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Introduction

UAE is the largest and richest country of Middle East in Asia. In UAE, there are lots of hypermarkets are business successfully. Among them Carrefour is most known and dynamic in player, It is selling about 100,000 items to customers everyday. New product development is a continuous process and an unavoidable part of Carrefours mission. New product development has many phases to work with it. From which, Carrefour can choose its target customer groups by identifying their needs, determining the desired market positioning, ready to adopt, develop and launch the appropriate new products. Successful new product development can make Carrefour to establish an effective organisation in the management of development process. Carrefour can also choose to use product managers or new product venture teams in the innovation of new product. From the financial report and secondary information collected for Carrefour, this can make the clear idea about the adoption of international market. Consumer adoption process is another important consideration for Carrefour. To learn customers about the new product development, tried them, and adopt or reject them. Carrefour has the opportunity to utilise precise media and estimation to target serious users as well as quick adopters of new products. This paper would draw attention to country consideration, market consideration, company analysis, new-product development process for Carrefour and marketing strategy of Carrefour. The paper also enlighten on factors influencing the adoption process, environmental analysis, market segmentation and drawn conclusion.

Country Consideration UAE

  • To find out the possibilities of new product development in UAE, first we have to have clear ideas about it. The United Arab Emirates (UAE) is a constitutional country established on 2 December, 1971. It has an area of 83,600 sq km, with largest capital of the federation Abu Dhabi. As per UN statistics 4.4 million people inherited in the country of UAE in 2007 and the life index of woman is 81 years when life index for men is 81 years.. Four fifths area of the country is filled by deserts and Rocky Mountains for which agriculture has a small contribution in the national economy. But a natural resource like oil and gas is the main export item of the country and it formulates GNI per capital is US $23,770 (World Bank, 2006)

Other Factors

There are also some important areas of UAE, which have to be considered before generating the idea of developing new product in UAEs markets. These areas are:

  • Political Area: UAE is one of the most liberal countries with other cultures. The area of Government in UAE are:
  • International Scope: There is some tension between in UAE and Iran over disputed Gulf islands; US treat etc.
  • Business & Economy: UAEs people enjoy living high standard able, because of oil wealth, regional trading, and tourism hub.
  • News & Media: The related areas are both electronic and print media including internet.
  • Travel & Tourism: United Arab Emirates is the worlds greatest increasing tourist spot with precise ingredients such as enjoying memorable holidays, sporting, visit, peerless of shopping as well as deluxe accommodations and restaurants.
  • Society & Culture of UAE is another important Factors to take into account for developing new product
  • Developing an organic product, we also have to know about science in UAE.
  • Shopping is another important factor in marketing.

Market Consideration

There are a propos of 81,000 hectares of agricultural lands in UAE for plantation. Among this cultivating land 30% area for fruits, 24% area to produce vegetables and 10% for feed harvest when 36% of the area is used for others. The most significant crops in of UAE are dates, melons as well as tomatoes. The agricultural production was accounted 1,055,000 M. tons of vegetables and 358,000 M. tons of fruits in 1999. The increasing emphasis adopted by government has resulted to gain a domestic production 60% of fruits and to decrease import of vegetables government encouraged cash incentives for the producers who efforts domestic production.

Company Analysis

Carrefour S A is a retailer as well as a hypermarket operator of French established in 1957. The business line includes discounted cash and carry, grocery and expediency stores and hypermarkets. Though a France based company in 2007 54% of its sales generated from overseas operation. Carrefour established more 1,353 latest stores in different countries and 145 new-fangled hypermarkets in 2007.

Carrefour UAE organised in 1995 as a joint venture company among Carrefour S A and Majid al Futtaim of UAE. Carrefour UAE offers the global standard quality and variety of Carrefour and ensures value-for-money. Carrefour UAE provides a very const effective solution for it customers and almost 200 millions customers worldwide shop with Carrefour UAE per year. Carrefours UAE outlets are situated in Al Ain, Abu Dhabi, Ajman, Al Khaimah, Ras Dubail and Sharjah where it provides the opportunity of choosing their products out of their available 100000 items. In each few months Carrefour will initiate a new country and draw attention to its wide assortment of foodstuffs available at Carrefour UAE.

  • Market situation: The Company is competent in restructuring ability to developing huge product assortments. Net sales revenue in 2007 gained ¬ 82,148 million which was ¬ 76,887 million. It indicates a great increase of 6.84% than the previous years. The primary buyers are low and middle income consumers of all age and those who are conscious about quality, price and willing to getting good services regarding.
  • Product situation and lifecycle:- To, exclaim the product situation, the following information are important-
Variables 2006 (in millions of euros) 2007 (in millions of euros)
Net income 76,887 82,148
Rental income 211 225
Sub-leasing income 103 124
Sundry income 722 798
ROE 4.10% 3.80%

Table-1. Source: Carrefour, Annual Report- 2007

Market Segments 2006 (in millions of euros) 2007 (in millions of euros)
Hypermarkets 47,026 50,883
Supermarkets 16,902 17,665
Hard Discount stores 8,007 8,641
Other activities 4,953 4,960

Table-2, Source: Carrefour, Annual Report- 2007

The following graph will show the Position of products

Share of sales by business segments
Figure 1.Share of sales by business segments
  1. Hypermarkets 61.94 %
  2. Supermarkets 21.50 %
  3. Hard Discount stores 6.04 %
  4. Other activities 10.52 %
  • Competitive situation:  Carrefours major competitors in the retail market are Majid Al Futtaim Group, Spinneys Abu Dhabi, Lulu Hypermarket, Al Kazzim Group, Al Maya Group, Geant Hypermarket and Jaleel Group. Each of the competitors has explicit strategy and position in the market. For example, Lulu Hypermarket a drives in overseas markets other than UAE such as Kingdom of Saudi Arabia and other golf countries. Their whole price range, sales primarily in department stores, and emphasis heavy advertising spender. It plans to dominate the market throughout product proliferation as well as price discounting.
  • Environmental situation:  Environmental analysis of Carrefour respects for community and the environment, universal right of entry to the prime quality foodstuffs and solidarity with adjoining communities strengthening Carrefours efforts to construct a responsible future. About 65% of the households now shops at hypermarket as the consumers are spending more natural foods without artificial colour and flavour which efforts must be turned to convince customers to upgrade their test and choice.

Organic Foods of UAE

Organic food can be defined as the food which produced without any fertilizers, treatment with synthetic pesticides or growth promoters like, hormones and antibiotics. A number of organic foods are fashioned in UAE those are all kinds of macrobiotic agricultural production by means of out of harms way process which allow the ecological and socio-cultural conditions. It seeks to achieve the integrity in all sectors of agriculture including productivity of plants, animals, and soil. In agriculture of organic products, the use of chemical fertilizer, pesticides, and artificial chemicals as production inputs, which enables natural laws to produce increasing agricultural production. Local legislation emphasised on organic food production to ensure safety for public health and to develop more awareness in UAE.

The fishery development and protection is a great deal in UAE, based on policy of the Government. The undersized fisherman and customary fishery are optimistic to get better income of them and to boost the tune-up of significant food resources. Dairy products are also organic foods, which mean having milk and other products form by milk, like, cheeses, butter, cream, ghee, and lots of other products. These are also important organic foods by taking good care of milk giving animals, like cows, goats, lambs, camels etc.

There are lots of organic foods available in markets as in form of meat, vegetables, fresh ground spices, trail mixes, real milk chocolates, candy, nuts, healthy snacks and many more. The flavourful and freshly prepared natural meals can be available without any hassle of cooking, prepared by top chefs. There are also available of organic entrees, salads, soups, natural appetizers and deserts. In recent, UAE government agencies are increasing support and encouragement to promote organic sector in double. The organic farming is increased with the demand of natural food products.

Carrefour: The Hypermarket in United Arab Emirates

The retail sector including food in UAE is grown in boom. It gets the opportunity to face the challenges of transporting mall footage within short episode of time. The renowned bulky stores as well share the quick increasing consumer commodity market. On the other hand diminutive stores are run autonomously by attracting customers services akin to free home delivery as well as credit. The principally mounting consumer struggle to travelling the elongated distance for profoundly overcrowded roads to hypermarkets situated within metropolis malls. Currently the hypermarkets are sustained to take the show the way in terms of total worth. The trends of longer establishment in smaller food retail stores are expected to roll over in market. The interesting alternatives and opportunities for the suppliers of hypermarkets build solid alliances. The demands of fresh food products are targeting the middle class continually. The Hyper Panda is another first growing hyper store of UAE and derived Saudi market with a regional expansion strategy and achieved the position of market leader. Other then Carrefour there is 100 super and 25 hypermarkets working in UAE with a large number of outlets.

When we talk about UAE, the product suitability is quite limited because of a Muslim country. They are having tight control system with few selected importers and retail outlets in several emirates. In UAE, there are spreading the stores with unbeatable choice of having more than 100,000 items. In each few months Carrefour launch new product from new country and draw attention to the wide range of items obtainable at Carrefour outlets. The departments of Carrefour are Market, Light Household, and Heavy Household

Carrefour in UAE departments contain different departments, where, market department has the Bakery and Pastry section, the Fruits & Vegetables section, Butchery & Fishery section, Roaster section, Deli & Cheese section, and many more. In consumer goods, it presents convenience of products, heavy and light household sections are offered wide range of products and brands. At the same time Consumers current product line Beverages, Snacks, Grocery, Bakery, Dairy, and Fish & Fruits.

New Product Development at Carrefour

Carrefour always aimed to add new products in its hypermarkets by acquisition as well as development. The development processs route is in two forms. New products could be developed at their own laboratories or can get in touch with other researchers and new product development organisations to keep joint effort for organizing new products. There are mainly six types of new products:

  • New to the World Product: The new product which can create completely new markets in the world. For Carrefour, it may be impossible to develop wholly a new product in its product list as it is a joint ventured company.
  • New Product Line: The New products are those which would be able to allow any firm to go into in a conventional market designed for the first time. In Carrefour, to create a new product line is possible, but it may incur huge costs to their financial statements.
  • Additions to Existing Product Line: The New product attributes would be able to supplements in a conventional product lines by package size, test and flavours. It is the easiest and most common way to develop new product in the markets. For an example, an additional fruits can be added in fruits section in UAE Carrefour.
  • Perfection and Revisions of Existing Products: The New products that has been organised enhanced performance and gained superior awareness on value can put back the currently available products of that organisation. For Carrefour, it is also possible way to develop new products in the market. For example, they can improve their any products by adding new quality or features.
  • Repositioning: The currently available products that can aim to the new-fangled markets as well as to new segments of the market. It is not the segment, which should cover in this essay paper.
  • Cost Reductions: The new product expansion that has analogous performance with inferior price. It is as well one more way, but would not able to envelop the area.

Factors Hampering New Product Development

There are various factors which can hinder the continuous new products. Theses factors are:

  • Shortage of Important Ideas in any Specific Areas: In some products, there may be few ways left to be improved, like steel. This would be major problems for Carrefour, which already has 100,000 of items and products in the market.
  • Fragmented Markets: Organisation has to target the new products at smaller segmentation in market, which can make lower sales and revenues for every product. In Carrefour, it is also going to develop new products only in UAE. But, from UAE, it should select smaller market segments, like youth of UAE only.
  • Social & Governmental Restrictions: The new products encompass to apprehension concerning environmental and consumers wellbeing. As a majority of Muslims, UAE can not easily accept alcoholic beverages and pork so easily. These possibly will grounds social and legislative restrictions.
  • Cost of Development: Organisation, when generates an idea about product development, it may faces high R&D, manufacturing and also marketing costs. The Carrefour should also focus on the cost of product development, whether it exceeds the revenues, may generated from the new product.
  • Capital Shortage: Some firms could build up innovative thoughts and dreams concerning their new product, but can not lift up the endowment for research and launch the products. Carrefour should not select such items of products in development, which may create capital shortages.
  • Faster requirements of time: Organisations must evaluate about compression of time in development by using techniques, strategic partners, conceptual tests, and advanced marketing planning. The time, which is limited for product development is another factor.
  • Lowest period in product life cycle: While manufactured goods market is developed within longer period of time, it will lose its market for decreasing selling. Because other competitors can copy the product so easily. Carrefour should develop such products, which are not easy to copy, or follow by the competitors.

Carrefour is capable to develop to organise process of organic food market through numerous ways. It is mainly assigned to product managers. But they should busy with maintain the existing products of the market. Also they have lack of skills and knowledge to develop new products in market. Carrefour should establish a new product department with substantial authorities and access of top management. This department can generate and screen new ideas, work with R&D department and carry out testing and commercialization.

Using cross functional teams are another way to organise new product development. These teams can be collaborated new product by pushing them to markets. They are also help to ensure the real need and want of potential customers.

Managing the Development Process of New Product in Carrefour

  • Idea Generation: The new product development process is starting with the search for new ideas. Carrefour should use marketing experts, who know the opportunities and leverages with new products, which are found the best possible set of customer needs and technical innovations.
  • To Interact with Others: New product ideas can be generated by interacting with various groups and using many sources, like, customers, scientists, competitors, employees, channel members and management of Carrefour. Interviews and focus group discussions can explore product needs and reactions to market. Depth experiential interviews can also uncover the vast majority of customer needs. Observational techniques with customers can be watched from behaviour on specific products and habits and sources of frustration. They can also use on site lab for several new product ideas.
Evolutionary Delivery Process
Figure 2. Evolutionary Delivery Process
  • Creativity Techniques: There are some creative techniques can also followed in Carrefour, like:

    • Attribute Listing: Carrefour can list the attributes of an object.
    • Forced Relationship: They can list several ideas and relation to each other.
    • Morphological Analysis: They can also analysis any idea by starting with a problem.
    • Reverse Assumption Analysis: In this, company can lists the normal assumptions about new ideas and reserve them.
    • New Contexts: Carrefour can take popular services like people helping services, and can also put them in a new context.
    • Mind-Mapping: In now days, new product ideas arises from combination of two product concepts to create a new offering. Carrefour can also apply these techniques in their organic food innovation.

In the development process of new product in Carrefour, they can use the line extension of existing products, as it has already large number of products. In the idea generation, some idea is generated for Carrefour product development, like:

  • Extension of Fruits section by importing or producing Jack Fruits
  • Extension of Snacks section by producing ready made corns as pop corn
  • Extension of Grocery section by producing prepared soup made by high quality chefs

Idea Screening: Carrefour should motivate employees and other groups of people to submit new ideas to a widely circulated person. Idea committee should written down and check ideas very frequently. Each idea provided to Carrefour should be researched and reported to the committee.

There can be mainly 3 kinds of thoughts:

  • Promising thoughts
  • Marginal thoughts
  • Rejects.

Concept Development and Testing: In this stage, attractive ideas should refine by testable product concepts. Carrefour can offer the possible product idea to the market.

Concept Development: In this process, Carrefour should focus on the nutritional value and taste of product concepts. In this stage, several concepts can be turned from it, like:

  • User/ Consumer of the Product
  • Primary benefit from the Product
  • Time of Consumption

The ideas, which are generated previously, are given in the concept development test below:

Extension of Fruits section by importing or producing Jack Fruits:

  • User/ Consumer of the Product: All groups of people in UAE
  • Primary benefit from the Product: Providing taste and nutrients to consumers
  • Time of Consumption: In season

Extension of Snacks section by producing ready made corns as pop corn:

  • User/ Consumer of the Product: Mainly the young people
  • Primary benefit from the Product: Providing taste and entertainments to consumers
  • Time of Consumption: When enjoying parties or special events

Extension of Grocery section by producing prepared soup made by high quality chefs:

User/ Consumer of the Product: All groups of people in UAE

Primary benefit from the Product: Providing taste and nutrients to consumers

Time of Consumption: In all seasons

Here, each concept represents a category concept with product competition. In product concept, the dimension of cost and preparation time is also important creating product positioning map. After that, Carrefour should improve invention concept into brand perception. Jack fruit does not need any brand name, as soup needs a brand name very badly. The brand name should be distinctive in medium price or high price. The brand can be extended from an existing brand.

Concept Testing: It involves in the presentation of product concepts and target customers and also their reactions, which can be done symbolically or physically. After evaluating the reactions between customers and new concepts, Carrefour can find out the following solutions:

  • Communicability and Believability
  • Need of Level
  • Gap of Level
  • Perceived Value
  • Purchase Intention
  • User Targets on Purchase

Carrefour customers can answers the concept with broad and strong appeal with best targets. The need and gap level is important for Carrefour to know the appearances of customers on new product category is to be winner, long shot or looser.

Conjoint Analysis: Consumer preferences for alternatives of new product category are measured by conjoint analysis, where the values of customers in levels of product attributes should measured by Carrefour. In this analysis, Carrefour can identify the most attractive offer and also estimate the share of the market and profit of Carrefour.

Marketing Strategy of Carrefour

After having a successful conceptual test, Carrefour should develop a primary strategy plan to introduce new product in UAE. There are mainly three parts in this plan, these are:

  • Product Positioning: The market of soups, pop corn and jack fruits can be positioned very easily.
  • Sales, Market Shares and Goal of Profits: As a new product development, jack fruits can easily capture the market shares but in case of import, it may be difficult. But the sales and market shares of soup and pop corn market is quite hard to capture.

In the second part, Carrefour should develop the following strategies:

  • Planned Price: Carrefour should select a planned price for the new product, which suits the social, economical and profit concept of UAE.
  • Distribution policy: The allocation plan will be selected by Carrefour, and they will consider whether organic foods will be imported or will be produced own country, and other strategies.
  • Marketing Budget: The budget of total market by Carrefour should also be planned.

In the third part of this paper would observe the current positioning strategy of this company by illustrating the current environment analysis, SWOT analysis and BCG matrix, considered the concept of retail marketing as well as conclude for future strategies to the management team of the selected retail marketing company Carrefour.

Business Analysis of Carrefour UAE

After emergent the invention concepts and marketing policy, Carrefour should illustrates the suggestion of business magnetism. They should need to prepare sales, cost and profit to determine whether it satisfies Carrefour objectives and international marketing.

  • To Estimate Total Sales:

To estimate the sales, Carrefour should sum of the estimated first time sales, replacement sales, and repeat sales. In year 2007, the sales of Asia in Carrefour were 5,480 millions euro. In estimation of sales, it is important to notice that, whether the product is one time purchase, infrequently purchased product like jack fruits, or frequently purchased product like pop corn or soup.

In the estimation of sales, Carrefour should estimate first time purchases of new product in each period, replacement sales by products survival age in market, and low end of distribution indicates the first replacements of the product. The timing is important to calculate variety of factors, because replacement sales are difficult to estimates before the use of the product by customers. In case of frequently purchased of new product, repeat sales should estimate as first time sales. Carrefour will predict about the market, if it identified that purchaser are pleased because they repeatedly purchase organic foods.

  • To Estimate Costs and Profits:

The estimation of costs is measured on basis of R&D, manufacturing, and marketing in Carrefour in 2007 are:

  1. Cost of Sales- 64609.4 millions Euros
  2. Sales, General and Administrative Expenses- 13,672.7 millions Euros

These costs of Carrefour are including product development costs, marketing and research costs, manufacturing and development costs. Carrefour should estimate these costs and also advertising, sales promotion, marketing research in administrative expenses.

Managing the Development Process

In the step of development process, Carrefour should determine to translate the product idea into technical or commercial feasible product.

  • Product Development: The method, Quality Function Development can be taken by Carrefour as to translate target customer requirements. This method lists the customer attributes and engineering attributes, which generated from marketing research. If the product development is not satisfied, R&D department should make the physical versions of product concept. Successful product can develop and manufacture safely under budgeted costs.
  • Customer Tests: When the product development is ready by Carrefour, it must go through rigorous functional tests and customers tests. It can be taken by several forms, like bringing consumers to laboratory, or give samples to use in their homes. For this paper, in home placement test is enough to know the new product tests. Consumer tests can be done by the following methods:
  • Rank Order Method
  • Paired Comparison Method
  • Monadic Rating Method

Consumer Goods Market Testing

In the process of market testing, there should be consider four variables by Carrefour, these are, trial, first repeat, adoption, and purchase frequency. Although the customers are trying new product, the re-buying or permanent adoption may be low. There are four methods of consumer goods market testing, which are: