PRODUCT DEVELOPMENT FOR SOCIAL ENTREPRENEURSHIP START-UP

CASE STUDY “BUTUHDEKAT” APPLICATION

Febrianto Mulyawan
Master of Business Administrator
Bandung Institute of Technology
febrianto.mulyawan@sbm.ac.id

Abstract - In Indonesia, competition retail businesses that sell

basic household needs today more dominated by several large-
scale businesses, which do not directly reduce small player
(traditional retail) from healthy business competition. The
competition is becoming increasingly unbalanced when players
large retail businesses can also take advantage using great
technologies to more engage consumers. People purchase
groceries every day from 80% traditional and 20% modern retail.
But modern retail such as supermarket, minimarket, hypermarket
and convenience store increase every years. In Indonesia, modern
groceries retail become the heighest sales value in 2010 by far. In
2015, Indonesia become 16th largest economy in the world and
have 31.230 retail with total omzet Rp. 184 trilyun. (Aprindo :
2015).. This research aims to help traditional retail with new
Figure 1 Sales Retail In Indonesia ( Economic Review March 2009)
product development in technology for increase traditional retail
sales and buyers satisfication. Implemented new product to Comparing between traditional retail and modern retail,
traditional retail with technology can help traditional retail to get it seems that the number of traditional retail not reflect the
more buyers and facilitate buyers for finding nearest traditional growth of economic value that is not commensurate with
retail that groceries buyers needs. In this reasearch the author modern retail that continue to growth market even to the
will use recommendation that help the company’s to implement
outposts. In fact, often the existence of this modern retail
technology needs for traditional retail and potential consumers.
Furthermore, the author also develop step-by-step process to disturbing traditional owners, as well as capital and also the
implement new product before the product launch into the market service they are far behind. Modern retail provide
using Stage-Gate model. Identifying competive situation from this convenient service to consumers with the physical
business discuss on this research, then the company’s can develop condition of the outlets that are cleaner and better
new product with new value preposition from another competitor. management. Even with the large capital at their disposal,
Accoding to Porter’s Five Forces, the author mentioned modern retail can use technology to reach potential
ButuhDekat product streght of current competitor and streght customers. In contrast to traditional retail who don’t have
position to join the market. From the analysis result, the author sufficient capacity both financially and also the resources
found some features that can be implemented in new product and
also with marketing strategy that consumer wants. The analysis
to compete for the market. Not infrequently many
result also inform new value preposition, business model and traditional retail slowly then closed, due to run out of
marketing mix for this new product development. New value capital to remain competitive with modern retail, whereas
preposition can be implemented as features of new product that many of the owners of traditional retail just laying on their
make difference between the company’s and another company’s. life through the retail business.
Identifying business model with commercial to pontential Due to of unbalance competition between modern market
consumers and impact to traditional retail, the author want to that is largest company to compete with traditional retail.
provide not only an opportunity to business but also social impact Therefore, it needs a solution for traditional retail with its
that the company’s can archieve. Understanding business model consumer potential, one of them by way of utilization of
in commercial and impact can lead the company’s to effectively
manage for viability and sustainaibility.
digital technology.

Keywords : traditional retail, modern retail, new product
development, recommendation features, nearest area, technology.
I. INTRODUCTION
Indonesia have many traditional retail, but sales from
traditional retail decrease sharply every years. According to
the Indonesian Chamber of Commerce (Kadin), modern
market sales by an average of 26% - 38% annually, leaving
the traditional stores which only increased by 10% each
year. The graph show information about sales from
traditional retail and modern retail.
II. BUSINESS EXPLORATION
This research is intended to develop new product for
traditional retail will start from step-by-step process to
implement new product development. Then this research
will analyze of “Business Situation” by implementing
PEST analysis, Competitive analysis and Industrial analysis
using Porter’s Five Force. After analyze of current
“Business Situation”, the company’s defining value
preposition of new product development commercial to
potential consumers and impact to traditional retail.
A. New Product Development
New product development is a process of bringing new
products or services to the market. New product
development can involve not only the idea generation,
product design and engineering, but also market research

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and marketing analysis. Companies see new product
development as the first stage in generating and
commercializing new products with several strategic
process of product life-cycle management used to grow or
maintain the company’s target market and market share
(Ulrich and Eppinger, 2012).
In product launch strategy Gluck (2012) defines several
important stages of product process, such as development,
internal testing, external testing, objective and goal setting,
positioning, excitement building and event timing.
Typically NPD process is describe as a sequential process.
Copper (2001) Stage – Gate process is a conceptual and
operational model for new product projects covering issues
from idea launch. As shown in figure 2.1 there are five
stages and after each stage is followed a gate. The gate
represent the activities that are taken during NPD process.
Figure 2 Stage – Gate Model (Cooper, 2001)
The NPD process include five sequential steps of
concept idea or idea generation, scoping, build business
case, development, testing and validation product before
launch product to the market. The five sequential steps of
NPD process are describe below:
• Idea generation activity that a company undertakes to
generate set of product concept represents the concept
of generation. The company’s will interview
traditional retail and potential consumers to approach
some feature to new product development.
• Scoping is the first stage of the new product
development and launch process of new product
development. Scoping information from this research
will help to the company’s about market and technical
solution for develop new product to traditional retail
that focus on potential market. Building business case
is the second stage is the last predevelopment stage.
Defining the customer value and benefit can determine
a successful product that is conduct to customer needs
and wants (Cooper, 2001). The company’s create some
survey to traditional retail and consumers to know who
needs, wants and demand about product. From 100
surveys traditional retail and customer in Bandung -
Indonesia area, if 80% customer want to sales in online
and know information about traditional retail stock and
opened in nearest area that become new feature of
product development.
• A product can exist as a concept passing all the
business tests. However the product concept needs to
go to the next stage that this development. In this
phase, R&D team will start developing new product
with concept idea, scoping and building business case
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as mentioned above (Kotler et al, 2013). In this stage,
the company’s use rapid development in term of three
months for prototype product. The company’s will
start with desain and implementation main feature of
the product. After three months, the company’s
encourage traditional retail and potential consumers to
use new product that which have gathered the data
from earlier interviews (respondents).
• Testing and validation is very important to validate the
functionality and documentation of the product (Soni
& Cohen, 2000). After three months from developing
new product, the company’s use beta testing and
gather feedback and input from traditional retail as
partner and potential consumers. Using beta testing
give information to the company’s about satisfied of
the product. Improvement in desing and development
from feedback potential consumer and partners will be
focus to develop new product in the next stage.
B. PEST anlysis
PEST anlysis framework is a method to anlyze the
macro environtment from this company. It assist to
understanding the external factor that influence the
development of this company that are :
• Political Factor - According to Ministry of
Communication and Information Technology in
Indonesia (2012), there are several budget allocation
that focus to develop environtment of IT business and
empowering small to medium business with
technology. Such as Government of DKI Jakarta,
partnership with Go – Jek company in transportation.
Therefore Indonesia needs to provide some technology
that can bring traditional retail to compete with modern
retail.
• Economical Factor - Indonesia currently the 18-th
largest economy in the world, is experiencing
remarkable economic growth from domestic
consumption. In line with rising per capita GDP and
low borrowing costs, Indonesia private consumption is
robust.
• Socio-Cultural Factor - According to W & S Thailand
Market Research (2015), Indonesia people more
choose supermarket than convenince store as shopping
spots for their daily needs whereas the number of
traditional retail more than modern retail.
• Technological Factor - Technology and advance in
understanding of many information that customer want
to fullfil daily needs buying from traditional retail.
C. Analysis of Business Situation
In Indonesia has many emerging service providers online
stores that offer the convenience of shopping needs that
exist in traditional markets by using the internet. There are
some company that focus on sales and purchase groceries
or daily needs in Indonesia are : HappyFresh, Go-Mart,
Alfacart, and Kudo.Some of the facilities offered by the
service providers of the online store is a delivery service,
online payment and COD (cash on delivery) or payment on
the spot. The ease of deals formed the opinion that online
shopping on the daily needs can be done easily and
comfortably.
 However, service providers benefit from the online store consumers. ButuhDekat have two value preposition that
has not felt directly by the business of traditional market difference between traditional retail and potential consumer.
for establishment of cooperation is not sustainable on
providers of online stores and traditional markets
businesses. In addition, several service providers online not
enable to support between the consumer and traditional
retail sales about daily needs.

Table 1 Overall Analysis of Business Situation

Figure 3 Value Preposition Canvas Consumers

D. Industrial Analysis
The company’s use porter’s five forces for understanding
where power of their product in business. The company’s
will indentify about their product strenght of current
competitor and to know strenght position.
• Threat of New Entrants Competitors - The company’s
not as a service in software development but also as a
product software development. It has held a very
significant market share for loyal customers are not very
likely to try a new apps.
• Threat of Substitute Products - The company’s try to
encourange traditional retail to have new innovation
value for fullfil consumer daily needs.
• The Bargaining Power of Buyers - Large retailers with
some apps, like HappyFresh partner with Lotte Mart,
have bargaining power because of the delivery service,
but the bargaining power is lessened because of the end
consumer will buy nearest store who sell daily needs.
• The Bargaining Power of Suppliers - The main supplier
from another competitors come from their subsidiary.
Because many competitor partnership from big
company.
• Rivalry Among Existing Firms - The company’s and
competitors have some committed to fullfil people daily
needs from traditional or modern retail.
E. Value Preposition
Value Preposition as state by Lynne Rylas (2011) is a
statement of value that the company provides to a customer
from its product or service offer. Customers are willing to
pay an amount in exchange of a product or service that
provide value to them and give solution to their problem.
Understanding value preposition will know about
commercial and impact from this product to potential
consumers and traditional retail. Figure 3 and Figure 4
illustrate between what jobs the particular customer
segment wants and what product can be provide with
product ButuhDekat throught traditional retail and potential
Figure 4 Value Preposition Canvas Traditional Retail
III. BUSINESS SOLUTION
In this chapter, the author generate and analyzesome
information that become business solution for new product.
Information for new business solution in this research using
analysis compatibility, marketing mix, competitive strategy
and collaborative strategy that can be implement to new
product.
A. Analysis Compatibility
Since the company’s choose purchase and sales daily
needs for Indonesia people as target market, the author
need to evaluate the compatibility of ButuhDekat market
and competitor. ButuhDekat has different product to
finding nearest retail in the nearest area from users. This
variable could be meet with demand in Indonesia who
needs application to fullfil their daily needs.
The competitors posistion can be analyze using variable
such as product and promotion. The position of company
that develop application for daily needs will analyze with
the strenght of companies product and promotion. The
position of HappyFresh, Go-Mart and Alfacart with
modern retail and Kudo, Kioson and Klikdaily with self
inventory in Indonesia.
The weakness of ButuhDekat product in Indonesia is
ecourage more traditional retail and consumers with new

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innovation value from product. The oppportunity that traditional retail to consumer. With this strategy, the
nowadays Indonesia have many traditional retail sales with company’s doesn’t need courier themselve.
offline and no company to encourage traditional retail. The
statement follows representative about competitors product IV. IMPLEMENTATION
market and promotion for ButuhDekat application. In After some consideration and analysis on Indonesia
Indonesia, many consumers tend to use one application daily needs market and competitor situation. In the
with easy to use and provide daily needs near consumers in implementation stage of new product development, the new
stable version. product is produced in market-scales quantities. The
company’s is actively absorbing the early market response
B. Marketing Mix and effecting changes both in the content of the product
The marketing mix is the most important set of and the way it is produced, also requirement system that
marketing tools which the company’s can use to influence useful to impact traditional retail and commercial to
the demand of the customers for ButuhDekat product. This potential consumers.
set is collected into a group called the four P’s stands for
product, place, price and promotion of marketing mix A. Implementation of Product
(Kotler, et al., 2013). This company’s have some strategis ButuhDekat have some technology such as Augmented
for marketing mix using 4P’s (product, price, place and Reality and finding nearest store with best last technology
promotion) that are : to encourage market in one application. The company’s
• Product - The company’s marketing to user don't know specific technology from product are :
available stock and store opened about groceries or • Presence Technology digital Maps and Street View for
daily needs in nearest area. It is make user need more determines the condition of a traditional retail nearby
information. users up to1 KM. Using technology nearby area, the
• Price - The company’s will take from commission 5% product provide information about traditional retail based
from every sales of more than 5 products and the cost on consumen area and also traditional retail product.
if the product ordered is more than 5 and less than 10.
• Place - The compay’s will be use brochures with
potential consumers and through advertisements
posted on social media like Instagram, Path, Twitter,
Facebook, Google Plus and others.
• Promotion - From the registration for the 100 first
seller free of charge and sale of the product is less than
Rp. 500.00,00 will not be making a commission. In
addition, the systems do free delivery if purchase more
than Rp. 200,000.00 products in one traditional retail.
C. Competitive Strategy
The company’s have competitive strategy consist of the
approaches and initiatives the product take to attract
customers, withstand competitive pressures, and strengthen
the product market posistion. According to Authur Figure 4 ButuhDekat Home Page
Thompson and A.J. Strickland in Strategic Management,
there are five competitive strategies for company to attract • Augmented Reality technology to inform consumers
more customer. Therefore, the company have three strategy know the store position from smartphone. Augmented
that are : reality technology also provide new technology that
• A board differentiation strategy - The product have traditional retail not left behind from modern retail
Augmented Reality, Google Maps, and Broadcast technology.
Information features that features not owned by
competitors product.
• A best-cost provider strategy - : The company’s give
customers and partnership some value for free and
premium with little different features.
• A focus, or market-niche, strategy based on diffentiation
- The company’s offering premium package for niche
merchant members without paying.
D. Collaborative Strategy
The company’s see to use collaborative strategies with
competitor and telecomunication or smartphone provider
for deliver daily needs to consumer or rent smartphone to
traditional retail. The competitor like Go-Mart have many
courier in transportation, the company’s can negotiate to
Go-Jek provide transportation to deliver product from Figure 5 Augmented Reality

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• Information on a list of traditional retail within a
specified radius from consumen. Consumen can choose
where the consumen want to buy with information
distance from customer and information open or closed
store.
Figure 5 Traditional Retail Maps Information
• Facilitate the seller of traditional retail provide
information open or close stores to consumers.
Information features not only open or close stores but
also operating hours of traditional retail.
Figure 5 Traditional Retail Information
• The seller of the traditional retail can broadcast
consumers to communicate information regarding
product availability and product promotion.
Figure 6 Broadcast Information
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• Before installing ButuhDekat application from Google
Play Store, the consumen can try to as information about
nearest traditional retail based on consumen area.
Platform use chatbot technology through Facebook
Messenger.
Figure 7 Chat-Bot Facebook Messeger
B. Current Product Archievement
After implementation product ButuhDekat and provide
less marketing to traditional retail and pontential consumers
in terms of 3 months after product launch. ButuhDekat
product have 150 downloads application from Google Play
Store, more 1000 followers on Instagram and partnership
with 100 traditional retailers. Advertising use Facebook
Ads more than 1000 likes and 6000 reach people. Using
Facebook Ads for advertising is very useful to inform
pontential consumers based on area and some category that
we wants. Improving in advertisment based on social media
or direct marketing can inform that traditional retail have
technology not left behind from modern retail.
C. Reability and Validity
The number of interviewer result of this thesis based on
resources and allocated time and place. Furthermore,
interview direct to traditional retail and potential consumers
the author collected feedback in order to get more accurate
result. The answer and feedback from the interviewers give
some suggestion of develop new product features. This
help the author to more confident in the choice of the
information presented for ButuhDekat application. Even
the number of the people during the research is relatively
small that are 63 respondents from traditional retail and 104
respondents from pontential consumers, gathered the data
was considerable. The feedback collected from the author
is focused mainly in traditional retail that not interest to
become partnership and pontential consumers. The
feedback can become new feature to be develop in
marketing or technology to gather traditional retail who not
insterest to become parnership for ButuhDekat application.
D. Further Discussion
This thesis framework based on internationally recognize
model in business to business (B2B) and business to
customer (B2C). The model was choosen for the fact which
given impact to traditional retail and commercial to the
customers.
The finalize recommendation process is unique for
different company that develop product in retail business.
The author studied separetely each process of Stage-Gate
usually be used on start-up company to develop new
product. The Stage-Gate model guide the author to study in
step-by-step and important stages of develop new product
from the idea generation to launch onto market.

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