Critical Success Factors Involved in the Launch of a New Product in National and International Market: Focus on Indian Paint

Companies

AKANKSHA GOEL

MSc. INTERNATIONAL BUSINESS

Critical Success Factors Involved in the Launch of a New Product in National and International Market: Focus on Indian Paint Companies

BY AKANKSHA GOEL 2008

A Dissertation presented in part consideration for the degree of MSc. INTERNATIONAL BUSINESS

ABSTRACT This research seeks to extend the earlier work done by various researchers and authors that examined the factors involved in the new product launch. In particular, the critical success factors involved in new product launch and the internationalization of the firm to launch the product in the foreign market is examined. The research is done in the context of the Indian Paint industry. The central research methodology for the project uses a qualitative approach involving the interviews. The interviews were taken from Asian Paints Ltd., Berger Paints and Rajdoot Paints. The interviewees were asked certain specific questions regarding the new product launch in national and international market. The interview explored the new product development and the launching tactics of these companies. From the interviews it was made clear that the companies follow all the main strategies that are required in the new product development and the launch of the product which proves out to be beneficial. But there are certain factors that companies do not take into consideration that the researchers talk about. These come out to be recommendations for them. Some of the limitation of the research is also covered which would be really helpful for the further researchers.

ACKNOWLEDGEMENT This dissertation is one of the most challenging projects that I will ever undertake and I would like to take this opportunity to thank all the people who contributed to the successful completion of my dissertation. I would like to express my sincere gratitude to Ms Deborah Robert, my supervisor, who served as a mentor for me throughout the dissertation schedule. I would like to thank her especially for her patience and time, for her constant encouragement, advice and guidance during the entire period of my dissertation. Her support was indispensable in completing this dissertation. It was truly a great learning experience working with her. I would also like to thank other module supervisors, with who I worked during my masters degree, who imparted knowledge about various other things which proved very beneficial for this dissertation without which this dissertation would have been incomplete. My sincere thanks are extended to all the respondents who agreed to participate in the interviews and share useful information and knowledge in spite of their busy schedules. I am extremely grateful to my parents for their constant support and loving encouragement, and for always believing in me. My special thanks to Rohit Mittal and to all my other friends in Nottingham, for their support, love and patience and for making this year memorable. Above all, I would like to thank God The Almighty for rendering all his blessings on me.

TABLE OF CONTENTS CHAPTER 1 - Introduction ....................................................................................... 7 1.1) 1.2) 1.3) 1.4) Indian market and the New Product Development ....................................... 7 Indian Paint Industry ................................................................................... 9 Project Objectives ..................................................................................... 10 Organization of the Report ........................................................................ 11

CHAPTER 2 - Literature Review ............................................................................ 12 2.1) Introduction .................................................................................................. 12 2.2) New Product Development ........................................................................... 12 2.2.1) New Product Development Process ........................................................ 13 2.3) Key Success factors in New Product Launch ................................................ 17 2.3.1) Strategic Decisions ................................................................................. 18 2.3.2) Tactical Decisions .................................................................................. 21 2.4) Internationalization ....................................................................................... 23 2.4.1) Deciding whether to go international ...................................................... 24 2.4.2) Deciding which market to enter .............................................................. 27 2.4.3) Deciding the mode of entry .................................................................... 28 2.4.4) Developing International Marketing Strategy: Standardization or Adaptation........................................................................................................ 29 2.4.5) International Marketing Operations ........................................................ 31 2.4.6) Role of Culture in International Market .................................................. 35 2.5) Chapter Summary ......................................................................................... 38 CHAPTER 3 - Methodology ................................................................................... 40 3.1) Introduction .................................................................................................. 40 3.2) Research Objective and Question .................................................................. 40 3.3) Research Method .......................................................................................... 41 4

3.3.1) Qualitative vs. Quantitative Research .................................................... 41 3.3.2) Why Qualitative Research ...................................................................... 42 3.3.3) Interviews .............................................................................................. 43 3.4) Stages of Conducting the Research ............................................................... 45 3.5) Sampling ...................................................................................................... 47 3.6) Data Analysis ............................................................................................... 48 3.7) Limitations of the Research .......................................................................... 49 3.8) Chapter Summary ......................................................................................... 50 CHAPTER 4 - Findings and Discussion .................................................................. 51 4.1) Introduction .................................................................................................. 51 4.2) New product Development Process ............................................................... 52 4.2.1) Idea Generation, Screening, Concept Testing ......................................... 52 4.2.2) Business Analysis, Product Development, Market Testing and Commercialization ........................................................................................... 54 4.3) Critical Success Factors in New Product Launch........................................... 56 4.3.1) Strategic Decisions ................................................................................. 56 4.3.2) Tactical Decisions .................................................................................. 58 4.4) Internationalization ....................................................................................... 60 4.4.1) Why to enter, Where to enter and How to enter ...................................... 60 4.4.2) Standardization and Adaptation .............................................................. 62 4.4.3) Pricing, Promotion and Distribution in International market ................... 63 4.4.4) Role of Culture in International market................................................... 66 4.5) Chapter Summary ......................................................................................... 68 CHAPTER 5 - Conclusion....................................................................................... 69 5.1) Introduction .................................................................................................. 69 5.2) Recommendations ........................................................................................ 69 5

5.3) Limitations and Further Research ................................................................. 71 5.4) Managerial Implications ............................................................................... 72 5.5) Summary ...................................................................................................... 73 Bibliography ........................................................................................................... 74 Appendix................................................................................................................. 82 Appendix I A Brief overview of Asian paints, berger paints & rajdoot paints .... 82 Asian Paints: .................................................................................................... 82 Berger Paints: ................................................................................................... 82 Rajdoot Paints: ................................................................................................. 83 Appendix II - Interview Questionnaire: ................................................................ 84

CHAPTER 1 - INTRODUCTION 1.1) INDIAN MARKET AND THE NEW PRODUCT DEVELOPMENT

India has changed drastically in the last one decade and the progress of India was neither effortless nor trouble-free, but it was definitive. Within the five years, India changed the attitude of its economy. India is not the same as it was a decade before, and it is doubtful that it will turn back now. India is one-sixth of the humanity and is the fifth largest economy in the world. It is the second largest amongst the emergent economies, and is the first immense, composite society to successfully transit from a socialist economy to a market economy. The growth of India has been bouncy but firm. Since 1991, India has emerged as the most favorable and democratic mass market in India (Bullis, 1997). Since the year 1995, the GDP of India started growing and in the same year GDP exceeded Rs. 700 crore (Rs.7 trillion). The growth of GDP was 5 percent and this was due to the 8 percent industrial growth. A new generation of entrepreneurs comfortable with market economics has arisen. Employment and poverty have reduced and the wage rate has increased (Mujamdar, 2004) As Indian economy has progressed a lot, the purchasing power of people has increased and in relation to that the industries have also increased. The modernization has attacked Indian society and consequently the taste and preferences of people have also changed. This persuades the industries to launch new products in order to appeal them. Several big industries of India now take the risk of developing the new products in order to maintain the pace with the fast growing Indian economy. As stated by Panwar and Bapat (2007), for the organizational growth, new product launch is a very 7

accepted strategy. To raise the market share and to attract more and more customers new products are launched in the market. Customers are served with different varieties of goods as the competition is increasing. The Indian market is also following the tactic of new product launch in order to differentiate it from others. The drastic changes in the consumption and the consumer pattern jointly with the expansion of international brands/ products have persuaded industries to modify their method of doing a business, particularly its new product development (NPD) (Chaturvedi and Rajan, 2000). Liberalization in foreign exchange dealings, market driven exchange rates, liberalization of imports, measures of export promotion have all been undertaken with this aim of integrating the Indian economy with the world economy. These procedures have had influence on the competitiveness of the Indian products. There have been major alterations in the marketing and the business atmosphere of the country (Mutiah, 2006). Now, as the country has progressed to a large extent, it would not be wrong to say that it holds the assets which prove to be beneficial while developing a new product. Asian market is not limited to only being the large market when developing the new products. Beside the large number of latent consumers, it provides several other players of NPD. It includes: suppliers, contractors, R&D specialists, designers, manufacturers, packaging, firms, distributors, and retailers (Ozer, 2006). In this research the main focus is given on the Indian paint industry, i.e. their way and method of developing and launching the new products. As the economy of India is on boom even the Paint industry is not behind. Not much of the research is done in the context of this industry. This study covers all the major aspects that are involved in Indian paint industry in the context of new product launch. 8

1.2)

INDIAN PAINT INDUSTRY

The Indian paint industry has lately completed its 100 years of manufacturing. The history of modern paint manufacture of India starts from 1902, when the first paint factory, Shalimar Paints came into horizon. The Indian paint industry is projected to be worth of approximately USD 1.8 billion. The total production of the paint is in the area of 900,000 metric tons. Apparently the Indian paint industry is the only sector of the Indian chemical industry that has been on the rise for the last three years. It has been recorded that the growth of the industry has been in double-figures. The per capita consumption of paint in the Indian market is noticed to be 0.8 kg or 800 grams. This consumption rate is much smaller to that of South-East Asia where the consumption is about 4.3 kg which is the total of the world average of 22kg. However as recorded by the Indian paint industry, the growth rate has been exceptionally promising. The demand and the consumption of the paint in the last 8 years have shown an increasing trend and the last 3 years have shown growth rates in excess of 10% (Raghavan, 2006). The paint industry in India can be distinguished by two segments- the organized (large-scale sector) and the disorganized (small-scale sector). The large sector is managed by 4 companies: Asian paints, Goodlass Nerolac paints, Berger paints, Rajdoot paints and ICI paints. These companies have the maximum market share and have know-how that outbalances all products and all applications. The small-scale sector includes around 2,000 players and they all have know-how in their specific areas. The organized sector has 55-60% of the market share (Ebsco Host, 2005). As discussed in the above section, new product launch has become the critical success factor for the industries. Paint industries are not far from this strategy and even it 9

adopts the same strategy. Chemical technology and the information play a key role in shaping the future of the paint industry in the terms of the progress and growth. As, the consumers knowledge is increasing as well as the severe internal and external competition is rising the industries are in the pressure of being more innovative, cost conscious and efficient in all its operations. Customers look for the fresh solutions to their problems and in addition with better value for their money. This persuades the paint industries to introduce products of some value with the lower cost. Some new types of paints launched by the companies to attract more customers are; washable odorless interior paints, water based enamels, and anti-bacterial paints. Apart from these, companies have even launched paints with long life guarantee (Mishra, 2002). Below is given the main objectives of doing this research. It gives the important questions that will be covered in this dissertation. 1.3) PROJECT OBJECTIVES

The main objective of this project is to do an exploratory study of the New Product Launch. The objectives can be summarized as: To examine how the new products are developed with the focus on the Indian paint industries. To determine critical success factors involved in the launch of a new product in the context of Indian paint industries. To determine the strategies adopted to internationalize after the successful launch in the national market in the context of Indian paint industries. In this project, the launch of the product at both the national and the international basis is studied. The products that are focused in this project are consumer durables.

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As the focused industry here is paint industry, in India the maximum consumption of paint is by the household sector. The particular sector uses paint for the decorative purpose.The decorative segment is estimated to have grown by 12-13% in financial year 2000-01 (Mishra, 2002). As the consumer market is been increasing, here business to consumer (B2C) marketing is studied. 1.4) ORGANIZATION OF THE REPORT

The report is divided into the five chapters. The first chapter is the Introduction of the report which provides the brief details about the emerging Indian market, new product launch in the Indian market and the overview about the Indian paint industry. Chapter two is the Literature review which contains the review of authors in the field, covering diverse literature in the area of new product launch. This chapter covers the critical success factors involved in new product launch, internationalization after the successful launch in domestic market and the role of culture. Chapter three identifies the research objectives and questions and also describes the methodology employed in this research, which guides the data collection and analysis. Chapter four explores the new product launch strategies of the Indian paint companies. Findings from the interviews are quoted and compared. In this chapter the analysis of the findings with respect to theories in chapter 2, literature review is also discussed. Chapter five provides recommendation to the Indian paint companies based on the findings and the opportunities. This chapter also states the limitations of the study. In the end it concludes the entire project and summarizes the entire research. 11

CHAPTER 2 - LITERATURE REVIEW 2.1) INTRODUCTION According to Adavikolanu and Korrapati (2006) the successful launch of the new product in the market is very important in determining the growth and success of any company. As the global economy of 21st century is facing increased competition and internet technologies have advanced, it has become very crucial for any company to launch new products in the market. As stated by Wind and Mahajan (1997) The high incidence of new product failure has been an accepted truth for long. The failure of the product launch has called for more marketing research, marketing orientation and better marketing launch. A new product could be highly innovative, incorporating advanced technologies that render them superior to competitive products, but still fail due to poor launch (Lee and OConnor, 2003). Even though several researchers have focused on finding out the strategies of launching a new product, the bond between the new product development and the launch strategy has not been entirely understood. The focus of the review is to explore the marketing strategies for the launch of a new product in both national and international markets from the viewpoint of eminent authors and researchers. 2.2) NEW PRODUCT DEVELOPMENT According to Craig and Hart (1992), New product development is not the only term used to describe process by which a new product is developed. In the words of authors, the term used depends upon the field where it is used. NPD is used by the researchers from the different fields. It is used by those in management, marketing,

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research & development and those from engineering. According to Trott (1998) new products carry out different roles for different companies at different times. The author relates new product with the innovation and states that new product development process is the sub process of innovation. Many studies have been done which says that the success or failure of NPD is related to critical success factors (CSF) (Afonso et al, 2008). According to Lester et al (1998) there are five CSFs that are related to success or failure of NPD, while Poolton and Barclay (1998) classified six CSFs which are related to NPD.In contrast to both, Cooper and Kleinschmidt (1995) studied 100 of cases to find out the difference between winners and losers in the process of NPD. While the different authors have related different types and numbers of CSFs with NPD, it has become complex to recognize universal set of CSFs for the NPD. The main process of developing a new product is described below which proves out to be profitable for the companies. This is a systematic way of developing a new product.

2.2.1) NEW PRODUCT DEVELOPMENT PROCESS The development of a new product includes a series of steps or procedures which an enterprise takes up in order to conceive, design and commercialize a product (Bradfield and Gao, 2007). According to Crawford and Benedetto (2006) various authors refer to the product development process as stage-gate process. The term gate here refers specifically to evaluation tasks between the stages, or phases. In other words, during these stages

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the crucial decision of GO/NOGO is made. The following are the stages of the product development process. Idea generation: The new product ideas are generated on the basis of the information collected from the current or the potential users. It largely depends on the type of information that is collected and the respondents from whom it is collected. Mostly, the information is collected from the users of the target market (Lilien, 2002). The most essential activities that are involved in the idea generation stage are problem identification, problem structuring and idea formulation. This stage involves observing the gaps and flaws with the present nature of thinking (Kijkuit and Ende, 2007). Screening: During the process of idea screening the Go/NO-GO decision of the new product development is made. In order to undertake the successful screening, it is crucial to present the brief description of particular idea which includes the target customers, rival brands, market size etc. (Keith and Ulrike, 2000). The process of screening should make certain that the new product should fit within the firms overall corporate and marketing strategies (Adrian, 2000). Concept testing: The main purpose of the concept testing is to present the early opinion from the market regarding the new product and the extent to which it appeals the market before it is even developed. The main purpose of the concept testing is to: (1.) eliminate the poor response (2.) generate the crude estimate of the sales (3.) develop further the original idea (Lees and Wright, 2004). The concept testing helps in locating the best design, positioning, pricing, and manufacturing of a new product (Dahan and Mendelson, 2001)

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Business Analysis: The process of business analysis is followed in order to evaluate if the concept of the product can be made into a profitable scheme. The key reason of this analysis is that the product should at least breakeven over a period of time (Adrian, 2000). In the business analysis gate the forecast of the sales and the level of profit of the new product is made. At this stage, companies make the use of sales criterion instead of the product-level criterion (Hart et al, 2003). Product development: As Jobber (2001) has cited in his book, at the stage of product development, the concept of a new product is transformed into the physical product. At this stage, the task is divided to multi-disciplinary project teams so that the product is brought to the marketplace. The sole motive is to combine the skills of designers, engineers, production, finance and marketing. Market testing: Market testing relates to the process of activities that are vital to test the physical product and the launch strategy in the target market. It involves the task of answering what, where and why to launch and the task of marketing mix decision, i.e. how to launch (Langerak, 2004). Market testing in the NPD process gives away the crucial information about the customer adoption. It also involves the customer feedback while launching the product (Anthony and Benedetto, 1999) Commercialization: This stage represents the organizations commitment to a fullscale launch of the new service (Cowell, 1988). This stage includes both the execution of operations plan and marketing launch plan. At this stage the performance of the product is reviewed. To measure the performance of the product, the current available data of revenue, profits, costs, timings and expenditures are compared with that of the projections. The decisive assessment of the projects strengths and weakness is also made (Cooper, 1990) 15

Source: Craig and Hart (1992).

As the above authors state that with the above process, new products can be launched successfully, Baker (2002) states that, this model does not focus on the external parties, who can have a major impact on the success of the NPD. Research by Littler et al, (1995) reveals that industries like telecommunications, suppliers, customers and even competitors have a major impact on the success of the products. Further to it he adds that different novel products have different characteristics and requirements. Therefore, this standard set of criteria may not be suitable for evaluating all the novel products. Stage gate model is likely to get meticulous because of the manner in which it is implemented (Sethi and Iqbal, 2008). Once the product is developed, the important factor arises, which includes, what to launch, why to launch, where to launch and how to launch. These are the factors that 16

decide the success of the product. If implemented properly they prove out to be very profitable for the company.

2.3) KEY SUCCESS FACTORS IN NEW PRODUCT LAUNCH According to Anthony and Benedetto (1999), Recent studies examining the product launch literature have identified two broad categories of launch decisions: strategic and tactical launch decisions. Authors stated that the strategic decisions take into account the issues related to product and the market. It is concerned mainly with the innovativeness of the product, the kind of market the product is launched into and the competitive stance or the positioning whereas tactical launch decisions involve marketing mix elements which include pricing; product and branding; advertising and promotion and distribution. Anthony and Benedetto (1999) even stated that, in addition to activities related to strategic and tactical decisions, information gathering throughout the NPD process is critical. The authors further state that the regular information and alterations of both marketing and production plans are necessary throughout the launching of the product. In this project the main two decisions are discussed.

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Source: Hutlink et al (1997).

2.3.1) STRATEGIC DECISIONS Strategic launch decisions include what to launch, where to launch, when to launch and why to launch. According to Rubio and Redondo (2005), generally the strategic decisions are made during the infant stage of development and at times before its development which is then continued right through the process. The strategic decisions are difficult to change at the later stage, and if any changes are made, it proves out to be expensive. There are four strategies that cover the strategic launch decision: 18

Product strategy: According to Hutlink et al (2000) the tendency of a large number of expensive, complex and technical items, together with more rational decisionmaking processes and multiple buying influences, intensify the need for a new product to deliver innovative or unique features to perform unique tasks. According to Cooper and Kleinschmidt (1995) the more ground-breaking the product is, the more successful it is. The author further states that, product uniqueness is positively related to the five of the seven performance measures, which includes: success rates, profitability rating, domestic market share, impact on the firm and technical success rating. However, Martenson (1994) states that the uniqueness and innovativeness of the product is not long lived in consumer market and it can be withdrawn very quickly because of its failure. Market strategy: According to Cooper and Kleinschmeidt (1987), a clear knowledge of the needs and wants of the customers and the market nature is very important in the success of the new product. The author states that, skipping the market orientation in the innovation of product, failure to undertake the desired market assessments and not focusing on the customers result in a disaster. As said by Hutlink et al (2000), careful targeting, avoiding head-on clashes with competitors, and placing the new products into the growth markets have been hallmarks of recent new product successes. The importance of market strategy stated by Cooper and Kleinschmeidt does not hold true in all the cases as, they only studied 252 industrial products and no consumer products. So, it would not be appropriate to generalize their statements.

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Competitive stance: According to Hutlink et al (2007), the competitive instance of new products at the time of launch has been shown to influence success. The author further states that, where the markets are determined with very few buyers, extreme sales competition enhances the attractiveness of the market where demand is growing or where comparatively there are not much buyers. Further Adams (1994) states that, most of the consumer brands are just the extension of the brands or the modifications. These products are mostly launched in the full-grown market where competition already exists and is quite high. Cooper and Kleinschmeidt (1987) do not give much importance to competitive situation and says that, several studies disclose that the competitive situation has not much to do with the product success and failure. He reveals that in spite of the competitive situations product can lose and win. In his words New products succeed not so much because of their external environment, but because of what project teams and leaders do. Firm strategy: According to Hutlink et al (2000), the final set of strategic decisions describes the firms overall strategy towards NPD which includes the drivers of NPD, i.e. if they are market or technology based, if the efforts of NPD follow cost reduction, innovation or imitation and the objectives of the development project. The author further states that the consumer products which are new are mostly launched in the markets which are old and developed, where competitive rivalry is based on a number of dimensions rather than predominantly focusing on technology. After the decision regarding what to launch, where to launch, why to launch and when to launch is taken, the important decision about how to launch is taken.

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2.3.2) TACTICAL DECISIONS Tactical launch decision includes how to launch. According to Rubio and Redondo (2005), tactical decisions are made after the product is physically and conceptually developed. Any changes can be made during the final stage of its development. There are four tactics that cover tactical launch decision: Product tactics: Hutlink et al (2000) propose that at the time of the product launch, the product decision is related to the policy of the branding and the breadth of product versions introduced. He further states that in the consumer marketing, branding is considered as a very important mean. Jobber (2001) supports the above statement and says that if a brand is built effectively then it can obtain the advantages of premium prices, achieving distribution more readily, and sustaining a high and stable sales and profits. Lambkin (1988) also states that the new firms presented a broader product line and they gained more market shares and more profit as compared to their rivals. Pricing tactics: According to Hutlink and Hart (1998), Pricing a new product, at the time of the launch, is an integral element in its appeal (or lack of appeal). As stated by Hutlink et al (2000), the pricing of a product can be a good direction towards the quality of the product, its benefits and its uniqueness. According to Monroe, 1990 (see Baker, 2000) price generally accomplishes two functions: it gives a hint towards the sacrifice the consumer has to make to obtain a product and it directs towards the product quality. Wills et al (1973) has the similar view and states that the price has two allied meanings for the consumers: the cost which he has to bear and the intrinsic worth. Promotion tactics: Promotional activities play a major role in the success of a product launch. The main aim of the promotion is to distinguish the product from the 21

rivals. As the competition can not be avoided promotion has become very necessary. According to Hutlink et al (2000), the total amount of money spent on the promotion has shown to impact the performance of new product introduction. Beard and Easingwood (1996) reveal that the investment that is made in the promotion of a product is very essential and is worth it. They state that for a consumer product mass advertising channels are used for promotion. However, Debruyne et al. (2002) states the new products on which lot of promotion resources have been spent, encounter more competition. Distribution tactics: According to Hutlink and Hart (1998), distribution is vital to gain the trust of consumers and to sale the product in the market, as it governs the availability of new products to customers.According to Goelho, Easingwood and Coelho (2003), the better is the channel management the better would be the performance of the channel in the long run. Bowersox (1990) suggests that there are three levels in which the customers can be served: availability, capability and quality which are all related to the distribution. However, Lambkin (1998) proposes that ground-breaking companies which have good return on sales and market share exhibit that it has a good customer service, but these customer services are not particularly dependent on the distribution. As it can be seen from the above discussion that the tactical decision which includes marketing mix is very essential while launching a product, which the researchers have even proved, but it has some limitations also. Van Waterschoot (1992) summaries them as: 1. It focuses on what marketers do to consumers rather than for them. 2. It is externally directed and ignores the internal market. 3. It says nothing about interactions between the mix variables. 22

4. It takes a mechanistic view about markets. 5. It assumes a transactional exchange rather than a relationship. After the firm launches the product in the national market, it tries to approach the international market. But not all the firms want to enter the international market, as; the internationalization is not easy and does not prove out to be profitable at all the times. A firm has to be well established in the domestic market before it can approach the international market. 2.4) INTERNATIONALIZATION The term internationalization refers to the process of increasing involvement in international markets. The process of internationalization involves the series of incremental stages where the firms gradually involve in the international business. As the firms adopt the process of internationalization, they commit the greater resources to the foreign market. The firms first establish themselves in the home market before they go for international strategies (Bell, Crick and Young, 2004). As stated by Sharma and Blomstermo (2003), firms first develop rapport with the domestic market by producing the desired products and services for that particular market. Expansion in foreign market means carrying out the knowledge and the practices of the home market. Once a firm finds itself strong and experienced enough, it tries to approach the international market. There are various reasons which persuade a firm to launch the products in international market. Some of the main reasons are discussed below.

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2.4.1) DECIDING WHETHER TO GO INTERNATIONAL There are several reasons for internationalization, but in the long run the aim of all the firms remain same, i.e. to grow and generate more profits. When looking more specifically, the drivers for internationalization can be divided into proactive and reactive reasons. Czinkota et al (2005) describes proactive drivers as stimuli that generate the firm-initiated strategic change and the reactive drivers as a set of purposes that persuade the firm to react to changes created by the outside firm. Proactive Motives According to Genestre et al (1995), the most important motivation for a company to go to international market is the profit and the growth goals. There is the likelihood for the firm to take up number of activities if it aspires to grow and progress, for example, seeking for new possible customers and markets in effort to accomplish its goal of increased profits. However, the companies initially can encounter many problems. There actual profit and the estimated profit can differ. The reason behind this could be that, at the initial stage, for its operation, the company might have to spend heavily which in turn leads to low initial profit. The companies should therefore expect long term profits than short term profits (Hollensen, 2004). Development in technology and the advancement in operation system can be one of the strongest drivers for the firms to globalize. The technological advancement has transformed the very traditional companies into modern companies, which is the key for the growth (Horn, 2002). However Hill (2005) stated that the companies may encounter some problems in the field of sales and marketing, which results in the

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ineffective communication between the company and the customers about the product. Another proactive reason that has an important impact on the decision of a company to internationalize is the managerial urge, i.e. the desire and the enthusiasm of the management to globalize and their motivation. Right attitude is very important for internationalization (Saarenketo, 2003). However Burpitt and Rondinelli (2000) state that the decision of the company to internationalize is usually taken by the owner of the company. His/Her decision on the other hand is based on the overseas experience and the observation about the growth and profitability. In contrast, large scale companies that constitute the experienced and trained staffs make decision among a special decision making unit. As stated by (Antoncic et al, 2007) the more the entrepreneurs possess skills of international business, the more they tend to internationalize. Crant (1996) suggests that the individuals and firms with proactive motives have better qualifications to create new prosperous ventures since they create their own competitive environment, identify new opportunities and act upon them with persistence. It is possible for them to achieve high returns if they are being fast and first to enter the market. Reactive Motives Competitors from both the national and the foreign markets are considered important factors persuading the companies to internationalize. Companies tend to respond to the moves of their competitors because they may fear of losing their market shares in both the national and the foreign markets to their rivals. One aspect of the global

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competitive environment is that it is increasingly difficult to evaluate competition in national terms (Horn, 2002). Some companies enter the home market of their competitors in order to retaliate as well as to reap the benefit of economies of scale (Yip, 2000). However the study of Nakos (2004), reveal that the following the competitor is not an important consideration for the firms. They have numerous competitors in the markets and thus they do not pay attention to the actions of other companies. The growth rate of the international market could be an important driver in persuading the firms to enter the international market. Even when the home market is mature, due to the processes of overseas and the slower process of diffusion of product, the international market may continuously grow (Elango, 1998). Many companies are forced to seek new markets and to spread their sales in different regions because of the reduced demand in the domestic market. Companies with the special product targeting the niche customers in different countries are good example for this. The market saturation and the declining stage of product life cycle is positively related (Nakos, 2004). Some of the main factors adopted by company are shown in the diagram below:

Internationalisation
Saturated domestic market Small doemstic markets Low-growth domestic markets Customer drivers Competitive forces Cost factors

Source: Jobber, D. (2001).

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Once a firm decides to approach international market, it even has to make decision regarding the type of market that it should enter. This is discussed below.

2.4.2) DECIDING WHICH MARKET TO ENTER After the firm decides to go international and launch its products, the main issue that arises in the front of it is the type of market that it will enter and launch its products. Johanson and Vahlne in 1977 developed a model known as Uppsala model. The model states that the choice of market is an important decision of the firm and it occurs at the time when the firm decides to go abroad. The theory rests on the assumption that the foreign market is more or less distant from the home market. The model emphasizes on the psychic distance. The psychic distance is defined as, the sum of factors preventing the flow of information from and to the market. According to Chowdhury (2006), these factors include social, cultural, legal, political and economic characteristics. As suggested by the model, the firm expands first into the market which are psychically close, and into more distant markets as they gain more practical knowledge (Johanson and Vahlne, 1977). Thus, it states that the markets where the companies do not feel too confident, they are unwilling to invest resources and make commitment to it. The concept of psychic distance was however criticized by Axinn and Matthyssens (2002), the Authors state that the concept implies that the firms begin to enter in the market which is similar to their market and later on invade markets with successively greater distance. However, the e-commerce is expanding in the different markets irrespective of the culture and geography.

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After the decision has been taken as to the type of market to enter and launch the products, the next issue that arises is the mode of entry. The type of entry is based on the type of firm, the product that it is launching and the type of market where it is launching the product.

2.4.3) DECIDING THE MODE OF ENTRY The internationalization process has been proposed by Dunning. Dunning developed a theory known as Eclectic theory. The theory says that the firm enters a foreign market by whatever means are most appropriate to the firm. The theory further states that the mode of entry is based on the firms particular benefit above its rivals, both at the home and overseas, and the entry method is decided without essentially going all the way through the in-between stages. For example: If a firm is strong in franchising, it will enter the foreign market through franchising, rather than exporting or licensing (Blythe, 2006). According to Agarwal and Ramaswami (1992), the Dunnings theory focuses on three components: ownership, location and internalization advantages and these three modes prove to affect the mode of entry that a firm chooses to enter a foreign market. As the findings of Williamson (1995) suggests, transaction cost analysis (TCA), is widely used in international entry mode research. According to the TCA framework, there are three factors that influence the decision of the mode of entry: asset specificity, uncertainty, and frequency. However, other authors and researchers have different opinion regarding this and they do not entirely agree with it. The research of Brouthers and Hennart (2007) reveals that, the majority of the TCA based entry mode studies tends to find no significant

28

relationship between asset specificity and entry mode choice (e.g.: Delios & Beamish, 1999; Kim & Hwang, 1992; Taylor, Zou, & Osland, 1998). A number of different classifications of foreign entry modes have been made from rough simple divides to well-structured and carefully detailed classifications. At first, the entry modes are classified roughly to equity-modes and non-equity modes. Starting from rough classifications, Root (1994) has divided entry modes into three basic categories: 1) export modes; 2) contractual modes; 3) investment modes. According to Harzing (2002) many researches provide the following classification: 1) licensing; 2) joint ventures; 3) wholly owned subsidiaries. Agarwal and Ramaswami (1992) distinguish between most common modes of foreign market entry mode to: 1) exporting; 2) licensing; 3) joint venture; 4) sole venture. The key to succeed in the international market and to capture the market is the decision regarding the standardization and adaptation. This decision plays a very important role when launching internationally.

2.4.4) DEVELOPING INTERNATIONAL MARKETING STRATEGY: STANDARDIZATION OR ADAPTATION After the decision about the internalization is made, the next important issue that arises is standardization or adaptation. A firm has four basic options in approaching a foreign market: (1.) Selling the product in the similar way as it is in international market. (2.) Modifying the product according to the specific country or region. (3.) Designing the new products specifically for the international market. (4.) Introducing a global product by incorporating all the differences into one product design (Czinkota & Ronkainen, 2004).

29

Followers

of

the

standardization

approach

believe

that

the

trends

of

internationalization are the main cause of the market similarity, more merging of the needs of the consumers, their tastes and preferences and the more technological homogeneity. However, the proponents of adaptation criticize the concept of

standardization and say that this does not go with the marketing concept and hence contradicts it. According to them, there is dissimilarity between countries to the extent of consumer taste, purchasing power, commercial infrastructure, laws and regulations, culture and tradition and technological advancement. So according to them, it becomes necessary for a firm to adjust their products accordingly (Theodosiou & Leonidou, 2003). The standardization adaptation debate focuses on the understanding of the consumer homogeneity and/or on the movement towards homogeneity. The researchers who perceive the markets and the wants and preferences of the consumers as homogenous believe that standardization results in the low cost, economies of scale which results in the expansion of the margins for a firm and thus is more effective. On the other hand, those who perceive markets as being heterogeneous with the consumers having different needs and preferences believe that the adaptation holds the much greater value (Ryans, Griffith and White, 2003). As Kotler et al (2005) suggests, the type of marketing mix should be based on the basis of the target market conditions and the strategy of Think globally but act locally should be adopted. Theodosiou and Leonidou (2003) have said, the decision of standardization and adaptation in order to achieve the higher business performance largely depends on the set of circumstances of the foreign market that a firm encounters at that point of time. This is explained further in the following diagram: 30

Source: Theodosiou, M and Katsikeas, C.S. (2001)

As, the product can be similar or different in the international market as compared to the domestic market, the launching of the product i.e. pricing, promotion and distribution can be similar or it can vary in the foreign market. This largely depends on the type of market and the customers that it caters to.

2.4.5) INTERNATIONAL MARKETING OPERATIONS As, it can be seen in the above discussion, there is the likelihood that the Marketing of a product can be different in international market as compared to the domestic market. The pricing, distribution and the promotion of a product can vary in both the markets.

31

Pricing The one element of the marketing mix that generates income is the pricing, rest all the other elements only produce cost. The pricing policy also reveals the value of the product in the market (Gerald and Tse, 2001). In international marketing channels the knowledge of the influence of the bargaining power and goodwill on the strategies of pricing is very crucial. The decision of pricing is very essential for the success in the international markets (Stottinger, 2001). According to Solberg et al (2006), the studies published on the international pricing focused specifically on the normative dimension of international pricing, and hence the weight has been given to how pricing decision ought to be made (Weekly, 1992). The authors state that the major limitation of these studies is that they are less generalized. They are very specific and they focused on issues such as, impact of technology on international pricing, pricing in emerging markets, development of gray markets etc. The pricing of a product in international market can be done either by accepting the method of standardization or the method of customization. Understanding the factors that determine the degree of the standardization and customization of the international pricing strategy is essential from the view point of the international management as the sales and profitability in the foreign market is dependent on these factors (Theodosiou and Katsikeas, 2001). Even though several decisions influence the pricing decision, they all are not the cost variables. The most important and complex issue that is still to be explored are specific cost variables factored into the price, or the cost complexity of the pricing

32

decision (Raymond, Tanner and Kim, 2001). Pricing is more difficult in international market than the domestic market due to multiple currencies, barriers in trade, additional cost considerations and the longer channels of distribution (Cavusgil, 1996). Study of Raymond, Kim and Shao (2001) reveal that in the emerging market the problems faced by international marketers are the setting of price, estimation of fixed and the variable costs and adjusting to the exchange rates. Distribution In order to sustain in the foreign market a company should adopt the distribution system or the network that satisfies the specific requirements of the particular market. For example, the distribution system in developing countries is different from those of highly developed countries and is not as sophisticated as theirs. All modes of market entry into the non-domestic market necessitate understanding of the variables that can have an influence on the firms distribution system. Few of these factors can be controlled by the physical distribution executive; others cannot be controlled but must be dealt with. Some of the uncontrollable elements are: political and legal system of the foreign markets, economic conditions, degree of competition in each market, level of distribution technology available, cultural norms etc. (Stock and Lambert, 1983) A manufacturer should decide the way the new product is to be distributed in the foreign market. They have the option of primarily captive agents (company sales force, and company distribution system) or primarily independent intermediaries (outside sales agents and distributors). This is also called make or buy issue and these issues are the most arguable topic in the international marketing (Anderson and Coughlan, 1987). 33

Many manufacturers rely on the independent intermediaries to enter a foreign market as they find it impractical to rely on the captive agents. These distributors not only offer a relatively easy, low-cost way to distribute globally but they also serve the manufacturers with the details of the foreign customers, necessary local market information, and sophisticated marketing services (Bello, Chelariu and Zhang, 2003). However, Arnold (2000) states the management finds faults in working with the distributors. According to them: The distributors didnt know how to grow the market. The distributors didnt invest in business growth. The distributors just werent ambitious enough. Promotion According to Papavassiliou and Stathakopoulos (1997), similar advertising message with only a slight alteration, or even the advertisements with appropriate transformation can be used in all the countries to get to the consumers. The justification behind this intention is that all around the world, the consumers desire the same wants and needs. Therefore, they can be convinced by the universal advertising. In addition to this, Fatt (1967) also shares the same view and states that a school of thought holds the belief that even different people are basically the same, and therefore, a global advertising campaign with a truly universal appeal can influence the customer in any market. However, not all the researchers and authors agree with the above discussion. Various researchers and authors hold a different perception. According to Kotler (1986), to

34

approach the consumers of different markets, different communication strategies should be used, by adjusting the message to the specific country. According to the author, there are unbeatable differences in different countries that cannot be changed, such as: cultural, economic, legal, product and media dissimilarities. These differences make it essential for the company to adopt different advertising strategies for different markets. As described by Jobber (2001), a campaign cannot be transferred from one country to another without any changes because of the different languages in different countries. Not only the above mentioned strategies matter in the international market, but the culture also plays a very important role when entering and launching the product in the international market. The culture differs from country to country hence; the firm should take it into consideration when they approach the international market.

2.4.6) ROLE OF CULTURE IN INTERNATIONAL MARKET The knowledge of the impact of cultural differences in the international marketing is crucial for a firms external operation. It helps in designing the appropriate competitive strategies by predicting the strategic moves and responses of the competitors. Apart from this, the understanding of the cultural differences on the marketing decision is important for the internal operations of the firm. The understanding of the influence of culture makes the firm capable of accommodating and adapting to the differences and hence minimizing noisy communications among executives and errors in decision making (Tse et al, 1998). As suggested by Hofstede (1994), to gain the knowledge about people, it is very crucial to understand about their background, and to predict their present and the future behavior. Their

35

background can be determined by having information about the culture they belong to. According to Usunier (2000), the theoretical sense of the culture originated in Germany in the eighteenth century where the term Kultur was used. As defined by Muhlbacher et al (1999), culture is the set of beliefs, perception, evaluation and behavior which is shared by the members of a social group. Linton (1945) gives an advanced definition of culture and defines it as, A culture is the configuration of learned behavior and results of behavior whose component elements are shared and transmitted by the members of a particular society. According to a large body of literature, the core problem of the international marketing and promotion is the difference in cultures. The most error in the international marketing occurs in the area of cross-cultural communications (Kale, 1991). Therefore, to launch and market the product internationally, study of culture is very essential. As noted by Kale (1991), Duesenberry in 1949 suggested that all the activities in which people are involved are culturally determined. In addition, all the purchases that were made were either to satisfy some kind of the physical need or to apply some kind of action that completes the cultural life. He states that the culture has the versatile and universal effect on marketing. Culture to a large extent influences the taste of the people, their preference for color, and the peoples attitude towards the classes of the products. Though, the maximum influence of the culture is on the way the information is gathered, stored, retrieved and employed for the decision making. Thus, it would be relevant to say that the culture plays a vital role in the marketing activities. 36

Hofstede (1994) (see, Doole and Lowe, 1999; Johansson (see Weitz and Wensley, 2002); Muhlbacher et al 1999; and Rugman and Hodgetts, 2003), defines culture in four main dimensions: 1. Power Distance: It relates to the extent the members of a national culture

perceive the distribution of the power. It is defined as the extent to which the people hailing from different backgrounds can relate to each other, and how easy for them is the upward social mobility. The more is the power distance, the more is the inequality. The power distance is defined from below (less powerful members) than from above (more powerful members). Hofstede states that all societies are unequal but some are more unequal than others. 2. Individualism versus Collectivism: It refers to the extent to which the

individuals are included in the group. Where the ties between the individuals are loose, it is considered as the individualistic society. Individuals are prepared to start new relationships that are not very well established. However, in the collectivist society, the persons identity and value is based on the social system. People from their birth mingle up with others and share a strong bond, usually extended family. 3. Masculinity versus Feminity: Masculinity in a society refers to the extent the

success, money and things dominate the society. It has been noted that the values attached to the men across the various countries are very competitive and assertive. However, feminity is described as the extent to which the caring for others and the quality of life dominates the society. The values attached to the women across the countries are modest and caring. 4. Uncertainty Avoidance: It is the degree to which the people of a society feel

vulnerable in the uncertain situation and have formed the beliefs and institutions for reducing or avoiding these unclear situations. Countries that come under high 37

uncertainty avoidance struggle to minimize the risk and frame systems and methods for handling these uncertainties.

According to Benedict and Steenkamp (2001), Hofstdes work is not free from any limitations. The association between the items that were used to gauge the cultural dimensions and the theoretical definitions of these dimensions is vague. Whether, the items share the same meaning in different countries is also not clear. The items used by Hofstede refer to the work-related values, which might not completely overlap with priorities of people in other roles (e.g.: consumers). When it comes to culture, the field of International Marketing is faced with a dilemma. Where on the one hand, researchers and mangers are required to be aware of the behavior of cultural differences and individual-level outcomes, on the other hand, researchers investigating the association between culture and individual response have not received enough evidence about it to make the suggestions that managers need with confidence (Leung et al, 2005). 2.5) CHAPTER SUMMARY In the above chapter, all the major factors regarding new product development has been covered. Firstly, the development process of NPD has been discussed followed by the critical success factors involved in the launch of the new product. After this, the process of internationalization is discussed which includes deciding whether to go international, which market to enter and the mode of entry. The discussion regarding the standardization and adaptation has been also been made. The literature also discusses the role of culture in international market. In this chapter, views of various authors and researchers have been criticized by other authors and researchers.

38

In the above literature, various authors and researchers have covered all the major issues regarding the new product launch in the national and international market. But there are some shortcomings in this literature which have been covered later in this dissertation. Firstly, the studies mentioned above have been conducted in the developed nations, whereas, their impact in developing nations like India is yet to be seen. This study will cover the issues regarding new product launch in the developing country like India. Secondly, the society is always evolving. This results in continuous change in consumer lives, needs and wants and their choices. Most of the studies conducted on new product launch are not very recent. This dissertation will find out and analyze the current strategies involved in the new product launch in context of the changing tastes and preferences, changing market, development of technologies etc.

39

CHAPTER 3 - METHODOLOGY 3.1) INTRODUCTION The most critical part of any research is the selection of the method for the data collection. This chapter will present the type of methodology that will be used in the research for the data collection. Different methodologies have different strengths and weaknesses, for that reason some limitations of the methods will also be presented. According to Miles and Huberman (1994), to ensure a high quality consistent and the logical flow of information, it is very important for a researcher to be attentive about the suitability and the limitation of the method. There are two major methods of doing a research: qualitative and quantitative. Research is something that people undertake in order to find out things in a systematic way, thereby increasing their knowledge (Saunders et al, 2007, p.5). 3.2) RESEARCH OBJECTIVE AND QUESTION An exploratory research on new product launch is conducted to study the impact of factors that play an important role in the development and the marketing of the new products. The research question for this paper is: Q: In competitive market like in India, what is the key success factors involved in the launch of a new product? The objectives of this research study are to investigate:

How the product is developed and marketed in the national market. After the successful launch in the national market, how the product is launched in the international market.

40

This paper aims to make the contribution to the research field of new product launch both on the national and international basis. As not much of the research is done on the industries of the developing countries, this research will focus specifically on how the industries of less developed countries launch their products. 3.3) RESEARCH METHOD As discussed above there are two types of research. According to Silverman (2005), to obtain the more valid results, selection of the appropriate methodology is highly important.

3.3.1) QUALITATIVE VS. QUANTITATIVE RESEARCH The two methods Qualitative and Quantitative are different from each other in major aspect. The two terms qualitative and quantitative are extensively used in the field of business and management. One of the major differences between the both is the numeric and non-numeric data. The term quantitative is usually used when the procedure of the data collection (ex: questionnaire) or the analysis of the procedure (ex: statistics or graphs) uses numerical data. While, the term qualitative is used when the procedure of data collection (ex: interview) or the analysis of the procedure (ex: categorizing data) that uses non-numerical data (Saunders et al, 2007). Qualitative research method explains and interprets the meaning of phenomenon that occurs naturally through interpretive approaches in the social world (Easterby- Smith et al, 2002) and thus it provides well sustained conceptual insights that reveal how broad concepts and theories that operate in particular cases (Gephart, 2004). While on the other hand, Quantitative research emphasizes measurement and analysis of casual relations among other variables (Denzin and Lincoln, 2000).

41

The findings of Bryman and Burgess (1999), reveals that in the quantitative research there is barely any contact between the researcher and the subject. As, the period of data collection is normally long, there is brief contact with each individual. On the other hand, in the qualitative research, there is continuous contact between the researcher and the subject, as, the researchers need to see the world through his or her subjects eyes. The authors further gives one more distinction between both the researches and states that the data obtained from quantitative studies are hard, rigorous and reliable, while the data obtained from qualitative studies are rich and deep which reveals that the quantitative data that are collected are organized and are collected in an efficient manner, while, the qualitative data are superficial and it explore incidents in great detail.

3.3.2) WHY QUALITATIVE RESEARCH The reason for choosing qualitative method instead of quantitative method is justified in the words of Strauss and Corbin (1998) as they claimed that qualitative research can refer to research about the persons lives, lived experiences, behaviors, emotions and feelings as well as about organizational functioning, social movements, cultural phenomenon and interactions between nations. Since, the main subject of study is the launch of the new product in national and international market, which relates to the behaviors of the consumers and the experience of the people launching the product, and even the cultural factors; it is very difficult to measure these and hence, the quantitative method is not appropriate for this study. One of the main influential causes for adopting qualitative research was to answer the research question in depth and to gather the information from the managers; this was done with the help of interviews, which allowed the flexibility in the collection of 42

data which was not possible in the case of quantitative research. The flexibility and openness of qualitative research allows access to some unexpected issues and areas which might not be visible at the time of planning the research or framing the research questions (Creswell, 1994).

3.3.3) INTERVIEWS A qualitative research interview is an interview whose purpose is to gather descriptions of the life world of the interviewee with respect to interpretation of the meaning of the described phenomenon (Kvale, 1983). To understand our fellow human beings, the most common and the most powerful way is to interview (Fontana and Frey, 2003). The main aim of the qualitative research interview is to examine the topic that is been researched from the interviewees view point, and to recognize why they have the particular perception. The principles of flexibility and negotiability persuade researchers to adopt this method, who, need to collect various types of data in a very short period of time (Cassell and Symon, 2005). The purpose of conducting an interview has been defined by Patton (1990), to find out what is on someones mindWe interview people to find out from them those things we cannot directly observe. According to Hannabuss (1996), interview is considered as the most appropriate method of collecting information by people who take up research. This is primarily because it helps the researcher to change the method and rate at which the interview is conducted to obtain the finest response. Furthermore, it is a very suitable way of gathering the opinions and information of people that is necessary for the research.

43

There are various types of research interviews, from the informal interviews, where the structure of the interview can be mould to the individual situation, and where the subject feels comfortable and unassessed, to the fully structured interview, where a particular and specific structure is followed with all the subjects, and where the organizing and quantifying are generally straightforward. There are in-between stages where the assistance can be given in the informal setting, and where a reasonable number of open questions can be asked in the structured interview (Hannabuss, 1996). For this research, two types of interviews were chosen: telephonic interviews and electronic interviews. These types were chosen because of the long distance. It was not possible to travel all the way to India and conduct face-to-face interviews with the paint companies. Therefore, interviews were conducted over the phone and via the emails. Before conducting the interviews, all the interviewees were explained the reason and the main aim behind the interview. The interviews were semi-structured and it allowed participants to respond the way that they preferred. Paint companies in India are very particular about their rules and they do not allow researchers easily into their industry for the research, even when they assure them of the confidentiality. Due to this electronic interview was conducted where a set of questions were framed and was mailed to the concern person. Once, the answers were received, they were requested for the telephonic interview to ask further questions. The interview was semi-structured; this was to allow the interviewer to be flexible with the questions and for the interviewees to talk freely.

44

3.4) STAGES OF CONDUCTING THE RESEARCH Data are the crude, unprocessed facts and figures, while the information is the data that have been processed into some significant form. The two main sources of data collection are primary and secondary. Primary data is the data that is not available previously and is collected by the researcher himself which can be done through interviews, surveys, direct observation etc. Primary data is considered to be the most reliable form of data collection (Kelly). Secondary data is the data that is collected from the external sources such as: television, newspapers, journals, articles, periodicals, magazines, internet etc. Secondary data is easy to collect and is less expensive than primary data, but it is not as reliable as the primary data. For this research, both, the primary and the secondary data were used. The secondary data have been collected using the marketing journals and other reports that were based on the topic and the study of the industry database proved out to be very useful in understanding the market trends. Industry periodicals provided the key insights about the marketing practices. As stated by Malhotra (2005) Examination of available secondary data is a prerequisite to the collection of primary data. Start with secondary data. Proceed to primary data only when the secondary data sources have been exhausted or yield the managerial returns. Thus, the study involves the collection and analysis of the primary data in conjunction with the secondary data. The primary data was collected with the help of the interviews, as it has been discussed above. The entire research was conducted in 3 stages:

45

In the first stage, views and opinions of various authors and researchers were studied and they were compiled together which formed the literature review. In literature review what has been done by authors and what has been left out by them was discussed regarding the new product launch. This helped in framing the initial draft of questionnaire. In the second stage, research data was collected via the secondary and the primary sources. With the help of secondary data a basic design was prepared for collecting the primary data. A pilot study was conducted to check the effectiveness of the questionnaire. Five students from the University of Nottingham were selected, who had some experience in marketing. This pilot study helped in restructuring the questionnaire. Few questions that were inappropriate and were difficult to understand were removed and few questions were added which gave some hint about the purpose of the research. In the third and final stage, data was collected with the help of interviews. Appointments were taken from the companies for the telephonic interviews after receiving replies of the electronic interviews. The interviews of the mangers and others of the Indian paint companies who were involved in the new product development were taken

46

The details of the interviewees are given below:

Name of the Name of the Age Company Interviewee

Designation

Profile

Work Experience in NPD 2.8 Years

Asian Paints

Ashish Jajoo Anjan Chatterjee

31 40 42 43 29 40

Group Manager Country Head

Brand National Marketing

Global Brand 5.4 Years Mgt 9 years

Berger paints

Raja Banerjee Abhijeet Roy

General Manager of National Marketing Marketing

Vice President of Global Brand 12 years Marketing and Sales Mgt Marketing Manager Product National Marketing 2.5 years

Rajdoot Paints

Rahul Sharma PR. Lodha

Country Head

Global Brand 5.5 years Mgt

. 3.5) SAMPLING A sample represents a large group of the entire population, for any questionnaires or interviews; samples are used rather than the population because it is not possible to gather data from the entire population. The basic purpose of sampling is that by selecting some of the elements in the population, we may draw the conclusions about the entire population (Cooper and Schindler, 1990). According to Flick (2002), in an interview, sampling is an important part as it helps in deciding who to interview which is the vital in obtaining the result of the research. It also helps in deciding which interviews should be further studied, i.e. transcribed and interpreted. Sampling becomes important because it is low on cost, data can be collected at the fast pace and it gives accuracy in result (Cooper and Schindler, 1990). 47

Sampling can be classified into two ways: nonprobability and probability. Nonprobabiltiy sampling relies on the personal judgment of the researcher rather than chance to select sample elements. It includes, convenience sampling, purposive sampling, quota sampling and snowball sampling. In probability sampling, sampling units are selected by chance. It includes, simple random sampling, systematic sampling, stratified sampling and cluster sampling (Malhotra, 2005). For this,

particular research, purposive sampling is used because this enables the researcher to use the judgment in order to select the cases that enables the researcher to ask the research question and meet the objectives (Saunders et al, 2007). 3.6) DATA ANALYSIS Data analysis is the critical part of any research. Data analysis should sum up the total data that is collected, and the result should present the most important parts of the research. According to Coffey and Atkinson (1996), qualitative data analysis starts with recognizing the key themes and the subjects that links the concept to the data. It is very important to compress the bulk data into small parts by making categories within them, to make them easy to analyze. The process is named as simplification or reduction. In this research, all the interviews that were taken were recorded and were then transcribed into the texts. The data received by the interview were condensed. This allowed the removal of any recall bias. The condensed data was sent back to the interviewees so that they can verify it. The data was further analyzed and were then reduced by splitting them into various themes, sentences, phrases and patterns. The process helped in arranging data in organized and in the efficient manner.

48

3.7) LIMITATIONS OF THE RESEARCH Every research has some limitations, which makes it less reliable. Even this research has several limitations which make it difficult arrive at the clear and accurate conclusion. While conducting the interview, open-ended format of questions were used. The researcher received lot of irrelevant data which was not needed and respondent went off-track. While, the secondary data was used in this research for collecting the company information and several other important data, there was the possibility of the misinterpretation of the data while reanalyzing. As stated by Corti and Thompson (2004), the misinterpretation of data can be the result of the fear of the selective and opportunistic interpretation in reanalysis. The misinterpretation of data can occur because of the large period of time and progress in intellectual understanding. Qualitative research requires skilled researchers for the data collection. In this study the researcher was novice and had no experience in conducting the interviews. There is the possibility, that the result might not be the same if it is conducted by the skilled researcher. For this research, only one particular kind of industry was chosen, i.e. the paint industry in India. It would have been much better if different kinds of industries were studied as they would have different strategies in launching the product. Another main limitation of this research could be the problem of the bias. Though, the interview was conducted only after the approval was taken by the interviewees, there is the possibility that they would have not revealed all the issues that were required 49

for this research, or, would have framed them as they wanted them. As Bell (1999) suggested that, interview is a highly subjective technique and therefore there is always the danger of bias. Similarly, the researcher may perceive what the study wants to communicate. Therefore, the data gathered may not be reliable. This study can be improved by the further research, while, keeping the limitations in the mind. 3.8) CHAPTER SUMMARY As stated by Albert Szent- Gyorgyi (1937), Research is to see what everybody else has seen and to think what nobody else has thought In this chapter, the detailed information is given regarding the research methodology, and, the reasons have been explained for choosing the qualitative research technique. The difference between the qualitative and quantitative methods has also been presented. For the data collection, both the primary and secondary data has been used. The primary data has been collected by the help of semi-structured interviews and the interview questionnaires. The secondary data has been collected with the help of internet, journals, periodicals etc. A discussion on the interview has also been presented. The sampling method adopted and the interviewees profile and the company details have been discussed. The various shortcomings of the research have also been discussed as well.

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CHAPTER 4 - FINDINGS AND DISCUSSION 4.1) INTRODUCTION The main aim of this chapter is to present the research analysis and discuss findings that are gathered from the interviews conducted with the brand manager and the global brand manager of the big and known Indian paint companies. The objective of this research analysis and discussion is to study the factors that play an important role in the new product launch both in the national and the international market. The analysis would be based on the most appropriate quotes and the viewpoints of the brand manager and the global manager. Qualitative researchers should be honest and systematic while they are interacting and disseminating the richness of the findings (Easterby-Smith, Thorpe, & Lowe, 2002). Moreover, the research analysis should be open to verification as far as possible so that it gives the chance to others to repeat what has be done and test the conclusions (Breakwell, Hammond, & Fife-Schaw, 2000) . This chapter consists of two main sections which are the new product development and the launch of the product in national market; and internationalization. Both the sections include various sub-sections which cover the main aspects of new product launch. In each of the section, the view and activities undertaken by the three big and dominating Indian paint companies will be presented and will be compared with the literature reviewed in the second chapter. The interviews of three big Indian paint companies were taken (Refer Appendix 1). As discussed in the introduction, the main Paint companies in India are Asian Paints, Berger Paints and Rajdoot Paints. Interviews with these three companies were

51

conducted in order to achieve the most appropriate data. As the interviews were conducted, it was clear that the Asian paints is the biggest and the most dominating paint industry in India, and, the most of the other paint industries including the Berger paints and Rajdoot Paints follow the strategies adopted by the Asian Paints. According to them Asian Paints is the leader and they are the followers. The following are is the section which includes the development and launch of the new product in the national market. 4.2) NEW PRODUCT DEVELOPMENT PROCESS 4.2.1) IDEA GENERATION, SCREENING, CONCEPT TESTING According to the interview from the product managers of all the three paint companies (Asian Paints ltd., Berger Paints and Rajdoot Paints), it is evident that all the stages of the stage gate process are interlinked. All the companies researched in this dissertation use stage gate process knowingly or unknowingly. The first three stages of the stage-gate process are also interlinked and hence they have been discussed under one section. As per the interview taken from group product manager of Asian Paints, the idea gets generated either from current / potential customers or from the R&D department of the company. Once, the idea has been generated, it is tested informally in the market through discussion between the various stakeholders and is discussed internally within various departments. The idea can also be evaluated by hiring the services of various marketing agencies. If idea is found to be weak it is dropped else, the blueprint of the product is developed.

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The interview with the product manager of Berger Paints revealed that the company lays emphasis on gap finding or identification of an opportunity in the market for idea generation. It tries to look for ideas from the current or potential customers and also continuously monitors the competitor activities and their product portfolios. Once, the idea is identified, the company evaluates the potential market of the idea and also matches idea with its internal capabilities/ resources / product portfolio. If the company foresees the potential in the idea, it tries to evaluate its market acceptability through interaction with its distribution network. From the interview of the product manager of Rajdoot paints it is clear that the company mainly follow the steps of its competitors. The company does not generate any new ideas in particular and thus basically go behind its rivals. Mostly, the company follows the strategy of keeping the price lower than its competitors in order to sell their products in the market. The company does not take any pain of hiring the marketing agencies or discussing the idea within the other departments. They believe in adopting the strategies of their competitors. It can be seen from the above findings that the companies generate the idea by understanding the needs of their customers. The company follows the process as it is suggested by the Lilien (2002), who states that the information is collected from the current and the potential customers and even from the target markets. The Asian paints go a step ahead and includes the R&D team in the process of idea generation which proves out to be beneficial for them. As said by the manager of Berger paints, they try to find the gap in the market. This goes well with what Kijkuit and Ende (2007) has said. According to them, the process of idea generation involves observing the gaps and flaws in the present nature of thinking. After the idea generation the 53

companies let out the ideas in the market and find out the response of their customers. The internal discussion is made and then the idea is matched with the capabilities the company. As said by the Asian Paints ltd. they develop the blueprint of their idea and take the help of the research and the marketing agencies. This goes well with the literature where Keith and Ulrike (2000) say, the idea should be briefly described in the market after it is generated. According to Lees and Wright (2004), the crude estimate of sales should be made during these stages, however none of the companies follow it as they have not discussed about it. As even stated by Mason (1990), during the initial stages of new product development, models of preference and choice have been used to predict the sales in the market.

4.2.2) BUSINESS ANALYSIS, PRODUCT DEVELOPMENT, MARKET TESTING AND COMMERCIALIZATION As per the interview taken from the Asian Paints, the business opportunities is made clear by estimating the value of the product and then by seeing how much the company can chip out of that product. They also look at the potential market of the product. After the idea seems feasible, it is converted into the product. This is done by passing it to the production team and by deciding on its production process, designing, packaging etc. which includes people from the various departments. The product is then tested in the market where the customer feedback is taken into the consideration. At the end, the appropriate marketing strategies for the launch of the product are decided. From the interview of the Berger Paints it is clear that the company forecast the business opportunities by looking at the volume of the consumption. If the company is launching the product which is quite similar to the existing product, then the

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estimation of the sale of that product in the past one year is taken. They then take the help of the various departments to produce the product physically. The company does the market testing by trying the products on their customers and thus gathers any available issues, problems or recommendations. There main aim is to look at the real life experience with that product. They then look out for the launching tactics to spread out their products in the market. From the interview of the product manager of Rajdoot Paints, it is evident that looking for the business opportunities is not a major task for them as they follow the path set up by the Asian Paints. If the product developed by the Asian paints is accepted in the market we know that developing the same product will then prove out to be beneficial for us. To produce a product they do not have to involve lot of specialized people as they already know beforehand what they exactly require. Their market testing is majorly price related as they do not produce something very innovative which does not exist in the market. The company goes for the same marketing strategy that their rival has adopted. As stated by Hart et al (2003), during the business analysis the forecast of the sale and the profit is made. Similarly, the companies reveal that at this particular stage they look out for the volume of the consumption and the market potential in order to forecast the sale of the new product. The companies reveal that during the stages of product development they seek the help from the various departments of the company. This is justified by literature where Jobber (2001) states that at this particular stage the task is divided into multi- disciplinary project teams. As it can be seen from the interviews the meaning of market testing for the companies just revolves around the customer feedback. They do not take into account the strategic 55

and tactical decisions at this point of stage. According to Langerak (2004), the stage of market testing should involve the task of answering what, where and why to launch and even the marketing mix decision, i.e. how to launch. The companies reveal that at the end of the production process the entire focus is given on the market launching. However, According to Cooper (1990), during the stage of commercialization the company should gauge the performance of the product, the current available data of revenue, profits, costs, timings and expenditures should be compared with that of the projections. The SWOT analysis of the product should be done. 4.3) CRITICAL SUCCESS FACTORS IN NEW PRODUCT LAUNCH 4.3.1) STRATEGIC DECISIONS As per the interview taken from the Asian Paints it is quite clear that they always look for some innovation. This can arise from the changing demands of the customers, change in technology, more new raw materials etc. but we also at times go for the development of the product which is the just the advancement of existing products. The company launches the product in the market where the existence of competitors is very small. The product manager says that they try to launch the product in the already developed market in order to appeal their customers more and more. When the firm launches the product in the market the main issue that is revealed is whether the product is a highly innovated product or is just the modification of the existing product. The Berger paint interview makes it clear that the company develop the products which are merely the alteration of the present products. We do not believe in developing a product which is full of innovation as it becomes risky. Berger Paints develop the products mostly into the market where it does not have to encounter lot 56

of its rivals. Our company launches the product in the market where we already have our customers as our product is just the advancement of the present product. After the product is launched the main area that it covers is the reduction in price with better quality. Rajdoot Paints as found earlier follows Asian Paints. We develop the product which has already been developed by our main competitor. It can be a very new product or it can be just a revision of the product that is already present. Our targeted market is the market which our competitors are into and even the market where they have not entered. As seen from the above findings, the companies follow the different strategies. Where Asian paints mostly believe in developing a highly innovative product it also goes for the advancement of the existing products while Berger paints have always believed in developing a product which is just an extension of the existing product. The strategy of the Asian Paints is supported by both Cooper and Kleinschmidt (1995) where they say that the more ground-breaking the product is, the more successful it is and by Martenson (1994) whereby he says that the uniqueness and innovativeness of the product is not long lived in consumer market and it can be withdrawn very quickly because of its failure. The strategies of Berger Paints get contradicted by the statement of Cooper and Kleinschmidt. The above findings reveal that the companies always try to launch in the market where they do not have to face lot of rivals. They prefer to stay away from them. This is justified by what Hutlink et al (2000) have said. According to them careful targeting, avoiding head-on clashes with competitors, and placing the new products into the growth markets have been hallmarks of recent new product successes. As the companies reveal that they mainly launch in the old 57

market, even, Hutlink et al (2000) states that consumer products new are mostly launched in the markets which are old and developed.

4.3.2) TACTICAL DECISIONS As per the interview conducted with Asian Paints, it is evident that the companies believe in the branding of the product. As the most dominant company in the market, we have experienced that the brand name works in the market. Developing a known branded product appeals the customers. When asked them about the pricing, the manger of the Asian paints states that Pricing work in a lot of ways. It is linked with the premiumness of the product. When asked about the importance of promotion while launching the product in the market the manger says, Promotion is highly important. This is a process through which we communicate with our customers and give them all the necessary details about the product. When it comes to the channel of distribution, the product manager of the Asian paints says that, to organize the distribution channel is very important for us. We have to take the crucial decision of whether to include the middleman or not. When asked to the product manger of Berger Paints about the marketing mix concept, he says that, when it comes to the development of the product we see the value that it will hold among the customers. In making the product very attractive the brand plays a major role. For the pricing related question the response that was received was, Pricing is a very crucial element of the marketing mix. If we are charging X price to the customer, he would want to know what is the return Y that he is getting out of it. To sustain in the market most of the time we have to price our products lower than our competitors. For the Berger Paints, even the promotion plays a very vital role in the launching of a new product. For us, promotion means communication. Through 58

this we can easily reach to our customers and can place our product at the superior position as compared to that of our rivals. For the Berger paints, focusing on distribution channel is not so important. We do not give much stress on the channel of distribution as we believe that in order to serve the customers, channel of distribution hardly matters. The interview of the Rajdoot paints regarding the marketing mix concept did not provide any extra bit of information and the manager went off the track. He did not seem to be too keen on discussing about the marketing mix. The only information that was received was that they do give importance to the tactical decisions (marketing mix) and follow the basic procedure required to serve the customers. So it would not be very useful to discuss it here. From the above findings it is clear that both the companies, i.e. Asian Paints and Berger Paints believe in the branding concept which can be justified by the statement of the Hutlink et al (2000) and Jobber (2001). According to them, branding is a very important mean while launching a new product in the market. But the companies do not take into the account the extent to which the product is launched. According to Lambkin (1988), the new firms which present a broader product line gain more market share and more profits as compared to their rivals. When it comes to the pricing tactics, both the company says that the pricing of the product is related to the uniqueness of the product and as said by Berger paints, even one penny spent on the product matters to the customers. They need some return on the every sacrifice they make. This is supported by what Monroe (1990) has said, price generally accomplishes two functions: it gives a hint towards the sacrifice the consumer has to make to obtain a product and it directs towards the product quality. The Berger 59

paints also states that pricing and competition is also related. The literature reviewed in this dissertation does not talk about anything relating price and competition. When the question regarding the promotion is asked similar response was received from both the companies. They stated that it is a medium through which they can pass the knowledge of the product to the customers. This goes well with what Hutlink et al (2000) has stated, total amount of money spent on the promotion have shown to impact the performance of new product introduction. The response received regarding the distribution channel was different of both the companies. Where Asian paint said that they focus on deciding whether to include middleman or not, Berger Paints stated that they do not give much importance to the channel of distribution. As stated by Lambkin (1998), customer service does not depend on the distribution channel. The second main section is internationalization. After the company successfully launches the product in the national market, it tries to approach the international market. In this particular section the process of internationalization and launch of the three paint industries are discussed. 4.4) INTERNATIONALIZATION 4.4.1) WHY TO ENTER, WHERE TO ENTER AND HOW TO ENTER The manager of Asian paints states that If we see the foreign market progressing at the rapid stage, we get tempted to enter that market. Regarding the type of market the manager says that, We initially enter the market where we know the customers would accept our products. This is mostly possible in the countries that hare the similar type of culture as ours. When asked about the mode of entry it was revealed that the company mostly opt the category of Acquisition. 60

Regarding the internationalization, the product manager of Berger paints says, If we feel that the demand is not much in the national market and our rivals are present in the foreign market, even we try to step internationally. We try to enter the market which is similar to our market so that the risk of failure is reduced. Regarding the mode of entry the manager says that, We follow the method of acquisition. The manager of Rajdoot Paints states, We identify the compulsory requirement, i.e. we see where the competition is big and we are not present and we have to be there. When it comes to deciding the market, we approach where our competitors are. The mode of entry is normally through acquiring another company. It is visible from the above discussion that the Indian paint industries largely go for the reactive motives for the internationalization which includes the growth of the international market and to copy the moves of the competitors in order to achieve the more market share. However, as suggested by Crant (1996), individuals and firms with proactive motives have better qualifications to create new prosperous ventures since they create their own competitive environment, identify new opportunities and act upon them with persistence. It is possible for them to achieve high returns if they are being fast and first to enter the market. The companies say that they approach the market where the culture is similar as to their home market. This is justified by what Johanson and Vahlne (1977) has said. According to them, the firm expands first into the market which are psychically close, and into more distant markets as they gain more practical knowledge.

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4.4.2) STANDARDIZATION AND ADAPTATION As per the interview taken from Asian Paints it is revealed that the company does not follow a particular strategy and the decision of Standardization and Adaptation totally relies on the type of product and the market the product is launched into. According to the Global product manager of Asian Paints, The decision regarding the standardization and adaptation is totally based on the product and the market. If we take up a company and its brand is working well in that market then the standardization will be a big problem. However, if we take a company whose brand is not so good but the acquisition is just because of its technological expertise, distribution and ability to get the policy thing done through government, then we can standardize and can have our own brand there. The interview of the Global product manager of Berger Paints makes it clear that even this company does not follow a particular strategy. According to the manager, The decision largely depends on how the branding is done, what kind of image we associate with the products and it depends on what kind of stage the other market is in. We have certain kinds of brand architecture in India which we will like to take with us when we enter a market, but it might or might not work there. When asked the same question of standardization and adaptation from the Global product manager of Rajdoot Paints, similar response was received from him. According to him, It is all based on the state of the market at that point and on the customers who we are targeting. It is difficult to say which one is better and which will prove out to be profitable.

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As it can be seen from the above findings, all the companies are skeptical about the type of strategy that proves out to be beneficial. According to them it depends on the market to market. They even stated that both the strategies can prove out to be beneficial if used at the appropriate time in the appropriate market. This shows that in practice both the strategies are equal and hence, one is not better than other. This goes well with what Theodosiou and Leonidou (2003) have said. According to them, the decision of standardization and adaptation in order to achieve the higher business performance largely depends on the set of circumstances of the foreign market that a firm encounters at that point of time.

4.4.3) PRICING, PROMOTION INTERNATIONAL MARKET

AND

DISTRIBUTION

IN

As per the interview conducted with the Global brand manager of Asian paints, it is clear that for the company decision regarding the price is very essential. According to the manager, The pricing vary from the country to country. The main reason could be the difference in the currency. We also associate pricing with the premiumness of the product, so lot of times we price higher in the foreign market if the benchmark of the of the competitor is higher. The pricing in international market could be higher or lower than of that in the domestic market depending on the situation. When it comes to promotion, the company does not prefer in adopting the same tactics as those of the domestic market. According to the manager, The communication pattern differs from country to country. We do not believe in adopting the similar techniques. In Egypt we use apply-supply technique which we probably will not use in India. Regarding the channels of distribution, the company believes in distributing the way as it is required by that specific country. According to the Global manager, We acquired a company in Egypt called SCIB. We have expertise in retail distribution while SCIB have 63

expertise in institutional distribution. So, we first adapted what they are good at and then we implemented what we actually do. The interview of Berger Paints makes it clear that the company gives importance to the element of pricing when launching internationally. According to their Global brand manager, Our Company definitely stress on the issue of pricing. When we price our product we look at the factor that will work in the market. We can price the product higher or even lower than the national market depending on the situation. For ex: If we want to enter the market aggressively, we have to bleed for sometime in the market as making money is not the priority for us at that time but capturing the market is. Regarding the promotion, the manager states that, We adapt to the promotion tactics that works in the particular country. There are lots of things that differ in the national and international market. So, it is not necessary the promotion tactics that work in our market will also work in other market. For the channel of distribution, the company prefers to distribute via the distributors as they are very reliable and they know the working process of that particular country. Rajdoot Paints interview reveals that the company do stress on the pricing factor while launching in the foreign market. As said by Global brand manager of the company, Pricing is something people take into consideration when they are buying a product. So the price difference of the product in the national and international market cannot be too huge. But yes, the factors like government regulations, difference in currency; economic effects do persuade some changes. When asked about the promotion, the response received was, The promotional is definitely not similar in both the markets. For ex: Competitive advertisement which works a lot in U.S. is not allowed in other countries. So, we have to promote our products 64

accordingly. When it comes to channel of distribution the manager says that, We have always believed in working with the distributors as they provide us the knowledge about the country and makes it easy to reach there. It can be seen from the above findings that all the companies take pricing very seriously. According to Asian Paints, the pricing is related to the premiumness of the product which can be supported by the literature. According to Gerald and Tse (2001), the pricing policy also reveals the value of the product in the market. The companies also say that there are some differences in the market which also persuade the change in the pricing. According to Cavusgil (1996), Pricing is more difficult in international market than the domestic market due to multiple currencies, barriers in trade, additional cost considerations and the longer channels of distribution. There are certain important factors that literature review talks about which these companies does not take into consideration. According to Stottinger (2001), in international marketing channels the knowledge of the influence of the bargaining power and goodwill on the strategies of pricing is very crucial. As said by Theodosiou and Katsikeas (2001), Understanding the factors that determine the degree of the standardization and customization of the international pricing strategy is essential from the view point of the international management as the sales and profitability in the foreign market is dependent on these factors. Regarding the promotional strategies, all the companies agree to the fact that adopting the different promotional tactics is important for the product launching. Similar strategies do not work everywhere. This can be justified by what Kotler (1986) has said. According to him, to approach the consumers of different markets, different communication strategies should be used, by adjusting the message to the specific

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country. For the channel of distribution, Asian Paints states that they initially adopt the distribution channel as is required by that country. This can be related to what Stock and Lambert (1983) has said; in order to sustain in the foreign market a company should adopt the distribution system or the network that satisfies the specific requirements of the particular market. Berger Paints and Rajdoot Paints states that they prefer working with the distributors. According to Bello, Chelariu and Zhang (2003), distributors not only offer a relatively easy, low-cost way to distribute globally but they also serve the manufacturers with the details of the foreign customers, necessary local market information, and sophisticated marketing services. However Arnold (2000) criticizes working with the distributor and states that they dont know how to grow the market, invest in business growth and they are not ambitious enough.

4.4.4) ROLE OF CULTURE IN INTERNATIONAL MARKET When asked to Asian Paints about the importance of culture while launching in the international market, the response received was, Yes, culture is really very important. It does matter a lot when we launch a product in the international market. Understanding the culture of a particular country makes it easy for us to enter in the market. For ex: when we enter in the European countries, if we go as Asian paints, people will hold different perceptions and they might not accept the company as it is an Asian country. So we prefer not to enter as Asian Paints, but as APL. As per the interview from Berger paints, it is clear that the company gives lot of importance when it comes to culture. According to the Global product Manager, To understand the culture of the target country is highly essential. If we know the culture then we also know we can capture the market. For ex: there has been lots of times 66

when the particular color did not work in a particular country and we had to remove it from there. Ex: when launching dark color paint, we will never enter Africa as we know it will not work there. From the interview with the Rajdoot Paints, it is clear that even this company believes in understanding the culture. According to the Global Product manager, The key to capture an international market successfully is to understand the culture of that country. If we do not have any knowledge of their culture, it is very much possible that we will not succeed in that country. There has been lot of times when a particular product proves out to be offensive to the customers. So, in order to attract more customers and to appeal them we have to mould the product according to their liking. As it can be seen from the above findings, understanding the culture is very crucial for the companies in order to launch their products successfully and to capture the international market. This can be justified with the literature review. According to Tse et al (1998), the understanding of the cultural differences on the marketing decision is important for the internal operations of the firm. The understanding of the influence of culture makes the firm capable of accommodating and adapting to the differences and hence minimizing noisy communications among executives and errors in decision making. As said by Asian Paints, some of the colors are not accepted in certain countries. This goes well with what Kale (1991) has stated. According to him, Culture to a large extent influences the taste of the people, their preference for color, and the peoples attitude towards the classes of the products. However, companies do not talk about the main dimensions of culture that has been defined by Hofstede and which has even been reviewed in literature. According to Hofstede there are four

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main dimensions through which culture can be defined. These dimensions make it easy to distinguish between the different types of countries.

4.5) CHAPTER SUMMARY In this chapter the findings from the electronic and telephonic interviews were interpreted and analyzed with respect to the various academicians and researchers in the field of new product launch. Different questions regarding the new product launch in national and international market were asked. Extracts from the review for each of the aspect has been quoted. There is a need for further research in this field. Recommendations for the companies regarding the new product launch are mentioned in the next chapter.

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CHAPTER 5 - CONCLUSION 5.1) INTRODUCTION The project looked at the critical success factors of the new product launch in both the national and the international market. The objective of this exploratory study has been shaped from the outset beliefs of authors and academicians in the field of new product development. The Indian paint industries that were interviewed revealed that they follow and take into the account what the literature says. But there are few factors of the new product launch which does not equate with the reality of the Indian paint industries which leads to make some suggestions for them. This chapter also presents some limitations of this study which should be kept in mind while doing the further research. The main conclusions that can be drawn here are that while developing a new product, the companies knowingly or unknowingly follow the stage gate process. They even focus on marketing mix while launching their product in the national market. When going to the international market, companies decide on the method of standardization and adaptation by looking at the status of the target market. The marketing mix followed in international market could be same or different from the domestic market based on the type of market. When it comes to culture, companies give the utmost importance to it and they believe that it is the key to success. 5.2) RECOMMENDATIONS As stated by the Asian paints regarding the work of R&D in the generation of the idea of the new product, even other companies should take this into account. They should not just take into the consideration the demands of the customers and what their competitors are doing. The suggestion of R&D can also work lot of the times. 69

During the stage of market testing, companies should not only focus on the customer feedback though it is very important but in addition they should also look for the marketing strategies that they are going to adopt. They should make the decision of what, where, when, why and how to launch. During the commercialization stage, companies should not only look and decide upon the tactics for launching in the market but they should also make the rough estimate of the cost, sale, and profits and should look at the strengths and weaknesses of the product. It is highly important for the companies to consider these issues. As said by Asian Paints, they follow both the strategies of developing a new product, i.e. developing a highly innovative product and developing just the advancement of the existing product. The company develops the product according to market fit and thus it proves out to be the most successful company. It is recommended to other companies to look at both the strategies and not to just stick at one while developing a new product in the market. When deciding on the product to be launched in the market via various marketing strategies, the companies should also take into the consideration the extent to which the product should be launched. Deciding the breadth of the product is also very crucial part while launching the product in the market. Some of the authors suggest that the broader product line allows the company to get the bigger share in the market. So, companies should take this into consideration. The companies should also follow proactive motives. Proactive motives have better qualifications to create new prosperous ventures since they create their own competitive environment, identify new opportunities and act upon them with

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persistence. It is possible for them to achieve high returns if they are being fast and first to enter the market. When pricing the product in the international market, companies should have knowledge of the influence of the bargaining power and good will on the strategies of pricing. Companies should also understand the factors that determine the degree of the standardization and customization of the international pricing strategy. The companies should also take into account the cultural dimensions mentioned by Hofstede. This makes it easy for them to understand the particular culture of a country. 5.3) LIMITATIONS AND FURTHER RESEARCH Every piece of research has its own set of limitations, which can arise during the course of conducting it. This research faced the following limitations

The sample size of the interviews being tested should be large enough to increase its validity. It was possible to interview the product managers of only 3 big Indian Paint companies.

The interview was conducted via mails and telephone. India being so far away and this study being done in U.K., it was not feasible to go to India and conduct the research. The interviewees were a little conscious of giving phone interviews. Face-to-face interview would have had an entirely different impact.

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The researcher in this study was a novice with no prior experience in conducting the interviews. The findings of the research might have been different had it been taken by an experienced researcher.

The present research carries some disadvantages entailed in the data collection approach of interviewing. Primarily, interviewing tends to reduce internal validity, as the process may cause research participants to respond according to what they believe the researchers scope might be, attempting to demonstrate an ideal behavior. In other words, respondent may try to deceive the researcher.

The interview of Rajdoot Paints did not prove out to be really beneficial because most of the times the answers that were received was that they follow what their competitors do.

5.4) MANAGERIAL IMPLICATIONS Being first to market does work in some ways and developing highly innovative product can have both the advantages and disadvantages. The best strategy is to look for real product advantage: superior quality products which bring out value for money, those which have high performance characteristics, and are more superior to the rival products when it comes to serve the needs of the customers. The task of marketing, i.e. initial assessment of market, the detail study of the market, tests or trials with the customers, the trial sell and the launch itself, are very strong drivers of performance. The balance between the technological process and the marketing orientation must be made.

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The success of the new product can be at the risk because it can have lot of errors and the problem of execution can also persist. For this there should be strong market orientation and the stage-gate format should be used, as the companies have successfully done. A good home-work is also necessary for the new product success. A proper understanding of the market place, the needs and demands of the customers competitive situation and the influence of culture makes it possible for the better performance on all the performance measures. 5.5) SUMMARY To conclude, new product launch involves lot of strategies and launching tactics. These strategies and tactics should be carefully applied as this can even put the company at a risk. The Indian paint industries follow all the procedures that are important while developing and launching a new product. The Indian economy is on boom and so is the Indian paint industry. If the above recommendations would be followed by the company, they can achieve the goal of growth both in the terms of sales and profits.

Total word count: 17,595.

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APPENDIX APPENDIX I A BRIEF OVERVIEW OF ASIAN PAINTS, BERGER PAINTS & RAJDOOT PAINTS ASIAN PAINTS: Asian Paints is engaged in manufacturing of paints. The company offers interior and exterior wall paints, automotive paints, powder coatings, auto refinish paints, and wood finishes. It operates in 21 countries and has 29 paint manufacturing facilities in the world servicing consumers in over 65 countries. It is headquartered in Mumbai, India and employs 3,924 people. Asian Paints is India's largest and Asia's third largest paint company today, with a turnover of Rs 44.04 billion (around USD 1.1 billion). The company has an enviable reputation in the corporate world for professionalism, fast track growth and building shareholder equity. Source: http://www.datamonitor.com/companies/company/?pid=EDEF5166-5D28-

4A65-A10C-C0712651BD2E

BERGER PAINTS: Berger Paints is the culmination of over seven-decade process of evolution and growth that began in 1923. Its growth has been closely linked with the business and industrial development of modern India. The Country's third largest paint manufacturer and the second largest decorative paint player, Berger is headquartered in Calcutta and services the market through a distribution network comprising of 75 stock points and 12,000+ paint retailers. It is involved in the Manufacture of paints for the decorative and industrial markets, including powder coatings. Berger Paints India (Berger Paints) is engaged in the manufacturing and sale of paints, varnishes and enamels and powder coatings. The company sells its products under the brands Luxol 82

Silk, Rangoli and Weathercoat. The company operates in India, Nepal, Cyprus, and Russia. Source: http://www.datamonitor.com/companies/company/?pid=C992F30C-1C99-

46EA-A3C8-D00FF1A33AFD

RAJDOOT PAINTS: Rajdoot Paints Limited (RPL) is a company incorporated on November 1, 1975 as a Private Ltd Company. Company has wide range of products which has its application in Domestic & Industrial use. The company markets its products under the brand name RAJDOOT, SPRED and YAK. The company's products have already established brand loyalty and awareness in the market. Company has a network of 26 Branch Offices across the country, which in turn service over 6,000 channel partners. Source: http://www.123eng.com/forum/viewtopic.php?t=26532

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APPENDIX II - INTERVIEW QUESTIONNAIRE: Interview questions of product managers: Name: Age: Company: Designation: Organization: Experience (NPD): Q1. From the recent developments, it has been evident that your company is coming up with new products. Why do you think it is important? Q2. In the last few years how many new products have you launched? Q3. What is the success ratio of the new products development? Q4. How do you decide on the new products to be launched? What factors (idea potential, market evaluation) do you consider? Q5. How do you decide your target market and the marketing strategies? Q6. Do you think pricing is an important aspect when launching a product? Q7. How much importance do you give in promotion of a product? Q8. What about the channel of distribution? What do you prefer? Q9. Is there anything that you would like to tell which has been left out?

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Interview questions of Global product managers: Name: Age: Company: Designation: Organization: Experience: Q1. On what basis do you decide about the internationalization? Q2. How do you decide the product that and the target market? Q3. What marketing strategy do you adopt when launching a product in the international market (Standardization or Adaptation)? Q4. How do you decide on the marketing mix of the product when launching in the foreign market? Q5. What other factors do you consider (like cultural) when launching in foreign market? Q6. Is there anything that you would like to tell that has been missed out?

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