Keywords: New product development NPD; Customer surveys; Competitor analysis; Fashion industry; Business strategy…... Moreover, the make-to-order concept to meet the needs of every custo
INTRODUCTION
Rationale
New product development (NPD) encompasses the process of conceiving, designing, and introducing new products or services to the market It plays a crucial role in maintaining competitiveness, as organizations seek to exploit market opportunities and overcome rivals with more established offerings NPD involves various stages, including planning, designing, prototyping, and marketing By incorporating innovative ideas and addressing product deficiencies, firms can enhance their market share and stay competitive in a rapidly evolving marketplace.
In the last decades, the market has changed rapidly and continuously, increasing the importance of investing in the development and innovation of all companies (M Rossi et al [9]) The product innovation and development processes are crucial and essential for ensuring the survival of business companies (S Kumar et al [10]) In addition, A Distanont and O Khongmalai [11] proved innovation's irreplaceable role in enhancing the SME level's competitive advantages, especially in the frozen food industry A Distanont and O Khongmalai also concluded that innovation or product development is becoming the strategic tool for enhancing business to gain competitive advantages among other competitors As a result, product development is now playing an essential role in all enterprises' strategic plans However, in the fashion industry, the success rate of NPD's project is relatively low because of the increased time and cost, difficulty in scheduling, and short product life cycles (D S Dewi et al [12])
Problem Statement
This paper formulated a method to develop new products, mainly depending on competitor analysis and customer surveys This method is especially suitable for products that become outdated rapidly or companies that want to expand into brand-new business areas By identifying customers’ needs and analyzing competitors’ current products, researchers and the product development department (R&D) shorten the time to develop new products to meet the market's current needs A new product developed by this method is expected to leverage almost the existing strengths of competitors’ products and have unique functions to solve customers’ inconveniences
The new approach is applied and verified by a case study of a start-up company in the fashion industry, where the business focuses on producing clothing quickly and inexpensively to meet the demands of current fashion trends (R Bick et al [13]) In this research, a new T-shirt collection can be planned by combining customer surveys and competitor analysis According to S K Wardoyo and R H Walean [14], customers prefer T-shirts from global fashion brands instead of local brands because of their quality and prestige, raising competitiveness As a result, a start-up company may find it challenging to launch a completely new T-shirt collection to compete Therefore, new T-shirt design development methods based on top competitor analysis and customer surveys can help researchers and R&D shorten the time to find the essential factors of best-selling items of successful local brands in the market and increase the competitiveness of the new brand in this fierce market In the past, the importance of the benchmarking process, which encourages enterprises to learn from lead players in the market, has also been mentioned (S Zailani et al [15]).
Research scope
Research period: 1 st February 2023 – 1 st July 2023
Research object: Thanh Cong company
Thesis goals
The thesis aims to suggest a new product development method, especially used for start-up companies or companies want to open new business areas.
Thesis objectives
The report has the following specific objectives:
- Suggest the proper NPD method for start-up companies & companies want to expand new business model
- Apply for a case study in practical
- Evaluate the efficiency by checking the result after fixed period.
Thesis structure
The graduation thesis consists of 7 chapters:
Chapter 1 provides an overview of "New Product Development" area in the world through many applications in different industries This chapter also indicates the remaining issues which make the authors display this thesis Based on this practical situation, this graduation thesis has set up goals and specific objectives to solve the mentioned problem
- Chapter 2: Literature Review and Methodology
Chapter 2 provides academic concepts related to methods used in the research This chapter also provides a methodology that presents the reporter's approach to solving problems mentioned in the previous chapter
- Chapter 3: Introduction to Research Subject
Chapter 3 introduces general information on the research subject, such as the company's achievements, the company's products, and the company's customer segments
- Chapter 4: New Product Development Application In Fashion Industry
Chapter 4 introduced the case study, which apply the suggested method of New Product Developments process Besides, the project management method also included in this chapter to manage the new product development process mentioned in this chapter Finally, the results are recorded to highlight the effectiveness of this method via applications in the case study
Chapter 5 evaluates the completion level of the report, and it also assesses the advantages and remaining disadvantages Some recommendations for plans to develop this research's ideas also be mentioned
LITERATURE REVIEW AND METHODOLOGY
Literature Review
New product development projects have already been paid attention by researchers and industries Depending on the scope of each project, different approaches were applied to develop new products in different areas A M Benur and B Bramwell analyzed and researched tourism product development and product diversification to attract more tourists to a particular destination In the mechanical area, A Albers et al developed a product development method called product Generation Engineering (PGE) and applied it to produce a Dual Mass Flywheel (DMF) Albers argued that the first product generation often lacks essential factors to be successful in the market, and the PGE approach can upgrade the first product version to reach the necessary level of product maturity With a different approach, S Altuntas et al [16] adopted Quality Function Deployment (QFD), a customer-oriented approach to develop an electric towing vehicle in the mechanical field In the Food and Beverage (F&B) industry, R Filieri [17] successfully established an NPD project in a food company by collecting many customers’ ideas, while R L Helmi [18] improved the healthy drink product by analysing the failures of other NPD projects in the company In the medical field, the NPD process can be more complicated, especially with products directly affecting human health, and clinical trials are required in the NPD process of medical products to ensure efficiency (K L Miller et al.) Moreover, by deploying the same co-creation approach with customers, L López-Mas et al also proved the importance of customers’ opinions in the beginning stage of the NPD process to develop new fish products in 3 different European countries Overall, NPD projects in all fields begin with the ideas brainstorming stage Although there are various ways to implement, the ideas for new products are typically inspired by customers' needs or the imperfection of the company’s current product
Focusing on the fashion industry, R Bandinelli et al [19] investigated eight Italian companies’ NPD processes and concluded that most of them started their NPD projects
6 by studying from the market research, selecting proper features to apply, and finally making prototypes to test their ideas Besides, a technical approach using 3D Virtual Prototyping was also suggested as a potential NPD tool in the fashion industry in the near future despite some obvious disadvantages (E Papahristou and N Bilalis [20]) Moreover, the make-to-order concept to meet the needs of every customer and setting up a strategic alliance with a textile expert to develop signature fabric are two other approaches for developing denim fashion products in Indonesia fashion start-up companies, which are mentioned in research by R Nurcahyo et al [21] Nevertheless, these two approaches necessitate significant financial investment and entail considerable risk, particularly for start-up businesses
The fashion industry has expanded rapidly in the last two decades (B V Todeschini et al [22]), it requires fashion companies to continuously improve and innovate their products to meet the customers needs and timely catch up with market trends However, not much research have been done to develop an NPD approach to optimize the process for this field In fact, available studies about NPD projects in the fashion area mainly focused on evaluating the importance of the NPD process to increase competitive advantages, not emphasising how to do it effectively Especially in fashion, there are many risks of challenging time scales, short product life cycles, and unpredictability (R Parker-Strak et al [23]), strengthening the importance of a new suitable NPD approach to tackle those problems In order to explore this gap, this study would propose an NPD method for companies in the fashion industry, which can shorten the time to brainstorm new product ideas, reduce the risk of failure and quickly meet customer needs by combining competitor analysis and customer surveys.
Methodology
In this section, the proposed methodology is presented in detail The New Product Development process is controlled by applying the project management method The main difference of the approach mentioned in this research is in the ideas generation
7 step, where the companies could shorten the time and reduce the risk of failure Data collection and competitor identification are two different skills used in the case study
There are many different ways to define a “project” According to Harold, a project can be considered to be any series of activities and tasks that having a specific objective to be completed, having defined start and end dates, having funding limits and consuming human and nonhuman resources According to Robert, a project is a sequence of unique, complex, and connected activities that have one goal or purpose and that must be completed by a specific time, within budget, and according to specification According to Project Management Institute , project management is the application of knowledge, skills, tools and techniques used to meet project objectives and its requirements On the other hand, Richard simply defines project as a task with desired end point To recapitulate, project is basically solving a problem Problem here can be defined as a new objective that an organization wants to achieve or a current bad situation that a team want to solve
Nowadays, project management is one of the most essential aspects that affect the development of bussinesses If organizations have a good project management system, they can save time and resource to solve a problem, then make better business decisions Kuster et al states that project management nowadays are used not just to manage complex tasks in technical environments, but also for problem solving and crisis situations in all management fields, such as Marketing, finance and corporate organization This is why planning and managing a project effectively is extremely important and necessary
The traditional project management method is applied to manage the NDP process effectively Institute divides the project life cycle into four stages: Starting the project, organizing and preparing, carrying out the project work and closing the project According to J Westland [24], the project life cycle consists of 4 main stages, including project initiation, project planning, project execution and project closure (Figure 2.1) Besides, in many practical works, the third stage can be separated into two small stages:
8 implementation and monitoring Although the names of each step in different documents cannot be similar, each stage's purposes remain the same In this research, we mainly focus on the initiation phase
Figure 2.1 Project life cycle [Westland (Placeholder1)(2007)]
This research collects data for evaluating competitors, identifying best-selling items on the market, checking fashion trends and applying for new product design Two main data collection methods are observation and customer surveys
By monitoring the sales figures and customer reviews on e-commerce platforms like Shopee, TikTok Shop, and Facebook, businesses can gather valuable insights into their competitors' performance This data-driven approach provides a comprehensive understanding of market trends and consumer preferences, enabling businesses to make informed decisions and optimize their strategies accordingly.
• Customer survey: Surveys were conducted to evaluate the strengths and weaknesses of current products in the market of competitors and to check the reaction of customers to innovate new functions of new developing products
Selecting proper competitors is an important step to help decision-makers have suitable strategies for the company In the NPD aspect, researching competitors’ products can enhance the firm's competitive advantages by making new products that can resolve the imperfection of competitors’ products In this research, the competitors selection tool is the Competitive Profile Matrix (CPM) S M Sohel et al [25] stated that Competitor Profile Matrix (CPM) is a supportive tool for assessing major competitors using critical success factors CPM analysis can identify the industry's most
9 substantial companies with comparable market share strength (K Wackowski et al [26])
The New Product Development model is applied in this research in a fashion company Although stages of the NPD process are established based on the discussion between R&D and other departments in a company, the main stages of the NPD process include identifying customers requirements, developing the concept of a product, generating detailed design, testing and product commercialization In the scope of this research, idea generation is drilled down, and a new approach is applied by combining competitor analysis and customer surveys The detailed methodology is displayed in figure 2
By adopting our model, start-ups can tap into new markets even with limited resources The approach involves identifying competitors with proven success in the target industry By analyzing their top-selling products, start-ups can uncover the essential factors that drive market demand This information provides valuable insights to guide product development and expansion strategies.
10 successful products in order to satisfy the customers Besides, by checking customer feedback on social media or selling platforms, the weaknesses, dissatisfaction, and imperfections of our competitors’ products could be recognised, which later can become the new functions of our company’s products to increase competitive advantages After identifying factors of best-selling items and new potential features, the R&D department can start developing detailed designs for new products Finally, samples are made, and customer surveys are conducted to continuously improve the product to be ready for mass manufacturing and commercialization
This methodology focuses on 2 aspects of a new product: applying success factors of current top-selling products and fixing the missing points of those products that can be developed more to increase customer satisfaction However, though the application of success factors is essential for all new product developments, the new functions are optional depending on the abilities of the companies and the effective level of those new functions.
INTRODUCTION OF RESEARCH SUBJECT
Introduction of Company
Thanh Cong – a renowned global textile manufacture offers a fully integrated Vertical Production System service Throughout company history, Thanh Cong has strived to maintain their core visions and values– to achieve mutually successful partnerships drive their business forward and offer the highest levels of quality and value The company main office is located in 36 Tay Thanh street, Tan Phu district, Ho Chi Minh city
Company vision is with desiring and working creativity every day, they want to create products of outstanding value associated with the sustainable development strategy, towards the leading position in the global textile and apparel market in the coming time
The company mission is that they work for:
- Customers: who are benefited by our products and services
- Investors: Who trust in our integrity and knowledge for their financial gain
- Employees: Who become more confident in their lives through the meaningful contribution
- Suppliers: Who are satisfied with our fair and transparent deal
The core values of the company is working for:
- Profitability: To need to maintain the sustainable profits for all the stakeholders as well as the enhance of the Company
- Integrity: To try to be intergrated in the course of the business
- Learning: To consider that our working place is the learning place in terms of finding talents and cultivation knowledge & character
- Serving: To serve our Customers as a king and social minorities as a family with our sincerity & passion
Thanh Cong company has received many awards throughout their working time as following picture:
Figure 3.2 Thanh Cong company award in recent years (Source: Company website)
Introduction of Company Business
The company business mainly focuses on garment manufacturing export (all types including all kinds of cotton, fiber, yarn, fabric, garments, shoes and machinery, equipment, spare parts, raw materials, materials and chemicals but except toxic chemicals, dyes, packaging)
In recent years, the globalized business landscape has witnessed a surge in companies diversifying into fashion retail and real estate Thanh Cong, a leading player, has initiated its foray into the fashion retail industry through TC Commerce, an e-commerce platform E-commerce encompasses the creation and operation of online marketplaces (excluding securities trading) to facilitate transactions between consumers and businesses.
Figure 3.3 TC Commerce (De Closet) - fashion platform of Thanh Cong
In the next year, Thanh Cong wants to expand their business more Starting with opening a new fashion brand, Thanh Cong wants to utilize their manufacturing advantage to be successful in retail area However, Thanh Cong company is not setted up for retail industry That is why a new methodology suggested in this report is really necessary and proper for Thanh Cong to develop and finish this new mission
Introduction of Customers
With the position of a leading company in Vietnam’s Textile and Apparel industry, Thanh Cong has owned a wide customer network around the world Over the past years, Thanh Cong has actively integrated into the world, expanded its portfolio of potential customers, and uplifted the brand name of Vietnam’s textile and apparel exports In which, its main customers come from the US, Japan, South Korea, China, and Europe
Figure 3.4 Customers of Thanh Cong garment manufacturing export
Company Problem
As being mentioned in previous part, Thanh Cong company wants to expand their business, starting with opening a fashion private brand The purpose of it is that Thanh Cong wants to build up a new growth engine for future Besides, they want to step by step develop as a comprehensive enterprise which can serve everything in life for everyone in Vietnam
To achieve this, Thanh Cong has to firstly clarify their product Although Thanh Cong has had some experience with fashion industry before with Esitto brand (women
15 casual wearing) and knowledge from invest company, this is the first time they try with Streetwear styles Besides, the operation process within Thanh Cong is not made for retail industry and neccesary resources including private design team, domestic sale team… needs to be rebuilt with past experience including Product Development process
In the competitive Vietnamese fashion market, Thanh Cong Company has initiated a new product development (NPD) project to develop its first streetwear collection This strategic move aims to minimize risk and facilitate the company's official market entry The NPD project will employ effective methodologies to guide the development and launch of the new collection, ensuring a successful penetration into the streetwear market.
NEW PRODUCT DEVELOPMENT APPLICATION IN FASHION
New Product Development Project Introduction
Thanh Cong company intends to expand a new business to become a local fashion brand and develop a new streetwear product The company has some requirements for this project:
(1) The first products are T-shirts, which would be sold mainly on online channels in Vietnam, including Shopee, Tiktok Shop, Facebook, and Instagram, to mention a few
(2) The first product is high-quality with the target price and possible to be sold 100%,
(3) Customer segment is ranged from 18 from 25 years old
(4) Time interval from ideas generated and production completed is within 2 months
To venture into the streetwear fashion industry for the youth, Thanh Cong, a garment manufacturing expert, considers employing the new product development method This approach emphasizes idea generation, which is crucial for defining the product's direction and market viability By harnessing this method, Thanh Cong aims to mitigate risk and optimize resource allocation during their expansion into the fashion retail sector.
If we cannot make a product that meet the demand of the market, we can fail.
Project Stakeholders
The project has 5 main Stakeholders:
CEO of ABC company Decide the budget/ products quantity for the project
Customers Directly buy and use the product
Suppliers Provide necessary materials for the product
Manufacturers Complete the product form raw materials to finished goods
Competitors Affect the market as well as selling ability of new product
General Requirements for New Products
The general requirements for new products development project have been decided through meetings of CEO and other departments The requirements for project has been listed on the Table 4.2:
Table 4.2 General requirement for New Product
1 The average price of new product is from 300,000 VND – 400,000 VND
2 Tiktok Shop and Shopee are chosen to be main selling channels
3 Marketing strategy of new product will concentrate on posts/video on social media
4 Minimize the cost and utilize all necessary resources of the company
5 Product will have suitable size/form for Vietnamese people
6 Target to make 20 different designs with 2000 units in total and sell in 3 months
New Product Development Idea Generating
4.4.1 Step 1: Market research – Competitors Analysis and Customer Research a) Competitors Analysis
In Vietnam, the Streetwear fashion market has been developing rapidly There are over 100 different Streetwear local brands established in recent years Figure 4.1 lists one of the most prominent brands in the market, which follow streetwear styles in
Vietnam (the famous level is listed based on followers quantity on all social platforms) This industry is extremely competitive, which required new brands to define who are their main competitors and identify their unique points to compete in this market
Identifying the top competitors in the market is important because they are currently leading the fashion industry If we can provide the customers with what they are selling with better quality and more innovative design, we can replace their position in the market sooner or later The Competitor Profile Matrix (CPM) method is applied to identify the top competitors The critical success factors used to evaluate the competitors in this CPM are fabric quality (1), perfection level of finished product (2), packaging quality (3), reputation (4), the creativity of design (5), unique level (6) and marketing strategy (7) The factors are decided based on the purpose of this market research: finding top local brands to develop products with trendy designs and styles for customers Notably, nearly 73% of purchasing decisions occur at the point of sale Hence, the creativity of design plays a pivotal role in differentiating brands and elevating products above the competition, shaping specific perceptions in consumers' minds (P
Srivastava et al [27]) Therefore, design creativity is among the most important criteria to decide customer satisfaction
The rating score for each factor ranges from 1 to 4 and refers to strengths and weaknesses, where 4 = major strength, 3 = minor strength, 2 = minor weakness, and 1
= major weakness Because the factors are qualitative indicators, a group of experts in the fashion industry is invited to join in this process The experts are responsible for considering the weight of all critical success factors in this CPM and rating scores for selected competitors By checking the monthly selling performance on e-commerce platforms, the company can select a list of prominent local brands to be joined in this CPM evaluation However, only the top 10 local brands with the highest scores are displayed in Table 4.3
Table 4.3 Choosing competitors by CPM method
In conclusion, brands A, B, and C are the company's top 3 biggest competitors in the fashion industry with streetwear style b) Customer Research
Then, those three competitors' best–selling T–shirts are analyzed in detail to define essential factors of streetwear items in the market that can meet the customers’ needs and ensure selling ability Customer interviews are conducted at this stage, and customer feedback on social media is also collected By doing this, we can know precisely what the dissatisfactions of customers with the products of those three brands and which factors from the products of the three brands impress customers the most Below is the customers survey questionnaire:
1/ How old are you? Checking customers target
2/ Which factors are the most important for you to buy a t-shirt?
Set priority for factors to apply in next steps
3/ Among those 3 brands, which brands do you like the most? Why?
Checking competitors signature point in customers’ point of view
4/ With the price of 350.000, which will you buy among best selling items of 3 selected brands?
Checking design areas => Which factors make customers like?
5/ What can be improved to be more attractive?
6/ Which T-shirt form is your favorite among best-selling items from 3 selected brands? Checking size and identify the best form might have 7/ Any recommendation for adjusting the size?
8/ Which fabric of best-selling items from 3 selected brands that you like?
Check fabric quality required by customers
Checking the color 9/ Which color impresses you the most? Find the color that customers like
10/ Is there any promotion types of those brands interest you to buy their product?
Find the effective promotion campaign for mass-selling
The researchers also search for review of customers on online selling platforms of those 3 brands The purpose of this action is to identify the dissatisfaction of customers for those top-seling items through negative comments and its ratio The results of both
22 customers interview and online review checking are summarized in table 4.5 The company's new products are expected to have all the current strengths of 3 competitors and improve all the weaknesses with new functions
Table 4.5 Identifying competitor's strengths and weaknesses
- Goof fabric quality – thick fabric & cotton 100%
- Size control (Size is too big)
- Good fabric quality – thick fabric & cotton 100%
- Having lots of simple design and easy to wear
- Lack of signature design (design is quite basic and not unique)
- Mostly baby tee form, easy to wear
- Can easily buy with discount price
- Poor fabric quality (especially T- shirt collar)
4.4.2 Step 2 Identify essential factors for best-selling items
In this NPD, four main aspects of a T-shirt are developed: fabric, colour, form and graphic design a) Fabric
There are two main features of fabric that we need to research, including the weight of the fabric and the type of material Generally, brands A, B and C all use 100% Cotton
The choice of fabric weight and type significantly impacts the quality and cost of T-shirts While brands A and B use thicker fabric weighing at least 230 grams per square meter (gsm), brand C employs lighter fabric below 200 gsm Consumer feedback indicates a preference for thicker fabric like brands A and B, while brand C's thinner fabric has faced criticism Fabric weight directly influences production costs, prompting the company to consider balancing cost efficiency with product quality Since the company prioritizes high-quality products, the initial T-shirt collection will use 100% cotton fabric weighing 230 gsm to satisfy customer preferences and compete effectively In the long run, the company will leverage its manufacturing capabilities to develop unique, functional fabrics for its brand By increasing order quantities in subsequent collections, the company can mitigate the higher production costs associated with premium fabrics.
The second feature is the type of material The project team has to select between 2-way stretch cotton 100% and 4-way stretch cotton 100% because brands A and B use both types for their products, and the start-up company cannot apply both for the first t- shirt collection The decision will be made using a trade-off method with three criteria, including cost, comfort level, and durability, with weights of 0.4, 0.4, and 0.3, respectively The score is evaluated by 7 textile experts in the industry, and the result is presented in following table Although 2-way stretch cotton 100% is less comfortable than 4-way stretch cotton 100%, its durability and cost are more proper for mass-selling products like T-shirts In conclusion, 2-way stretch cotton 100% weighing 230 gsm has been selected for new product development
Table 4.6 Choosing fabric for new products
Cost Comfortable level Durability Final score
Figure 4.2 4-way stretch fabric & 2-way stretch fabric (Source: Internet) b) Fabric colour
To identify the trendy colours in the market, the top-selling items of 3 brands are evaluated carefully Brands B and C are famous for making collections with a wide range of fabric colours, while brand A only focuses on their signature colour After checking the selling performance of other competitors’ products, the project team can divide the colour proposals into two groups: basic and unique
The basic colour is mainly decided based on the analysis of brands B and C products Although various colours are developed in the same collection, the T-shirts, whose main fabric colour is black, white or cream, are recorded to have the best-selling performance compared to the other items For example, “Popular Logo 2.0 T-shirt” collection of Levents, our biggest competitor, is chosen to evaluate the selling status
Based on the sales data on Shopee platform, Black, White and Green are 3 best selling colors in this collection, which overweigh other colors
The unique colour is considered based on the analysis of brand C’s products Besides, brand C likes to adjust the tone of original colours to create their new signature colours According to their selling performance, the customers highly favour the new colour tone of pastel purple, brown or blue navy
Figure 4.3 Monthly sales of “Levents Popular Logo 2.0” collection by color
Finally, the project team decided to develop new product designs with 60% of the designs applied with basic colours like black, white and cream The remaining 40% of designs are created with new blue navy, brown, and purple tones Also signature colors that never appeard in market yet are also considered c) T-shirt form
The form includes two main factors, including T-shirt shape and size About the shape, each brand has different T-shirt shapes, but the two most popular T-shirt shapes are oversized and boxy shapes The oversize shape is wider and longer than the boxy shape While brand A produced a 100% oversized shape, brand C made a 100% boxy
Black White Green Blue Yellow Red
26 shape, and brand B tried both T-shirts with different percentages in their collections However, after checking the selling performance of products with boxy forms of brand
B, the project team decided to develop only oversized forms because the average selling performance of brand B is 10 times less than the unisex form Moreover, brand C is now developing a new type of T-shirt, baby tee The project team is also aware of a new trend for teenagers next year, the baby tee, and we can consider developing this type in the following collection
New Product Development Project Management
Project can be divided into 4 main phrases including researching, planning, doing and controlling Table 4.17 displays the estimated timeline for the project with information about all tasks , earliest start time (ES), latest start time (LS), earliest finish time (ES), latest finish time (LS) and available lateness time (s) for each task
After task ES LS EF LF S
The AON network describes the project tasks and their order:
Figure 4.8 AON network of the project
The project is planned to happen within 32 weeks and new products are expected to launch in week 19
Figure 4.9 Gantt chart for project
The company will allocate the workers from differrent departments to join in project team The Table 4.18 displays the required number of workers for each task:
Table 4.18 Human resource for project
Market research 1 Marketing, 1 Sales, 1 R&PD 3
Competitors analysis 1 Sales, 1 R&PD, 1 Design 3
Sales/Marketing plan 1 Marketing, 1 Sales 2
Products launching 2 Sales, 2 Marketing, 1 Finance 5
Project completing 2 Sales, 2 Marketing, 1 Finance 5
Based on the timeline of each task and required resource for each task, team members of this project will include:
Table 4.19 Human Resource Allocation by Period
Department Number of workers Time joined
Some members of project will only join in a certain period After that, they will be allocated to join in other projects of the company However, all members still have the responsibility to follow up the project status to support immediately if necessary CEO of company will be directly in charge of controlling project team members’ performance
The new products are expected to sell 100% after 3 months since launching day with product price decided to be 350,000 VND
Table 4.20 Pricing of New Product
Estimated fabric cost 29.625 VND Estimated manufacturing cost 42.000 VND Estimated packaging cost 3.000 VND
GP (gross profit – excluding VAT 10%)
S&A cost (in case 50% of price) 175.000 VND
Therefore, Sales/Marketing strategy will be planned to implement within 3 months However, there are many Sales and Marketing strategies that make the product be sold with lower price like discount directly or buying with vouncher Therefore, Sales team has calculated the revenue of project with different discount scenarios as following table After discussing with CEO, Marketing and finance team; the case 3 has been approved: The product will be sold at least 50% units with original price and 25% units with 90% price Besides, Sales team can sell flexibily 12.5% product with 80% price and 60% price based on their Sales strategy
According to case 3, the revenue of the project is estimated to be 630,000,000 VND Moreover, Marketing budget for project will take 30% of estimated revenue According to general requirements, Shopee and Tiktok Shop will be 2 main selling channels, while Facebook and Instagram will be main Marketing & branding channels Marketing budget will be distributed to each channels as Table 4.22:
Table 4.22 Sale & Marketing cost distribution
Facebook advertisements, Content making, Giveaway campaign
Instagram advertisements, content making, Giveaway campaign
Tiktok advertisements, KOCs booking, livestream, content making
Others 10% 9,450,000 VND Lookbook photography, other fees
Company will invest maximum 200,000,000 VND for this project This investment budget will be spent on paying cost in preparation stage including manufacturing cost, package bag cost and fabric purchasing cost The following table displays the investment cost monthly before launching products:
Table 4.23 Estimated Cost of Project
Investment Cost/unit Qauntity Month 1 Month 2 Month 3 Month 4
The products are launched in 5 th month and the total revenue is expected to be 630,000,000 VND according to price strategy of Sales team Therefore, the monly revenue will be around 157,500,000 VND The cost of this project will include investment cost, operation cost (electricity, analysis tools, phone…), employee salary cost and Marketing budget The operation cost will be assumed to be approximately 3,000,000 VND per month Moreover, each team member of project team will be assumed to have monthly salary around 7,000,000 VND However, each employees in ABC company will be incharged of at least 2 different projects Therefore, the salary of related employees that this project has to pay will be divided in half Marketing budget of this project is 15% of the monthly revenue Finally, the tax of this project will be around 20% of the profit (revenue – cost) After calcalating, the next cash flow of this project is expected to be as Table 4.24:
In conclusion, with 149,550,000 VND invested in the beginning, this project is estimated to have over 100.000.000 net profit per month after launching This money will be used to continuously invest for the second T-shirt streetwear collection of company However, after launching first collection in this project, company intends to manufacture more units for second collection to have higher profit
Table 4.24 Estimated Profit of Project
D Net Cash Flow - After Tax (.mil VND)
Predicting risk that might happen in a project can increase the possibility of being successful Based on the experience with brand in the past, experts in the company predicted the possible risks, evaluate its impacts and suggest solutions
First, the risk likelihood will be evaluated with 5 levels: (1) Very unlikely, (2) Not likely, (3) Possible, (4) Probable, (5) Very likely Second, the impact scale will be assessed with 5 levels: (1) Negligible, (2) Low, (3) Moderate, (4) Significant, (5) Catastrophic Finally, the risk rating will be calculated by multiflying the risk likelihood score and the impact scale score.
1 Sales is much lower than expected 4 4 16 More Marketing/Sales plan to boost sales
2 Low competitive pricing 3 3 9 Accept the risk
3 Not enough stock for selling 2 4 8
Re-orders for top selling products & new products every month
4 Not enough human resources to manage the project
3 2 6 Allocate more back-up workers if necessary
5 Too much defective products after finishing manufacturing
Change the manufacturers/fabric suppliers
6 Customers do not like the design 4 5 20 Stock clearance, restart the
Although new NPD approach has been suggested in this case study, the possibility of the risk “design is not favored by customers” is evaluated to be the highest The risk might be happened mainly because the mistakes could be made in each step of NPD process.
Result Evaluation of the Method
Almost all the suggestions about New Product Development mothod has been applied, although the suggested project management has been adjusted a little due to some constraints of Thanh Cong company The detailed of application is displayed in Table 4.26:
No Suggested application Actual application
Design orientation based on proposal method Applied
The main reason for not applying all the suggested plan is that Thanh Cong wants to utilize their manufacturing background by making fabric and manufacturing for new products instead of outsourcing This decision makes the cost of manufacturing increase dramatically because New products are made with small quantities compared to the
MOQ of Thanh Cong order However, it can support for further development of the local brand because after developing in the future, the brand can manufacture more quantity per times, which fits the required MOQ of Thanh Cong
The suggested method has been implemented in practical and the results have been recorded Some positive impacts showing efficiency are listed as below tables: a) Decreasing the time for NPD process
Normally, a New Product Development project will occur around 2-3 months for preparing New Products including manufacturing stages The ideas preparation normally happens for a month including customers survey with large samples, making samples, trend research… After all of that processes, designer can start to make draft design for new products However, with suggested method, the time spent on ideas preparation stage has decreased significantly to around only 1 week In 1 – 2 weeks, the company just need to spend time on searching customers best selling items, checking customer reviews & making products analysis
In the dynamic fashion industry, rapid trend cycles require a streamlined NPD process to stay ahead of the competition A fast NPD process allows for efficient conversion of ideas into products, reducing the risk of missing out on market opportunities It also contributes to increased success ratios by minimizing the time and resources spent on developing products that fail to resonate with consumers By leveraging a fast NPD process, fashion businesses can adapt swiftly to changing trends, maintain a competitive edge, and maximize their success in a fast-paced and ever-evolving market.
Because the selling ratio of research items have been checked The company can feel secure about selling ratio after launching In fact, after company applys all of the factors made by the suggested NPD in this report, we found over 10/20 products that sell really well on the market
The 10 remaining styles sell lower than expectation because the application points are not as attractive as the available products on the market c) Decrease the cost and the resource
Because the main tasks the company has to do during NPD processs is reasearch and checking customers review, we do not need to spend so much budgets and also
48 human resource for that Compared to traditional methods, we have to make a lot of samples and go research several times to adjust and check the hypothesises.
Future Application for the New Product Development Process
Because the project of new products of a local brand can require NPD process frequently, a NPD process after this first collection can be adjusted a little for more convenient:
1 The main competitors in the market might not be replaced quickly That is why we just need to do the competitors identifying one time per 3 months
2 The best selling items on the market should be checked frequently as well as our products since last project Because we should know which factors from our products interest the customers the most, then we have to continue applying for next collection
3 The factors for success are like a trend We should update frequently to not make the old-fashioned design, leading to failures
4 We also need to care about our customers feedbacks from last products to improve continuously
Figure 4.10 Adjustments for next NPD project of the company
CONCLUSION AND RECOMMENDATION
Discussion
Recently, private SMEs, including start-up companies, account for 97% of total companies and become the main growth engine in Vietnam (N N Thi [28]), which motivated this research to focus on improving those companies' activities The presented case mainly investigates the success factors of designing new products in the fashion industry While T-shirts are a typical product, most of their developments tend to align with short-term trends Interestingly, customers exhibit a strong inclination toward the graphic design of these products over other factors when making purchases, particularly within the fashion sector Despite occasional customer feedback suggesting the incorporation of new functionalities into creating the perfect T-shirts, the study concludes that pursuing these advancements is not justifiable due to the considerable costs and efforts involved in their development Instead, it underscores customers prefer aesthetic elements, especially graphic design, in new fashion items Besides, compared to competitors' products, the new T-shirt collection developed by the proposed method combined all outstanding points to attract customers' interest and ensure a quick selling ratio
Applying this approach, the company's New Product Development (NPD) process has many positive improvements The project lead time was shortened, the risk of failure was decreased, and the necessary resource was reduced The time saved is mainly on the generating stage The time interval between the beginning of the project and the time when a draft design is finished is about one month and a half The company spent around
In-depth market research is conducted to gather insights from competitors and customer feedback, enabling identification of industry benchmarks and strategic opportunities Key performance indicators of successful products are analyzed, guiding the creation of a robust design tailored to meet market demand After two weeks of design refinement, the product is ready for production.
Regarding the resources, compared to the old plan with another NPD approach of the company, the human and budget required for this project are significantly declined
51 because the main work is only making research about competitors and checking customer feedback on social media Moreover, with this proposed approach, we know the essential factors of best-selling products and do not need to make many samples and test customer reactions several times, decreasing the wasted budget for this project Moreover, by selecting all the best features of top-selling items on the market to apply for new products with some innovations, the selling performance of new products after being launched can be ensured because we know which factors can attract customers in advance In conclusion, this approach is entirely effective for companies that want to develop new products with less time and budget but still have to ensure a certain level of success
Innovation management is crucial for successful product development Integrating concepts like Six Sigma ensures product quality during production Lean product development has a significant impact on project success, allowing companies to increase their chances of success by following its principles To maintain a competitive edge, companies should adopt a systematic approach to managing their innovation drivers, enabling them to proactively respond to market demands.
Conclusion
After the implementation process, the research has achieved results compared to the original objectives, specifically in the following table:
Identify the proper NPD method for start-up companies & companies want to expand new business model
2 Apply for a case study in practical Completed
3 Evaluate the efficiency by checking the result after fixed period Completed
In conclusion, this graduation thesis has finished all the targets which was set at the beginning
The report has been suggested with many good impacts
1 The method and case were suggested based on the actual need of the market of a new development method for start-up companies, which are limited by resource and experiences
2 The actual efficiency of new method is easily to record thanks to the practical case stusy in this report
3 The method is potential to continue researching in the future for furrther applications
Along with the advantages, the report also shows a few shortcomings that can continue to develop:
1 The case study did not cover all the best features of the suggested methodology Another sesearch should be made for further conveying the messages and efficency of the methodology
2 Although the report has mentioned clearly about the new product development stages, but the project management should also mentioned and clarified more.
Recommendation
The case study proves the effectiveness and possibility of the proposed New Product Development approach According to Cooper (2019), two success drivers for individual new-product projects can be building in voice-of-customer (VOC) or
53 adopting a global orientation Compared to our approach proposed in this paper, we also set up a New Product Development project based on competitor analysis, which can reflect the global fashion trend Moreover, customers voice is also included in this methodology because their social media feedback is the most reliable source to evaluate the strengths and the weaknesses of competitors in the market Therefore, the proposed approach is potential and practical, especially for start-up companies or firms expanding new business areas
The proposed methodology is limited to addressing typical problems in start-up companies in the fashion industry; therefore, this methodology can be further applied more effectively by adding more product functions after doing competitor analysis and customer surveys For example, within the scope of the case study, the T-shirt is only developed in the design by combining all success factors in the design of top-selling products in the market Suppose the company wants to gain more competitive advantages by launching new products In that case, they can spend more time on conducting customer research and product material analysis and further develop new functions for the T-shirts like UV protection, reducing stain intention, automatically drying quickly after washing, etc Those new functions are outstanding and different from items in the market and support increased customer satisfaction, although it would take more time and resources to develop The ideas of new functions can also be inspired by customer dissatisfaction that the product development team realises through the customer feedback checking step
Although the proposed method was applied to the company mentioned in the case study and proved its effectiveness, it can be continuously improved to become more popular and suitable for NPD projects of startup companies and others For further research, this rproposed NPD method will be applied to other companies in the future in different industries to evaluate the suitability level and explain insight of this method for each industry Then, adjustments are necessary to increase the effectiveness of this approach
Besides, further research is also required to analyse this methodology's risk factors in practical applications Since this methodology mainly depends on checking customer feedback and competitor analysis, if research teams make mistakes while checking customer feedback by not removing distracting opinions or deleting wrong data, it can make the final analysis results completely incorrect, leading to later wrong decisions in product development On the other hand, all products have a peak selling period, especially products with short life cycles like clothes and food It is important to focus on finding top-selling products starting their selling period The consequence of selecting out-trend products is a low selling ratio and high inventory To avoid failures, those risks should be considered while starting a new product development project
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CERTIFICATE Certificate of original report