It takes time to rollout new product and fill dealer pipelines and sales growth tend to be slow while profits are negative or low during the product introductory stage. Several causes for the slow growth are due to delays in the expansion of production capacity, technical problems and delays in obtaining adequate distribution through retail outlets and customers reluctance. Coupled with slow growth, promotional expenditures are at their highest ratio to sales because of the need to (1) inform potential consumers, (2) induce product trial and (3) secure distribution in retail outlets. The difficulties of introducing new product are then exacerbated by the existence of actual and potential rival offering the same products and substitutes that a buyer might consider. Thus, considering the risks and difficulties in introducing a new product, smart companies and shrewd businessmen do various market studies and research beforehand to ensure that their new product would be accepted to its targeted customers.



As an essential part of the IPMI Master of Business Administration Program, we, the Group Field Project (GFP) Team, have performed an assessment of market potential in respect of the new Caladine Baby products (i.e. soap & shampoo 2 in 1, hair lotion and caring oil) manufactured by PT Galenium Pharmasia Laboratories (GP). We understand that in January 2006 these products, aimed as extension of the Company's popular Caladine brand, were limitedly launched in a test market in Central Java (i.e. Semarang, Jogyakarta, Solo, Jepara and Purwokerto) to a disappointing result. Through the preparation of quantitative analysis, the GFP's overall objectives are twofold:

(1) to assist the Company management in conducting the control/feedback stage and

(2) to formulate recommendations that could be beneficial for a successful nationwide launch of Caladine Baby products.



On a random basis, we have selected 94 respondents (all mothers with babies aging from 0 to 3 years old) with social economic status of B to A 1 (based on 2006 ACNielsen's SES Category) residing in Jakarta and nearby areas (i.e. Bogor, Depok, Tangerang and Bekasi). We have conducted a two-phase interview with the above respondents. The first phase of the interview was about their buying and consumption behavior and pattern with respect to baby products in general. Thereafter we gave them free samples of the new Caladine Baby products for trial use. The second phase of the interview was done after a week (to one month) of trial use, to get their input about the new Caladine Baby products in particular. Suggested retail price of each Caladine Baby product was also prompted to respondents for feedback. The result of this survey exercise disclosed the following:



* Among the baby care products existing in the Indonesian market, soap, shampoo, hair lotion and caring oil were in the top five products used by mothers for their babies.



* Good quality was the most important buying driver for the respondents. However, good quality for a number of respondents could have various meaning. For them quality was not solely about product content. They also equated and associated quality to mildness, soft fragrance, packaging, design and convenience.



* Although majority of the respondents were loyal to their respective preferred brands, respondents were likely to shift to other brand/s under certain circumstances such as: their baby/child develops irritation, their preferred brand is out of stock or due to product promotions of other brands.



* With respect to promotion and placement; TV, magazines and brochures were the most preferred media while supermarket and hypermarket were the most preferred purchase place.



* Respondents awareness of Caladine brand was quite high (67%), most of them associated the brand with Caladine Potion and Caladine Powder products.



* Majority of the respondents purchased baby soap, baby shampoo, hair lotion and caring oil on a monthly basis, buying one to three pieces of each product at preferred medium and large sizes. While the 95 ml size for hair lotion and caring oil was already considered the right size by the majority of respondents; for baby soap and baby shampoo, respondents preferred the products in 400 ml or bigger sizes. All Caladine Baby products would be available in 65 ml and 95 ml bottles, thus, the packaging for Caladine Baby Soap & Shampoo 2 in 1 would be relatively small compared to the preferred size of the respondents.



* After the trial use and after prompted by the suggested retail price, majority of the respondents seemed to agree with the suggested retail price for Caladine Hair Lotion. However, majority of the respondents viewed that the suggested retail prices for Caladine Baby Soap & Shampoo 2 in 1 (i.e. before price tag was prompted, 66.7% indicated intention to buy versus 40.9% after price was prompted) and Caladine Baby Caring Oil (i.e. before price tag was prompted, 52.2% indicated intention to buy versus 18.5% after price was prompted) were far higher than what they expected for such products.



* The result of product benchmarking revealed that caladine bany products were still lagging behind in several criteria specially in terms of quality and packaging as compared to market leaders (i.e. soap & shampoo 2 in 1 and hair lotion leading brands were Switzal, Johnson & Johnson and Cussons while Konicare and Ny Meneer were the leading brands for caring oil).



Based on the survey result mentioned above, there is a high potential that Caladine Baby products could make a successful product launching. GP is already on the right track by offering the baby products mostly used by mothers and the Company can fully capitalize the market's high recognition of Caladine brand to penetrate the market. Moreover, market opportunity is present, as mothers might shift to other brand in some circumstances or given the right incentive and promotion.

Since the three Caladine Baby products were perceived differently in the survey, and the products' readiness level was varied, it is best for GP to launch the most ready product first (Caladine Baby Hair Lotion first, second is Caladine Baby Soap & Shampoo 2 in 1, and third is Caladine Baby Caring Oil).





Research Location : PT Galenium Pharmasia Laboratories

Supervisor : Mudzaffar Daud

Date Accepted : November 6, 2007



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