Part 2

NPD - Part 2September 21, 2010

1 Introduction

Over the past decade the technological innovations have reached very exciting and unbelievably realistic heights that couldnt have been foreseen in the past. Amongst many of such useful and desired innovation is the iVo. What is it? Well if you look closely at the computer and its value added accessories which have helped mankind easily carrying out several useful tasks such as printing out documents, scanning, editing videos, graphics and so on and so forth, the iVo brings to you a whole new perspective.

The technology industry in Sri Lanka has emerged considerably over the past few years and with the introduction of the iVo we believe we can capture the recognitions of millions over the world.

The primary focus and aim in composing this report is to provide the management of Soft Logic with a clear and effective development plan that would help in the approval of this exciting and new product invention which is in collaboration with their company vision and goals.

This report will include the idea screening, which provides different feasible products that were considered before deciding on the final most demanding and effective product, the iVo. It was followed by an in-depth market analysis for this product along with the business analysis. Test marketing will be carried out with a clear informative program to both give an idea to the potential consumers as well as to get a feedback on the probable demand for and acceptance of the product. Upon realization, the commercialization and launch of the iVo would take place. The final and most influentially vital aspect, the future prospective directions would then be identified.

2 iVo: The Total Product

The iVo a one of a kind product that cannot be compared to non in terms of its breath taking functions will attract its target market both locally and globally. The products functions, design, colours and user friendliness will benefit one and all.

Even though Soft Logic has several close competitors in the form of IBM computers, Nano computers, Microsoft and PC house, none will compete with the iVo as it is a completely fresh and new concept that will be copyrighted as well as difficult to imitate, also achieving a first mover competitive advantage if imitated in the long run.

The target market for this product would be both genders above the age of 16 who are primitively students and professionals. Since the product

2.1 Product specification summary

The iVo is a system that recognizes any persons voice and accent, converts the spoken words and sounds into files that will be transferred to a machine-readable input and produce text files / printouts by use of hardware device or a computer.

The Voice Recognition Systems features comprises of the following which will be beneficial to different types of uses at different user situations;

The device recognizes speech up to 200 words per minute

It has the capacity of identifying any accent of speech

It recognizes speech for a distance of maximum 200 meters

The device is portable and user friendly which can be taken every where you travel

One of the special added feature in the device is the ability translate one language into another.

There are various technologies that should be used to process input data. In order to comply with the latest technologies, the product should use the best technologies in terms of a good quality product; therefore one of the techniques used in speech processing is VAD (Voice Activity Detection). (Cook, 2002) This enables the hardware device to translate the speech into a coding format and thus detect the entire speech. The performance of this system is determined by the accuracy and speed of this device. The accuracy is usually rated using Word Error Rate (WER) where as the speed is measured by the use of real time factor. (Cook, 2002)

In order to supply software and hardware equipments needed for the voice recognition system, Evertek Computer Corporation was selected. This was selected in order to provide a quality product to the market as this company sells quality deals at aggressively low prices. This is a worldwide trader of computer accessories and equipments. The company was formed in 1990 and has worked for almost nineteen years in the industry. (Evertek Corporation, 2009) Evertek Corporation is a main supplier of software and hardware accessories to top companies such as IBM.

3 Idea Screening

The idea screening process is the first filtering process in the new product development process. This is a very important step as it decides whether the product is in line with or in consistent with the organisations goals, objectives and values. The main concentration was to develop a new product to the market according to the capital as of hand now and to develop a more of a local product which also might have the potential to move in to been a foreign product. Another factor which affected was the products life expectancy in the years to come and whether there is a potential target market to accept the product. Therefore depending on the highlighted factors the screening of ideas began under the following criteria;

The linkage of the product strategy with the company objectives

Technological and financial feasibility of the product,

Market Demand and marketability

Competition

Following are the new products which our company has come up with and the idea screening process of each of the individual items;

3.1 Shower curtain with compartments

This product would have made more space available in the wash rooms as it has all its compartments on the product itself but it was rejected after taking in to consideration the market demand and marketability aspect amongst the customers and the profitability it generates to the organization in the long term.

3.2 Butter stick

This product was rejected since it was too simple and customers are actually not facing an issue or a problem for our company to come up with such a new product. our company thought that it was no point in investing in a butter stick as the research and development will be costly but the profits generated by this product will not be beneficial to the organization.

3.3 Skirt plus t shirt

The fashion and trends in Sri Lanka changes from time to time within the industry and when coming up with this new product the customers will grasp it as soon as it launchs in the market as there a potential for it to be profitable and to be competitive. we decided to reject the product as its more of a fashion fad the life cycle of the product will be short and the expected life for the product will be less. This will be a loss for the company as to develop the product will be very costly due to the surveys which needs to be carried out and the manufacturing of the skirt plus t-shirt.

3.4 Remote pram

We came up with the idea of the remote pram as we needed to have a technological product before processing with the idea screening. Even though this would have made life easier for mothers with children we also figured out that the demand for this product will be less as parents thought that it will be dangerous when the pram is controlled by a remote and not by either of them. So this will lead to a loss for the organization as manufacturing a remote pram will need a lot of equipment and will be vastly costly.

3.5 Contact sun glasses

Contact lenses are not a new product to the market in Sri Lanka as many of the customers are used to wearing different colours and types of contact lenses. The newness of this is that without going through the hazel of carrying sun glasses around customers can just put on the contact lenses according to their preferred colors. When producing the lenses we found out that the chemical we use to colour the contact lenses in order to block the sun from the eyes might actually be harmful for the eyes of the customers and due to that the risk of manufacturing the contact sun glasses should be eliminated from the new products list after the idea screening process as it was also not aligned with the organizations goals, objectives and values.

3.6 Ring phone

Even thought the ring phone sounds very convenient the technology behind can lead to many complications as well as a customer may find it very complex to use the product. Due to that factor the demand for the product will be less and the profitability generated from the ring phone will be reduced and the company will not succeed by developing a new product as such. It will also be very costly as the technology will be the same as manufacturing a mobile phone and due to the factors mentioned above this product was rejected.

3.7 Carrot ripple ice cream

Sri Lankans prefer tasty food items where they will feel like purchasing as soon they hear the name of the product. When producing the carrot ripple our target market will be small as most of them would prefer to purchase another fruit ripple rather than carrot. Even though the carrot ripple may taste good customers will not be willing to take the risk of tasting an unknown taste as they would much rather prefer to stick to what they already like. This will lead to low profitability of the carrot ripple ice cream and will make a loss to the company when compared to the initial costs spent by the company.

3.8 Hair colouring shampoo

This is mainly for the youths where it will be an easy way to colour the hair at home instead of wasting time at a salon. The product was rejected due to the chemicals which are used for the coloring of the hair as it can be harmful for certain individuals when using it regularly. It can decay the hair and lead to hair loss or even allergies. This was also rejected as it was not aligned with the organizations goals and values.

4 Concept Testing

In order to carry out the concept testing, questionnaires were distributed to the potential target market. The number of total questionnaires distributed is 150 among which 27 were rejected due to errors and rest of the 123 questionnaires were taken into consideration for the results.

As a result of the analysis of the questionnaires the following results were found out;

Percentage of the target market currently using a voice recorder is 50%

Percentage of the target market not using a voice recorder is 50%

Therefore 50% of the target market is not captured yet. This is the potential target market which can be targeted in order to widen our customer base. The reason behind 50% of the market not using a voice recorder is due to the complexity of usage of the voice recorders in the market.

Both male and female equally uses voice recorder which identifies that gender has no bias towards it. But, it revealed that females tend to use it very often than males.

On the basis of age;

People who are between the ages of 16-25 are highly using voice recorder who are mostly students and young professionals.

The second majority of usage lies between the age of 40-60 which includes professionals who are at the maturity stage of their career and heading towards retirement.

But comparatively there is a reasonable level of potential customers using a voice recorder in all age groups.

Among the target customers the majority of usage is by the students amounting to 59%.

Surprisingly the next majority of users were under the category of other where theyve specified jobs like travel consultants / tour guides and secretaries /assistants. This gave us a different set of target customers whom can be targeted for our new product.

Specifically among students females mostly use voice recorder in comparison with the males.

The current problems customers face in using a voice recorder would be;

Unable to store 52%

Voice clarity 26%

Reach 13%

Other - Transferring 9%

It seems that customers are not so concerned or worried about translation in a voice recorder.

Hence, it gives a clear idea about the areas we should focus in our new product and it seems that adding the attribute of translation is of no use as they do not give immense importance for that.

When questioned about our new product iVo 60% of the respondents were absolutely ready to use it and rest of the 40% were willing to try it at least once.

It is a positive impact that none of them said NO to try our new product. This shows that the market reaction to our new product iVo is very much positive.

When considering the benefits for which the customers are willing to buy the product it can be ranked as follows;

Can get the printed version of the recorded voice 20%

Identification of any type of accent 18%

Recognizes speech for a distance of maximum 200 m 14%

Translation from one language to the other 14%

Very high speed in recognition of voice12%

Recognition of different languages 11%

Portability and user friendly 11%

Suggestions by the customers which they prefer having in our product;

Camera

Pen drive

Display

MP3

4.1 To profile the intended market

Current buying patterns and Existing segments

16 and above

Both males and females

Any income level earners

Students, professionals and tour guides/ assistants

Purpose to record lectures and conversations

Customers view of available products

No similar product existing in the market

Issues with clarity, storing, reach and transferring to computers in the current products

Best brands are Sony and Panasonic

4.2 To assess purchase intentions and product positioning:

Brand loyalty

Brand loyalty seems to be low as the customers are more benefit oriented than purchasing for brands or prestige.

Gap analysis

Gap in identifying potential target segments

Gap in customer expectation and what we intend to provide

Should be aware of the gaps in understanding the impact of Research limitations and assumptions

4.3 To refine and improve the concept:

Overall Product

Overall the product was accepted by the target sample and the market reaction was positive

Specific features and attributes

They do not prefer to have a translation feature

But they wish to have features such as;

Pen drive

Camera

Display

MP3

Different languages to be printed

Portability and user friendly is not their biggest concern but benefits.

5 Market Analysis 5.1 Market for iVo5.1.1 Market Size Actual & Potential

Actual market size is the total amount in the population who will purchase iVo. The markets we intend to attract include professionals such as journalists, students, doctors, lawyers, managers etc. During the expansion of our product, we intend to market our product to other technological companies such as Abans etc. This will assist to bring about a higher customer base. In the long term, we intend to expand our business to other countries which will assist to bring about greater growth and profits.

Currently the market size is quite small where we target only the population in Colombo. But we intend to widen the market size by targeting all the other regions around Sri Lanka and also to expand internationally.

5.1.2 Market Growth

Since our product is new to the world, we have no direct competitors and therefore we have the first mover advantage. Even though the voice recorders in the market are our indirect competitors by emphasising on the added features we give to our customers which provides them more value for money will beat the competition we might possibly have through current voice recorders in the market. Hence, there is high potential in the market for a product like iVo to grow. As long as we have the patent rights the market growth will be slow and steady where iVo will be stabilized. Hence, in time to come when the competitors start entering the market the competition will be really intensifying which will give rise to higher market growth. This will lead to iVo becoming a star in the market striving continuously to retain its market position.

5.1.3 Market Trends

It is clear that the world has developed a great deal. In the past, student and professionals used books in order to record data. With time, computers, voice recorders and other technological advancements have developed. We believe that this product to reduce the time and effort taken to listen to a voice recorder as the material can be printed. This will assist the user to read faster and highlight key areas. Therefore we believe that our product is following market the trend.

Having in concern our product concept we intend to become the trend setters in the market in terms of breaking the norm that services cannot be stored. We create a new lifestyle among our target market through which we segment them. This will be of great advantage for a technological company like ours as the world is moving fast with the growth of technology.

5.2 Macro- Environmental Analysis

It is clear that many factors such as competitors, customers, business to business as well as business to consumer and suppliers play a key role in the success of our business. Therefore analyzing this is important.

5.2.1 Competitors

From our market analysis it is clear that our product does not have direct competitors. When considering indirect competitors, they include voice recorders, personal computers from companies such as IBM computers, Nano computers, Microsoft etc. (Anon,2010) Since our product has a forced relationship, it can be easily copied by competitors in Sri Lanka as well as overseas especially in countries such as China . Within Sri Lanka our main competitors are PC house, Unity plaza, E wiz etc.

5.2.2 Customers

Customers are the core determinants of the success or failure of a business. Therefore it is necessary for us to understand that the customer is king. We hope to provide our customers a product with a high quality, capacity and reliability. The main focus of our product is to provide customers a with a user friendly and convenient product.

B2B & B2C

Our promotional campaign will introduce our product to local companies in Sri Lanka. They could provide our products to the senior executives and management within their organizations which will assist them to save time and increase productivity. Local companies would also be given incentives and information. Direct sales to consumers will be made through special orders, in store purchases and sales promotions.

5.2.3 Suppliers

Suppliers are an important aspect to every organization. They assist to provide cost advantages through low cost strategies and economies of scale which assist to bring about higher profit margins. Our permanent supplier is Evertek Computer Corporation as the company sells quality material at aggressively low prices. The company is a worldwide trader of computer accessories and equipment and has been in the industry for 19 years. (Evertek, 2009) We chose this company as the sole supplier of raw materials due to its high dependability, cost advantages and quality products. An extended credit period of 30 days was also provided by the company.

5.3 SWOT Analysis

A SWOT analysis will help us to capitalize and maximize on the strengths, minimize visible weaknesses, take advantages of the opportunities and counteract the threats by implementing effective strategies.

5.3.1 Strengths

Unique, new and exciting

User friendliness

The device is portable and user friendly which can be taken every where you travel

Consistent increase in potential customers as people over 16 will realize the benefits of owning the iVo.

Can be used as a multi-purpose product such as the benefit of the inbuilt camera

First mover advantage, competitive advantage

The device recognizes speech for a distance of maximum 200 meters

The devices ability to translate one language into another

5.3.2 Weaknesses

Price seems to be too high for the affordability of all students

Unable to test market, through actual product

Could be easily copied by competitors

5.3.3 Opportunities

Can be expanded globally targeting new markets in the future

Potential to increase more value adding functions according to the market changes and customer requirements in the future

5.3.4 Threats

Difficult economic conditions in the market such as recession and inflation would affect the sales of the iVo and the purchasing power of customers.

Price wars may occur and make it difficult to achieve economies of scale

Since its a high end product, when patent rights are over competitors can copy the product with low quality and price which will diminish the image and value of the high end brand

5.4 PEST Analysis

Pest analysis is conducted to analyse the external factors which affects the company as well as each of these individual products in the market.

5.4.1 Political

As the government seems to be in a more stabilized position in the country it will be a good opportunity for us to introduce new products to the industry as there is more freedom for people to move around in and out of Colombo as to the countys situation. Due to this, more people will enter Colombo especially foreign customers. Hence, our company has the potential of developing a new product as it will be profitable. Another disadvantageous factor would be during the election time there will be less media space for the product to be advertised as it will be crowded with media political advertising campaigns. During this time creating awareness of the product and making the brand to be a top of the mind brand will be complex.

5.4.2 Economic

When considering the external factors this is the most critical factor that a company should keep in mind. As the world is coming out of the economic crisis (recession) and people are settling back in their jobs and also after the political stability in Sri Lanka there are likely to be more job opportunities for the people who have lost jobs during the recession as our product is a more technical product our company needs more human labour to get the product in order. (Jayawardena, 2009) As our product is a more exclusive product the long term growth in Sri Lanka should be there as the disposable income rises the customers have the opportunity to go to a variety of stores such as soft logic to purchase our product.

5.4.3 Social

Our product will be very useful as all this time we could only record a voice but no proof in writing. Therefore the IVO voice recorder is very useful to our target markets to record verbal communication anywhere and then take a print out in writing within no time. This way the people can lessen the hazel of carrying out the voice recorder which can only be listened and get the new IVO where a print of what has been verbally mentioned can be taken out as a print out.

5.4.4 Technological

As to expand our target market and have a bigger market share in the industry we must use the technology such as internet and other communication networks to create awareness within the customers. Use of technology will help the business better as we can get things done faster. Maintaining a creative and attractive website will also be helpful as customers would visit often and purchase the products online to their convenience. With the rapid growth of globalization it is difficult to conduct business without the use of technology. Also regular emails should be sent to potential customers about the IVO to get the feedback on how the product can be more developed according to their preferences.

6 Business Analysis6.1 Financial Analysis6.1.1 Initial Investment

Cost

Rs.

Machinery

12050000

Vehicles

8725000

Office Furniture and Equipments

5750000

Launch

11000000

Total

37525000

Vehicle Cost (Rs.)

Cost per unit

Quantity

Total

Van

2575000

2

5150000

Lorry

3575000

1

3575000

Total

8725000

6.1.2 Initial Cost6.1.2.1 Budgeted Labour Cost

Cost per month

Rs.

IT Manager

51750

Software Developer

414000

Systems Analyst

207000

Project Manager

230000

Total

902750

Type

Cost per year

Rs.

Software Development Staff

10833000

Factory Workers

287500

Total

11120500

6.1.2.2 Budgeted Equipment (Hardware and Software) Cost

Quantity

Price of a unit

Production cost per unit

Cost of production for 500 units

Nos.

Rs.

Rs.

Rs.

Microphone

2

2300

2300

1150000

Speech recognition Software

1

8000

2000

1000000

Portable Hardware device/plastic

1 Kg

20

20

10000

Sound card

1

400

400

200000

Half Sheet (A1) - Small size

1 Kg

50

50

25000

USB cable

1

100

100

50000

Ink cartridge (Small) - Black

1

100

100

50000

Battery Charger

1

1500

1500

750000

Rechargeable Battery

1

800

800

400000

VRS device holder

1

750

750

375000

CD Rom

1

100

100

50000

Memory Chip

1

8000

4000

2000000

Accuracy detection software

1

9000

6000

3000000

Speed detection software

1

2300

2300

1150000

Steel required for the device

50 g

11

11

5500

Text formatting software

1

5000

3500

1750000

Total

23931

11965500

6.1.3 Projected Cash flow Statement for the first three years

2010

2011

2012

Rs.

Rs.

Rs.

Inflows

Capital

40000000

Sales

32500000

42250000

52812500

Total Inflows

72500000

42250000

52812500

Outflows

Fixed Asset Purchases

13525000

Purchases

25325000

27857500

30643250

Carriage Inwards

300000

300000

300000

Direct Labour

11120500

11398513

11683475

Administrative Expenses

R&D

60000

66000

72600

Rent

480000

528000

580800

Electricity

480000

504000

529200

Telephone

420000

441000

463050

Maintenance

240000

252000

277200

Other Expenses

Marketing and Promotional Expenses

475000

400000

360000

Distribution Expenses

100000

50000

20000

Insurance Expenses

100000

100000

100000

Total Outflows

52625500

41897013

45029575

Cashflow

19874500

352987.5

7782925

Balance at the beginning

19874500

352988

Balance at the end

19874500

20227488

8135912

6.1.4 Projected Income Statement for the first three years

2010

2011

2012

Rs.

Rs.

Rs.

Revenue

32500000

42250000

52812500

Cost of Sales

(25586000)

(26865300)

(28208565)

Gross Profit

6914000

15384700

24603935

Expenses

Administrative Expenses

1680000

1791000

1922850

Marketing and Promotional Expenses

475000

400000

360000

Distribution Expenses

100000

50000

20000

Insurance

100000

100000

100000

Total

(2355000)

(2341000)

(2402850)

Profit before tax

4559000

13043700

22201085

Tax (35%)

(1595650)

(4565295)

(7770380)

Net Profit

2963350

8478405

14430705

6.1.5 Fixed and Variable Costs

Rs.

Variable Costs

Equipments

23931

Total

23931

Fixed Costs

Direct Labour

11120500

R&D

60000

Rent

480000

Telephone

420000

Electricity

480000

Maintenance

240000

Marketing and Promotion

475000

Distribution

100000

Insurance

100000

Total

13475500

6.1.6 Ratio Analysis6.1.6.1 Breakeven Analysis

Breakeven Point

SP

65000

VC

23931

Contribution

41069

Fixed Cost

13475500

Breakeven Point = Fixed Cost / Contribution

328 units

6.1.6.2 Return on Investment (ROI) forecasts

Year

%

2010

7%

2011

21%

2012

36%

6.1.6.3 Payback Period

Year

Cashflow

Cum. CF

0

-40000000

-40000000

2010

19874500

-20125500

2011

20227488

101988

2012

8135912

8237900

Payback Period = 1+ 20125500 / (20125500 + 101988)=1.99 years

6.1.6.4 NPV Analysis

Year

Cashflow

DCF @ 5%

Present Value

0

-40000000

1

-40000000

2010

19874500

0.952

18928095

2011

20227488

0.907

18346927

2012

8135912

0.864

7028107

NPV

4303130

IRR

7.2%

6.2 Risk Assessment

When introducing a new product to the market any organization will face risks. Therefore it is always better to assess the risk faced by the organization by taking into consideration the porters five forces where it analyses the potential threats of competitors/ substitutes/ new entrants, bargaining power of suppliers/Customers. These factors need to be carefully evaluated to reduce the risk in developing a new product.

6.2.1 Threat of new entrants - HIGH

In the mere future after the launch and when our patent rights are over there is a greater possibility where competitors can copy the product and enter the markets which will be harmful for the market share and the profitability of our product iVo. As there are neither direct competitors nor a strong player in the market there will be no barriers to entry. Due to this, the profits could reduce for our company and its best to come up with strategies to prevent it in the future.

6.2.2 Threat of substitutes - LOW

As iVo helps the target market to record as a voice recorder and then instantly take a print out of the oral words in writing there are no substitutes in the market for iVo and the threat of substitutes will be low and this will not lead to a decrease in the profitability for our company.

6.2.3 Bargaining power of suppliers - HIGH

As we plan on existing for a long time period we hope to build a long term trust and relationship with our suppliers. Since the copyrights of the softwares we are using for the production of our product lies with Microsoft who is our main supplier their bargaining power would be high. Quite similarly other raw materials for the production are from Evertek. Though raw materials are widely available in order to protect the concept behind the product well be having agreement with Evertek particularly. Therefore, this hinders our bargaining power over the suppliers.

6.2.4 Bargaining power of customers - LOW

The bargaining power of customers will decrease as there are no other competitor brands available in the market. The profits can be increased when the brand name is established and made well aware as a top of the mind brands in the customers minds. With the initial development of the product it will be in the introduction and growth stage of the product life cycle and the bargaining power of customers will be higher when providing the innovators and early adaptors to try out the product.

6.2.5 Intensity of the current competition - LOW

As this is a totally new concept to the market and as there is no competitor for our product we can capture high market share and profits in the industry. Even though there are indirect competitors such as the voice recorder, it cannot harm the market share and profits of iVo as it has a special feature which basic voice recorders dont contain.

7 Product testing

Product testing assists to assess whether the promised benefits are satisfied by the actual product. . Therefore in order to assess the potential buyers opinion of actual products, the test should be realistic, sensitive and valid. In order to be realistic we gave questionnaires to potential buyers within the natural environment in such places as majestic city, Unity Plaza, the BT store and Crescat. We also produced the product for the sample of our target market to try out and asked potential consumers to evaluate the product based on its features. In order to better understand how consumers perceive the product against competitors as well as customer sensitivity, focus groups were conducted. We found our product to be valid as many consumers rated the product high due to its perceived benefits. During this process since wanted to find out if the product was user friendly or not we did not offer much guidance except for the products basic operations. We also used beta testing as our staff has been familiarized with the product and therefore to get valid information we chose this method.

8 Test Marketing

The aim of test marketing is to test the marketing mix of our product iVo. During the product launch a roll out strategy will be incorporated. Therefore, a test market was carried out due to this reason. This assisted us to understand the launch as well as the commercialization process and the amendments required in order to improve the final plan. Test marketing assisted us to understand the expected sales in order for us to break even as well as the importance of the marketing mix.

Our test market consisted of males (55%) and females (45%) of journalists, lawyers, doctors, students and other professionals within the Colombo area. Factors tested included storing, voice clarity, reach and transferability

8.1 Results from Test marketing and Questionnaires

The test marketing results were conducted through focus groups, Questionnaires and interviews. According to research, the questionnaires were formulated with simple and questions that are easily understandable.

It was clear that the test marketing identified our product to be feasible due to the positive responses we received. It was clear that males preferred it more than females and that the age group from 16-25 preferred it the most. Research shows those students (59%) are the highest purchasers of our product.

The overall result of the test marketing was positive and favourable towards our product with regards to price, features, preference, needs, benefits etc.

8.2 Modifications made after test marketing

It was clear that the overall concept was accepted by the target audience. Yet, certain modifications were preferred to specific features and attributes of the product.

They did not prefer to have a translation feature. Other features they preferred to have were the pen drive, camera, display, different languages to be printed as well as the portability and user friendliness of our product.

Promotions:

It was evident that the target audience preferred a launch party for the iVo. This is in line with the futuristic concept. Therefore, we propose a cocktail party which will be launched the night before the store opens.

9 Commercialization

The final stage in the new product development process is commercialization, the decision to market a product. The importance of having a proper product mix is crucial for a vehicle to be commercialized, especially to target for the first time. If this is done correctly, we can capture our potential customers; consumers will know about our product specifications, value added services and so on. All promotion strategy, price strategy, distribution strategy and even the product strategy should be carefully organized, also they are discussed below.

9.1 Product

As mentioned previously under the Total Product section, with the aid of our companys technological expertise we take pride in introducing a voice recognition system for the first time ever in the Sri Lankan market and will make people experience this product at an affordable price with the latest and the most advanced technologies in the world thus will enhance reduce stress in writing or typing a report. The product itself and the box is a unique design which is transparent on one side and bear different theme colours which are targeted at different customer segments and would also delivered with different accessories packs. This colour combination is a unique blend which is very attractive and has the ability to draw the shoppers eye to the product.

9.2 Price

As the voice recognition system is been introducing for the first time in Sri Lanka we have the advantage in setting our price decisions. We offer products that are of high quality and have the latest technologies embedded in the products. Therefore by setting a Market-skimming pricing strategy, we believe that we will gain better revenues. Since we are targeting to a small segment, and there is no other availability of this product the pricing strategy will make fewer but more profitable sales to the company. Thus the average price of the product would be Rs. 65 000.

9.3 Place

There are 101 soft logic branches island-wide. We will be distributing this product across our branches in the initially targeted geographical region which is the western province. The product is set to distribute directly to the end user. Based on the response of the customers, we will continue to distribute the product through our main dealer IBM.

9.4 Promotions

According to (Belch & Belch, 2004), a basic tool used to accomplish an organizations communication objectives are often referred to as the promotional mix. Many organizations at present use elements/ promotion tools such as advertising, direct marketing, internet marketing, sales promotions, public relations and personal selling to communicate with the consumers. Thus to get the message through we will use a variety of promotional tools.

Event marketing

We are planning to have our launching ceremony as a cocktail event inviting all the Board of Directors, Media as well as the innovators of our product. The basic idea of a cocktail is to incorporate all possible stakeholders of our products which will be the best way to introduce our product to. Hence, we want it to be semi-formal as an event. Therefore this launching ceremony in terms of a cocktail is also one of the best ways to promote our product. This will be effective as an event marketing tool where we can easily reach the market and the satisfied audience of this event will be a source for positive word of mouth.

News paper & Magazine advertisements

We will be developing our core positioning message The Easy Way - First time ever in Sri Lanka - A voice recognition system No more manual typing, with instant print-outs, to differentiate our product from competitors. In order to do so, we will be using Sunday Observer, Daily news, Sunday Times, The Island, as the local news paper to advertise as these papers are assumed as the most viewed papers by customers. In addition, business Magazines such as LMD, Business today will be using to publish.

Sales Brochures

Sales brochures will be distributed among the day to day customers and visitors of our showrooms.

Direct mails & Pop- ups

Sending direct mails to our customer contact mail addresses will be a method of promoting the product. We already maintain a record of our customers contacts as & when a transaction takes place. Therefore by directly mailing to these contacts we believe we can promote the product. Also, there are many Sri Lankans who browse the internet very often. Pop up advertisements can be published in a number of selected web sites in order to make this group of people aware of the product.

Mass Media

This will include TV as well as radio stations. As for TV advertisements, channels such as ETV, MTV and ART TV and for Radio advertisements, Yes FM and E- FM will be used.

10 The Launch

iVo team will be considering following a Roll-out strategy instead of market penetration, as the product itself is relatively not easy to imitate, since we are planning to get patents, also relatively high in cost and the price is also relatively high in the market. We also enjoy a sustainable competitive advantage in the form of a completely novel concept and there is no direct threat of competitor reaction; this too qualifies the use of the waterfall (roll-out) strategy. The launch will includes the event marketing plan to see why, who, when, where and what to be launch and the promotional plan of the new product.

10.1 The 5 Ws of Event Launching10.1.1 What

This basically refers to the contents of the particular event. If the content of an event goes hand in hand with the desires of the audience, the event is more likely to be a successful one and vice versa. The event content must be pre determined by the organizers in order to fulfil the campaign objectives.

As our initial point of showing our colours we hope to launch with a tremendous party, not in the form of quantity, but rather in quality. The main objective of the launch is not only to create awareness; also mainly to earn the good will of the invitees are they are not only part of our target audience the innovators, but they are prominent entrepreneurs and socialites forming the main part of the Colombo elite. This means that networking with them would gain iVo an abundance of advantages. Thus a cocktail party will be organized targeting corporate clients mostly from the technological Industry.

10.1.2 Who

The launch would primarily target the trend setters of the exclusive organizations in Colombo. This would include the innovators who acquire added value from popularizes a trend or from being the first to do something. This would also include the board of directors of our company, higher management teams of the leading technological (software providers) and telecommunication organizations in Sri Lanka as well as well as some predominantly selected individuals to represent the target market (well known journalists, well performed senior students from universities, etc.).

10.1.3 When

We decided the best date for the event would be 24th of September, Friday 2010. It will be held from 7.30pm till 11.30 pm. Friday was selected because during interviews with our clients they mentioned that weekends tend to be busier and has been scheduled for their formal meetings and personal events. Hence, Friday night will give them the ease of mind to enjoy and get involved in the event.

10.1.4 Where

The launch will be held at the Mount Lavinia Hotel, The Terrace. We chose this place as this was Designated by Newsweek magazine as one of the "World's best gathering places", and can enjoy the enchanting experience of dining under the stars, seduced by a soft tropical breeze, while lounging by the pool. This place is renowned for its food, hospitality of the service and the prestige, the attributes our target segment is very much concerned with.

10.1.5 Why

This posts the question, Why should the people attend the particular event, spending their time and money? The answer to this question must be provided in a way in which, it would convey and convince the audience, the key benefits which could be obtained by attending the event. The answer to this question would be, the audience will witness the launch of a totally new, unique and a beneficial technological product, which present itself as a well known but technologically improved product for Sri Lankans, to easily get use of the product.

11 Budget

Cost

Rs.

Idea Generation and Screening

Nominal

Concept Testing and Research

100000

Business Analysis

50000

Prototype Development

23931

Test Marketing

500000

Commercialization

TV Ad

200000

Radio Skit

50000

Magazines

40000

Direct Mails

10000

Sales Brochures

75000

Sales Promotions

100000

Launching Ceremony

11000000

Machinery

12050000

Vehicles

8725000

Office Furniture and Equipments

5750000

Salaries

11120500

Raw Materials

11965500

Total Cost

61759931

12 Future Direction

The future direction of any organization is important and therefore must be thought of and planned well ahead. iVo have mapped out a path way in order to expand our potential. The Research and Development team of iVo will continuously obtain feed-back from customers and will eliminate all the loop holes in our product to become successful once we enter into the other regional markets.

Furthermore, we will be looking forward to add many more features and customize the product to match individual preferences. This will become an added benefit which we are planning to provide our customers where they can visit our web-site and provide us with the details and we will make the products according to their preferences.

Once the local market is matured and becomes saturated we will be moving towards gaining international market share as well which will be again can considered as an approachable.

13 Conclusion

The past years have been the era for technological innovations which took people to the heights of excitement where everything was made easy and quick. In todays world, technology is the knack of so arranging the world that we don't have to experience it. In a technologically well to-do era for companies to survive in the business world it is necessary for organizations to continuously cope up with the growing trends in the market in terms of technology. Hence, in order to compete and position yourself in the market, it is vital for business ventures to continuously be innovative and produce eye catching, yet problem solving and useful products to the market.

As Softlogic Tradings is a leading technological company in Sri Lanka, in terms of survival and stabilization in the market they are in the process of new product development through technological newness. The following report is the first part of the new product development process of one such potential and possible successful innovation the company has come up with to introduce in the market. The rationale behind this innovation is to be thriving among its competitors thus gaining a good reputation to the company.

It is a detailed plan for the new product iVo which will be a technologically advanced product that will detain spoken words and sounds and transfer into a machine readable format which will capture the market in Sri Lanka by benefiting many groups of people. As we have already submitted the first part of the report the second part would consist of areas such as idea screening, concept testing, business analysis, development, product testing, test marketing and commercialization which include the launch as well.

Never before in history has innovation offered promise of so much to so many in so short a time. But we are one among the extra ordinary who are ready to stun you by our innovations.

14 References

Anon. (2010). Information communication technologies. Retrieved 07 12, 2010, from Sri Lanka export development board: http://www.apng.org/museum/pdf/e-srilanka.pdf

Cook, S., 2002, Speech recognition How to web site [online], Available from: http://www.faqs.org/docs/Linux-HOWTO/Speech-Recognition-HOWTO.html [Accessed date 5th December 2008]

Evertek Corporation. (2009). Retrieved 07 03, 2010, from http://www.evertek.com/

Jayawardena. (2009, 3 31). Parliament of the democratic socialist republic of Sri Lanka. Retrieved 9 1, 2010, from inlandrevenue: http://www.inlandrevenue.gov.lk/publications/Acts/VAT/VATActNo15(E)2009.pdf

15 Appendices15.1 Main supplier for raw material

In order to supply software and hardware equipment needed for the voice recognition system, Evertek Computer Corporation was selected. This was selected in order to provide a quality product to the market as this company sells quality deals at aggressively low prices. This is a worldwide trader of computer accessories and equipment. The company was formed in 1990 and has worked for almost nineteen years in the industry. Evertek Corporation is a main supplier of software and hard ware accessories to top companies such as IBM.

Industry Analysis

The industry of information and communication technology (ICT) is highly competitive in Sri Lanka. Sri Lanka has the highest literacy rate in the south Asian region which is 92 percent of the total population. (Refer appendix 3) There are many IT skilled labour forces available in the country. According to previous statistics it has found that there are approximately 1375 IT personnel passing out from public universities and institutions while approximately 4000 personnel pass out from private institutions. Presently there are about 75 software development companies in the country. The estimated exports of software and related services of Sri Lanka has amount to US $ 70 million. This shows that the industry is growing rapidly. The peoples knowledge about the IT industry is immense. As people have a better knowledge of the industry, their knowledge of selecting the best quality, durable products in the market also have increased. Factors most effecting in this industry would be Price, quality, reliability, customer service, post purchase services. Even though there are many branded companies in the market, with the increase of our brand name and popularity thus by being the first to market, we have a unique opportunity to brand ourselves with the product.

Competitive comparison and competitive edge

Our main competitors in the industry are IBM computers, Microsoft, Nano computers and PC house. Since this product is the first to the market, there is no competition among these companies for this particular product. Therefore there is no doubt in gaining benefit from a competitive advantage over our competitors in the industry.

15.2 Workings for the Financial Forecasts15.2.1 Cost of Sales Calculation

2010

2011

2012

Rs.

Rs.

Rs.

Cost of Production

11965500

12563775

13191964

Direct Labour

11120500

11398513

11683475

Utilities

2500000

27857500

30643250

Total

25586000

26865300

28208565

% increase

5%

5%

15.2.2 Market Demand Calculation

Target Employees

No. of employees

Professionals

Doctors

15255

Engineers

8963

Lawyers

14560

Managers

12630

Accountants

18523

Secretaries

4633

Other professionals

90000

Journalists

4600

Students

State Universities

956000

Private Universities

490000

Other Organizations

560250

Total

2175414

Initial mark-up share

35%

Demand for the first month

761395

15.2.3 Sales Demand Forecast for the first three years

Year

Sales Demand (Rs.)

% increase in sales demand

2010

32500000

2011

42250000

30%

2012

52812500

25%

15.2.4 Selling Price Calculation

Cost per Unit

Rs.

Cost of equipment

23931

Direct Labour

22241

Utilities

5000

Total Production Cost

51172

Profit mark up (25%)

12793

Selling Price per unit

63965

SP per unit (Rs.)

65000

15.2.5 Marketing and Promotional Budget

Activities

Cost (Rs.)

2010

2011

2012

TV Ad

200000

150000

150000

Radio Skit

50000

50000

45000

Magazines

40000

30000

30000

Direct Mails

10000

10000

10000

Sales Brochures

75000

60000

50000

Sales Promotions

100000

100000

75000

Total Expense

475000

400000

360000

15.2.6 Administration cost budget

Per month

Per annum

2010

2011

2012

Rs.

Rs.

Rs.

Rs.

R & D

5000

60000

66000

72600

Rent

40000

480000

528000

580800

Telephone Charges

35000

420000

441000

463050

Electricity

40000

480000

504000

529200

Maintenance

20000

240000

252000

277200

Total

140000

1680000

1791000

1922850

15.3 Concept Testing Results

AGE16-2526-4040-6061 and above

%38%15%26%17%

GenderMale Female

%55%45%

Income15000 - 2500026000 - 4000041000 - 6000061000 and above

%25%30%20%25%

OccupationJournalistsLawyers DoctorsStudentsOther

%2%2%2%59%35%

UseYes No

%50%50%

Current ProblemVoice ClarityReachStoringTranslationTransfering to the computer

%26%13%52%0%9%

PreferenceYesI would TryNo

%60%40%0

a. Very high speed in recognition of voice

b. Identification of any type of accent

c. Recognizes speech for a distance of maximum 200 m

d. Can get the printed version of the recorded voice

e. Recognition of different languages

f. Translation from one language to the other

g. Portability and user friendly

Benefitsabcdefgh

%12%18%14%20%11%14%11%0

15.4 Questionnaire - Concept Testing

1. Age

SHAPE \* MERGEFORMAT 16- 25 years SHAPE \* MERGEFORMAT 26 40 years SHAPE \* MERGEFORMAT 40 60 years SHAPE \* MERGEFORMAT 61 and above

2. Gender

SHAPE \* MERGEFORMAT Male SHAPE \* MERGEFORMAT Female

3. What is your income level?

SHAPE \* MERGEFORMAT Rs 15,000 Rs 25,000 SHAPE \* MERGEFORMAT Rs 26,000 Rs 40,000 SHAPE \* MERGEFORMAT Rs 41,000 and above

4. Occupation

SHAPE \* MERGEFORMAT Journalists SHAPE \* MERGEFORMAT Lawyers SHAPE \* MERGEFORMAT Doctors SHAPE \* MERGEFORMAT Students

If other, specify: ......................................................................................

5. Language

SHAPE \* MERGEFORMAT English SHAPE \* MERGEFORMAT Sinhala SHAPE \* MERGEFORMAT Tamil

If other, specify: ......................................................................................

6. Do you use a voice recorder?

SHAPE \* MERGEFORMAT Yes SHAPE \* MERGEFORMAT No

7. If yes, how often do you use it?

SHAPE \* MERGEFORMAT Daily SHAPE \* MERGEFORMAT Weekly SHAPE \* MERGEFORMAT Monthly SHAPE \* MERGEFORMAT Rarely

8. What is the brand of your current recorder?

9. What is the purpose of the use? (very briefly specify)

10. Any problem you come across during the use of a voice recorder?

SHAPE \* MERGEFORMAT Voice clarity SHAPE \* MERGEFORMAT Reach SHAPE \* MERGEFORMAT Storing SHAPE \* MERGEFORMAT Translation

If other, specify:..

11. Will you prefer using our Voice Recognition System where you can print what you record?

SHAPE \* MERGEFORMAT Yes SHAPE \* MERGEFORMAT I would try SHAPE \* MERGEFORMAT No

12. The benefits of the product are as follows;

Very high speed in recognition of voice

Identification of any type of accent

Recognizes speech for a distance of maximum 200 m

Can get the printed version of the recorded voice

Recognition of different languages

Translation from one language to the other

Portability and user friendly

For which one or more of the benefits of the product are you willing to buy the product? (Ex: a,b,c,d,e,f,g)

13. The maximum price you are willing to pay for a product like the Voice Recognition System?

SHAPE \* MERGEFORMAT 10 000 15 000 SHAPE \* MERGEFORMAT 15 000 20 000 SHAPE \* MERGEFORMAT 20 000 25 000

SHAPE \* MERGEFORMAT 25 000 and above

14. Apart from the above mentioned attributes / benefits any other feature which you would like to have in our product?

15. Overall, how will you rate this new product?

SHAPE \* MERGEFORMAT Excellent SHAPE \* MERGEFORMAT Good SHAPE \* MERGEFORMAT OK SHAPE \* MERGEFORMAT Not worth it

15.4.1 Product Testing

1. Age

SHAPE \* MERGEFORMAT 16- 25 years SHAPE \* MERGEFORMAT 26 40 years SHAPE \* MERGEFORMAT 40 60 years SHAPE \* MERGEFORMAT 61 and above

2. Gender

SHAPE \* MERGEFORMAT Male SHAPE \* MERGEFORMAT Female

3. What is your income level?

SHAPE \* MERGEFORMAT Rs 15,000 Rs 25,000 SHAPE \* MERGEFORMAT Rs 26,000 Rs 40,000 SHAPE \* MERGEFORMAT Rs 41,000 Rs 60,000

SHAPE \* MERGEFORMAT Rs 61,000 and Above

4. Occupation

SHAPE \* MERGEFORMAT Journalists SHAPE \* MERGEFORMAT Lawyers SHAPE \* MERGEFORMAT Doctors SHAPE \* MERGEFORMAT Students

If other, specify: ......................................................................................

5. Language

SHAPE \* MERGEFORMAT English SHAPE \* MERGEFORMAT Sinhala SHAPE \* MERGEFORMAT Tamil

If other, specify: ......................................................................................

6. Do you like this new recorder iVo?

SHAPE \* MERGEFORMAT Yes SHAPE \* MERGEFORMAT No

7. How often will you use it?

SHAPE \* MERGEFORMAT Daily SHAPE \* MERGEFORMAT Weekly SHAPE \* MERGEFORMAT Monthly SHAPE \* MERGEFORMAT Rarely

8. Will you switch to iVo?

SHAPE \* MERGEFORMAT Yes SHAPE \* MERGEFORMAT No

9. Why will you buy iVo for? (specific benefit)

10. Any problem you come across during the use of iVo?

SHAPE \* MERGEFORMAT Voice clarity SHAPE \* MERGEFORMAT Reach SHAPE \* MERGEFORMAT Storing SHAPE \* MERGEFORMAT Translation

If other, specify:..

11. The benefits of the product are as follows;

Very high speed in recognition of voice

Identification of any type of accent

Recognizes speech for a distance of maximum 200 m

Can get the printed version of the recorded voice

Recognition of different languages

Translation from one language to the other

Portability and user friendly

For which one or more of the benefits of the product are you willing to buy the product? (Ex: a,b,c,d,e,f,g)

12. Does iVo satisfy all the promised expectations?

SHAPE \* MERGEFORMAT Yes SHAPE \* MERGEFORMAT No

If other, specify:..

13. Overall, how will you rate iVo?

SHAPE \* MERGEFORMAT Excellent SHAPE \* MERGEFORMAT Good SHAPE \* MERGEFORMAT OK SHAPE \* MERGEFORMAT Not worth it

15.5 Price Quotations

Voice recognition software

Price of Stainless steel 50 g

This is a price quotation for steel in India. Therefore Sri Lankan stainless steel prices will be three times of the price in India.

Stainless steel I kg in India- Rs. 72

Stainless steel 1 Kg in SL- Rs. 216

Stainless steel 0.01Kg/ 10g in SL- Rs. 2.16

Stainless steel 50g in SL- Rs. 10.8 = 11

Sound cards

USB Cables

Battery charger

Rechargeable battery

Memory Chip

Accuracy detection software

Speed detection software

Text formatting software

Speech recognition software

15.6 Economic Statistics in Sri Lanka

Tax rates in Sri Lanka

Inflation of consumer prices during the following years in Sri Lanka

Sri Lankas ranking in the Ease of doing Business in the south Asian region

Industry development in the Communication and technology in Sri Lanka

Labour costs for the following employees in Sri Lanka

Table of Contents

11Introduction

22iVo: The Total Product

22.1Product specification summary

43Idea Screening

43.1Shower curtain with compartments

43.2Butter stick

53.3Skirt plus t shirt

53.4Remote pram

53.5Contact sun glasses

53.6Ring phone

63.7Carrot ripple ice cream

63.8Hair colouring shampoo

74Concept Testing

94.1To profile the intended market

94.2To assess purchase intentions and product positioning:

104.3To refine and improve the concept:

115Market Analysis

115.1Market for iVo

115.1.1Market Size Actual & Potential

115.1.2Market Growth

115.1.3Market Trends

125.2Macro- Environmental Analysis

125.2.1Competitors

125.2.2Customers

135.2.3Suppliers

135.3SWOT Analysis

135.3.1Strengths

135.3.2Weaknesses

145.3.3Opportunities

145.3.4Threats

145.4PEST Analysis

145.4.1Political

155.4.2Economic

155.4.3Social

155.4.4Technological

166Business Analysis

166.1Financial Analysis

166.1.1Initial Investment

166.1.2Initial Cost

186.1.3Projected Cash flow Statement for the first three years

196.1.4Projected Income Statement for the first three years

196.1.5Fixed and Variable Costs

206.1.6Ratio Analysis

226.2Risk Assessment

226.2.1Threat of new entrants - HIGH

226.2.2Threat of substitutes - LOW

226.2.3Bargaining power of suppliers - HIGH

236.2.4Bargaining power of customers - LOW

236.2.5Intensity of the current competition - LOW

247Product testing

248Test Marketing

248.1Results from Test marketing and Questionnaires

258.2Modifications made after test marketing

269Commercialization

269.1Product

269.2Price

279.3Place

279.4Promotions

2910The Launch

2910.1The 5 Ws of Event Launching

2910.1.1What

2910.1.2Who

3010.1.3When

3010.1.4Where

3010.1.5Why

3111Budget

3212Future Direction

3313Conclusion

3414References

3515Appendices

3515.1Main supplier for raw material

3615.2Workings for the Financial Forecasts

3615.2.1Cost of Sales Calculation

3615.2.2Market Demand Calculation

3715.2.3Sales Demand Forecast for the first three years

3715.2.4Selling Price Calculation

3715.2.5Marketing and Promotional Budget

3815.2.6Administration cost budget

3815.3Concept Testing Results

4215.4Questionnaire - Concept Testing

4415.4.1Product Testing

4615.5Price Quotations

4915.6Economic Statistics in Sri Lanka

54