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Impact of new product development on the sales turnover of small and medium scale enterprises using Bakery Industries in Nigeria

 Format: MS WORD   Chapters: 1-5

 Pages: 75   Attributes: COMPREHENSIVE RESEARCH

 Amount: 3,000

 May 11, 2020 |  09:29 pm |  1029

THE IMPACT OF NEW PRODUCT DEVELOPMENT ON THE SALES TURNOVER OF SMALL AND MEDIUM SCALE ENTERPRISES USING BAKERY INDUSTRY IN AKURE ONDO STATE AS A CASE STUDY

CHAPTER ONE

INTRODUCTION

 

1.1    BACKGROUND OF THE STUDY

As human beings have always sought for growth and development all through their life span, so also an organization does likewise. A good, service or idea that is perceived by some potential customers as new is a new product. It may be through innovation, limitation, and renovation.

In trying to secure growth for a firm’s product, their lots of strategies which an organization may embark upon, such as market penetration, market development and product development. From these three, product development is one of the avenues of enlarging the size of the product portfolio of any organization, increasing its sale volume and enlarging its financial strength. Many organizations seem not to have recorded much success as a result of depressed economic situation. It is important to recognize the fact that necessity gives birth to invention or innovation and for an organization to avoid been forced out of the market, it has to innovate.

Due to the development or increasing numbers of small and medium scale enterprises in our country Nigeria, new products development strategy therefore, determine both the levels of economic growth and standard of living of the citizens. Most products in the market today had undergone changes over times. According to Olowe (2012) new product has been seen as the life blood of any organization. This is because seizing new opportunities as they emerge is a way to increasing profit as a result of increases in turnover. This means that a firm with a successful new product has the chance of building its competitive advantage against other competitors. Therefore, every enterprise must develop new products because new products shapes the enterprise‘s future. Replacement of products must be created to maintain or build sales. Customers want new product and firms should do their best to supply them.

Developing and managing products is critical to organizational survival and growth, although several organizational approaches to product management are possibly the share common activity function and decisions necessary to guide a product through its life cycle. New product development involves generating idea. Screening to determine which idea to develop, expounding an idea through business analysis, test marketing, commercialization and evaluation. Therefore, with all these crucial activities and some identified problems of new product development, this research work is to investigate on the impact which new product development have on sales turnover focusing attention on some few small and medium scale enterprise as case study. Since product development consist of the company seeking increase sales by developing new or improved product for its current market, a company can develop new product features or content through attempting to adopt, modify, minify, substitute, rearrange, reverse or combine existing features or the company can create different quality version of the product or can develop additional models or sizes.

The new product development (NPD) literature emphasizes the importance of introducing new products on the market for continuing business success. Its contribution to the growth of the companies, its influence on profit performance, and its role as a key factor in business planning have been well documented (Booz, Allen & Hamilton, 1982; Crawford, 1987; Urban & Hauser, 1993; Cooper, 2001; Ulrich & Eppinger, 2011). New products are responsible for employment, economic growth, technological progress, and high standards of living. Therefore, the study of NPD and the processes through which they emerge is important.

In the last few decades, the number of new product introductions increased dramatically as the industry became more aware of the importance of new products to business. Correspondingly, managing the NPD process has become a challenge for firms as it requires extensive financial and human resources and is time sensitive. The harsh realities are that the majority of new products never make it to market and those that do face a failure rate somewhere in order of 25 to 45 percent (Crawford, 1987; Cooper, 2001). For every seven new product ideas, about four enter development, one and a half are launched, and only one succeeds (Booz, Allen & Hamilton, 1982). Despite the extensive research on how to achieve success in NPD, firms continue to deliver products that fail and therefore NPD ranks among the riskiest and most confusing tasks for most companies. As the number of dollars invested in NPD goes up, the pressure to maximize the return on those investments also goes up. It becomes worse as an estimated 46 percent of resources allocated to NPD are spent on products that are canceled or fail to yield an adequate financial return.

 

1.2    STATEMENT OF THE PROBLEM

New product development has contributed much to the sales turnover and survival of small and medium scale enterprises. In Nigeria, the concept has suffered many problems in its implementation. Due to these problems the researcher was interested in this topic to know the significant impact of new product development on sales turnover. This research work is therefore designed to critically evaluate the problems of a new product development which are as follows;

·         Lack of indepth research on the actual needs of consumers

·         Inadequate capital to fund the new product ideas

·         Lack of human capacity essential for the implementation of the project and finally

·         The inability to follow the rules and regulations being formulated by the government from time to time.

For the purpose of this research work, the selected few small and medium scale enterprises embarked on some of these activities. The question then is that “with all these problem and activities of new product development, can it have any significant impact on sales turnover.  This is why the research was carried out.

1.3    OBJECTIVES OF THE STUDY

The main objective of the study is to examine the impact of new product development on the sales turnover of small and medium scale enterprises using Bakery Industry in Akure Ondo State as a case study.  Other specific objectives of the study are:

i. To identify challenges encountered during new product development  

ii. To examine the relationship between new product development and sales turnover of selected    Catering firms in Akure Ondo.

iii. To examine effects of new product development on sales turnover in the study

1.4    RESEARCH QUESTIONS

The following research questions were addressed:

i. What are the challenges encountered during new product development?

ii. What is the relationship between new product development and sales turnover?

iii. How does new product development affect sales turnover in the study area?

1.5    RESEARCH HYPOTHESES

The following hypotheses were tested in order to achieve the stated objectives:

HYPOTHESIS 1

Ho1: There is no relationship between new product development and sales turnover.

HYPOTHESIS 2

Ho2: New product development does not affect sales turnover in the study area.

1.6    SIGNIFICANCE OF THE STUDY

This research work is significant to the organization and the following set of people.

The Firms: It will help firms to identify the problems involved in the development of a new product and also suggest solution to them, as well as to increase its sales volume, profit and market share.

The Researcher: This research work will enable the researcher to ascertain the problems involved in the cause of developing a new product.

The Society: This research work will go deep to assist the economy by increasing job opportunities for the young graduates. It will also help to develop marketing activities in the economic environment both domestic and international.

1.7    SCOPE OF THE STUDY

This study examines the impact of new product development on sales turnover of Bakery Industry in Akure, Ondo State. This study is limited to Bakery Industry in Akure, Ondo State because Bakery Industry is a small and medium scale industry in Nigeria. Therefore, effort is geared towards examining how Bakery Industry can develop new product in their organization. The study covers the period between 2017 and 2018.

1.8    ORGANIZATION OF THE STUDY

This project consists of five chapters and are listed thus: Chapter one contains Introduction, Background to the study, Statement of the problem, Research Questions, Objectives, Research Hypothesis, Significance of the study, Scope of the Study, Organization of the study Definitions of key terms.

Chapter two contains Literature review and Theoretical review: Advertising and marketing, Sales Orientation, Branding, Strategic Orientation, Price, Organizational and Behavioral Influences, Technology and what is new Product.

Chapter three contains Research Methodology: Area of the Study, Study Population, The Study Research Design, Sampling Techniques and Sample size, Sources of Data, Data Analysis Techniques and Model Specifications.

Chapter four consist of Data Presentation, Analysis and Discussion: Data Presentation, Test of Hypotheses, Discussion

Chapter five consists of Summary, Conclusion and Recommendation.

1.9    DEFINITION OF TERMS

For misinterpretation of any aspect of this study to be avoided, it becomes necessary to the researcher to define some of the essential terms used. In the work. These therefore should be understood as follow.

·         Product: This is one of the elements of marketing mix that represents the basic offering being made to consumers. It is also everything (both favourable and unfavourable) that one receive as an exchange; it is a complexity of tangible and intangible, attribute, including functional, social and psychological utilities or benefits. A product may be a good, service or an idea.

 

·         Marketing Mix: This consists of four major variables in marketing, which serve as pillars that make marketing to stand well; they are product, place, price, and promotion. It is also called 4ps and marketing elements.

·         Marketing Strategy: This is a process of determining a target market and choosing the marketing mix variables needed to maximize satisfaction of the consumers. It is also the set of objectives which an organization allocate to its functions in order to support the overall corporate strategy, together with the broad method chosen to achieve these objectives.

·         Innovation: This is the process of producing something new inform of  product or service that someone or any company has never produced before it is also refers to any good, service or idea that is preserved by someone as new.

·         Research: This is an organized way of finding valid or useful information about a particular domain or phenomenon in an environment with a set of objectives. It can also be described as a thorough and systematic investigation on indepth search for the causes of any problem, with the intention of proffering solutions.

·         Commercialization: This is one of the product development stages in which the product is first submitted to the market and this commences its life cycles.

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