NPD - Part 2

September 21, 2010

1 Introduction
Over the past decade the technological innovations have reached very exciting and unbelievably realistic
heights that couldnt have been foreseen in the past. Amongst many of such useful and desired innovation
is the iVo. What is it? Well if you look closely at the computer and its value added accessories which have
helped mankind easily carrying out several useful tasks such as printing out documents, scanning, editing
videos, graphics and so on and so forth, the iVo brings to you a whole new perspective.
The technology industry in Sri Lanka has emerged considerably over the past few years and with the
introduction of the iVo we believe we can capture the recognitions of millions over the world.
The primary focus and aim in composing this report is to provide the management of Soft Logic with a clear
and effective development plan that would help in the approval of this exciting and new product invention
which is in collaboration with their company vision and goals.
This report will include the idea screening, which provides different feasible products that were considered
before deciding on the final most demanding and effective product, the iVo. It was followed by an in-depth
market analysis for this product along with the business analysis. Test marketing will be carried out with a
clear informative program to both give an idea to the potential consumers as well as to get a feedback on
the probable demand for and acceptance of the product. Upon realization, the commercialization and
launch of the iVo would take place. The final and most influentially vital aspect, the future prospective
directions would then be identified.

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2 iVo: The Total Product

The iVo a one of a kind product that cannot be compared to non in terms of its breath taking functions will
attract its target market both locally and globally. The products functions, design, colours and user
friendliness will benefit one and all.
Even though Soft Logic has several close competitors in the form of IBM computers, Nano computers,
Microsoft and PC house, none will compete with the iVo as it is a completely fresh and new concept that
will be copyrighted as well as difficult to imitate, also achieving a first mover competitive advantage if
imitated in the long run.
The target market for this product would be both genders above the age of 16 who are primitively students
and professionals. Since the product

2.1 Product specification summary

The iVo is a system that recognizes any persons voice and accent, converts the spoken words and sounds
into files that will be transferred to a machine-readable input and produce text files / printouts by use of
hardware device or a computer.
The Voice Recognition Systems features comprises of the following which will be beneficial to different
types of uses at different user situations;

The device recognizes speech up to 200 words per minute

It has the capacity of identifying any accent of speech

It recognizes speech for a distance of maximum 200 meters

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

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

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There are various technologies that should be used to process input data. In order to comply with the latest
technologies, the product should use the best technologies in terms of a good quality product; therefore
one of the techniques used in speech processing is VAD (Voice Activity Detection). (Cook, 2002) This
enables the hardware device to translate the speech into a coding format and thus detect the entire
speech. The performance of this system is determined by the accuracy and speed of this device. The
accuracy is usually rated using Word Error Rate (WER) where as the speed is measured by the use of real
time factor. (Cook, 2002)
In order to supply software and hardware equipments needed for the voice recognition system, Evertek
Computer Corporation was selected. This was selected in order to provide a quality product to the market
as this company sells quality deals at aggressively low prices. This is a worldwide trader of computer
accessories and equipments. The company was formed in 1990 and has worked for almost nineteen years
in the industry. (Evertek Corporation, 2009) Evertek Corporation is a main supplier of software and
hardware accessories to top companies such as IBM.

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

The linkage of the product strategy with the company objectives

Technological and financial feasibility of the product,

Market Demand and marketability

Competition

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

3.1 Shower curtain with compartments

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

3.2 Butter stick

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

3.3 Skirt plus t shirt

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

3.4 Remote pram

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

3.5 Contact sun glasses

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

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list after the idea screening process as it was also not aligned with the organizations goals, objectives and
values.

3.6 Ring phone

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

3.7 Carrot ripple ice cream

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

3.8 Hair colouring shampoo

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

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4 Concept Testing
In order to carry out the concept testing, questionnaires were distributed to the potential target market. The
number of total questionnaires distributed is 150 among which 27 were rejected due to errors and rest of
the 123 questionnaires were taken into consideration for the results.
As a result of the analysis of the questionnaires the following results were found out;

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

Percentage of the target market not using a voice recorder is 50%
Therefore 50% of the target market is not captured yet. This is the potential target market which
can be targeted in order to widen our customer base. The reason behind 50% of the market not
using a voice recorder is due to the complexity of usage of the voice recorders in the market.
o Both male and female equally uses voice recorder which identifies that gender has no bias
towards it. But, it revealed that females tend to use it very often than males.

On the basis of age;

o People who are between the ages of 16-25 are highly using voice recorder who are mostly
students and young professionals.
o The second majority of usage lies between the age of 40-60 which includes professionals
who are at the maturity stage of their career and heading towards retirement.

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

Among the target customers the majority of usage is by the students amounting to 59%.
o Surprisingly the next majority of users were under the category of other where theyve
specified jobs like travel consultants / tour guides and secretaries /assistants. This gave us
a different set of target customers whom can be targeted for our new product.
o Specifically among students females mostly use voice recorder in comparison with the
males.

The current problems customers face in using a voice recorder would be;
o Unable to store 52%
o Voice clarity 26%
o Reach 13%
o Other - Transferring 9%
o It seems that customers are not so concerned or worried about translation in a voice
recorder.

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

When questioned about our new product iVo 60% of the respondents were absolutely ready to
use it and rest of the 40% were willing to try it at least once.
o It is a positive impact that none of them said NO to try our new product. This shows that
the market reaction to our new product iVo is very much positive.

When considering the benefits for which the customers are willing to buy the product it can be
ranked as follows;
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o Can get the printed version of the recorded voice 20%

o Identification of any type of accent 18%
o Recognizes speech for a distance of maximum 200 m 14%
o Translation from one language to the other 14%
o Very high speed in recognition of voice12%
o Recognition of different languages 11%
o Portability and user friendly 11%

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

o Camera
o Pen drive
o Display
o MP3

4.1 To profile the intended market

Current buying patterns and Existing segments

16 and above

Both males and females

Any income level earners

Students, professionals and tour guides/ assistants

Purpose to record lectures and conversations

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Customers view of available products

No similar product existing in the market

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

Best brands are Sony and Panasonic

4.2 To assess purchase intentions and product positioning:

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

Gap in identifying potential target segments

Gap in customer expectation and what we intend to provide

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

4.3 To refine and improve the concept:

Overall Product
Overall the product was accepted by the target sample and the market reaction was positive
Specific features and attributes

They do not prefer to have a translation feature

But they wish to have features such as;

o Pen drive
o Camera
o Display
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o MP3

Different languages to be printed

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

5 Market Analysis
5.1 Market for iVo
5.1.1 Market Size Actual & Potential

Actual market size is the total amount in the population who will purchase iVo. The markets we intend to
attract include professionals such as journalists, students, doctors, lawyers, managers etc. During the
expansion of our product, we intend to market our product to other technological companies such as Abans
etc. This will assist to bring about a higher customer base. In the long term, we intend to expand our
business to other countries which will assist to bring about greater growth and profits.
Currently the market size is quite small where we target only the population in Colombo. But we intend to
widen the market size by targeting all the other regions around Sri Lanka and also to expand internationally.
5.1.2 Market Growth

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

It is clear that the world has developed a great deal. In the past, student and professionals used books in
order to record data. With time, computers, voice recorders and other technological advancements have
developed. We believe that this product to reduce the time and effort taken to listen to a voice recorder as
the material can be printed. This will assist the user to read faster and highlight key areas. Therefore we
believe that our product is following market the trend.
Having in concern our product concept we intend to become the trend setters in the market in terms of
breaking the norm that services cannot be stored. We create a new lifestyle among our target market
through which we segment them. This will be of great advantage for a technological company like ours as
the world is moving fast with the growth of technology.

5.2 Macro- Environmental Analysis

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

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

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Customers are the core determinants of the success or failure of a business. Therefore it is necessary for
us to understand that the customer is king. We hope to provide our customers a product with a high quality,
capacity and reliability. The main focus of our product is to provide customers a with a user friendly and
convenient product.
B2B & B2C
Our promotional campaign will introduce our product to local companies in Sri Lanka. They could provide
our products to the senior executives and management within their organizations which will assist them to
save time and increase productivity. Local companies would also be given incentives and information.
Direct sales to consumers will be made through special orders, in store purchases and sales promotions.
5.2.3 Suppliers

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

5.3 SWOT Analysis

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

Unique, new and exciting

User friendliness

The device is portable and user friendly which can be taken every where you travel
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Consistent increase in potential customers as people over 16 will realize the benefits of owning the
iVo.

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

First mover advantage, competitive advantage

The device recognizes speech for a distance of maximum 200 meters

The devices ability to translate one language into another

5.3.2 Weaknesses

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

Unable to test market, through actual product

Could be easily copied by competitors

5.3.3 Opportunities

Can be expanded globally targeting new markets in the future

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

5.3.4 Threats

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

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

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

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5.4 PEST Analysis

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

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

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

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

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

6 Business Analysis
6.1 Financial Analysis
6.1.1 Initial Investment

Machinery
Vehicles
Office Furniture and Equipments
Launch
Total

Vehicle Cost (Rs.)

Cost per unit

2575000
3575000

Van
Lorry
Total

Cost
Rs.
12050000
8725000
5750000
11000000
37525000

Quantity
2
1

Total
5150000
3575000
8725000

6.1.2 Initial Cost

6.1.2.1Budgeted Labour Cost
Cost per month
Rs.
IT Manager

51750
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Software Developer
Systems Analyst
Project Manager
Total

414000
207000
230000
902750

Total

Cost per year

Rs.
10833000
287500
11120500

Type
Software Development Staf
Factory Workers

6.1.2.2Budgeted Equipment (Hardware and Software) Cost

Quant
ity

Microphone
Speech recognition
Software
Portable Hardware
device/plastic
Sound card
Half Sheet (A1) Small size
USB cable
Ink cartridge
(Small) - Black
Battery Charger
Rechargeable
Battery
VRS device holder
CD Rom
Memory Chip
Accuracy detection
software
Speed detection
software
Steel required for
the device
Text formatting

Production
cost per unit

Cost of production
for 500 units

Nos.
2

Price
of a
unit
Rs.
2300

Rs.
2300

Rs.
1150000

8000

2000

1000000

1 Kg

20

20

10000

400

400

200000

1 Kg

50

50

25000

100

100

50000

100

100

50000

1500

1500

750000

800

800

400000

1
1
1

750
100
8000

750
100
4000

375000
50000
2000000

9000

6000

3000000

2300

2300

1150000

50 g

11

11

5500

5000

3500

1750000

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software
Total

23931

11965500

6.1.3 Projected Cash flow Statement for the first three years

Inflows
Capital
Sales

2010
Rs.

2011
Rs.

2012
Rs.

400000
00
325000
00

422500
00

528125
00

Total Inflows
Outflows
Fixed Asset
Purchases
Purchases
Carriage Inwards
Direct Labour

725000
00

422500
00

528125
00

135250
00
253250
00
300000
111205
00

278575
00
300000
113985
13

306432
50
300000
116834
75

60000
480000
480000
420000

66000
528000
504000
441000

72600
580800
529200
463050

Administrative
Expenses
R&D
Rent
Electricity
Telephone

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Maintenance
Other Expenses
Marketing and
Promotional
Expenses
Distribution
Expenses
Insurance
Expenses
Total Outflows

240000

252000

277200

475000

400000

360000

100000

50000

20000

100000

100000

100000

Cashflow
Balance at the
beginning
Balance at the end

526255
00

418970
13

450295
75

198745
00

352987
.5
198745
00
202274
88

778292
5
352988

198745
00

813591
2

6.1.4 Projected Income Statement for the first three years

Revenue
Cost of Sales
Gross Profit
Expenses
Administrative
Expenses
Marketing and
Promotional
Expenses

2010
Rs.
32500000
(255860
00)
6914000

168000
0
475000

2011
Rs.
42250000
(2686530
0)
1538470
0
179100
0
400000

19

2012
Rs.
52812500
(2820856
5)
2460393
5
19228
50
36000
0

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September 21, 2010

Distribution
Expenses
Insurance

100000

50000

20000

100000

100000

10000
0

Total
Profit before
tax
Tax (35%)
Net Profit

(2355000
)
4559000
(1595650
)
2963350

(2341000)

(2402850)

1304370
0
(4565295)

2220108
5
(7770380)

8478405

1443070
5

6.1.5 Fixed and Variable Costs

Rs.
Variable Costs
Equipments
Total

23931
23931

Total

11120500
60000
480000
420000
480000
240000
475000
100000
100000
13475500

Fixed Costs
Direct Labour
R&D
Rent
Telephone
Electricity
Maintenance
Marketing and Promotion
Distribution
Insurance

6.1.6 Ratio Analysis

6.1.6.1Breakeven Analysis
Breakeven Point
SP
VC
Contribution
Fixed Cost

65000
23931
41069
13475500
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Breakeven Point = Fixed Cost / Contribution

328 units

6.1.6.2Return on Investment (ROI) forecasts

Year
2010
2011
2012

%
7%
21%
36%

6.1.6.3Payback Period
Year
0
2010
2011
2012
Payback Period

Cashflow
-40000000
19874500
20227488
8135912

= 1+ 20125500 / (20125500 + 101988) =

Cum. CF
-40000000
-20125500
101988
8237900

1.99 years

6.1.6.4NPV Analysis
Year

Cashflow

DCF @ 5%

40000000
19874500
20227488
8135912

2010
2011
2012

21

0.952
0.907
0.864
NPV

Present
Value
-40000000
18928095
18346927
7028107
4303130

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September 21, 2010

IRR

7.2%

6.2 Risk Assessment

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

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

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

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

6.2.4 Bargaining power of customers - LOW

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

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6.2.5 Intensity of the current competition - LOW

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

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

8 Test Marketing
The aim of test marketing is to test the marketing mix of our product iVo. During the product launch a roll
out strategy will be incorporated. Therefore, a test market was carried out due to this reason. This assisted
us to understand the launch as well as the commercialization process and the amendments required in
order to improve the final plan. Test marketing assisted us to understand the expected sales in order for us
to break even as well as the importance of the marketing mix.
Our test market consisted of males (55%) and females (45%) of journalists, lawyers, doctors, students and
other professionals within the Colombo area. Factors tested included storing, voice clarity, reach and
transferability

8.1 Results from Test marketing and Questionnaires

The test marketing results were conducted through focus groups, Questionnaires and interviews. According
to research, the questionnaires were formulated with simple and questions that are easily understandable.
It was clear that the test marketing identified our product to be feasible due to the positive responses we
received. It was clear that males preferred it more than females and that the age group from 16-25
preferred it the most. Research shows those students (59%) are the highest purchasers of our product.
The overall result of the test marketing was positive and favourable towards our product with regards to
price, features, preference, needs, benefits etc.

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8.2 Modifications made after test marketing

It was clear that the overall concept was accepted by the target audience. Yet, certain modifications were
preferred to specific features and attributes of the product.
They did not prefer to have a translation feature. Other features they preferred to have were the pen drive,
camera, display, different languages to be printed as well as the portability and user friendliness of our
product.
Promotions:
It was evident that the target audience preferred a launch party for the iVo. This is in line with the futuristic
concept. Therefore, we propose a cocktail party which will be launched the night before the store opens.

9 Commercialization
The final stage in the new product development process is commercialization, the decision to market a
product. The importance of having a proper product mix is crucial for a vehicle to be commercialized,
especially to target for the first time. If this is done correctly, we can capture our potential customers;

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consumers will know about our product specifications, value added services and so on. All promotion
strategy, price strategy, distribution strategy and even the product strategy should be carefully organized,
also they are discussed below.

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

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

9.3 Place
There are 101 soft logic branches island-wide. We will be distributing this product across our branches in
the initially targeted geographical region which is the western province. The product is set to distribute
directly to the end user. Based on the response of the customers, we will continue to distribute the product
through our main dealer IBM.
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9.4 Promotions
According to (Belch & Belch, 2004), a basic tool used to accomplish an organizations communication
objectives are often referred to as the promotional mix. Many organizations at present use elements/
promotion tools such as advertising, direct marketing, internet marketing, sales promotions, public relations
and personal selling to communicate with the consumers. Thus to get the message through we will use a
variety of promotional tools.

Event marketing

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

News paper & Magazine advertisements

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

Sales Brochures

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

Direct mails & Pop- ups

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

Mass Media

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

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

10.1 The 5 Ws of Event Launching

10.1.1

What

This basically refers to the contents of the particular event. If the content of an event goes hand in hand
with the desires of the audience, the event is more likely to be a successful one and vice versa. The event
content must be pre determined by the organizers in order to fulfil the campaign objectives.
As our initial point of showing our colours we hope to launch with a tremendous party, not in the form of
quantity, but rather in quality. The main objective of the launch is not only to create awareness; also mainly
to earn the good will of the invitees are they are not only part of our target audience the innovators, but they
are prominent entrepreneurs and socialites forming the main part of the Colombo elite. This means that
networking with them would gain iVo an abundance of advantages. Thus a cocktail party will be organized
targeting corporate clients mostly from the technological Industry.
10.1.2

Who

The launch would primarily target the trend setters of the exclusive organizations in Colombo. This would
include the innovators who acquire added value from popularizes a trend or from being the first to do
something. This would also include the board of directors of our company, higher management teams of the
leading technological (software providers) and telecommunication organizations in Sri Lanka as well as well
as some predominantly selected individuals to represent the target market (well known journalists, well
performed senior students from universities, etc.).
10.1.3

When

We decided the best date for the event would be 24th of September, Friday 2010. It will be held from
7.30pm till 11.30 pm. Friday was selected because during interviews with our clients they mentioned that

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weekends tend to be busier and has been scheduled for their formal meetings and personal events. Hence,
Friday night will give them the ease of mind to enjoy and get involved in the event.
10.1.4

Where

The launch will be held at the Mount Lavinia Hotel, The Terrace. We chose this place as this was
Designated by Newsweek magazine as one of the "World's best gathering places", and can enjoy the
enchanting experience of dining under the stars, seduced by a soft tropical breeze, while lounging by the
pool. This place is renowned for its food, hospitality of the service and the prestige, the attributes our target
segment is very much concerned with.
10.1.5

Why

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

11 Budget
Cost
Rs.
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Idea Generation and Screening

Concept Testing and Research
Business Analysis
Prototype Development
Test Marketing
Commercialization

Nominal
100000
50000
23931
500000

TV Ad
Radio Skit
Magazines
Direct Mails
Sales Brochures
Sales Promotions
Launching Ceremony
Machinery
Vehicles
Office Furniture and Equipments
Salaries
Raw Materials
Total Cost

200000
50000
40000
10000
75000
100000
11000000
12050000
8725000
5750000
11120500
11965500
61759931

12 Future Direction
The future direction of any organization is important and therefore must be thought of and planned well
ahead. iVo have mapped out a path way in order to expand our potential. The Research and Development
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team of iVo will continuously obtain feed-back from customers and will eliminate all the loop holes in our
product to become successful once we enter into the other regional markets.
Furthermore, we will be looking forward to add many more features and customize the product to match
individual preferences. This will become an added benefit which we are planning to provide our customers
where they can visit our web-site and provide us with the details and we will make the products according
to their preferences.
Once the local market is matured and becomes saturated we will be moving towards gaining international
market share as well which will be again can considered as an approachable.

13 Conclusion

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The past years have been the era for technological innovations which took people to the heights of
excitement where everything was made easy and quick. In todays world, technology is the knack of so
arranging the world that we don't have to experience it. In a technologically well to-do era for
companies to survive in the business world it is necessary for organizations to continuously cope up with
the growing trends in the market in terms of technology. Hence, in order to compete and position yourself in
the market, it is vital for business ventures to continuously be innovative and produce eye catching, yet
problem solving and useful products to the market.
As Softlogic Tradings is a leading technological company in Sri Lanka, in terms of survival and stabilization
in the market they are in the process of new product development through technological newness. The
following report is the first part of the new product development process of one such potential and possible
successful innovation the company has come up with to introduce in the market. The rationale behind this
innovation is to be thriving among its competitors thus gaining a good reputation to the company.
It is a detailed plan for the new product iVo which will be a technologically advanced product that will detain
spoken words and sounds and transfer into a machine readable format which will capture the market in Sri
Lanka by benefiting many groups of people. As we have already submitted the first part of the report the
second part would consist of areas such as idea screening, concept testing, business analysis,
development, product testing, test marketing and commercialization which include the launch as well.
Never before in history has innovation offered promise of so much to so many in so short a time. But we
are one among the extra ordinary who are ready to stun you by our innovations.

14 References

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NPD - Part 2

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

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

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

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

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15 Appendices
15.1 Main supplier for raw material
In order to supply software and hardware equipment needed for the voice recognition system, Evertek
Computer Corporation was selected. This was selected in order to provide a quality product to the market
as this company sells quality deals at aggressively low prices. This is a worldwide trader of computer
accessories and equipment. The company was formed in 1990 and has worked for almost nineteen years
in the industry. Evertek Corporation is a main supplier of software and hard ware accessories to top
companies such as IBM.
Industry Analysis
The industry of information and communication technology (ICT) is highly competitive in Sri Lanka. Sri
Lanka has the highest literacy rate in the south Asian region which is 92 percent of the total population.
(Refer appendix 3) There are many IT skilled labour forces available in the country. According to previous
statistics it has found that there are approximately 1375 IT personnel passing out from public universities
and institutions while approximately 4000 personnel pass out from private institutions. Presently there are
about 75 software development companies in the country. The estimated exports of software and related
services of Sri Lanka has amount to US $ 70 million. This shows that the industry is growing rapidly. The
peoples knowledge about the IT industry is immense. As people have a better knowledge of the industry,
their knowledge of selecting the best quality, durable products in the market also have increased. Factors
most effecting in this industry would be Price, quality, reliability, customer service, post purchase services.
Even though there are many branded companies in the market, with the increase of our brand name and
popularity thus by being the first to market, we have a unique opportunity to brand ourselves with the
product.
Competitive comparison and competitive edge
Our main competitors in the industry are IBM computers, Microsoft, Nano computers and PC house. Since
this product is the first to the market, there is no competition among these companies for this particular
product. Therefore there is no doubt in gaining benefit from a competitive advantage over our competitors
in the industry.
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15.2 Workings for the Financial Forecasts

15.2.1

Cost of Sales Calculation

Cost of Production
Direct Labour
Utilities
Total

2010
Rs.
11965500
11120500
2500000
25586000

% increase

15.2.2

2011
Rs.
12563775
11398513
27857500
26865300
5%

2012
Rs.
13191964
11683475
30643250
28208565
5%

Market Demand Calculation

Target Employees

No. of employees

Professionals
Doctors
Engineers
Lawyers
Managers
Accountants
Secretaries
Other professionals

15255
8963
14560
12630
18523
4633
90000
4600

State Universities
Private Universities
Other Organizations
Total

956000
490000
560250
2175414

Journalists
Students

Initial mark-up share

Demand for the first month

35%
761395

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15.2.3

September 21, 2010

Sales Demand Forecast for the first three years

Year

Sales Demand
(Rs.)

2010
2011
2012
15.2.4

% increase in sales
demand

32500000
42250000
52812500

30%
25%

Selling Price Calculation

Cost per Unit
Rs.

Cost of equipment
Direct Labour
Utilities
Total Production Cost
Profit mark up (25%)

23931
22241
5000
51172
12793
63965

Selling Price per unit

SP per unit (Rs.)

15.2.5

65000

Marketing and Promotional Budget

Activities

TV Ad
Radio Skit
Magazines
Direct Mails
Sales Brochures
Sales Promotions
Total Expense

2010
200000
50000
40000
10000
75000
100000
475000

38

Cost (Rs.)
2011
150000
50000
30000
10000
60000
100000
400000

2012
150000
45000
30000
10000
50000
75000
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15.2.6

September 21, 2010

Administration cost budget
Per month
Rs.

R&D
Rent
Telephone Charges
Electricity
Maintenance
Total

5000
40000
35000
40000
20000
140000

15.3 Concept Testing Results

39

2010
Rs.
60000
480000
420000
480000
240000
1680000

Per annum
2011
Rs.
66000
528000
441000
504000
252000
1791000

2012
Rs.
72600
580800
463050
529200
277200
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a. Very high speed in recognition of voice

b. Identification of any type of accent
c. Recognizes speech for a distance of maximum 200 m
d. Can get the printed version of the recorded voice
e. Recognition of different languages
f.

Translation from one language to the other

g. Portability and user friendly

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15.4 Questionnaire - Concept Testing

1. Age
16- 25 years

26 40 years

40 60 years

61 and above

2. Gender
Male

Female

3. What is your income level?

Rs 15,000 Rs 25,000

Rs 26,000 Rs 40,000

Rs 41,000 and above

4. Occupation
Journalists

Lawyers

Doctors

Students

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

5. Language
English

Sinhala

Tamil

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

6. Do you use a voice recorder?
Yes

No

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

Daily

Weekly

Monthly

Rarely

8. What is the brand of your current recorder?

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

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

Reach

Storing

Translation

If other, specify:..
11. Will you prefer using our Voice Recognition System where you can print what you record?
Yes

I would try

No

12. The benefits of the product are as follows;

Very high speed in recognition of voice

Identification of any type of accent

Recognizes speech for a distance of maximum 200 m

Can get the printed version of the recorded voice

Recognition of different languages

Translation from one language to the other

Portability and user friendly

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

13. The maximum price you are willing to pay for a product like the Voice Recognition System?
10 000 15 000

15 000 20 000

20 000 25 000

25 000 and above

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

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

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Excellent

15.4.1

Good OK

Not worth it

Product Testing

1. Age
16- 25 years

26 40 years

40 60 years

61 and above

2. Gender
Male

Female

3. What is your income level?

Rs 15,000 Rs 25,000

Rs 26,000 Rs 40,000

Rs 41,000 Rs 60,000

Rs 61,000 and Above

4. Occupation
Journalists

Lawyers

Doctors

Students

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

5. Language
English

Sinhala

Tamil

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

6. Do you like this new recorder iVo?

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Yes

September 21, 2010

No

7. How often will you use it?

Daily

Weekly

Monthly

Rarely

8. Will you switch to iVo?

Yes

No

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

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

Reach

Storing

Translation

If other, specify:..
11. The benefits of the product are as follows;

Very high speed in recognition of voice

Identification of any type of accent

Recognizes speech for a distance of maximum 200 m

Can get the printed version of the recorded voice

Recognition of different languages

Translation from one language to the other

Portability and user friendly

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

12. Does iVo satisfy all the promised expectations?

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Yes

September 21, 2010

No

If other, specify:..
13. Overall, how will you rate iVo?
Excellent

Good OK

Not worth it

15.5 Price Quotations

Voice recognition software

Price of Stainless steel 50 g

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

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Stainless steel I kg in India

- Rs. 72

Stainless steel 1 Kg in SL

- Rs. 216

Stainless steel 0.01Kg/ 10g in SL

- Rs. 2.16

Stainless steel 50g in SL

- Rs. 10.8 = 11

Sound cards

USB Cables

Battery charger

Rechargeable battery

Memory Chip

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Accuracy detection software

Speed detection software

Text formatting software

Speech recognition software

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15.6 Economic Statistics in Sri Lanka

Tax rates in Sri Lanka

Inflation of consumer prices during the following years in Sri Lanka

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

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Industry development in the Communication and technology in Sri Lanka

Labour costs for the following employees in Sri Lanka

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Table of Contents
1

Introduction.........................................................................................................................................1

iVo: The Total Product.........................................................................................................................2

2.1

Product specification summary....................................................................................................2

Idea Screening.....................................................................................................................................4
3.1

Shower curtain with compartments..............................................................................................4

3.2

Butter stick...................................................................................................................................4

3.3

Skirt plus t shirt............................................................................................................................5

3.4

Remote pram................................................................................................................................5

3.5

Contact sun glasses......................................................................................................................5

3.6

Ring phone...................................................................................................................................5

3.7

Carrot ripple ice cream................................................................................................................6

3.8

Hair colouring shampoo...............................................................................................................6

Concept Testing...................................................................................................................................7
4.1

To profile the intended market.....................................................................................................9

4.2

To assess purchase intentions and product positioning:...............................................................9

4.3

To refine and improve the concept:............................................................................................10

Market Analysis.................................................................................................................................11
5.1

Market for iVo............................................................................................................................11

5.1.1

Market Size Actual & Potential..........................................................................................11

5.1.2

Market Growth...................................................................................................................11

5.1.3

Market Trends....................................................................................................................11

5.2

Macro- Environmental Analysis................................................................................................12

5.2.1

Competitors........................................................................................................................12

5.2.2

Customers..........................................................................................................................12
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5.2.3
5.3

Suppliers............................................................................................................................13
SWOT Analysis.........................................................................................................................13

5.3.1

Strengths............................................................................................................................13

5.3.2

Weaknesses........................................................................................................................13

5.3.3

Opportunities.....................................................................................................................14

5.3.4

Threats...............................................................................................................................14

5.4

September 21, 2010

PEST Analysis...........................................................................................................................14

5.4.1

Political..............................................................................................................................14

5.4.2

Economic...........................................................................................................................15

5.4.3

Social.................................................................................................................................15

5.4.4

Technological.....................................................................................................................15

Business Analysis..............................................................................................................................16
6.1

Financial Analysis......................................................................................................................16

6.1.1

Initial Investment...............................................................................................................16

6.1.2

Initial Cost.........................................................................................................................16

6.1.3

Projected Cash flow Statement for the first three years......................................................18

6.1.4

Projected Income Statement for the first three years..........................................................19

6.1.5

Fixed and Variable Costs....................................................................................................19

6.1.6

Ratio Analysis....................................................................................................................20

6.2

Risk Assessment........................................................................................................................22

6.2.1

Threat of new entrants - HIGH..........................................................................................22

6.2.2

Threat of substitutes - LOW...............................................................................................22

6.2.3

Bargaining power of suppliers - HIGH..............................................................................22

6.2.4

Bargaining power of customers - LOW.............................................................................23

6.2.5

Intensity of the current competition - LOW.......................................................................23

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Product testing...................................................................................................................................24

Test Marketing...................................................................................................................................24
Results from Test marketing and Questionnaires.......................................................................24

8.2

Modifications made after test marketing....................................................................................25

8.1

Commercialization.............................................................................................................................26
9.1

Product.......................................................................................................................................26

9.2

Price...........................................................................................................................................26

9.3

Place..........................................................................................................................................27

9.4

Promotions.................................................................................................................................27

10

The Launch....................................................................................................................................29
10.1

The 5 Ws of Event Launching..................................................................................................29

10.1.1

What................................................................................................................................29

10.1.2

Who.................................................................................................................................29

10.1.3

When...............................................................................................................................30

10.1.4

Where..............................................................................................................................30

10.1.5

Why.................................................................................................................................30

11

Budget...........................................................................................................................................31

12

Future Direction.............................................................................................................................32

13

Conclusion.....................................................................................................................................33

14

References.....................................................................................................................................34

15

Appendices....................................................................................................................................35
15.1

Main supplier for raw material...................................................................................................35

15.2

Workings for the Financial Forecasts.........................................................................................36

15.2.1

Cost of Sales Calculation...................................................................................................36

15.2.2

Market Demand Calculation..............................................................................................36

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15.2.3

Sales Demand Forecast for the first three years.................................................................37

15.2.4

Selling Price Calculation....................................................................................................37

15.2.5

Marketing and Promotional Budget...................................................................................37

15.2.6

Administration cost budget................................................................................................38

15.3

Concept Testing Results.............................................................................................................38

15.4

Questionnaire - Concept Testing................................................................................................42

15.4.1

Product Testing..................................................................................................................44

15.5

Price Quotations.........................................................................................................................46

15.6

Economic Statistics in Sri Lanka...............................................................................................49

55