EASTERN INTERNATIONAL UNIVERSITY

Final Report

Lecturer: Mr. Vo Thanh Long

Group Members IRN

Nguyen Huu Dan Duyen 1632300153

Nguyen Thanh Trung 1632309004
Pham Thi Ngoc Anh 1632300061
Tran Thi Ngoc Linh 1632300264
Huynh Thi Diem Quynh 1632300231
Tran Hoang Phi 1632300038
Na Hyeon Jun 1332300001

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Table of Contents
Type chapter title (level 1) 1
Type chapter title (level 2) 2
Type chapter title (level 3) 3
Type chapter title (level 1) 4
Type chapter title (level 2) 5
Type chapter title (level 3) 6

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I. DATA ANALYSIS (THE COFFEE HOUSE)
1. Background information
a. Job title and functional role: a new product developer and reviewer
b. Years in this product industry: 5 years
c. Years involved in NPD evaluation: 3 years
d. Company’s product industry: beverage products
e. Target customers: everyone who have demands for drinks
f. Company ownership type: a joint stock company
g. Company size: About 3,000 employees
h. The interviewee takes part in creating idea, screening idea and product testing.
2. NPD overview
 Within a year, there are lots of new products, but it will include more than 4 product
groups and each group will have a variety of different beverages.
 The Coffee House has about 10 to 12 new ideas per year (they are from customers,
outside markets, the needs and tastes of young people). Then they choose to lauch at
least 4 products a year. So that, each season will have at least 1 new product.
 It takes about 3 months to launch a new product.
 There are 5 stages in the new product development process
 Stage 1
Idea screening: they do the survey and evaluation based on customers needs and want.
Then, they choose some of the ideas that matches with TCH's concept.
 Stage 2:
Business analysis: Accounting and purchasing departments will calculate and estimate
the cost and the revenue that they can gain from the new product.
 Stage 3:
Product testing: After selecting an idea, they make this product for R&D team to test and
evaluate it base on their own idea and taste. When everyone agree with the new product,
they will send the idea to the marketing department.
 Stage 4:
Test marketing: They will test the new product in 10 stores and these 10 stores will be the
stores with the best product consumption. After 10-14 days, they know the results and
they will decide whether they should bring the product to the customer and run the whole
system or not.
 Stage 5:

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 Post-launch evaluation: after about 2 months of market testing, they will evaluate the
success level of the product. If the product can meet their KPI (29,000 units/ 2 months), it
means this new product is successful.
3. Main criteria

CRITERION USED BY INTERVIEWEE

1 Customer acceptance X
2 Customer satisfaction X
3 Sales objectives X
4 Sales growth
5 Market share
6 Sales in units X
7 Break-even time
8 Profit-objectives X
9 IRR/ROI
10 Margin
11 Stays within budget X
12 Introduced in time X
13 Product performance X
14 Quality X
15 Time-to-market
16 Product uniqueness
17 Market potential X
18 Marketing chance X
19 Technical feasibility X
20 Intuition X
21 Seasonal rules X

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 GATES used GATES that the interviewee
GATES from the literature Notes
in the firm engages in

1.Product idea screening X X

2.Product concept testing

3.Business Analysis X

4.Product testing X X

5.Market testing X

6.Post-launch evaluation X

4. Evaluation criteria and rules

The Coffee House uses 5 main criteria

a. Product performance: The Coffee House evaluates a new product base on the KPI that they
have set before. For example, they have set KPI for Christmas item of 29,000 glasses for 30
days from November and ends at Noel.
b. Operation way: a new product is feasible when it can match with the available ingredients,
machine and materials
c. Seasonal rules: The Coffee House tends to create new products base on the season. The
available material like fruits will change in different seasons, so they always choose the
most suitable type of fruit to create new drinks in a specific season. The fruit must be fresh,
easy to operate, its cost and loss is not much.
d. Market trends: They provide new products base on the current demand for taste of the
customers.
e. Quality: They also concern about the customer's health, because most of the customers who
come to The Coffee House are interested in whether the product brings them health or not.

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Compare to the last two years, the criteria of the company is increasing because The Coffee
House is now targeting more customer segments than before, and targeting customers who have
a habit of consuming healthy drinks and at the same time more diverse, it must be more.

II. DATA ANALYSIS (NHAT AN CAFÉ)

1. Background information about interviewee and the company
a. Job title and functional role: Ms. An – the owner of Nhat An café.
b. Years in this product industry: 5 years (from 2015 until now)
c. Years involved in NPP evaluation in whole career: about 4 years
d. Company’s product industry: Food and Beverage.
Target customers: everyone who have demands for food and drinks
e. Company ownership type: Limited liability company
f. Company size: about 36 employees
2. NPD overview
 Generally, Nhat An has 18 new ideas in a year. Ideas are generated in many periods in a
year, especially in special holidays such as Tet, summer, mid-autumn, Christmas, etc.
 There are 5 stages where NPPs are evaluated to decide which ones can continue: Idea
generation, Idea screening, Product and market testing, Business analysis, and Post-launch
evaluation
 Idea generation: There are 6 staff, each staff is responsible for inventing three to five
recipes. In general, there are at least 18 new ideas in total.
 Idea screening: Based on price per unit, quality, colors, they will screen and choose
ideas that they think they are feasible.
 Product and market testing: After selecting appropriate ideas, all departments in the
company will join in evaluating these ideas based on each person’s taste to adjust and
improve the drinks. In this step, both staff and selected customers will be free to try
the drinks.
 Business Analysis: in this step, they will analyze and estimate the profit that they can
gain from the new products.

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  Post-launch evaluation: After 3 months of market testing, they will evaluate the
success level of products relying on revenue, profit to see which ideas are the best.
They expect they can gain 30-40% profit from revenue, and about 100 units in one
month.

In which, the interviewee takes part in Idea screening, product testing, business analysis and post-
launch evaluation.

CRITERION USED BY INTERVIEWEE

1 Customer acceptance X
2 Customer satisfaction X
3 Sales objectives X
4 Sales growth
5 Market share
6 Sales in units X
7 Break-even time
8 Profit-objectives X
9 IRR/ROI
10 Margin
11 Stays within budget X
12 Introduced in time X
13 Product performance X
14 Quality X
15 Time-to-market
16 Product uniqueness
17 Market potential X
18 Marketing chance X
19 Technical feasibility X
20 Intuition X

GATES that the

GATES used
GATES from the literature interviewee engages Notes
in the firm
in

1.Product idea screening X X

2.Product concept testing
3.Business Analysis X X
4.Product testing X X

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 5.Market testing X
6.Post-launch evaluation X X

3. Evaluation criteria and rules

Nhat An company use three main criteria to evaluate an NPP. The first criterion is Product
performance, second is market acceptance, and the other is Profit objectives.

 Product Performance: The company uses Product Performance as the first important
criterion to evaluate an NPP. In this criterion, they require the appearance, color, and the
taste of the drinks to make sure that customers will be attracted and want to try the drinks.
 Market acceptance: As Ms. An said in the interview, she provides products based on the
trends of the community, the current demands or customers. For example, today people care
more about diet, so she decides to provide healthy drinks which include fresh ingredients.
 Profit objectives: The most important thing that the company care is the profit. The owner
expect that she could earn 30 – 40% profit from revenue. However, if any products are
interested by majority of customers, she would accept the profit at 10-20% of revenue.

Sometime, the company also base on intuition to evaluate products. In which, she often uses
intuition in the product testing stage because in this stage her feelings are various. However, she
would not use intuition in the last stage.

Compare to the last two years, the criteria of the company always change. The company
focus on making drinks with less complexity. She would drop ideas which require complicated
steps

III. COMPARISON ANALYSIS (THE COFFEE HOUSE AND NHAT AN CAFÉ)

1. What are the similarities and differences in their NPD process between the coffee house
and Nhat An?
1.1. General information

a. Similarity between The Coffee House and Nhat An

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 The first similarity was that both interviewees had similar careers. Specifically, both of them
have been in the beverage industry for five years, and they have been in the evaluation of
new product projects for more than three years, TCH for 3 years and NA for 4 years
respectively

 The second similarity is that the target customers of both companies are similar. Neither
company had a specific segment. In other words, their target customers represent everyone
who have demands for drinks

 The third similarity is that both companies conduct NPD on a team basis. The Coffee House
has been working with the R&D team and Marketing during the new product development
process, and Nhat An also had a bartender team of 6 members.

b. Differences between The Coffee House and Nhat An

 The first difference is the size of the company.

 The Coffee House is a large joint stock company with approximately 3,000 employees.

 Nhat An is a small, limited liability company with approximately 35 employees.

 The second difference is that the number of new product launches and ideas every year.

 The Coffee House had more new product launches and ideas every year than Nhat An.

 The Coffee House has been releasing a new product every quarter, approximately every
three months, with a minimum of 4 ideas every 3 months and selected from 10 to 12
original ideas.
 Nhat An does not release new products every year. The menu is updated every two
years. For example, it plans to add 7 to 8 new products in two years.

 The third difference is the selling price.

 The Coffee House is a famous brand, so the price is set at a higher price from 49,000 to
69,000 compared to Nhat An.

 Nhat An is a small brand, so the price is set at a cheaper price from 20,000 to 40,000
compared to The Coffee House.

1.2. NPD stages

a. The similarity in the number of NPD stages

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  Both TCH and Nhat An have similar pattern in the number of NPD stages. There are 5
stages for NPD process: Idea generation, Idea screening, Product and market testing,
Business analysis, and Post-launch evaluation

b. The difference in the GATES that the interviewee engages in

 TCH interviewee: creating idea, screening idea and product testing.

 Nhat An interviewee: Product idea screening, Business Analysis, Product testing, and Post-
launch evaluation

GATES that the

GATES from the literature GATES used in
interviewee engages Notes
(The Coffee House) the firm
in
1.Product idea screening X X
2.Product concept testing
3.Business Analysis X
4.Product testing X X
5.Market testing X
6.Post-launch evaluation X
GATES that the
GATES from the literature GATES used in
interviewee engages Notes
(Nhat An) the firm
in
1.Product idea screening X X
2.Product concept testing
3.Business Analysis X X
4.Product testing X X
5.Market testing X
6.Post-launch evaluation X X

c. Similarities in NPD stage strategies

 Both TCH and Nhat An emphasize great importance to financial aspects in the process of
creating and adopting an idea, such as how much money will guarantee a profit, how much
material is needed, and they also need to know how long it will take to complete a cup. In
other words, both companies strictly consider the cost of raw materials, the revenue of a
new product in the NPD Idea phases, which are idea generation phase and idea screening
phase.

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  However, for Both TCH and Nhat An, customer evaluation and reaction have been the
most important in the product testing process and post-launch evaluation process.

d. Differences in NPD stage strategies

 In the idea screening stage, TCH conducted a new product survey based on customer needs,
but NA selected ideas based on feasible ideas from staff.

 In the product testing phase, TCH will test the new product in 10 stores with the best
product consumption. But NA strategy is that both staff and selected customers will be free
to try the drinks.

 In the post-launch evaluation stage, TCH evaluates the success level of the product after
about 2 months of market testing. But, NA evaluates the success level of the product after
about 3 months of market testing

2. Criteria :
a. The comparison between The Coffee House and Nhat An in terms of criteria

 In NPD process, both companies regarded the taste and price of the product most important
criteria. The drink should be delicious and beautiful, and the price should be affordable and
reasonable.

 However, as the next important criterion, The Coffee House emphasized the importance on
the (health of customers) in evaluating whether it was a good product, while Nhat An
emphasized the importance on the presentation of the drinks must be eye-catching (visual
aspects).

USED BY USED BY
CRITERION INTERVIEWEE INTERVIEWEE

(The Coffee House) (Nhat An)

Customer acceptance X X

Customer satisfaction X X

Sales objectives X X

Sales growth

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 Market share

Sales in units X X

Break-even time

Profit-objectives X X

IRR/ROI

Margin

Stays within budget X X

Introduced in time X X

Product performance X X

Quality X X

Time-to-market

Product uniqueness

Market potential X X

Marketing chance X X

Technical feasibility X X

Intuition X X

b. The comparison between the first two years and present

 Unlike in the first two years of TCH, currently, more criteria such as product images and
quality design are additionally used.

 The reason why TCH need to put more criteria: The Coffee House is now targeting more
customer segments than before, and targeting customers who have a habit of consuming
healthy drinks and at the same time more diverse, it must be more criteria.

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  Unlike in the first two years of Nhat An, now there are fewer criteria than in the past.
Currently, Nhat An want to follow a simple trend.

 The reason why NA need to put fewer criteria: Nhat An also had a few strange dishes,
combining many kinds of fruits to attract customers, but the cost would be high but it is
unlikely that the customers would like it anymore. the product must be simple but has to
catch up with the current trend. So, Nhat An does not need to put many criteria because they
just follow simple trend.

3. What are the interesting points that one firm has and the other are not?
 One interesting point is that Nhat An adopted the method of updating (renewal) the menu
every two years. On the other hand, The Coffee House's seasonal strategies (3 months
/quarterly) were mostly used.

 Surprisingly, when comparing the number of the usage of criteria in the first two years and
the present, TCH stressed that further increases in criteria were important in the NPD, but
Nhat An rather declined following a simple trend.

4. What can we learn from them?

a. At each stage, different specific criteria become important.

 For example, financial criteria are the most important in the process of creating ideas and
the adoption (screening) process, whereas, customer reaction and evaluation are most
important in product testing and post-launch process.

b. It is important to consider particular trends such as seasons or special days in the NPD
(idea generation) process for beverage industry.
 For example, Both Nhat An and The Coffee House seem to highly consider the concept
of Christmas or Seasonal concepts such as summer or winter season in new product
development.

c. It is important to focus on one key new product rather than focus on developing more
new products.

 If we focus on many products in NPD process, there is a concern that not only the cost
will be high, but also the quality will be lowered.
d. We learned the importance of working in teams rather than individuals in the
development of new products. Also, each member can participate in more stages, not just
a stage.

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e. We learned that as the material acquisition and cost are different for each season, it has a
great influence on what kind of new products are developed in beverage industry.
 For example, because it is the time to harvest strawberries in the winter season, the cost
of obtaining strawberries is cheap and the acquisition of ingredients is easy, so we can
predict it can be easier to develop new products related to strawberries.
f. We learned that in the process of launching, adding a story on the new product is
important to the success of the new product in terms of marketing strategies.
 In the process of new product launching, with the story-telling promotion, TCH was
quite successful as a lot of customers sent positive feedbacks such as meaningful stories,
good effects, and the increasing sales of mooncakes in The Coffee House.
g. Do not use hunch during product testing.

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