product development project mcom part 1 sem 2
DESCRIPTION
Product Development PROJECT MCOM PART 1 SEM 2 , BLACK BOOK PROJECT , 40MARKS PROJECT, MCOM PART 1 SEM 1 CBSGSTRANSCRIPT
Executive Summary
Trinker Wets Company is a registered small medium enterprise manufacturing wet ear cotton ear
buds. It the first ever company in the cotton bud industry to offer such a unique range of cotton buds.
This paper looks at opportunities to the market as well as to the business in starting up a new venture
of providing wet cotton ear buds in the cotton bud industry. It also assesses its opportunities of success
by analyzing competitor companies and through the use of financial statement to make variations of
when Trinker Wets is likely to be profitable. The financial statements of Trinker Wets show a
reasonable profit margin with breakeven after year 1. The wet ear buds will be packaged in sachets
that are laminated with films from the inside to preserve the moisture content of the ear buds. The
sachets will also be designed in a way that they will be convenient to carry around for example in
hand bags. Trinker Wets Company will also go through intensive marketing campaigns that include a
wide array of promoting strategies such at television ads and product sampling. Trinker Wets
Company foresees penetration into profitability in its business operations in the future and shows
greater potentials of growth.
1
INTRODUCTION
New product development has been defined by Meybodi (2003); Nadeem et. al (2011) as “a
process in which first the needs and wants of customers are determined and according to those needs
and wants the new products are tailored”. This means that in order to development a new product
extensive market evaluation should be taken into consideration and more research on the product and
customers attitudes toward the new product must be given appropriate attention, therefore a new
product can be defined as a good business idea that has appeared to be new to potential customers
(Kotler & Armstrong 2005). In today’s business world new product can be achieved through
modification or improvements from the existing ones, this is because we are living in the period
where globalization is at its highest point therefore there is numerous change in systems and
technology which makes product modification and improvement more simple. Mark Twain
acknowledges that “the secret of making progress is to get started. The secret to starting is to divide
your complex, overwhelming tasks into small, manageable tasks, and then start the first, hence this
quote supports Crawford and Di Benedetto (2008) New Product Process of launching a new product
which are; Opportunity Identification and Selection, Concept Generation, Concept/Project Evaluation,
Development and Launch. For our product to be successful we are working on a motto which says
“we are stronger when we stand together as a team and work together by giving support and
encouragement to each other”.
OPPORTUNITY IDENTIFICATION AND SELECTION PROJECT PROPOSAL
The identification of opportunities has been recognised as one of the most important abilities
of successful entrepreneurs and consequently has become an important element in the various
scholarly studies (Ardichvili, Cardozo and Ray, 2003).This clearly highlights the vital significance of
identifying opportunities for new products. For our group this process of
2
spotting and discovering new market needs occurred via the process of brainstorming. A notion
often defined as a process for developing creative solutions to problems (Osborn, 1963).At first
stage our group met and discussed the assignment key points and then dispersed when each
individual was assigned to go and think of a product will meet a need and fill in a gap in a
market. We later on gathered again where each individual member of our group shared the idea
they propose for the assignment. All ideas were welcomed at first no criticism of other members
ideas was done. So we came up a selection of products we are willing to develop and the ones
that will not cause any constraints as we proceed with our product development.
A list of various products which were brought up include the un-plaiting hair
machine, Outdoor clothes dryer rack, wet cotton ear buds, multi compartments
headlights and in-built blackberry battery. The un-plaiting hair machine was a machine which
will enable Africans to undo their hair extensions and braids with ease while saving time. The
outdoor clothes dryer rack on the other hand was aluminium steel handmade outdoor clothes dryer
with multiple rack layers for a more efficient way of drying clothes. Moreover wet cotton ear buds
are for the removal of ear wax efficiently and with ease without exposing customers to risk of injury
as they are furthermore medicated. , Multi compartments headlights will serve as a medium for
enabling drivers to detect objects at a far distance and alert the driver to take cautionary measures so
as to avoid collisions. Lastly the in-built blackberry battery will be designed to sustain the longevity
of the phone battery while saving costs at the same time.
After this we settled and selected three products which had the potential to be developed based on
their feasibility features, the gap in the market and whether it will be possible to produce the product.
These products include wet cotton ear buds, multi compartments
headlights and in-built blackberry battery; afterwards we took these products and
3
consulted our teacher Dr Cheah for an overview and insightful advices so as to see if we were
in the right track. We took his realm of input into consideration and assigned each group
member a product to focus on and further more research any relevant information that will
contribute to the success of our new product development.
PRELIMINARY CONCEPT SELECTION AND SCHEDULE
SCORING TABLEEvaluation Criteria In-built Black- Wet Cotton ear- Adaptive
Berry battery buds illuminationHeadlights
MarketabilityCompetitors 7 6 4Market size 5 10 8Placing 6 10 4Need 6 10 7Viability 5 10 2Risk 9 4 7Technology 7 8 8Total score 45% 58% 40%
Evaluation scale: (0-10; 1 = lowest, 10 = highest)
Our group went through a preliminary assessment of the five products that we had come up with
to develop in the market so that we can identify those that have more viability, marketability, the
technology to produce them, and whether they have a market need. In this event, the group went through
product screening whereby it is a process of filtering or screening new product developments before they
enter the stage-gate process and start to consume significant resources. The Stage-Gate process was created
by Dr. Robert Cooper and is a method described by Cooper and Kleinshmidt of a systematic moving of a
new product through various stages from the screening process to product launch [online source, 2012].
During idea screening the objective is to eliminate unsound concepts prior to devoting
resources to them. Several questions we as the group asked ourselves during this process
include:
Will the customer in the target market benefit from the product?
What is the size and growth forecasts of the market segment/target market?
4
What is the current or expected competitive pressure for the product idea?
What are the industry sales and market trends the product idea is based on? Is
it technically feasible to manufacture the product?
Will the product be profitable when manufactured and delivered to the customer at
the target price?
At first, our results were based on all the five products that the group had initially
brainstormed upon. This is to say that, during the screening process, the group considered all
five product from the beginning; the products being:
- The built-in battery for blackberry phones
- Wet cotton ear buds
- Hair/braid un-plaiting machine for African hair
- Outdoor clothes dryer rack
- Adaptive illumination headlights for automobiles
By applying the screening model, the group was able to categorize and determine an overall
rating for the ability to develop and launch a new product successfully. From the five
products we initially had, we reduced them down to three (through screening), into those that
were most likely to be marketable and feasible according to the market needs and the
available technology to produce them. Among the three products that had been filtered from
the initial five, we then again reached another conclusion to choose the best product to
produce out of them. From the three:
- Blackberry in-built battery
- Adaptive illumination headlights for automobiles and
- Wet cotton ear buds,
we categorized them again into the least feasible and the most feasible, meaning that we
considered things like actualization, the current technology that is available in the market and
those other options that would help us in producing the product. This led us to conclude and
choose to develop the wet cotton ear buds because we saw it as most feasible and would
5
likely to be better marketed.
Finally, we designed a Gantt chart to show our plans of action to complete the project over twelve
weeks. During the course of associating a plan of action, determining the market need for the
most feasible product that we chose will be done through the use of questionnaires. In this case,
questionnaires will be distributed out to the raw market that has not yet been exposed to the new
product to find out how they respond to it.
GANTT-CHART
6
CONCEPT GENERATION
According to Sander and Brombacher (2000) “To create a concept/ idea during product development
is quite challenging therefore a five-step method steps needs to be followed.” The model has five steps
and the first thing to consider when creating an idea is to clarify the problem, then search internally,
externally, explore systematically and lastly reflect on the solution and problem. Therefore at this
stage of the new product development we came up with three products that are feasible and can be
viable in the market.
Wet cotton ear buds
Wet cotton ear buds
The above diagram shows wet cotton ear buds. Wet Cotton ear buds consist of small roll of wet /
moisture cotton wrapped around both ends of a plastic. They’re used for removing ear wax. Wet
cotton ear buds will provide better health to all people. We all know that for safe and efficient
removal of earwax it is essential to soften the cotton ear bud, therefore to make it soft people often use
olive oil, mineral oil, glycerin, saliva, water, cooking oil and petroleum jelly in which we find some of
the items used are very dangerous for the ear so it is better to produce wet cotton ear bud to serve
this purpose and material used will be clinically tested hence good for the ear. It also has potential in
7
the market because the use of
8
cotton ear buds with no softening items corrodes the ear hence coming with a new and
improved type of cotton ear buds have a greater advantage in the market as people do not
have to spend on cotton ear buds and softening products. We chose wet cotton ear buds
because the technology for producing cotton ear buds is already there in the market. Removal
of ear wax is a very sensitive issue to some people. It is for this reason that we might face a
lot of competition from the following:
Some people may still prefer seeing the doctor for ear wax removal. By seeing the doctor
they do not have to use the cotton ear buds or our wet cotton ear buds to remove the wax as the
doctor can offer some machines for removal with pain free and with no fear of loss of hearing or
damage to the eye as all the items used are clinically proven. Our other competitor is ear wax
removal home remedies. There are a lot of alternatives that people can choose from at home. For
example, injecting warm water into the ear canal for a few minutes to soften the wax and then
later let the water and dirty drip into a towel. Or they can opt for over-the counter kits for ear wax
removal, which comes with instruction of how to use and how many times in a week or month.
Lastly the current cotton ear buds.
A competitor is any entity which is a rival against another. In business, it is a company in the
same industry or a similar industry which offers a similar product or service (Business
Dictionary,2012).
Our current direct competitors in the cotton bud/pads industry include companies like Dove,
Johnson & Johnson, Watsons, and Guardian. Such companies offering cotton buds like
Johnson & Johnson and Dove, can be characterized as dominating the market in this industry
due to their innovation and advertising strengths and have become the most commonly used.
Made from 100% pure, non-chlorine bleached cotton, Johnson & Johnson’s cotton buds are
usually priced at about RM9 per packet, while Dove’s are usually priced at RM8 depending
on the count of buds in each pack being sold. On the other hand, retailers like Watsons and
Guardian usually offer their cotton buds at a price range of about RM3-RM4, also depending
on the count of buds in each packet sold/offered for sale. All of the companies have managed
to maintain their price in the health care segment on consumer goods, with some like Dove
9
which are slightly innovative than the others when it comes to advertising and promotion of their
product (Dove Beauty, 2012). Our pricing strategy on the other hand focuses on offering a pack of
wet cotton buds at RM12. It is priced at this amount because of its uniqueness to have 2-in-1 factor,
where our customers will not have the hassle of going out into the market to purchase their cotton
buds as well as the solution to use for their ears. Trinker Wets cotton buds are ready made for them to
just take home and use on the spot.
DANGER OF CURRENT COTTON EAR BUDS AND SOLUTIONS
Now think about what happens when you twirl the cotton swab around in your ear, Part of the cotton
will come off and the swab is likely to remain waiting for the next ear cleaning hence it build up of
cotton inside the passageway of the ear can lead to impacted earwax. (Teague, 2008). Hobson and
Lavy (2005) carried out a research to find out how many people used cotton swabs and alternative
solutions to soften them. They found out that 53% of respondents used cotton swabs with water,
cooking oil and other purchased ear drops. Hence all this patients had complaints with hearing and
itchiness of the ear, while others had complaints of pouring too much water into the ear and clogging
it. Rensink and Martin (2007) who is Otolaryngologist and a dispensing Audiologist respectively in
San Diego also confirm that people use wrong softening solutions which are dangerous to their ears.
10
Multi-compartment headlight
A multi-compartment headlight is where the changing light is produced by various combinations of
lighted compartments. This change occurs between different illuminations functions (e.g., low and
high beam) for automobiles. The multi-compartment solves the problem of the current car lighting
systems that have to be manually operated rather it will be automatic and censored. Unlike the
standard vehicle headlight, the sensors in an adaptive headlights system prevent the lights from
turning when they do not need to. If the car is not moving or is moving in reverse, the adaptive
headlights will not activate. This assists to keep the lights from inadvertently blinding other drivers.
Thus this brought up our competitive edge as the current car manufacturers / companies do have
standard headlights on the cars.
Our product will benefit the users/ customer as it meets their market needs of lack of multi-
compartment headlight. The purpose of this system is to provide illumination for the driver to operate
the vehicle safely after dark, to increase the conspicuity of the vehicle, and to display information
about the vehicle's presence, position, size, direction of travel, and driver's intentions regarding
direction and speed of travel. According to our observation, standard headlights shine straight ahead,
no matter what direction the car is moving. When going around curves, they illuminate the side of the
road more than the road itself. Adaptive headlights react to the steering, speed and elevation of the car
11
and automatically adjust to
12
illuminate the road ahead.
Finally the product is likely to face threats from its nearest competitors such as Audi and
BMW which already have multi-compartment headlight that can turn the lights up to 15 de-
grees from center, giving them a 30-degree range of movement. BMW - Some BMW models
are equipped with cornering lights. $156.59/headlight (2011 BMW 128i). the adaptive multi-
compartment headlights will then be our competitive advantage as it is not standard and can
be used at all angles.
In Built blackberry battery
The blackberry inbuilt battery is a form of innovation that already exists and is being used by our
competitors, for example Apple and HTC. We identified an opportunity in the market for
manufacturing Blackberry mobile phones that do not have removable batteries because inbuilt
batteries have a longer battery life. Blackberry users are mostly complaining about the poor battery
life of their phones therefore meeting their need and producing a phone that has an inbuilt battery will
boost sales promptly because the main push away for customers to buy phones from competitors is the
poor battery lifespan hence if taken into consideration more and more sales will result. The blackberry
phones have an application that eases communication which other phones currently do not have, the
blackberry messenger which is the most effective tool for communication and if coupled with long
lasting battery, customer satisfaction is guaranteed. Producing a battery that goes on for 2 or more
days will be beneficial to the users and more convenient as well.
In a nutshell we have already came up with a way of handling competition from Apple
and HTC by also developing an in built blackberry battery while for the adaptive lighting systems we do
not have direct completion since all the automobiles use standard lights, therefore this innovative lighting
system will help reduce accidents but people might still prefer to use their standard lights which might be a
threat. On the other hand we have direct competition on our wet cotton ear buds, hence to solve the
problem in which people prefer the current cotton ear buds the we can use our marketing activities, such as
providing free samples and try to produce at a lower cost and sell at a lower price. Our competitive strategy
is more into Best-cost provider, meaning that we will be able to provide high quality wet cotton ear buds
at a relatively cheaper price. And because people do not have a choice, they are using home remedies but
with the introduction of wet cotton ear buds they might be willing to test them and skip the process of
having to inject their ears with warm water which
13
if not performed properly might damage the ear.
ORGANISATIONAL STRUCTURE
ROLES AND RESPONSIBILITIES
Chatiwa Mbotho- Chief executive officer
Chief executive officer implements the strategic goals and objectives of the product. She also has
the responsibility as a communicator and leader as well as decision maker.
Masego Kotopo -Chief financial officer
She will provide insight beyond financial-based performance. Focus more on measuring and
14
controlling business risk through an effective financial risk management framework. She will
15
also effectively contribute to strategic initiatives, promote the internal control framework and also
provide financial advice within the organisation. Equally important is the establishment of
reporting relationships with operational and program managers who have day-to-day
accountability for the use of resources and the delivery of outputs.
Bonang Natshane-Marketing Manager
As a marketing manager she will be responsible for Setting our business's marketing strategies,
carrying out marketing and promotional campaigns as Well as managing people.
Amogelang Neo Tshukudu -Product Manager
A production manager is a person who undertakes the task of monitoring and ensuring smooth functioning of the production process, preparing production plans after making detail surveys and researching and ensuring consistent supply of raw materials and essentials for high-speed production of goods
· Responsible for the completion and control of all production and R&D engineering
documentation.
· Planning strategies to increase the productivity of the factories by the use of latest ma-
chines and equipment.
· Close monitoring of team performance
· ensure that the clients of the organization are delivered the products on time and get
regular feedback from the clients regarding the service provided to them
Jane Makwinja-Human resource manager
Her responsibilities are concerned with developing, advising, implementing and communicating management policies. Also I will be responsible for the welfare of the organization’s staff, training & development, salary reviews and recruitment.
1.2 MISSION STATEMENT
Mission Statements as strategic marketing and business development tools that add value
because they define your products / services, goals and culture to your employees, suppliers,
customers, vendors, and the media. (Mayhew,2012) Our aim is to be the best provider of
16
effective and hygienic wet cotton ear buds in the industry so as to ensure the overall comfort
and safety to our customers' well being in the most feasible and efficient way.
1.3 VISSION STATEMENT
A vision statement defines what a business does and why it will exist tomorrow And it has
Defined goals to be accomplished by a set of date. It furthermore takes into account the Cur-
rent status of the organization And serves to point the direction of where the organization is
heading.(Mayhew,2012). We want to be the excellent and most outstanding producers of wet
cotton ear-buds in the East Asian region by the year 2016.
1.4 MOTTO
One way of setting company goals, meeting objectives and setting benchmark for a business
is by incorporating a motto in its operations. Therefore a motto can be said to be a short
descriptive phrase or statement about a company it represents A set of beliefs, ideals and
ethical stance that the company takes as a business entity,(smith,2012).As for our company
we intend to be the best efficient largest wet ear bud provider in the ASEAN region.
LOCATION
Location is empirical to every business and where the business place is situated. Our business will be
located in Petailing Jaya, SS16/2, 47500, Petailing Jaya, Subang Jaya, Malaysia. Sev-eral factors have to
be considered when choosing a location for the business and they influ-enced our choice of location.
Careful assessment of costs was considered as we chose a place where it is near to our targeted market and
cost of delivering the goods to the supermarkets and pharmacies would be cheaper. Trinker Wets Company
is located in a very well estab-lished business environment; area where there are other local businesses
operating there thus more people will be able to identify the area. Rent costs are affordable as compared to
city area such as Kuala Lumpur. Accessibility is another crucial factor that was considered, the business
office for Trinker wets will be accessed easily as it is linked to the main roads and high ways. For the
warehouse also Trinker Wets company considered the availability of labor therefore we decided to locate it
in Shah Alam industrial area were often people come and
17
search for jobs. Shah Alam is near Petailing Jaya therefore transportation of materials/ goods
will easier and costs will be reduced. This is supported by Mataloni Jr (2010, p.159) who
states that, “ most of the location attributes that are found to be significant are related to
productivity enhancing features such as labor, industrial agglomeration and extensive trans-
portation infrastructure”
PRODUCT INNOVATION CHARTER
Product innovation charter has been defined as a document that gives conditions under which
an organization will operate, it constantly reminds the management that the strategy is for
products not process or other activities (Crawford and Di Benedetto, 2003). While Cooper
states that product innovation charter is not just one stage in the company’s new product
process but rather an overarching construct that influences every stage of the new product
process (Bart, 2002). The contents of the PIC are background, focus (the target business
arena), goals/ objectives and guidelines.
Background
18
Cotton swabs or ear buds are existing product in the market and they were first developed in the
1920s by Leo Gerstenzang. We have observed that most people when they use the current cotton
swabs or ear buds they try to make them soft by using water, baby oil, saliva and other soften products
that will make it easy and comfortable for them to clean their ear canal and remove ear wax.
Therefore we are concerned about the health hazards that might come with the use of clinically
unproven products to soften the cotton buds, because some of the products might clog the ear and
cause temporary or permanent deafness. The initiation of wet cotton ear buds brings the opportunity
of something that meets the health standards as the softening (moisturizing) products will be clinically
test and scrutinized for the safety of all. Hence people will be using a product that gives them comfort
and that is very effective. The trinker wets have the potential of being successful in the market
because they have the first mover advantage in the wet cotton ear buds market.
Focus
Focus deals with the market competitiveness that is technology drivers and market drives.
Technology: In developing our wet cotton ear buds we will use the cotton swab machine,
cutting cotton machine, counting and packaging machine. We will also utilize the spindles
and absorbent materials.
Market: Trinker wets will be distributed through retailer, pharmaceuticals and supermarkets.
It will appeal to those consumers who need swabs that are moisture with good PH conditions
and clinically proven. Trinker wets will also be found in hospitals and clinics. Our product
will focus more on quality, standards and safety, which are the most valued features by
customers in many products.
Goals and objectives
1. To remodel the current cotton ear buds
19
2. To produce efficient and hygienic cotton ear buds that provides customers with com-
fort
3. Sustain and ensure long term health benefits for all.
4. Bring about the awareness of good care of the ear
5. We want to produce high quality and safe cotton ear buds that will be affordable to all
Guidelines
Trinker Wets is an adaptive product because we are improving it from what the current cotton ear
buds look like. Quality control, safety management, effectiveness, packaging and product
integrity as well as byproduct/waste will be our core guidelines. This is because proper hygiene is
the most important part of healthy lifestyle and it should not be disregarded. Many quality control
measures will be used to ensure that spindles and the final product are acceptable and free of
imperfections.
Customer Needs
Customers are looking for a product that will be effective in removing ear wax and at the same
time also safe to use. They are also looking for swabs that will prevent damage of the ear tissue.
The development of spindles that are less likely to slip in the hand will also avoid accidents for
those people who clean their ears under tremendous pressure or stress. Our customers will buy our
products if they are packaged in material that will provide durability and that are user friendly
with relatively cheap price.
20
1.0 MARKETING PLAN
In today’s ever changing and sheer business environments succumbed with cut throat compe-tition, it
is of vital importance that new business ventures and innovators take into considera-tion
implementation of a marketing plan so as to ensure the viability and success of their goods and
services. Therefore a properly integrated marketing plan will expose the product to opportunities that
the market offer and prepare it to withstand complex challenges and busi-ness downfalls in the
process. Furthermore it will enable the business or an organization to be able to spot the precise
marketing mix so as to measure the overall performance of their prod-ucts and keep track of their
marketing strategy in place.
For the marketing plan to be successful and of a greater accomplishment it has to be written
and documented in detail providing sufficient clarity on the marketing approaches and initia-
tives taken into account for the business or an organization to achieve their overall goals and
objectives. Therefore that is why we have taken it upon ourselves to foresee that we place ef-
fort in integrating a marketing plan for our product so as to ensure that it yields productive
and efficient results in the run.
1.1TARGET MARKET SEGMENT
Target market segment is the identification of sub-groups of customers who share common needs; the
selection of which of these groups or segments to target;and, the presentation to these targeted customers
of well defined sales and marketing programmes emphasising a dis-tinctive product image or brand
positioning (Dibb.S and Simkin.L 1996) . That is a better as-sessment of a target market segment can yield
greater benefits, a clearer product orientation
21
let alone an insightful understanding of the customer's specific needs which can position a
company or business at a competitive edge.
Our aim is to reach all customers of all age groups thus from toddlers to grownups and of all
sexes both females and males therefore it does not have a specific market niche but rather
caters for the entire population at large. However our target audience will be specifically for
the population of Petaling Jaya area which comprises of a projected population of 520698
people therefore making it easier and less costly to reach (klcityplan2008). Currently the
market offers cotton ear buds that are dry and in most cases customers find it difficult to
thoroughly clean their ear canals properly. Our wet cotton ear buds will aid the consumers
with personal hygiene care at ease. Our product will be available for both public use and
private institutions like hospitals, pharmacies and others.
TRADEMARK AND PATENT REGISTRATION
Many companies / business are very careful with protecting their products /processes through
patents .Lihong & David (2011, p.286) defined a patent as an “ exclusive right given for an invention,
product or a process that’s provide a new way of doing something, or also pro-vides a new technical
solution.” Therefore to establish a company in Malaysia patent regis-tration procedures have to be
followed in accordance to Malaysian laws under the Patents Act 1983 and the patents Act 1986. In
order for the trademark and patent to be approved certain conditions must be considered by the
issuing office such as immorality or misleading. Ac-cording to Crawford (2011, p.413) “the
trademark should also not be too descriptive of a product type”. Therefore or trade name, 'Trinker
wets overrules those condition thus making it good name that underlines with the law. The trademark
will undergo Malaysia Trade Mark Act 1976, The Trade Marks Regulations 1997 and under section
10 of the Act 'Trinker wets’ should satisfy one of the stated essential particulars such as the invented
word(s). (Abu Samah & Mohd Zukki, 2009, p.2905)
22
REGISTRATION
Registration of a company is very crucial as it determines the existence of a company or not therefore
our company will undergo Malaysian Registration of Businesses Act 1956 (Revised 1978) (Laws of
Malaysia) that governs the formation of all businesses. The first step that will do is to submit an
application form (13A) to the Companies Commission of Malaysia (CCM) in order for us to ensure if
the company name proposed is available. This is done with a cost of MYR 30. As soon as the name is
available stamping of the documents will be under-taken with a fee MYR 220 provided an original
copy for registering with Companies Com-mission of Malaysia. Mohd-Sulaiman (2011, p.58) stated
that “After all these processes will then file the necessary documents with the Companies Commission
of Malaysia(CCM) so as to obtain tax registration, company corporation and also the Employment
Provident Fund (EPF), Social Security Organization and the Inland revenue Board.” The cost for all
these fees is MYR 2550(registration fees).
COMPETITIVE ANALYSIS
Competitive analysis is a process whereby a company attempts to define and understand its
industry, identify its competitors and anticipate their moves (Mostert, 2005). Therefore
competitive analysis will then assist us with strategy formulation on how to keep our product
a success in the market because it assesses the external environment of the organization. Wet
ear buds are not yet available in the market but there are products that are almost similar to
our product, the difference of cotton ear buds that already exist in the market and our product
is that they are not moistened. Our direct competitors include Johnsons &Johnsons, Watsons,
Guardian and Dove; they cater to the similar needs of customers and offer their products at
quite reasonable prices in packs of mostly 120 pieces ranging at around RM3-RM9.
The difference between us and our competitors is the kind of product we offer, its
usefulness and effectiveness in the removal of ear wax. We have tapped into offering a
product that will not cause discomforts to users as the already existing cotton ear buds
because they are dry, once they are put into the ear they cause friction to the inner ear since
the user will exert pressure to try remove the dried wax. Most of the times mothers usually
23
wet these dry cotton buds to try make them comfortable in infants’ ears using inappropriate
liquids like baby oil which may have an effect to the inner ear. Offering a unique and
effective product to the market will be our competitive advantage and will differentiate us
from our direct competitors.
MARKETING MIX
Marketing mix is a key tool which companies use to gain the reaction it is seeking from its
targeted market in relation to its objectives. The marketing mix comprises of product, price,
promotion and place and this are known as the 4ps.
PRODUCT
Product plays an important role in the success of a business as it is the core of it’s existence therefore
our product has features that appeal to the wet ear cotton bud users. Crawford & Bendetto (2011,
p.434) stated that, “Product is effective for introducing new product cate-gories with high relative
advantage.” A product must have the right features, supporting ele-ments such as attractive design,
function well, warranties, guarantees, after sales services and so forth .The wet ear cotton bud is
designed for people who are encountering problems when using the current ear buds that are available
in the market. With the current ear cotton the consumers face unhygienic problems, and they find
them uncomfortable to clean the ear thus wet cotton buds tackles those problems.
Wet cotton ear buds are very unique as compared to what our competitors are offering. First of all
it is moistened with pure virgin olive oil that will beneficial to the ear and does not tend to cause,
dryness and ear drum damage. Therefore the product has a competitive advantage to penetrate
through in the market. also our product is safe, comfortable , easy to use and can be used by all
consumers of all age.
PLACE
Jackie & Sudhir ,(2010, p.446) describes that, “A place is vital element of the marketing mix as it aligns
the storage , where the product is made and how it can be transported to the cus-
24
tomer.” Basically is all about the sales & distribution channels in which products are market-ed
and distributed. Therefore Trinker wets’ company makes sure and gets the right products, to the
right place at the right time through place under marketing mix. Our product aims to be
distributed through multi-channel distribution whereby they will be indirectly and directly
distributed. Will be using the proper distribution channel to make sure our customers get the
product therefore the wet cotton ear buds will be made available and found conveniently in places
like pharmacies and supermarkets such as Jusco and other retail where they normally buy. Sales
and distribution channels allow intensity of coverage where issues after sales or maintenance
service needs are offered easily to retailers/ consumers. Furthermore distribution incentives are
found there were availability needs to be stimulated. (Crawford &Benedetto, 2011).
PRICING
Pricing element refers to the pricing strategy that a business should employ when selling their products. It
is all about methods that of setting profitable and justifiable prices Kurtz( 2009 p.51) It is empirical for a
company to decide on the product objectives before setting the price which comprises of profit-oriented,
sales oriented pricing and status –Quo. Choosing the price of a product should be done in a haphazard way
and thorough research should be conducted in several areas including customer market, competition and
product lifecycle.
Our company will be using market based pricing strategy which is also known as a competi-tion-based
strategy. Jesse and Huat (2011), explained market based pricing strategy as, “Set-ting a price based upon
analysis and research compiled from the target market.” With this pricing strategy, Trinker Wets Company
will be able to evaluate the prices of similar products that are on the market such as Dove, Guardian and
Watson cotton buds. It is important to only consider those products that are similar to the product being
offered. The Wet cotton buds has more features than the current cotton ear buds that are available in the
markets such as con-formability thefore will set a higher price of RM12. This pricing strategy is suitable
for the wet ear cotton bud as already there are various companies offering dry cotton ear buds thus our
company has to convince the consumers they are receiving fair value for their money. Our prices will be
based on value and costs incurred as explained by Crawford. The price that we chose also was based on a
survey results where most of the respondents are willing to
25
buy our products at the price of MYR12 therefore it proves that consumers would be able to
identify the features of the wet ear cotton buds.
PROMOTIONAL STRATEGY
Promotion is a communication process that takes place between a business and its various publics.
(Marketing, 2007). 'Trinker wets’ communicates with its targeted market about its products in a
various ways. The company aims to accomplish certain tasks such as to increase demand of the wet
ear cotton buds, differentiate the product and to stabilize the sales sam-pling is our main promotional
tool that’s will be used by our company. Samples will allow our consumers to use, test and able to
perceive the difference of a product. With sampling product advantages are able to be learnt through
using it.(Crawford & Bendetto, 2011, p.434). Discounts will be offered to bulk buyers such as
retailers.
NON-PERSONAL SELLING
It includes tools like sales promotion public relations, guerilla marketing, sales promotions
and advertising. For our company will only employ advertising as the main method. Non
personal selling tends to create a flexible way of raising awareness and interest during the
buying process.( Merly & Bigot , 2010 p. 265)
ADVERTISEMENT
Several advertising method will be used in order to reach our targeted customers and increase sales.
Advertising is any paid, non-personal communication that involves different media in regard to the
business or a product intended to inform or persuade.(Kurtz & Boone 2006). .A push approach strategy
will be employed as it allows our company to promote the products to the retailers and the retailers will
make sure the product is advertised to the consumer. Com-panies have recognized the need for market
focus on their products through push strategies however; William and Shahdad (1996, p. 88) stated that,
“Push strategy has led to a product orientation of ‘if we build it they will come to philosophy”. With push
strategy being used by our company, the objective is for us to persuade the distributor or retailers to carry
our brand “Trinker Wets”, offers it a shelf space and advertises it too. The goal here is to make sure; those
distribution channels ultimately push the products forward to the consumers through sales promotions
strategies such as free trials, discounts contests and buy back guarantees.
26
According to Olharger &Ostlund, ( 2007 pg. 49) “Push marketing is good for creating brand
awareness, promoting a new product or service and or delivering a time-sensitive message.” With
that said, our company marketing tool will be push strategy.
Our company will also incorporate use of low-cost, unconventional techniques and innova-tive to
attract attention such as brochures, posters and television. Once the wet ear cotton buds have been
launched, the company will have product sampling thus will be able to inter-act with our consumers
and to build awareness. Apart from sampling will also have posters that will advertise around places
like universities such as Sunway College. The company will primarily focus on mass media such as
newspaper and video screens in supermarkets
BRANDING
In any essence, it makes sense to understand that, branding is not about getting your
target market to choose you over the competition, but it is about getting your prospects to see
you as the only one that provides a solution to their problem. According to Lake (2012), the
objective that a good brand will achieve include; delivering the message clearly, confirming a
company’s credibility, connecting target prospects emotionally, motivating the buyer as well
as concreting user loyalty. Orana (2010) adds on to say that in business, a brand is a very
important thing and that when a business does not have a solid brand reputation; it will
always stand at a disadvantage against branded products and services. When trying to
establish a unique brand, it is advisable to come up and keep the brand name short, simple
and precise; preferably the type of brand name that customers can easily remember and
associate a product with. In this case also, the brand name must, on its own, differentiate
itself from those that are existing in the market already.
Trinker Wets is a brand name chosen by our group to represent the uniqueness of our
ear cotton buds and how they are different from our competitors. Our reason for choosing this
27
brand name is because we believe that it is a simple personification of our company’s image
28
and that it gives our customers a quick and simple view into what type of product and/or service we
provide. Trinker, comes with a ‘Wets’ at the end because it is as similar to what is being provided in
the market today, yet different enough to an extent that our product provides a solution to the problem
that standard cotton buds are associated with like proliferations. And lastly, we chose the brand name
‘Trinker Wets’ because the content of the brand name matches the very product that we are bringing
forth to the market, customers can easily catch on as soon as they see and advertisement, or pick up a
packet of cotton buds in a supermarket or pharmacy. According to Crawford (2003) firms that have
invested in protecting their equity to maintain the value of their brand names are the ones that benefit
mmost in their industry and that a brand with a high equity encourages loyalty amongcustomers,
making advertising and other forms of promotion more efficient.
POSITIONING
By positioning our product in the market, we are ensuring a target market that has
reason to buy our brand in preference to others. A definition by the Management Study Guide
(2008), states positioning as an activity of creating a brand offer in such a manner that it
occupies a distinctive place and value in the target customer’s mind and it takes identifying
and determining points of similarity and differences to ascertain the right brand and to create
a proper brand image. In trying to position our brand in the market, our focus is to outshine
our competitors by providing a product that performs better and efficiently in catering to the
needs of our customers.
Although our cotton buds are not the first to enter the market in the cotton bud industry,
we believe that we have and will position Trinker Wets in the market as a first mover in the wet
cotton buds sector. As noticeable so far, no other firm that provides ear cotton buds is offering
out of the ordinary cotton buds such as the ones we are offering.
29
According to the Pearson Education (2012), the basis of first-mover advantage is simple: by
being the first to enter a new market, or bringing in a completely different product from those
existing, the business gains an advantage over its actual and potential rivals. Additionally, Suarez
(2005) says that, although no advantage lasts forever, firms that succeed in building durable first-
mover advantages tend to dominate their product categories for many years, from a market's
infancy until well into its maturity. In addition to our focus, we also intend on creating a
relationship with our prospective customers where we share the safety of their well-being by
providing durable and easy to use buds.
30
SWOT ANALYSIS
Strengths
Quality control measures-. One of WHO's constitutional functions is to provide objective and reliable
information and advice in the field of human health, a responsibility that it fulfils in part through its extensive
programme of publications. Since our company produces a product that is highly related to people’s health we
will follow some of the regulation from WHO organization to guide us on what is required and what should be
avoided, we will prioritize on activities that will prevent and control possibility of ear damage and infections
(World health organization, 2012). Therefore the material used for packaging and will be scrutinized so as to
make sure that they do not alter the quality of our wet cotton ear buds. The packaging material will protect the
wet cotton ear buds from extraneous matter under the conditions of handling and storage. If a product fulfils the
customer’s expectations, the customer will be pleased and consider that the product is of acceptable or even high
quality. If his or her expectations are not fulfilled, the customer will consider that the product is of low quality
(Anon, 2012). This means that the quality of a product may be defined as “its ability to fulfil the customer’s
needs and expectations”. The other strength of our product is Product integrity recognize that social and
environmental impacts in the design, development, manufacturing, marketing, and disposal of products can be
anticipated and managed for the benefit of the company and its stakeholders. Therefore our wet cotton ear buds
are designed in such a way that they will prevent ear damages unlike the current cotton ear buds that are very
dry and tend to scratch the ear canal. After being used the spindle since is made out of plastic it can be recycled
and
31
used for producing more plastics or related products. We will urge customers to avoid dumping their
waste products in the streets as that might cause air and water pollution which is very dangerous for
their health. Our marketing will provide customers with all the information related to the products so
that there is consistence in the use of the product. According to Clark and Fujimoto (1990) Products
with integrity perform superbly, provide good value, and satisfy customer's expectations in every
respect, including such intangibles as their look and feel. In their research they also found out that
product integrity is in two parts that is internal integrity which conformity between the function and
structure of the product. For example our spindle and cotton wrap fit well into each other and work
collaboratively, while the external integrity is the consistency between product performance and
customers expectations (Clark and Fujimoto 1990). The other strength of our product will last longer
because of its packaging, in which the moisture will be preserved by aligning the container with a foil
so as to kip them wet for a very long period, hence this is supported by our unique selling proposition
“you get fresh and extreme comfort with trinker wets”
Weakness
Our product has no market presence or reputation therefore customers may fear the risk of paying for a
new product. Because our product is still new in the market we cannot gain the economies of scale, meaning that
we cannot simply expand into other geographic areas during the first year of the product launch into the market,
hence only people in Petaling Jaya will be aware of the product in high percentages. Because we have no market
present it will also affect the talent that we recruit because most people might have a feeling that a new company
might not easily or quickly advance their careers as compared to companies that already have good market
presence and good publicity. Therefore more money will be spent in marketing so as to tell customers about our
product and build brand equity. It is very difficult to attract new customers. The other threat is that our cash
32
flow will be unreliable for the first year and this will affect the salaries for our employees and
many aspects of our product development. Lack of stable cash flow will affect might affect the
chances of us getting good distribution channels in terms of the commissions we pay so that our
product can get good shelves in retailers and supermarkets.
Opportunities
We have the opportunity of doing Joint venture or mergers with other well established companies like
Watsons, Johnson and Johnson, as a result we will benefit from sharing the resources and learn more of new
product development skills and gain talents from such entry modes. This will present us with new technologies
that we can adopt and the one that might improve the quality of our products and standards hence meeting both
ends of customer’s expectations, needs and wants. The other opportunity is that people are becoming more and
more health conscious so we have the opportunity to nurture our target market, because we are offering a
product that is simply functional and that will provide them with better health and ears hygiene, as less damage
will be done into their ears due to the moisture cotton buds. Hence this serves as our competitive advantage.
Threats
Quality standards keeps on changing hence this might affect our position in the market, this is because
making Joint ventures is a very risky business as there comes a time that they dissolve and our partners might
use what they learnt from us for their own advantage and since they have more capital they can afford to recruit
people with very high technical expertise hence come up with products that have new quality standards and
better than what we offer customers hence in the long run some customer will be willing to switch to better
quality standards therefore posing another threat of Information security issues can have a great impact on our
new product. Consumer’s needs, wants and expectations are not static, they are dynamic, meaning that they
change with time hence this is a threat if we cannot quickly realize and respond to them and their demand.
33
FINANCIAL ANALYSIS
Our cost of production amounted to RM17, 111.4 which is slightly low as we will not produce
spindles and cotton for ourselves but rather buy from manufacturers such as Johnson and cotton
manufactures in Malaysia therefore this in turn justifies why our cost of production is low as no
extra costs and charges will be incurred as compared to importing it overseas. Currently
Malaysian customs charges 10% custom duties for the total amount of all items purchased,
(malaysiaexports.com,2012).
Estimated Cost of production
Unit Unit Cost (RM) Total (RM)Spindle 64557 65848.14 0.20 12911.4
Cotton (in Kg) 20Kg 20 20.2 120.00 2400Solution (in Gallons) 10 10.2 150 1800TOTAL - - - 17111.4
Our cost of production amounted to RM17,111.4 which is slightly low as we will not
produce spindles and cotton for ourselves but rather buy from manufacturers such as Johnson and
cotton manufactures in Malaysia therefore this in turn justifies why our cost of production is low
as no extra costs and charges will be incurred as compared to importing it overseas. Currently
Malaysian customs charges 10% custom duties for the total amount of all items purchased,
(malaysiaexports.com,2012).
34
Estimated Distribution costs
TotalUnit (RM)
Caring Bhd 16,139 20,000Watsons Bhd 16,139 20,000Gardian Bhd 16,139 20,000Jusco Bhd 16,139 20,000TOTAL 64557 80000
We are going to compensate our distributors a sum of RM20,000 each leading to a total sum
of RM80,000.This incentive of offering attractive pay will act as a motivator effect for the distributors
as the higher the commission the more the distributors will be eager to sell our products and shelve it
where customers will be able to see it. It will furthermore encourage them to place more emphasis on
our product as our competitor’s products.
35
Estimated Start Up Cost (First Year)Price Uni Month(RM) t s Total (RM)
1 Cost of Production - - 17111.42 Distributors - - 800003 Transportation cost 1,000 2 - 20,000.004 Machines 3 - 250,00005 Monthly Phone Charge Usage 600 3 12 21,000.006 Internet Installation 170 170.007 Internet charges 500 12 6,000.008 Rental (Deposit) 5,000 - - 5,000.009 Rental (1-Floor Office) 54,000 6000010 Office Equipment 30,000.00 - - 30,000.0011 Marketing Expenses 75,000 - - 75,000.0012 Salary (CEO) 3800 1 12 4560013 Salary (Finance Staff) 1800 4 12 8640014 Salary (HR Staff) 1400 2 12 3360015 Salary (Marketing Staff) 1,500 3 12 54,000.0016 Salary (Product staff) 1,600 3 12 57,600.0017 Insurance (per annum) 1,500 - - 1,500.0018 Buy 2 Vans (Tata) 40000 2 12 4000019 Maintenance of Vehicle (Tata) 300 2 - 7,200.0020 Utilities(Electric, Water, etc.) 12 25,000.002
36
1 Warehouse Rental 14,000 - - 14,000.00
37
22 Miscellaneous (Photostat paper, ink) 4,000 - 12 4,000.0023 Registration 2550 - - 2550
TOTAL 999731.4
Our machinery costs encompasses of three machines which all account to a sum of
RM30,000, the most expensive machine will be the automotive packaging machine, which will help
us speed our production rate effectively and efficiently while reducing costs on labour at the same
time. For the transportation of our materials we are going to purchase two vans TATA winger which
costs close to RM20, 000 in the automobile industry, (infibeam.com,2012). Therefore the two vans
will amount to a sum of RM40, 000 in total which is relatively reasonable enough to sustain our
operational costs. Our warehouse rental expenses are based on yearly basis, in which we will pay
upfront the sum of RM14, 000.
From the questionnaires: (Strongly agree & agree)
A = 48 48/100 x 50 respondents = 24%
T = 35 35/100 x 50 respondents = 17.5%
A = 61 61/100 x 50 respondents = 30.5%
R = 47 47/100 x 50 respondents = 23.5%
Forecasted Market share
Thumb rule 90% : 30%
(0.9x0.16) + (0.24x0.3)
38
T= 0.216
39
=0.22
Switching rule
R= Rs / (1+Rs-Rr)
0. 75/ (1+0.75-0.8)
R= 0.7894
We assume that awareness will be high due to our pull strategy of marketing and distribution,
therefore we estimate it to be 75% and our products will be available in all the four companies in the
distribution list and looking at the fact that our population is very small then the products will be
widely available for them. Hence it is estimated to be 95%
Market share= AW * T * AV * R
0.75 x 0.22 x 0.95 x 0.7894
Ms= 12.4%
FS= 12.4 x 520698 x RM 12.00
=64,557x RM12.00
RM =774,684
40
Estimated Profit and Loss Statement (First Year)RM RM
Revenues:Sales 774684
Expenses:Fixed CostMachines 250000Office Equipment 30,000Internet Installation 170Warehose rental 14,000Vans 2 @20, 000 each 40000Registration of Company 2550Rental Deposit 5,000
341720Variable CostCost of Production 20269Distributors 80000Salaries 277200Transportation Cost 20,000Monthly phone charge usage 21,000Rental 60000Insurance 1,500Maintenance of Vehicle 7,200Utilities 25,000Miscellaneous 4,000Internet charges 6,000Office maintaince fee 6,000Marketing expenses 75,000
603169
Total Cost944889
Loss -170205
41
BREAK-EVEN ANALYSISBreak-even analysis is an essential step towards profitability for businesses, to analyse our
two years flow of cash. A model of Block and Hart(2008) was adopted to reflect on the
calculation of our break-even point.
Breakeven AnalysisRM
Sunk Cost 336720Depreciation First Year (10% of the sunk cost) -33672Breakeven Formula Total Cost - 1st Year Depreciation of Sunk Cost
Total SalesBreakeven Formula RM944,889 – RM33,672
RM774,684Breakeven Period 1.176 years
Break-even Break even is a Point where revenues are exactly equal to costs (Holland 1998) At
this point no profit or losses are incurred. Our breakeven period sum of 1.176 years reflect the
potential and ability of Trinker wets company to acquire back and regain our operations capital
from the period we our start-up venture. The break-even sum of 1.176 clearly signify the ability
of our company to attract and retain investors and boost their trust in our company. However to
clearly forecast our operational costs and sales effectively cash-flow model can be used instea
42
CASHFLOW STATEMENTCash flow from Operating activities 2013 2014Cash receipts from customers 820 000 1,234,556Cash paid to suppliers and employees (302 000) (420000)Cash from operations 518000 814556Dividends received 45000 52000Interest received 1500 1500Interest paid - -Tax paid (600) (600)Net cash flow from operating activities 563900 761656
Cash flow from investing activitiesAdditions to equipment (65000) (10000)Replacement to equipment - (2000)Proceeds from sale of equipment - -Net cash flow from investing activities (65000) (12000)
Cash flow from financing activitiesProceeds from capital contributed 100000 135000Proceeds from loan - -Payment of tax (1500) (1500)Net cash flow from financing activities 98500 133500
Net increase/decrease 597400 883156Cash at beginning of period 477,484 1,074884Cash at the end of the period 1,074884 1,958,040
Interest received is the remainder of RM1000000 after using the other amount for startup costs therefore accumulating an interest of RM1500 annually. The cash at the beginning of 2013, is the amount we had at the end of 2012, after paying our suppliers and employees.Tax paid comprises of clearance costs and custom charges to import the olive oil solution.
FUNDING
Funding is a fuel in which a business runs. A business can take different avenues to attain funding, such as banks and investors (Francis & Meda, 2012). Trinker Wets is funded by Tan Sri Dato’ Jeffery Cheah, with an amount of RM1 million. Jeffery Cheah is considered as a super business angel, Fahad (2011, pg 35). Super business angels are characterized as investing early like traditional angel investors but raising funds like venture capitalists. Therefore he fits the position of being a venture capitalist since he has invested on large institutions like the health sector (Sunway Medical) and manages his money growth of new businesse
43
CONCLUSION
Having assessed our financial projections, sales ,and incorporated the industry analysis tool SWOT analysis
to give an insight of its performance and position in the market .Trinker wets ear buds overall is a promising
and potential product that stands a chance of yielding higher returns in the industry. From the two
differentiation strategy which are platform and brand strategy highlight that Trinker wets will be successful
as there is already abundant technology which we as producers will take advantage of it and utilize it to
further elevate our product, moreover our target market seems to be good. Our brand may be new in the
market but its name “Trinker wets” is informative and clarifies to customers what our company stands for
and does.
44