ABSTRACT
This work ascertained the effect of new product development on the growth of brewery firms in Nigeria with a special reference to Guinness Nigerian PLC. There has been a perennial argument on to what extent has new product development been able to achieve specific growth expectations of the firm if the complete innovation. The major objectives is to determine the degree of association between new product development and the consumption rate, profitability, market share and sales volume of Guinness PLC products. To achieve this, the study designed as a survey study used a structure questionnaires to elicit information from the staff and customers of Guinness Nigerian PLC in the Lagos, Benin and Aba. The data was analysed using percentage, bar chart, descriptive analysis and Pearson moment correlation. The empirical evidence shows that developing a new products in a beverage brewery firm is moderately significant on consumption rate, market share and customer satisfaction in Guinness. The other results shows that new product development does not imply profitability but it has a strong impact on the sales volume of the product because people want to taste something new. The study made strong recommendations. The conclusion is that product development keeps the firms alive in the mind of the people.
TABLE OF CONTENTS
Title
Page i
Declaration ii
Certification iii
Dedication iv
Acknowledgement v
Table of Content vi
List of Tables viii
Abstract ix
CHAPTER
ONE
INTRODUCTION
1.1 Background of the Study 1
1.2 Statement of Problem 5
1.3 Objectives of the Study 6
1.4 Research Questions 7
1.5 Research Hypotheses 7
1.6 Significance of the Study 8
1.7 Scope of the Study 10
1.8 Operational
Definition of Terms 11
CHAPTER
TWO
REVIEW
OF RELATED LITERATURE
2.1 Conceptual Framework 13
2.1.1 Concept of New Product
Development 14
2.2 Research Development 15
2.3 Organizational
Arrangement for New Product Development (NPD). 16
2.4 Screening and Evaluation New Product Ideas 17
2.5 Concept Development and Testing 17
2.6 Marketing Strategy Development 18
2.7 Business Analysis 18
2.8 Product Development 19
2.9 Test Marketing 20
2.10 Commercialisation 20
CHAPTER
THREE
RESEARCH
METHODOLOGY
3.1 Research
Design 22
3.2 Area
of Study 22
3.3 Sources
of Data and Method of Collection 23
3.4 Population
of the Study 24
3.5 Sample
Procedure and Sample Size 24
3.5.1 Sample
Procedure 24
3.5.2 Sample
Size Determination 25
3.6 Instrument
for Data Collection 26
3.7 Method
of Data Analysis 27
CHAPTER
FOUR
DATA
PRESENTATION AND ANALYSIS
4.1 Data Analysis and Interpretation 29
4.2 Testing of the Hypotheses 34
CHAPTER
FIVE
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION
5.1 Summary of Findings 71
5.2 Conclusions 75
5.3 Recommendations 78
REFERENCES
LIST OF TABLE
Table
1: Product Awareness by Respondents 29
Table 2: Rating of the new product planning of Guinness Nigeria 30
Table
3: Sales Promotion Increases the
Consumption Rate of
new products 31
Table
4: Impact of new product planning on
the Profitability of
GN Plc. 32
Table
5: Product planning has contributed
to the Sales Volume of
GN Product 32
Table 6:
Experience: What is the experience
of the company’s
workers? 33
Table 7: Does your
company carry out new product planning
always? 34
Table
8: Test Responses on Hypothesis 1 36
Table
9: Test Responses on Hypothesis Two 37
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Guinness Nigeria, a subsidiary of Diageo Plc of the United Kingdom, was incorporated in 1962 with the building of a brewery in Ikeja, the heart of Lagos. The brewery was the first outside of Ireland and Great Britain. Other breweries have been opened over time – Benin City brewery in 1974 and Ogba brewery in 1982. This is the story of a truly successful company
with a rich heritage and a great track record of growth and strong performance.
Guinness Nigeria is not only regarded as an iconic African company, renowned
internationally for its brands of unmatched quality, but also as a company that
believes in enriching the communities within which it operates, through investment and active participation in the positive
evolution of society. Guinness Stout was first exported to Sierra
Leone in 1827 and soon became popular across West Africa. In 1963, Ikeja in
Lagos Nigeria was chosen as the first location outside the British Isles to
brew the iconic dark beer. Two years later, in 1965, Guinness Nigeria was
listed on the Nigerian Stock Exchange. Steady growth in markets for Guinness
Stout and Harp Lager during the next 30 years prompted the building of three
more major breweries in Nigeria. In 1974, the company built a second brewery in
Benin, where it produced Harp lager beer. This facility was later expanded to
accommodate a second stout brewery, commissioned in 1978. In 1982, a fourth
Guinness brewery was built in Ogba, Lagos to brew Harp Premium Lager beer. This
site too, was expanded to include Guinness Stout. Several years later, in 2004,
Guinness Nigeria commissioned a new brewery at Aba, Abia State.
In 2011, the Benin and Ogba breweries were expanded to further increase
capacity and meet the growing demand for Guinness Nigeria products which
include the acclaimed brands: Guinness Foreign Extra Stout, Guinness Extra
Smooth, Origin, and Harp Lager beer. Other brands include Gordon’s Spark,
Smirnoff Ice, Armstrong Dark Ale, Satzenbrau Pilsner, Top Malt, Harp Lime,
Dubic Extra Lager and most recently, Origin Low Sugar. Guinness Nigeria is
committed to enriching the communities in which it operates and plays a leading
role in the socio-economic development of its host communities. To ensure that
efforts can be as effective as possible and are sustainable, the company
concentrates on these focus areas: the provision of clean potable water
(through the Diageo Water of Life initiative), Health and Education.
New product planning is one of the avenues of enlarging the size
of the product port folio of any organization, increasing its sales volume and
enlarging its financial strength. Many organizations seem not to have recorded
much success as a result of depressed economic situation. It is imperative to
recognize the fact that necessity gives birth to invention or innovation,
and for an organization to avoid being forced out of the market, it has to
innovate.
New product planning is important in a competitive market like
that of Nigeria. It determines both the levels of economic growth and standard
of living of the citizens. Most products in the markets today have undergone
changes over times. According to Mr. Roland’s Lecture note, new product has
been seen as the life blood of any organization. This is because seizing new
opportunities as they emerge is a way to increasing profits. This means that a
firm with a successful new product gives it the chance of creaming off large
profit before effective competition develops. Every company must develop new
product because new products shapes the company’s future. Replacement product
must be created to maintain or build sales. Customers want new products and
firms will do their best to supply them. Companies that fail to develop new
products are putting themselves at great risk. Developing and managing products
is critical to organization’s survival and growth. Although several
organizational approaches to product management are possibly the share common
activity functions, and decisions necessary to guide a product through its life
cycle. Product managers coordinate efforts and become the strategic centre for
the product in all markets. Marketing managers focuses on products for specific
market. A venture team is sometimes used to develop new products. Members of
the venture team come from different functional area within an organization and
have authority to execute plans. Product planning requires the coordination of
such functional areas such as research and development, production and
engineering, research and finance, accounting and marketing. Each of these
areas of departments has functional authority over some aspects of the
product:
1. Lack of research or the inability of the management to find
out what the consumers need.
2. Failure to find out
the government rules and regulations
3. Lack of training programme; Failure to train marketing
personnel for new product and new markets.
4. Lack of Capital: The
company cannot raise fund needed for new product development when there is new
ideas. From the marketing standpoint, the socio-economic justification for the
existence of any business organization is the satisfaction of customers’ needs
and wants. The organizational survival over-time depends on its ability to
create loyal customers because its products match the needs of the buyers.
Thus, the organization meets its basic responsibility to the society through
its product offerings. For a firm to compete effectively in the dynamic and
competitive business environment and achieve set goals in terms of
profitability, high sales volume, and large market share, it must continuously
develop products and product lines to satisfy the constantly changing desires
and needs of customers (Grundiche, 2004:168).
1.2 Statement of Problem
In the process of planning and developing new product from local
raw materials, Guinness Nigerian Plc is having its second experience in new
product development, the first being with Merit lager beer in 1986. The
complete withdrawal of merit lager beer from the market barely two years after
the launch raises serious doubts as to the success of the company in the
development of new products. In the light of the company's first experience
with merit lager beer, these could have been considerable apprehensive about
the survival of Origin in the market. Origin as an alcoholic and medicinal drink
has scored considerable, success in the market since its introduction in 2014.
It is assume that every company must carry on new product development, if for
no other reason than that some existing company product will enter the decline
stage. Replacement product and business must be found in order to maintain or
build the company's sales. Furthermore, customers want new products and
competitors will do their best to supply them. A Booz, Allen and Hamilton
survey reported that seven hundred companies expected that 31 percent of their profit
would come from new products introduced in the next five years.
A Company can add new products through acquisition and for new
product development. The new product route can take two forms. The Company can
develop new products in its own laboratories. Or it can contract with
independent researchers or new-product-development firm to develop specific
products for the Company. Many Companies pursue growth through new product
development.
1.3 Objectives of the Study
The major objective of the research is to study measure the impact
of new product planning on the growth of Guinness Nigerian PLC.
The other specific objectives are to:
1. evaluate the effect of New product Development on the market share
of Guinness Nigeria PLC’s product.
2. determine the effect of new product development on the sales
volume the Guinness PLC’s product
3. new product development influences the profitability of Guinness
PLC.
1.4 Research Questions
This study seeks to provide answer the following research
questions:
1.
What is the
effect of new product development on the market share of Guinness PLC products?
2.
Does new
product planning affects the profitability of Guinness Nigeria?
3.
Does Product planning enhance the sales volume
of Guinness Nigeria product?
1.5 Research Hypotheses
The following hypotheses was formulated
for this study
Hypothesis One
HO1: Product planning has no relationship with the sales
volume of GN Plc Product.
Hypothesis Two
HO2: New product development of Guinness PLC does
not influence the market share of Guinness PLC.
Hypothesis
Three
HO3: Guinness PLC new development does not significantly effect the
consumption rate of Guinness product PLC.
1.6 Significance of the Study
This research is counted on the impact of new product planning on
the growth of a firm, a study of Guinness Nigeria Plc. This research work will
go a long way in helping the following;
The Researcher: - It
will enable the researcher to ascertain the problems involved in the course of
developing a new product.
The Firm: - This
research work will help the Guinness Nigeria Plc to identify the problems
involved in the development of a new product and also suggests the everlasting
solution to them. It will also help the firm to increase its sales volume,
profit and market share.
The Society: - This
project work has gone deep to assist the economy by increasing Job
opportunities for the young graduates. It will also help to develop marketing
in the economy environment both domestic and international.
Following the 2013 industrial policy on the local sourcing of raw
materials for the Brewery Industry, new product development has become a
central focus of all the Breweries in Nigeria. It is not just development of a
product but such product must have the capacity to provide both physical and
psychological satisfaction. The processing of the local raw materials for the
beer industry involves a lot of research and cost. For example, the technology
developed in Nigeria for merit lager beer has built on and GNPLC has been able
to tap the extensive resources of the Guinness Brewing Worldwide
research-centre in Ireland. Brewers and scientists from Guinness Brewing
world-wide and Guinness Nigeria PLC have worked together as a team to produce
Guinness stout and Harp lager beer to the same traditional excellence by using
only maize and sorghum.
In view of these constraints, many Breweries have opted for bitter
drinks production as beer is becoming too costly for average consumer's packet.
Bitter drinks has become a class of its own occupying the gap between outright beer
brands like Guilder.
The pathway of NPD from the laboratory bench to the ultimate
consumer is a complex and difficult one involving manufacturing, commercial,
financial and marketing forces. It is a well known fact that over 90% of all
new product launched end in failure. The relevance of the topic become much
more important as the Nigeria Brewery Industry look up to the development of
new products for their survival. The blanket ban on advertising of alcohol on
electronic media in Nigeria has placed the Brewery industry in a dilemma as
most of their activities now go unnoticed.
There is no doubt that advertising performs both informative and
persuasive role in industry. Although there is yet no conclusive research to
demonstrate this.
An examination of the NPD process leading to the launching of new
Guinness products would guide government in policy formation in the future not
only for the Brewery Industry but for the entire manufacturing sector.
The study would also contribute to academic research as it is
likely to open up discussions on the development of new products in Nigeria.
Ultimately, the result of the study and the attendant discussion are likely to
provide a base for the development of a general new product model which takes
care of the unique circumstances of developing economies such as Nigeria.
1.7 Scope of the Study
The study was limited to the experience of Guinness Nigeria PLC.
This is because the company occupies the position of market leader in some of
their product (Stout) and also the market challenger (Guinness Malt)
in another product line. Above all the company is
doing well in the Nigerian brewery industry and remains the great brewers of
the best stout drink in Africa (Guinness Stout) since 1759.
The entire new planning process leading to the launching of Origin
drinks by Guinness Nigeria was examined. The origin drink is a herbal drink
with a sweetened fruit drink that is alcoholic. The product enjoys a perfect
market taste leader in the fruit herbal drink in Nigeria.
The geographic scope is deliniateed to a specific area and people.
1.8 Operational
Definition of Terms
Promotion: Means activities that communicate the merits of the products
and persuade target customer to buy it.
Market Share: The proportion of a market which preferred to buy a
company’s product (usually in percentage).
Promotional
Mix: This is the effective
combination of the components of the promotional tools to achieve the
promotional objectives.
Optimal
Promotion Strategy: The
combination of different promotion tools such that maximum benefits or returns
is achieved.
Product Life
Cycle: This is different stage
a product pass through during its life time.
Consumer: The end or actual users of a product or service.
Metropolis: This is the Chief or capital city of a state or country or
zone.
Marketing
Mix: This consists of four (4)
major variables in marketing, which serves as pillars that makes marketing to
stand well; they are product, place, price, and promotion. It is also called
the 4P’s and marketing elements
Marketing Strategy: This is the process of determining a target market and choosing
the marketing mix variables needed to maximize satisfaction of those consumers.
It is also the set of objectives which an organization allocates to its
functions in order to support the overall corporate strategy, together
with the broad methods chosen to achieve these objectives.
Innovation: This is the process of producing something new inform of product
or service that someone or any company has never produced it before. It is also
refers to any good, service or idea that is preserved by someone as new.
Research: This is an organized way of finding valid or useful information
about a particular domain or phenomenon in an environment with a set of
objectives. It can also be described as a thorough investigation or in-depth
search for the causes of any problem within intention of preferring
solutions.
Commercialization: This is one of the product development stages in which the
product is first submitted to the market and thus commences its life styles. Kotler Philip (1980).
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