Final Project

25/May/2011

Submitted To: Sir Hammad Ashraf

Lahore Business School University of Lahore 1-KM Defence Road, Bhoptian Chowk Lahore, Pakistan

Submitted By:
Ali Arshad MBA02093 152

New Product Development

Table of Contents
I. II. Note...................................................................................................................................... 4 Companys Introduction ................................................................................................... 4 A. Vision Statement .................................................................................................................. 4 B. Mission Statement & Analysis............................................................................................. 5 III. IV. V. Paint Industry in Pakistan ................................................................................................ 5 Market Trend & Market Growth .................................................................................... 6 External Environmental .................................................................................................... 7

A. PESTLE Analysis ................................................................................................................ 7 1. 2. 3. 4. 5. 6. 7. VI. 1. 2. 3. 4. 5. Political & Legal: ............................................................................................................. 7 Economic:......................................................................................................................... 7 Socio-Cultural: ................................................................................................................. 8 Technological: .................................................................................................................. 8 Environmental: ................................................................................................................. 8 Global: .............................................................................................................................. 8 Demographic: ................................................................................................................... 8 Five Forces Model of Competition ................................................................................... 9 Threat of Substitute Products: Medium ........................................................................... 9 Threat of New Entrants: High .......................................................................................... 9 Bargaining Power of Buyers: Medium............................................................................. 9 Bargaining Power of Suppliers: Medium ....................................................................... 10 Rivalry among Competitors: High ................................................................................. 10

B. Competitive Analysis ......................................................................................................... 10 VII. Internal Environment Audit ........................................................................................... 11 A. Value Chain Analysis ........................................................................................................ 11 1. 2. Primary Activities .......................................................................................................... 11 Secondary Activities ...................................................................................................... 12

B. SWOT Analysis: ................................................................................................................ 12 VIII. Interview with the officials of Diamond Paints ............................................................. 13 A. Opportunity Identification & Concept Generation Stage .................................................. 13 1. How did Diamond Paints generate the concept to introduce Durasilk? ......................... 13

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2. 3. 4. Did diamond paints used product platform planning for making Durasilk? .................. 13 Did Diamond Paint use any of the CD source to make Durasilk? ............................ 15 Did Diamond Paints use any of the Analytical Attribute Techniques?.......................... 15

B. Evaluation Stage ................................................................................................................ 18 1. How have you made the percentages for ATAR model? ............................................... 18

C. Launch Stage:..................................................................................................................... 18 1. What were the strategic platform decisions Diamond Paints made at the launch of Durasilk? ................................................................................................................................ 18 2. More than 90% products fail at launch stage. What did Diamond Paints do to avoid this? ........................................................................................................................................ 19 IX. X. References ........................................................................................................................ 19 Questionnaire ................................................................................................................... 20

A. Opportunity Identification & Concept Generation: ........................................................... 20 B. Concept Evaluation: ........................................................................................................... 20 C. Development Stage: ........................................................................................................... 20 D. Launch Stage:..................................................................................................................... 20

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I.

Note

This report is prepared from sources and data which we believe to be reliable, but we make no representation as to its accuracy or completeness. The report is provided solely for informational purposes for New Product Development and is not to be construed as providing advice, accurate recommendations or representations of any kind whatsoever. Opinions and information provided are made as of the date of the report started.

II. Companys Introduction

Paint is defined as the group of emulsions, consisting of pigments suspended in a liquid medium, for use as decorative or protective coatings. Today, contemporary paints and coatings consist of countless compounds uniquely formulated to fulfill the varied requirements of hundreds of thousands of applications. "Paint" ranges from the broad group of environmentally-sound latex paints that many consumers use to decorate and protect their homes and the translucent coatings that line the interior of food containers, to the chemically-complex, multi-component finishes that automobile manufacturers apply on the assembly line. (Ebrahim Khrais, 2008) Diamond Paints Pvt. Limited was founded in 1982 with the vision of becoming the largest manufacturer of quality paint and coating products. By engaging some of the industry's best resources, the company achieved the highest standards of manufacturing. This turned out to be value adding and made Diamond Paints the leader among the national manufacturers, while competing with the multinationals. Initially, the operations started off with the manufacturing of synthetic and stoving, enamel products. These paved way to research and development of new products. Today, the company is the only one in the country that produces its own Alkyd resins as well as powder coating products. Diamond Paints is the only local company which has the widest and most comprehensive range of products for both industrial and decorative needs of the market. Diamond Paints has all along maintained an apposite interactive level with their clientele in the form of efficient customer service. Commitment to professional excellence has made Diamond Paints the largest selling national brand with a sales network spanning all across Pakistan.

A.

Vision Statement
To become the largest manufacturer of quality paint and coating products

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New Product Development B. Mission Statement & Analysis

Diamond Paints mission is to become a global leader in Paints & Coatings industry, serving the needs from customers to small companies to multi-national corporate. Our mission and responsibility as a paints and textures provider is to: Provide the best paint available in the country Maintain the highest level of customer satisfaction and service Form strategic alliances and partnerships

S.N 1 2 3 4 5 7 8 9

Elements
Product and Service Customers Market Technology Philosophy Concern for Society Concern for Employees Core Competition

Analysis
Product & Service Both Satisfaction in Paint Quality Integrated Latest Quality and Reliability Quality Conscious Training and Motivation Own Resin Manufacturing

III. Paint Industry in Pakistan

One of the first industries of Pakistan - the paint industry - today we have is one of the most modern for locally produced paints, varnishes and allied products in the export market. Numerous varieties of paints are available, from Defence service paints, decorative & general service, exterior and industrial finishes and special paints. New varieties are being added in a vastly innovative market. Varieties of varnishes produced are of very high standards. The paint industry in Pakistan operates both in the organized as well as the unorganized sectors. There are around 22 paint producing units in the organized sector. There are three multinational companies also in the organizational sector. The data regarding the number of units and the production of the unorganized sector is not available; therefore it is difficult to determine the total production and number of units of the paint industry. According to an estimate, over 350 units producing paints and varnishes are operating in the unorganized sector. Many of them are also not covered under the excise net in the someway as the organized sector and therefore, are in a better position to compete in the local market. According to the Federal Bureau of Statistics, during 1997-98, around 17,000,000 liters of paint was produced from 87 units. Pakistan Paint Manufacturers Association (PPMA) represents the organized units in the paint sector. The paint industry uses about 300 different types of raw materials for producing various kinds of paints. Page | 5

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About 15 percent raw materials of the industry are petroleum-based. In 1971, between 80to 90 percent requirements of the raw materials were met through imports, which currently have been reduced to about 40 percent due to increased production of indigenous raw materials. The major raw materials produced locally include Mineral Turpentine, Resins, Vegetable Resins and Gums, whereas raw materials such as Pigments, Zinc Oxide, Titanium Oxide and Lithopone are imported. Paint is categorized in two broad classes; namely water based paint and solvent based paint. The industries produce a wide range of finished and intermediate products which include pigments, distempers, plastic emulsion, enamel, undercoat, primers, rubber paint, aircraft paint, marine paint, anticorrosive paint, anti-fouling paint, etc. (Rashid, 2010)

IV. Market Trend & Market Growth

One of the greatest opportunities for paints producer is that now a day's people are very much conscious about the quality of the paints. They are aware of the fact that good quality paint is long lasting for their houses and businesses. Paints producers are also investing heavy in advertisement. As a result customers are getting aware of the importance of paint and their trends are moving from traditional white wash (KALI) to quality paints products. As producer companies of paints will more focus on the TQM, it will increase the demand of products. There is also a great opportunity for paint industry; the housing rate in Pakistan is flourishing very rapidly, especially after the Earth Quake in Pakistan. Paint industry can target these customers. (Azhar, 2009) There are huge opportunities for the growth of paint industry in Pakistan. And this industry also has shown very good results in last decades. But due to economic recessions and bad political condition of Pakistan this business has declined by the 10%. But after the creation of new government in 2008, this business has able to increase its 1% share. Although decorative business increased market share by 1% and industrial sales also increased because of the very significant decline in the size of the decorative market, the overall reduction in sales volume is 4% as compared to the previous year. However gross margin increased by 6% through improvement in product mix and efficiencies in procurement and manufacturing, which coupled with stringent control over fixed costs resulted in as operating profit improvement of 14.4% over last year to Rs. 262.9 million. (Khurshid, 2009) The new government has increases the general sales tax from 15% to 16%. This increase can hurt the growth of the paint industry. Recently this industry has increase the 1% share but new government policies can again hurt this industry. The increase in tax, energy crisis in Pakistan and high prices of the decorative paint products are major hurdles in the growth of this industry. But there are still chances to grow. There are almost 54, 0000,000 potential customers in Pakistan. There are huge opportunities for paint industry of Pakistan to export the paint products to Middle East and Afghanistan. If government gives incentives to paint industry in export, this 6|Page

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can increase its growth; as a result Pakistan will also generate the heavy revenues. (Khurshid, 2009) Recently new competitors are coming in this industry, which is the sign of the growth of paint industry. According to industry analysts, this tough competition, high promotion strategies and increasing trend toward paint industry are the clear chances of the high growth in the paint industry.

V. External Environmental
A.
1.

PESTLE Analysis

Political & Legal:

Political situation is vital for any business to run smoothly. Pakistans political instability has led to uncertain environment in the paint industry, which is also a threat for any business including Diamond Paints. Change of government leads to change in Rules & Regulations which affects the smooth flow of business for Diamond Paints. For example, last government introduced subsidies for the chemical sector but the current government has finished all subsidies. The political instability has also crucial impact on Law & Order situation in the country. The high costs of the petroleum products, energy crisis and lack of infrastructure are the major hurdles in the growth of this industry. Political instability and bombings had inverse effect on the confidence of foreign investors. Anyhow, the current government is supporting the paint industry and has given legal reliefs on paint industry. It has also reduced 10% central excise duty on paint products.

2.

Economic:

Inflation remains the biggest threat to the economy. The surge in global petrol prices and thus local petrol prices hurt the buying power of consumers that reduce the demand for products. Due to inflation the cost of doing business has also gone higher. Government has imposed 16% sales tax and heavy duties on imports of raw materials. Paints industry of Pakistan import 75% of its raw materials so import duties have increased the production cost thus decreasing the profit margin. Recessionary conditions continue to prevail as the government pressed on with its efforts to document the economy. The depressed construction industry and the slow trading industry and the slow trading environment resulted in an overall market shrinkage in the decorative business by 10%. Against this back drop the business however has able to increase its market share by 1% through its advertising and promotional campaigns and effective after sale service. The industrial

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business continued to deliver a robust performance driven by penetration of new market segments within the general industry sector.

3.

Socio-Cultural:

Increasing globalization has amplified the influence of Western Culture in Pakistan. The lifestyle of Pakistani population is changing rapidly. People are more conscious about their houses presentation. Pakistans current population is 187,342,721(2011 est.) and it is increasing at a rate of 1.573% (2011est.). Consequently, to meet the demands of a rapidly increasing population, there is an increase in the number of construction projects in Pakistan which is a positive sign for Diamond Paints.

4.

Technological:

Technology in paint industry has improved significantly in past few years. According to a market research, the technology in paint industry has changed more in the last eight years than in the past eighty years. Diamond Paints is no exception to others. They are equipped with latest machinery and they are the only company in Pakistan which is producing its own resins as well as powder coating products.

5.

Environmental:

In recent years, paint industry has shown a lot of concern for society. Industry is very conscious about environmental pollution which occurs because of the production of paints. The industry has huge focus on the SH&E. The paint producers are trying to produce those products which are free from the harmful chemicals. With these concerns, Diamond Paints has introduced lead-free paints for home users which are not harmful for children and adults.

6.

Global:

Globally Diamond paint has not entered many countries. Diamond Paints has limited its market to neighboring countries only and they have a major distribution in Afghanistan. They get 15% of the total sales from Afghanistan. In future, they have plans of entering the Middle Eastern and central Asian markets.

7.

Demographic:

Diamond paints market is distributed among two groups, consumers and distributors. In consumers the target market is further divided into two segments i.e. Quality conscious and Price conscious. For quality conscious consumers, Diamond paints have launched Ace. This is a 8|Page

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premium quality series and is equal in quality with any other multinational paint companies in Pakistan. For Price conscious consumers, diamond paints have two product series namely Overall series and Value series. All the paint distributors are targeted as a homogenous segment.

VI.

Five Forces Model of Competition

Competitive Forces
Bargaining Power of Buyers Threat of new entrants Bargaining Power of suppliers Threat of substitutes products Rivalry among competitors

Threat to industry Profitability

Low Medium High

1.

Threat of Substitute Products: Medium

Although products such as distemper (choona), wallpaper, tiles etc are available but customers are not likely to substitute them for paints as it would compromise on quality and at the same time would not server the purpose. The growing share of companies in the unorganized sector provides a low price substitute.

2.

Threat of New Entrants: High

With regard to the paint industry in Pakistan, there is a high threat of new entrants. The main reason for this being low entry barriers, as there is no requirement of high capital investment to enter the paint business. Also, there are no proprietary product difference and low switching costs which puts the phrase brand loyalty into jeopardy. What make the paint industry attractive for newcomers is also the ease of acquiring skilled people, material and supplies. Moreover, lack of long term contracts also contributes towards the attractiveness of the industry for the newcomers. However, there are established brand identities as well as consolidated distribution channels to be accessed which would result in strong retaliation to be faced by the newcomers. Such is an example of Nippon who set up its business in Pakistan recently.

3.

Bargaining Power of Buyers: Medium

Bargaining power of the intermediaries is high because the industry is divided into the structured and unstructured market and doesnt act as a unified whole to leverage the bargaining power in its favor. The more the channel sells each product, the higher the margin they keep for the company. Page | 9

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The bargaining power of end users however, is low because there a large number of buyers, each with relatively small purchases. In addition to this, the organized paint sector has also accepted branding which creates loyalty and decreases the price sensitivity, resulting in low bargaining power of buyers.

4.

Bargaining Power of Suppliers: Medium

Bargaining power of suppliers is low in the decorative segment as inputs required are commodities and there are numbers of suppliers available who are fighting for a small market. However, since big companies fight on the quality dimension and cannot switch their suppliers are in a position to negotiate their terms upon providing the desired raw material which makes the overall bargaining power of suppliers moderate.

5.

Rivalry among Competitors: High

The paint industry can be characterized as a fragmented industry divided into the organized and unorganized sector. The unorganized structure is the biggest threat for established brands.

B.

Competitive Analysis

Diamond paints is facing strong competition from Berger Paints, Master, ICI, Silky, Buxluy and Silver Sand. Because of these competitors, Diamond paints Pakistan is facing a serious problem in attracting new customers and retain their existing customer. In order to meet the competitors, Diamond paints has to spent more money on advertising, promotional activities and area coverage for their customer satisfaction. Recently new competitors are coming in this industry, which is the sign of the Growth of paint industry. According to industry analysts, this tough competition, high promotion strategies and increasing trend toward paint industry are the clear chances of the high growth in the paint industry.

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VII. Internal Environment Audit

A.
1.

Value Chain Analysis

Primary Activities

a) Inbound Logistics: Diamond paints mainly imports Titanium, Coconut oil, Lamonin and Colors/Dyes. The titanium are imported in large quantity i.e. containers from USA. The coconut oil is used in Resin manufacturing and it is imported from Philippine and Thailand. Lamonin is used in Resin and it is imported from China. The colors and dyes are of various colors are imported from china by road. The trucks and containers are brought on rent when they cross Pakistan border. b) Operations: First of all the material brought is unloaded to the factory and is being stored in necessary environment and all the stock record is maintained. The production hall sends the requisition to storage for paint manufacturing. The lab approves the requisition. Then the required quantity is delivered from storage hall to production hall. The production hall produces the batch of paints and some of the samples are given in the lab and the lab approves its quantity and standard. Once approved, it is sent to filling hall. After the filling the boxes are sent to distribution. The distribution department delivers the paint boxes to the dealers on the FIFO basis. All the pains and their shade cards are also given to the dealers which are approved by the labs.

c) Outbound Logistics: The Company uses its own transportation that includes light and heavy vehicles for the purpose of providing the paint which includes the paint, the samples, the emulsions, enamel paints and their after sales services. The paint is distributed to different cities, from Gujranwala to Gujarat. Diamond paints is also exported to Afghanistan in rented containers.

d) Marketing & Sales: Diamond paint uses shop boards as a marketing tool for their different products. Mr. Qayyum is their marketing supervisor. The have giveaways for the painters and executives. To painters they give key chains, caps, shirts and wallet whereas executives get folders, wallet and dairies. Their branding is also done in the marketing department where activities are involved from designing to packaging. Some part of advertising is outsourced to Synergy where they make TVCs, media campaigns and BTLs.

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e) Customer Service: Their customer service includes color consulting to the customers based on their requirements and needs. All the requests regarding any problems or ambiguities on how to select the right colors are entertained by the experts or dealers by visiting the respective site.

2.

Secondary Activities

a) Procurement Department: All the purchases are made by Syed Zafar. He is the head of Procurement department and also handles the accounts and purchasing for the company. He also deals with all the vendors and dealers and negotiates with them on rates. b) Human Resource: Mr. Hamza is the head of HR department. There are three sub departments under Mr. Hamza. The first department is responsible for recruitment and selection of the employees and the second department is compensation and benefit department. There are few other department known as training and development department and Safety, health and environment department. The final decisions of all departments are made my Mr. Hamza. c) Top Executives: Meer Shuaib is the CEO of the company and is solely responsible for the decision making regarding the budgets and the strategies that the company pursues.

B.

SWOT Analysis: Strengths Weaknesses

1. Marketing & Advertising 2. Brand not well recognized 3. Indirect Selling through dealers

1. 2. 3. 4. 5.
1. 2. 3. 4.

Financial Stability Largest supplier to Fan Industry Technological Advantage Widest range of products Nationwide Distribution

Opportunities
International Expansion Increasing demand in Automotive Industry Use OOH Advertising Open own Retail Outlets for Direct Selling

Threats
1. Multinational & National Competitors 2. Energy Crisis 3. Wrong perception of economical & cheap

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VIII.Interview with the officials of Diamond Paints

After conducting various interviews with the officials of Diamond Paints that includes Mr. Shakeel Ahmed, we collected sufficient material to make this a concise and expressive report and after scrutinizing all the points, these are the results given below conferring to their corresponding questions.

A.

Opportunity Identification & Concept Generation Stage

1. Did diamond paints used product platform planning for making Durasilk? Product platform planning was used extensively in making Durasilk. From Brand name, logo and technology to mode of transportation, production plant and distribution channel product platform planning was used. The ingredients of the paints more or less remain the same. The change that comes is mixing, quantity and quality of the ingredients. Resin is the primary ingredient of any paint and in Durasilk the highest quality of resin is used. The product platform planning was used as the resin plant, the production and the mixing plant remained the same. The distribution channel also remained the same as diamond paints used the same mode of transportation and retailers to distribute Durasilk. Durasilk has its own unique packaging and designing but the logo printed on the packing and the Ace trademark remains the same. So we can conclude that Diamond paints used product platform planning heavily in the making of Ace Durasilk. Recommendations: As we can safely say from the information above that diamond paints relies heavily on their existing infrastructure to make new products such as Ace Durasilk. It works for them at the moment but the load on the existing assets or infrastructure may become too much in future. So they should also think about enhancing their infrastructure so that in the future, they can keep making new products without having to put extra burden on their existing resources.

2. How did Diamond Paints generate the concept to introduce Durasilk? With the interview conducted with Mr. Shakeel Ahmed, we came to know that the companies in paint industry use various methods for concept generation of their new products. Without this they cannot launch a successful new product. Same is the case with Diamond Paints. They are using problem-based ideation to recognize the opportunities for concept generation of Ace Durasilk.

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In problem-based ideation, the company identified an unsolved problem is occurring in high quality paint category and through their internal records and complaints of clients they came to know that the customers are demanding scrub resistant, durable and washable paints. After that the company identified the list of heavy users of their products in which it will be builders and contractors. The company gathered a set of problems and ranked them accordingly. Problem Coherence Anti-Fungal Durable Washable Scrub-resistance Problem Occurs Frequently 50% 90% 35% 90% 75% Problem is bothersome 40% 35% 55% 80% 60% AxB 20.0% 31.5% 19.3% 72.0% 45.0%

Table 1.1: Problem based Ideation According to Mr. Shakeel

The company identified the above mentioned five problems that the customers were facing. They also analyzed how frequently customers faced these problems and how much they are bothered by it. This analysis led to the concept of Ace Durasilk. Before ace Durasilk, the companys approach was more or less reactive i.e. as all the national paint companies used to only react to any step ICI, the paint giant, used to take. With Ace Durasilk, Diamond paints has become the first national paint company to act in a proactive manner and make this product with superior properties than the large multi nationals. Scenario analysis was not used for any new product idea as paint industry is Pakistan is relatively new as compared to the international companies and they are far from achieving the maturity stage as they are still in developing stage and scenario analysis is a step where paint industry in Pakistan has not reached yet.

Recommendations:
National paint manufacturers should start acting in a proactive measure as they have the advantage of knowing and understanding the local market better than the foreign companies. Diamond paints has not used scenario analysis for the concept generation of Ace Durasilk and they should opt this for their future idea generation. Diamond Paints only used 5 factors in their problem analysis and in future they should research and use for factors for their new product concept generation.

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3. Did Diamond Paint use any of the CD source to make Durasilk? Diamond paints has their own R&D cell within the company. They conduct all their researches, formula testing, and quality testing. Not only they research on their own products but also research and conduct tests on competitions products. This gives them an edge over the competition. As per Mr. Shakeel Ahmed Khan, Diamond paints are not using any of the C&D techniques properly but they do gather information from their Area sales managers and Regional Sales managers about the customer requirements and problems in their respective areas. Mr. Shakeel also told used that since Diamond paints also manufactures automotive paints, they go connect with the automobile industry to check with their requirements. When asked about any such effort being made during the making of Durasilk, the answer was in negative and we were told that no such technique was used in the making of the product. Maximum effort regarding C&D during the making of Durasilk was that Diamond paints consulted with their few selected distributors and retailers about what they think the end consumer required. Proper C&D techniques were not used as no one from outside the paint industry was consulted during the making of Durasilk. Recommendations: Diamond paints should use open networks like Ninesigma and innocentive etc. and other techniques of C&D so that they can come with more innovative and breakthrough ideas. This will also help them in cementing their place in the market and maintain their competitive edge.

4. Did Diamond Paints use any of the Analytical Attribute Techniques? Yes, Diamond paints used two of the Analytical Attribute techniques i.e. GAP analysis and Tradeoff analysis. This was told to us by the marketing head of Diamond paints i.e. Mr. Shakeel Ahmed. The interpretations of both analyses are given on the next page.

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a) GAP Analysis:

GAP

Silversand Master
1

Happilac Berger
2 3

ICI-Dulux Nippon

Turlac
Corona Low Class Paints
2

Jotun Brighto Sparco

Nelson

Table 4.1: Determinant & Perceptual GAP Analysis

As we can see in the above shown GAP Analysis, Durasilk found a clear edge over all its competitors it generated the concept of both highly washable and durable paint. This relationship is such that how durable a paint is with regular wash to keep the walls clean. Turlac and Brighto paint products are also highly washable but their durability is questionable when washed. ICI Dulux is the closest competitor of Diamond Paints Durasilk as is evident from the above analysis. As the above analysis show that the gap existed in highly washable and at the same time highly durable category and this is where Diamond paints Durasilk came in and filled the GAP.

b) Trade-Off Analysis: As per the interview with Mr. Shakeel Ahmed, the company used various questions in trade-off analysis. However he mention only few of them in which one of them was. How much Durability you expect from your product? How much washable paint you want? What type of finish you want from their paints?

The graphical results of these questions are given below:

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Durability
8 6 4 2 0 1 - 2 Yrs 3 - 4 Yrs 5 - 6 Yrs 7 - 8 Yrs > 8 Yrs 10 8 6 4 2 0 Every Week

Washable

Once Every Month

Once Every Quarter

Once Every Year

Never

Finish
9 8 7 6 5 4 3 2 1 0 Matt Texture Silky Glossy

As we can see the customers wanted more durable, washable and paint with a silky finish. Durasilk fulfills all three of the above mentioned requirements. With these features in mind the concept of Durasilk was finally made and put forward to the evaluation stage. Recommendations: The company has made only one GAP analysis for both perspectives i.e. customer and managerial. They should opt for both maps in their future GAP analysis. The company has not used conjoint analysis in their new product development. They should use conjoint analysis in their future new product developments The company didnt approach the end user for their feedback which can be used for analytical purposes. Instead they assumed distributors and contractors as their end user in this new product development. They should approach the end user in their future products.

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New Product Development B.

1.

Evaluation Stage
How have you made the percentages for ATAR model?

The company did not provide us the accurate sales evaluation for ATAR model but they did give us the evaluation in liters. This is what we came up with after evaluation. Potential Market: 40 Million Awareness: 80% Trial: 60% Availability: 80% Repeat: 50% Profit Margin: 1350 1000 = 350 Profit: 40M * .8 * .6 * .8 * .5 * 350 = 268,800,000 Diamond paints did not use the full screening model as they had a clear dimension about what the customers wanted using the analytical and problem based ideation. So they had only one option in mind i.e. Durasilk. Recommendations: The company did not use the full screening model and compared multiple options to pick one out of them. They should have more than one option and generate multiple ideas and concepts so that they can have the choice of going for the best possible option in the evaluation stage.

C.
1.

Launch Stage:
What were the strategic platform decisions Diamond Paints made at the launch of Durasilk?

a) Type of Demand Sought: As per the interview with Mr. Shakeel Ahmed khan, diamond paints aimed for the customer migration. As emulsion paints were already being offered by diamond paints but they wanted their existing upper and upper middle class users to migrate from the emulsion to high quality superior emulsion i.e. Durasilk. The aim was also to catch the attention of competitors customers as well by offering the most superior silk emulsion paint.

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b) Permanence: While launching Durasilk, Diamond paints strategy was to stay in the market and there was no though of taking the product off the shelves. They intend to keep the product in the market permanently and have added Durasilk to their regular product line. c) Aggressiveness: The launch of Durasilk can safely be categorized as being an aggressive one. Heavy investment was done in the initial stages of the launch to catch the attention of the target market and to grab the market share for Durasilk. The purpose of this was also to spread awareness for those who were not well informed about the benefits they can get out of this product by using the rational appeal in advertising as the key features of Durasilk were clearly highlighted in all the campaigns. Apart from advertising, painter parties were also conducted in different parts of the country in order to persuade them to give Durasilk a try and later on use it as a regular feature in their work. d) Competitive Advantage: Durasilk provided some of the features no other product provided at the time of its launch i.e. High Stain Resistance, superior scrub resistance, silky touch and is conveniently washable.

e) Resources and Funds: The company didnt provide us with the exact figure of the funds allocated to the launch campaign but the Marketing Manager did stress on the fact that the launch of Durasilk was one of the most aggressive and expensive one as far as the Pakistani paint industry is concerned. 2. More than 90% products fail at launch stage. What did Diamond Paints do to avoid this? Mr. Shakeel Ahmed khan was of the view that most of the products that fail at this stage are either copy of the existing products in market or are not needed by customers. In order for a product to succeed, it must be a new idea which is also required by the market. Diamond paints also worked on these lines to make sure Durasilk was a requirement of market and was also unique in its category.

IX. References
Azhar, A. (2009). ICI Paints. Market Trends of Industry. Ebrahim Khrais, A. (2008) The Paint And Vernishes Industry In Jordan. WWW.ULUM.NL . Khurshid, A. (2009). Parget Paints. Market Growth of Industry. Rashid, A. (2010). ICI Paints Pakistan Limited. Paint Industry in Pakistan.

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New Product Development A.

1.
1) 2) 3) 4) 5) 6) 7) 8) 9)

Questionnaire
Opportunity Identification & Concept Generation:
How DP identify opportunity for introducing Ace Durasilk in the market? What sort of idea generation technique D use for Ace Durasilk Does DP use lead user process for generating ideas for NPD? If yes, than how can DP search for lead user? Does DP use the open networks for idea generation? What number of ideas DP generates for introducing Ace Durasilk? Did DP use Problem-based ideation technique for developing new products? How DP face problems while listening to customers for new product idea generation? How DP do industry analysis ad find opportunities for ND? What are the internal sources of idea generation at DP? i) Is it a creative team? ii) R&D cell? How did the NPD team of DP place outcome based interview? How did DP translate ideas into concept? What are the main attributes you think paint has? Does DP conduct OBI interview from distributors, retailers and stakeholders?

10) 11) 12) 13)

2.
14) 15) 16) 17) 18)

Concept Evaluation:
How does the idea screening process take place at DP? Does DP make product brief of Ace Durasilk for concept evaluation? How does DP make sure that the right ideas should be selected? Should DP depend on conventional marketing research techniques for decision making? Does DP make and prototype sample of Ace Durasilk before the development stage?

3.
19) 20) 21) 22) 23) 24) 25) 26)

Development Stage:
How the NPD process is inter-connected with firm strategic directions? Does DP ensure the NPD process adheres to sound ethical principles and conforms to public policy issues? How DP managing creative environment which is important for innovation in NPD process? What were the challenges, issues and threats DP faced in manufacturing of Ace Durasilk? Which of your key technologies do you want to strengthen for developing new product? Which technology do you to acquire that help to better compete with rivals in developing new products? Did DP use product platform planning to achieve economies of scale? What was the role of your technical staff in developing Ace Durasilk?

4.
27) 28) 29) 30) 31) 32)

Launch Stage:
What sort of marketing plan is sketch for Ace Durasilk before launching in the market? Does Ace Durasilk use test marketing of Ace Durasilk before executing it into the market? What kind of marketing strategies your organizations use to compete with competitors? Does DP use feasibility testing technique before it launch in market? How DP plan to position the Ace Durasilk in the market? More than 90% products fail in launch stage, How DP reduces this risk?

B.

Audio Transcript

The CD for Audio Transcript of the interview is attached with the report. 20 | P a g e