
proceduresforNewProductscontributeinsuccessofaproductonthemarketandtowhatextend?
Aswecanseefromtheinterviewswithprojectteammembers,theNewProductDevelopmentprocesswasconducted
bythebook,butattheendtheteamfacedfailurewiththeproductonthemarket.Thecriticalmistakesweredone
duringtheresearchphaseswheretheyunderestimatedormisjudgedtheneedsandcriteriaofourcustomers.TheProject
teamwasfollowingtheirgoals,andforgotwhatthegoalsofourcustomerswere.Morespecifically,theproductspecific
frontendactivitiesthatshouldclarifytheproductconcept,defineproductandmarketrequirements,anddevelopplans,
werenotdevelopedindetails.Theproductconcept,thatispreliminaryidentificationofcustomersneeds,market
segments,competitivesituations,businessprospectsandalignmentwithexistingbusinessandtechnologyplans,wasnot
asclearasitshouldbeinorderthemanagerscansensewhetherthenewlydefinedopportunityseemsworthexploring.
Theydidn'tunderstandconsumer'sneeds,sotheycannotunderstandthetradeoffsamongcustomerrequirements,
technology,andresource/costconstraints,whatresultwithproducingaproductforacompletelydeferenttargetgroup.
Marketresearchisaboutunderstandingconsumersandtheirneedsandshouldbeacorecompetenceattheheartofany
companywithastrategicvision.Differentiatingproductsandservicesisbecomingharderandproductlifecyclesare
becomingshorter.Thus,intuitivedecisionmakingisriskierandincreasinglycompaniesareturningtomarketresearch
toprovidethekeyinputtomoreeffectiveandefficientstrategicandtacticalplanning.
Veryimportantistonotethatacomprehensivemarketresearchandcompetitiveanalysisshouldbethestartingpointfor
abrandpositioningstrategy.Moreover,pretestingisanessentialstepthatisoftenneglectedintheimplementation
phase.Athoroughtesthelpstoavoidcostlyblundersthatcouldotherwisereducethechanceofsuccessofthenewbrand.
InthecaseofGorskobeer,thesuccessofthebrandliesintheabilityofthecompanytocopewithinthelocal,specific
identifiedsegment.
NPDprocessrequiresverycarefulanddetailedmanagementthroughthewholelifeoftheproduct.Allstagesandsub
processeswithinNPDprocessshouldbeharmonizedandcarefullyprojectedandconducted.Projectteamsinmanycases
whilelaunchingproducts(beerorsoftdrinks)donotoftendothis,duetolackofprofessionalskillsandknowledgeinNPD
process.BesidetheNPDprocess,alsoveryimportantpartofsuccessoftheproductisbrandingstrategy.Brandingisan
effectiveweapontowinconsumer'sheartandmind(Aaker,1996Arnold,1992).Theimportanceofbuildingabrand
nameforaproductshouldbetakenseriouslybyNPDteamattemptingtosellitsproductondomesticorexportmarket.
ThecompanyshouldseetheNPDprocessasanorganizationalprocessinwhichinformationaboutthemarketandits
actorsisgathered,assimilated,processedandreturnedintheshapeofanewproduct.Therefore,thecompany's
approachonNPDprocessshouldbebasedonunderstandingof:
1.Thefactthatbothtechnicalandmarketknowledgeandinformationarenecessarytoruneffectivedevelopment
process,
2.Thewaymarketinformationcanbegathered,spreadandcombinedwithtechnicalinformation'stodevelop
successfulproduct.
ThemainprinciplesofNPDprocessare:
1.Consumers'needsshouldbethestartingpointoftheNPDprocess,
2.ThegoalofNPDprocessshouldbethefulfilmentofconsumerneedsandtherealizationofconsumervalue,rather
thenthedevelopmentofproducts,
3.Salesandsatisfactoryreturnsoninvestmentcanonlybeachievedbyanticipating,identifyingandsatisfyingneeds.
ThustheNPDprocess'smeasureofsuccessshouldbethedegreeoffitbetweentheneworimprovedproductand
consumerneeds.
FromtheconductedintervieweeswiththekeypersonsintheNewProductDevelopmentprojectwecanderiveseveral
conclusionsandreasonsforthenewbeerfailure.
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AccordingtotheProjectcoordinator,thepeoplewerenotdifferentiatingGorskobeerfromtheotherSkopjeBrewery
beers.ThestoredisplaysandotherpromotionslookedtoomuchlikethoseforSkopskooralreadywithdrawnbeerStar
Lisec.Whilewewere,atsome,pointsuccessfulindifferentiatingfromcompetitors,wefailedtodifferentiateamong
SkopjeBreweryproducts.
Themajordisantvantageoftherapidmarketingapproachisthattheydidnotdomarkettestingintermsofbrand
perception.TherearepeoplewhotypicallypurchasebeerorotherproductsrespectedtheSkopjeBreweryname,and
alsotherearemanyearlyadoptersprimarilyduetoitsinitialnovelty.Howevertheydidnotknowhowmanypeople
purchasedGorskobasedsolelyontheSkopjeBreweryorigin,althoughsomehadconfusedGorskobeerwithStarLisec
duetothefox'spawonitsfrontlabel.TheStarLisecsimilaritywastheprimarysourceofconfusion.Whattheymeantto
beanadvantage,turnonasadisadvantage.Duringallresearch,theteamhadfocusedontheproduct,notthebrand.
TheprimarygoalinconstructingtheneweconomyGorskobeerwasachievingcompetitiveprice.Thatmeansaprice
equalorlowerthanthepriceofothercompetitivebeersinthesegment.Forthatreason,theprojectteamundertakes
severalsteps,bywhichsuccesstomanagealowerprice.Thefirststepwasdecreasingthepercentageofalcoholinone
litterbeer.Accordingtothelocallegislative,thetaxforbeeriscalculateddependingonthepercentageofalcohol
containinginonelitterbeer.Inordertolowerthetaxthatwehavetopayforproductionandsellingofbeer,wedecideto
decreasethepercentageofalcoholwhateffectthefinalpriceoftheproduct.Thatwasoneoftheradicalmistakesthat
ourteamundertakeinordertoapproachestotheeconomymarket.Theresultsfromresearchshownthatveryfew
participantsknowthepercentageofalcoholandextractofthebeer.Theyareusuallyfollowedbythetastewhenestimate
the%ofalcoholIneverreadonthebacklabeltoseethe%ofalcohol.Greaterawarenessisshownforthe%of
extract(inarangeof11and12%ofextract)ofbeers.
Preferredproductcharacteristicsofnewbrand:
Lower%ofalcohol
Lowercarbonation
Lowerbitterness.
Now,theresearchshowedusthatactuallyordinarypeoplearenotaswellfamiliarwithcontextofthebeer,oratleast
withthetextonthebacklabelofthebeer.
ThefirstcommentsafterfirsttasteofthenewbeerfromtheconsumerswerethatGorskoisabeerforwomen.Andit
wasimmediatelyabandonfromheavybeerdrinkers.
Ourstrivingsforachievinglowerpricecontinueswithchoosingsameoldprimaryandsecondarypackagingmaterials.The
bottles,althoughrecentlypurchased,werewiththeoldestshapeanddesign,andwewereusingthemfordecades.
SkopskobeerandpreviouslymentionedStarLisecwerebottledinthosebottles.Consideringthecreates,weusethe
sameoneasweuseforSkopskobeer.AlotofnegativecommentswereappointedfortheLabel.Itwascheapandwith
lowquality.
Consideringthestrategyforlaunchinganddistributingonthemarket,wecanseethatthefirstplanwastohaveselected
distribution,onlyintheruralareaswerethepositionsofSkopskobeerwereaffected.Butverysoon,afterbadoverall
results,andinordertocompensatesales,weforgotourstartingstrategy,anddistributethebeeralloverthemarket,
throughallsegments.So,theneweconomybeercouldbefoundinalloutlets,supermarkets,kiosks,groceriesetc.The
reactionfromtheconsumerswerethatSkopjeBreweryasacompany,isloosingthemarketshareso,thatiswhy,itis
launchingacheapbrand.Theimagethatthecompanywasbuildingthroughmanyyearsbylaunchingtoppremiumbeers
likeHeineken,Amstel,wasputinadangeroussituation.TheunsuccessoftheGorskobeercaninfluenceonSkopskoby
loweringitsbrandimageandequity.
Ontheotherhand,theperiodforlaunchingoureconomybeeroverlapswiththeperiodoflaunchingeconomypackaging
fromthecompetitor'sside.Beerin1,5litterplasticbottlewasapureinnovationonourmarket,whichforeverchangethe
pathsinthebeerindustrydevelopment.Both,MarketingandSalesmanager,emphasizelaunchingthe1,5litterplastic
bottleasasignificantinnovationonabeermarket,especiallyonaneconomybeermarket.AccordingtotheMarketing
manager,forthepriceoftwo0.5l"Skopsko"bottlescustomerscanbuyone1.5lbeerinPETpackaging.

CHAPTER5
5.1.Recommendedsolutionsforfurtheractions
Thenewbranddidnotreallymeettheexpectationsofitstargetcustomers.Theresearchshowedthattasteisthemost
importantfactoraffectingconsumer'schoiceinbuyingbeer,insteadofprojectteam'sopinionthatpriceisfundamentalin
makingdecisionaboutbuyingbeer.Thesecondmostimportantattributewasthealcoholcontent.

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TVadvertisementisthemosteffectivewayofgettingconsumer'sawareness.Duringresearchphase,alotofprospects
statethattheyheardaboutcompetitiveeconomybrandsfromTVadvertisement.However,TVadvertisingcostonprime
timeismostexpensive.Inthatcase,therecommendationisnottousethepopularandexpensivechannelstoadvertise
thenewbeer,butlocalandcheaperones.
Basedontheconductedinterviewswithprojectmanagers,andconsideringthatNPDprocesswasconductedinaright
way,therecommendedactionswillbeconnectedwithbrandingadjustments.Theprojectteamshouldprepareforre
launchthebrandbygivingGorskoanewlook.
FirstofallthedesignofGorskobottleshouldbesignificantlychangedtobecomemorecolourfulandappealing.For
example,atransparentyellowcolourinsteadofdarkredwillbetterembellishGorskolabels.Thebrightyellowscolour
presentsagoldenqualityofbeer,somethingthatisveryimportantonthemarket.Inaddition,thedecisiontoincrease
thealcohollevelequalorhigherthan4,5%istomeetthepreferencetasteofthetargetconsumers.Afterall,onewould
expecttoquicklyhavearelaxedfeelingaftergettingbehindahardworkingday.Andlastsbutnotleast,alotofprospect
commentthatGorsko,duetothelowpercentageofalcoholinit,isabeerforladies.
SkopjeBreweryhasthreewellestablishedbrandsthatareSkopsko,AmstelandHeineken.Althoughallthreebrands
belongtopremiumandmainstreamcategory,Skopskobrandisintentionallypositionedtoserveaclasslower.Byadding
Gorskotoourbusinessportfolio,SkopjeBreweryhashopedthatthenewbrandwouldbeaboosterbringingnewmarkets
tocompensateforthelossincurredbySkopskoinrecentyears,duetoincreasingcompetitioninthissegment.Fromthe
beginning,thenewbrandmissionwastoattacktheunfilledsegments,andshouldnotposeanythreatstootherexisting
brandsofthecompany.Butinreality,therewerecustomersswitchingfromSkopskobeertoGorsko.Thatisoneother
reasonfornecessityofchanginganddifferentiatingthepackagingfromotherbeerbrands.
Changingthelabelbyaddingforexampleabucketofmalt,andofcourse,removingthefoxpawthatassociateon
alreadydeletedbeerStarLisec.
Accordingtofindingsfromliteraturereview,theNPDprocessshouldbemanagedinthatwayastobequickenoughto
capitalizeonthenewproductopportunitybeforecompetitorsdoso.InthecaseofSkopjeBrewery,thecompetitors
alreadylaunchnewproductonthemarket,andthepressurefromloosingmarketshareandsaleswassobigthatour
team'sprioritygoalwasassoonaspossibletolaunchanewproduct,withouttakingintoconsiderationallfactorsthatcan
influenceinsuccessoftheproductonthemarket.Andinthefuture,moreandmore,thecompanieswilltrytoshortenthe
NPDprocessinorderforlessmoneyandshortertimetohaveproductonthemarket.Duetothat,astrictassignmentto
theprojectleadershouldbetomonitorifprojectteamisfollowingNPDprocessoneffectiveandefficientway.The
ProjectleadershouldfacilitatetheNPDprocessandcoordinatetheProjectteam.
TheNPDprocessshouldincludeseveralcheckpointswhereallpastactivitieswillbeevaluatedinordertoconfirmifthe
projectteamisonrightway.Formovingonfromstageintonextstage,adecisiongateshouldexist.Atthispoint,the
NPDteamshouldpresentfindings,insightsandrecommendationsfromtheprojecttotheNPDprocessgatekeeper.The
gatekeepershouldbedecisionmaker,memberofseniormanagement,authorizedtoreviewtherecommendationsofnew
productteamatkeydecisionpoints.Basedonprojectimportanceandprojectachievements,andtheriskand
uncertainnessthatremainthegatekeepershoulddecideaboutthefutureoftheproject.
Understandingcustomersatisfactionisakeyfactorforloyalcustomerretentionandgrowth.Withgoodunderstandingof
whatdrivescustomersatisfaction,companiescancontinuetorefineandmarkettheirproductsandservicestomaintain
andgrowaloyalcustomerbase.
Productteamshouldbedirectlyinvolvedinunderstandingcustomersneeds,whichshouldinvolvevisitingormeetingwith
customers,observingcustomersusingourproducts,participatinginfocusgroupsorrotatingdevelopmentpersonnel
throughmarketing,salesorcustomersupportfunctions.Thedirectinvolvementprovidesabetterunderstandingof
customer'sneeds,thecustomer'senvironmentandproductuse.
Arecommendationtoallcompaniesistodesignaninternal,formalNPDprocesswithregularreviewofallphasesof
development,astagegatedecisionmodelthatcaptureinformation'sanddecisionsoutputateachstage.Technicaland
marketinginformation'sshouldbebothaccurateandtimelyandmustbeconstantlyreworkedinthelightofchanging
circumstancesduringthecourseofdevelopment.

5.2.Gorskoprospect
ThechanceforGorskotosurviveismorethanpossible,especiallyifSkopjeBrewery'smanagementteamdecidetomake
severaladjustments.Thefollowingargumentswilljustifythecase:
BeingaproductofSkopjeBrewerycanbeensuredofanexcellentandconsistentquality.Itcanalsotaketheadvantage
ofthegoodreputationofitsbrotherbrandsandenjoytheeffectivesupportoftheexistingmarketingorganizationand
distributionnetwork.

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GorskowasSkopjeBrewery'sresponsetothedecliningtrendintheeconomysegmentofthebeermarket.Theresearch
showsthatthegrowthrateintheeconomysegmentcontinuestobehigh,whilethatinthemainstreamandpremium
segmentremainmoderate.
Gorskoisthefirsteconomybrandlaunchedbyinternationalcompany.(SkopjeBreweryisaHeinekenandCocaColajoint
venture).IthadtocompeteonlywithdomesticbrandsofMacedonianbrewery'sthatoftenlackoffinancialandhuman
recoursesandmarketingeffectiveness.
AllfurtheradjustmentsonGorskobeershouldbebasedonpreviousresearchandconsumers'feedback.

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