Coca Cola’s New Product Development Process

To obtain or maintain a competitive edge over their competitors, organizations often have to develop new products to complement or replace non-performing or lesser performing products. Furthermore, companies or manufacturers often have to introduce a new product in untapped or emerging markets. Both these occur through a process known as the new product development process. Unmet product demands, trends, and emerging consumer needs play a pivotal role in necessitating new product development. Companies, including Coca Cola, have their well-documented customized NPD framework, which they utilize to achieve the organization’s goals. It is a sequential eight-phase process that involves steps starting from formulating the product and culminating in its introduction to the market for consumers to use. Though stages may overlap or vary slightly from organization to organization, there are certain steps in an establishment’s new product development procedure. Being one of the largest non-alcoholic beverage companies in the world, Coca Cola always aims to maintain its appeal among consumers. Therefore, in response to consumer demand, they needed to introduce a new drink named Real Taste, Zero Sugar. However, introducing a new product to the market often come with many challenges that need addressing. Therefore, it is instrumental for an organization to understand their competition and their target market because successfully introducing a new product is an uphill task. Not all products that enter this new product development process reach the market. 

Steps in the New Product Development Process, their Importance, and Challenges 

There are eight steps in Coca Cola’s new development process, as shown in the table below. 

The genesis of this process should be all-inclusive, which includes brainstorming and identifying the healthy soda that they need to develop to meet market demand. Coca Cola can get these ideas from either external or internal sources. Internally, employees’ contributions and data from an organization’s research and development are instrumental in determining which new products could need development. On the other hand, ideas could come from external sources, such as external surveys, suppliers or distributors, consumer suggestions or feedback, and even from competitors. Customers are the most important external source of product ideas since they will be the main target and buyers (Alam & Perry, 2002). Therefore, Coca Cola should prioritize their customer’s demands. However, the process of gathering data and information from which to base ideas is often a tedious and time-consuming process that involves consumer interviews among other things. Therefore, the newly developed beverage should satisfactorily provide customer value. The next step in the process involves screening of the ideas, not only to select the best ones from an existing pool but also to identify impracticalities or flaws in the generated ideas. Since product development is expensive, it is crucial to eliminate any flawed ideas and minimize the costs of trial and error of multiple beverages. Screening could have many detrimental challenges such as being time-consuming if different employees do not agree on the merits and faults of different ideas. Furthermore, if the idea comes from external sources, Coca Cola may need to outsource experts if its employees are not very conversant with the product idea. 

After the screening, comes the product’s concept development and testing. A SWOT analysis is a crucial part of this stage to determine a product’s feasibility and design. A product’s concept is a more detailed breakdown of the product to structure it in a precise way that could be presentable to consumers. After that, it is important to physically test and taste the product’s concept with potential customers and Coca Cola employees. For instance, to test the new beverage, it may be necessary to evaluate a product’s sweetness, aftertaste, and fizziness among consumers. This testing is important in identifying problems with the new products, getting customer or employee recommendations, and acquiring data that a company may use for minor tweaks. Coca Cola could also use focus groups and interviews to test the product concept. One of the key challenges in this stage would be acquiring a sufficient sample size to represent a cross-section of the market. Failure here could lead to the development of a niche product. After successful testing, it is necessary to for Coca Cola to develop a viable marketing strategy to facilitate maximum penetration of the product into the market. This stage is important in that it determines how best to supply, price, promote, and sell the product to ensure an optimal market response (Callan, 2019). Moreover, it is at this stage that organizations set marketing budgets and profit targets based on the potential market size and financial plans. Coca Cola can gather online feedback from the potential buyers concerning the product’s images. This stage has several challenges, which include a time-consuming in-depth assessment of a wide range of advertisement platforms and tedious detailing of budgets and projections. Miscalculations, assumptions, or misconceptions are common in this stage as many organizations over-project the impact of advertising on product visibility or popularity. 

It is then important for Coca Cola to conduct a business analysis, including reviews of profit projections and expenses associated with the product to determine whether it aligns with a company’s culture and objectives. In essence, it evaluates the business attractiveness in light of the product before full development. Coca Cola can estimate the new product’s sales from sales of similar products in the past, market surveys, and simulations. The firm must get information on the maximum or minimum expected sales so that they may properly manage their risk in investing ( Takeuchi & Nonaka, 1986 ). If Coca Cola Zero Sugar’s attractiveness exceeds its detriments and challenges it moves to the development stage. It can be challenging for Coca Cola to project the product’s potential profits or its market reception if it is the first of its kind; that is if it is substantially different from similar products. There would be a mock product of Coca Cola Zero Sugar before the development stage. It is during this stage that the concept beverage idea materializes into a tangible and market-ready product. It is important because it will facilitate the creation and finalization of the product customers will consume. Coca Cola would need to invest heavily as it is often the most capital-intensive step of the entire process. Quantity and quality control are paramount in this phase. Coca Cola’s R&D department tests some of the products to ensure they meet certain standards and requirements before mass production starts. The main challenge in this step is the high amount of capital and time necessary to produce a quality product. This investment does not necessarily translate into sales. Furthermore, it is at this stage that Coca Cola could run into challenges, such as environmental requirements for production, and legal operational requirements. 

A handful of Coca Cola workers and customers can test the developed products before they reach the widespread market in the test marketing stage. Here, it subjects the product to realistic market conditions to test the marketing and product rollout strategy. This tests the advertising, targeting, packaging, and positioning strategies before a full launch of the product ( Goulding, 1983 ). This step would precede the commercialization stage and provide the final information about whether the product launch should happen or not. It is very time-intensive because it involves getting feedback and assessing product performance over a fixed amount of time. Testing with realistic market conditions can also lead to losses if the product generates little demand. The commercialization stage involves rolling out the final product to the mass market for consumption. Commercialization is critical in that it facilitates the sales of the developed product and subsequently allows profiting off of it (Olson, Walker, & Ruekert, 1995 ). It can also be very capital-intensive depending on the necessary sales promotion, advertising, or other expenses such as renting or acquiring a sales store. Introduction timing is important in aligning with prevailing economic conditions and competitors’ plans. For instance, if Coca Cola’s rival Pepsi, plans to release a competing product it may be prudent to launch a product sooner. Additionally, if a product is seasonal, Coca Cola should wait for the right time to maximize sales. The other aspect of commercialization that they need to consider is introduction place, which is where to launch the products first. This would ensure that Coca Cola first launches new products in places where they would either incur the least expenses, run into the least number of hurdles, or maximize profits. It is also crucial for Coca Cola to determine the rollout map based on areas that they anticipate the highest demand. One key challenge of commercialization that Coca Cola would run into is the high capital amount required to launch and distribute the product and remunerate the relevant staff. Also, commercialization requires gathering comprehensive feedback to assess the market’s reception of the product. Coca Cola should conduct a post-analysis of the commercialization stage to identify any necessary tweaks in the product or its prices and the sales patterns. 

Conclusion 

Undeniably, the development of a new product is an important undertaking for any organization seeking to get or maintain a competitive edge in the marketplace. Coca Cola frequently develops new products that serve to meet emerging consumer demands, morphing trends, or replacing obsolete alternatives. This healthy beverage product would be both to meet consumer demand and counter a similar product by Pepsi, one of their main competitors. By tapping into these product demands, Coca Cola can benefit greatly if they implement their new product development process well. There are well-established steps in their new product development process that start with creating ideas to eventual commercialization of the product. Each step is of undeniable significance, but also brings challenges to organizations. Ideally, the steps should aim at providing a product that adds consumer value, which will subsequently lead to profitability for an organization. 

References 

Alam, I., & Perry, C. (2002). A customer-oriented new service development process. Journal ofServices Marketing , 16 (6), 515-534. 

Callan, J. (2019, June 27). The new product development process (NPD) - 8 Steps. Retrieved from https://marketing-insider.eu/new-product-development-process/ 

Goulding, I. (1983). New product development: A literature review. European Journal of Marketing , 17 (3), 3–30. doi: 10.1108/eum0000000004811 

Olson, E. M., Walker Jr, O. C., & Ruekert, R. W. (1995). Organizing for effective new product development: The moderating role of product innovativeness. Journal of Marketing , 59 (1), 48-62. 

Takeuchi, H., & Nonaka, I. (1986). The new new product development game. Harvard business review , 64 (1), 137-146.