FST 253
Research and
Development of
Food Products
1
Why do you need a
development process ?
Control cost and time

An investment not a risk
2
New Food Product
Development Phases
Several distinct phases
Phases are not sequential
They overlap, are concurrent and
interactive
May even return to conceptual
phase
3
Phases… (cont.)
Perceived Need of Consumer
Company Objectives
IDEAS
Feasibility Studies
Consumer Research
Financial Review
SCREENING
DEVELOPMENT
Gold standard to Pilot
Data
Flow
Production
Consumer Trials
Test Market
4
The Phases:
1.
2.
3.
4.
5.
6.
7.
8.
Market Research Phase
Ideation Phase
Feasibility Assessment Phase
Development Phase
Testing Phase
Rollout Phase
Evaluation Phase
Maintenance Phase
5
The Development Team
Cross-functional
Different departments
STAGE-GATE approach to product
development
6
Idea
0
Business
Case
Concept
1
1
2
2
Scale Up
Test/
Validation
Develop
3
3
4
4
Post
Launch
Audit
Launch
5
5
6
6
Key Decisions throughout the Process
Stage 0: Idea/ Planning and Situation Analysis
Gate 1: Decision to do a preliminary investigation
Stage 1: Preliminary investigation/ Consumer Needs and Idea Generation
Gate 2: Decision to build a business case
Stage 2: Detailed investigation and business case/ Concept Development
Gate 3: Decision to go into development
Stage 3: Development/ Feasibility Confirmation
Gate 4: Decision to go into testing and validation
Stage 4: Testing and validation/ Scale up Confirmation
Gate 5: Decision to go into full production and market launch
Stage 5: Full launch and final report/Product Launch
Gate 6: Project Termination
Stage 6: Post Launch Audit/ Key Learnings
7
Market Research Phase
Identify market
Identify the market needs
Conduct focus groups
8
Ideation Phase
Generate new product ideas
Reduce to management number
Define the concept
9
Feasibility Assessment Phase
Make sure the ideas are feasible
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meet needs
withstands critical analysis
10
Development Phase
Develop the concept
This is the phase where the Culinologist
is most involved
11
Steps of the Development Phase
Research
Develop “Gold Standard” or benchmark
Develop prototype
Convert to plant friendly formulation
Document!
12
Steps of the Development Phase..
Specs and procedures for plant
Small manufacturing run / Pilot
In-house and consumer testing
Packaging
HACPP plan
Nutritional info
Final Spec Sheet
Legal issues
13
During development process…
Data obtained during Development steps
can be used to:
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Refine marketing costs
Source out ingredients and packaging
materials
Draft marketing plans, labels, promotional
literature, etc.
Determine production facilities
Determine warehouse and distribution needs
14
During development process…
Each stage requires interaction with
different departments
Product statement may change
Changes in the direction of product
development
Can return to the “drawing board”
numerous times
15
After development process…
After consumer trials, company can
decide whether or not to go into a test
market
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Selection of test market
Mini-market tests
Regional launch
16
Evaluation
Evaluation of the test market
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correct weaknesses
recognize strong points
17
Maintenance
Make improvements
Pep up sales
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New use, new niche, added value
18
Reasons for Success/Failure
Management

strategic goals, commitment
Marketing
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Product appropriateness
Sales strategy
19
20
21
New Product Failures
Why?
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Poor planning
Poor management
Poor concept
Poor execution
22
New Product Failures
Poor Planning

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Product does not fit company’s strategies,
competencies, or distribution strength
Failure to properly analyze market in order
to understand opportunities present or
specific unsolved consumer needs
23
New Product Failures
Poor Planning (cont.)
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Failure to understand cost to enter and
sustain position in product category
Failure to perform due diligence in
discovering patent and copyright issues
24
New Product Failures
Poor Management
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Organizational culture
Support and resources for new product
process
Management’s expectations and focus
Process used to develop products and
determine budget
25
New Product Failures
Poor management behaviors:
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No entrepreneur behavior
Discourage or penalize risks
Inadequate investment capital
No cross-functional teams
Demand immediate returns
Firms that do not invest in innovation
won’t experience any innovation
26
New Product Failures
Poor Product Concept
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Lacks a compelling benefit
A me-too item with no real and relevant
difference with existing products
Does not have a defined market target with
adequate sales potential
Introduced at the wrong time
27
New Product Failures
Poor Product Concept

Incorrectly positioned product, such as
 Benefits of a product that are irrelevant to the
consumer
 Consumer is unable to perceive a meaningful
difference between brands

Thus, consumer sees no need to buy the
product
28
New Product Failures
Poor Product Concept
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Can add to shelf clutter and consumer
confusion
Fragmented product line, which increases
costs in production, distribution, and
inventory control
29
New Product Failures
Poor Execution

Products that do not deliver as promise
 Lack taste and texture
 Packages that are difficult to open
 Deteriorates before expiry date

Extends to all areas of marketing plan
 Insufficient advertising, poorly scheduled
launch, fails to reach targeted consumer, fails
to communicate product’s name, benefit, and
availability
30
New Product Failures
Poor Execution
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Introduced too late
Introduced too early
 Campbell’s Intelligent Cuisine
31
New Product Success
4 Basic Consumer Truths
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Product needs to deliver on the concept
promised
Advertising quantity and quality matters
Distribution drives sales
Long-term support for new brands are
needed
32
New Product Success
Other “truths”
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New items adds incremental dollars and
profit to both category and brand
Enhances manufacturer’s and retailer’s
position
Launches are carried out with minimum
disruption
33
New Product Success
Other “truths” cont.
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Accompanied by product service plan and
consumer target plan
Identification of activity-level costs
These are the back-end of the
development process
34
New Product Success
5 most important factors in distinguishing
between a product winner and a loser:
1. Understanding of user’s needs
2. Attention to marketing and launch publicity
3. Efficiency of development
4. Effectiveness use of outside technology and
external scientific communication
5. Seniority and authority of responsible
managers
35
New Product Success
The development of a new product is
the development of every aspect of the
business that the product needs to be
successful
Consistently successful new products
need every aspect of the business
working in harmony
36
New Product Success
12 Requirements that are needed for a
product to be successful:
1. Appropriate organizational environment and
top management support
2. A disciplined new product development
process
3. Dedicated development teams plus the
willingness and ability to partner and
outsource
37
New Product Success (12
reqs.)
4. Product development activities that start
with and flow from business unit strategy
5. Understanding the external environment
and identifying market opportunities that fit
core competencies
6. Identification and specification of what is
driving the consumer and what the
consumer wants
38
New Product Success (12
reqs.)
7. Processes and techniques for keeping the
pipeline filled with a wide variety of product
ideas
8. Clear and focused product definition early in
the process before development work
begins
9. A superior and differentiated product and
package
39
New Product Success (12
reqs.)
10.Use of research to measure reaction to
the product and all elements of the
program throughout the development
process
11.A well-executed launch
12.Ability to adapt, grow, and improve as
market and competitive condition evolve
40
1. An appropriate organizational
environment and top management support
Nurturing of innovative thinking
Support risk taking
Ability to sustain losses from first to third
year
Committed to putting right team
together with adequate resources
41
2. Use of a disciplined new product
development process
Need for completeness, consistency,
and proficiency
Realistic but disciplined timetables
Proper up-front planning is critical
42
3. Dedicated development teams plus the
willingness and ability to partner and
outsource
Use of cross-functional teams
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Enhances speed to market
Facilitates implementation of projects
Food processors are using suppliers
expertise and resources
Manufactures are partnering with each
other and with suppliers
43
4. Product development activities that start
with and flow from business unit strategy
Product development must be a part of
overall business unit strategy, stemming
from clearly articulated objectives for
business growth
Financial and human resources must be
available
44
5. Understanding the external environment
and identifying market opportunities that fit
core competencies
Identifying “gaps” that are created by
changing consumer tastes that are
driven by changes in the marketing
environment
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Demographic, socioeconomic, and lifestyle
changes
Advances in technology
45
6. Identification and specification of what is
driving the consumer and what the
consumer wants
Unsatisfied consumer needs represents
potential new product opportunities
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Understanding customers needs, wants,
and preferences
E.g. Pre-cut salads
46
7. Processes and techniques for keeping
the pipeline filled with a wide variety of
product ideas
Consistently identify and screen a large
multitude of new ideas through a
systematic process and set of
techniques

E.g. Kraft Foods
Ideation requires encouragement and
reward for creativity and excellent
market intelligence
47
8. Clear and focused product definition
early in the process before development
work begins
Need to identify target market, product
concept and positioning, and consumer
benefit to be delivered first
48
9. A superior and differentiated product
and package
A superior product must be:
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innovative, possessing unique features,
meeting customer’s needs better,
delivering higher relative product quality
and solving the customer costs.
E.g. Frito-Lay’s Baked Lays
49
10. Use of research to measure reaction to
the product and all elements of the program
throughout the development process
Continuous market studies
Continuous refinement and evaluation
of product
Thorough testing of product
50
11. A well executed launch
Defined as:
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setting specific goals and targets for
market performance
running initial production, distribution and
selling it to the trade
implementing the advertising and
promotional programs
tracking all of these activities relative to
goals and targets
51
11. A well executed launch (cont.)
Success measured in 4 key areas:
1.
2.
3.
4.
Production and distribution
Sell-in
Consumer reaction
Overall performance
Launch must be tracked to determine
success
52
12. Ability to adapt, grow, and improve as
market and competitive condition evolve
Firms plan to ensure market success
via contingency planning and to
continuously improve the product
bundle
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Establishing scenarios of market and
competitive reaction
Monitor reaction
Having alternative strategies available
53
Product Policies and Goals
Needed for new project success
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Consistent approach to new products
Charter to guide new product development
efforts
Management of a portfolio of development
process
Specific projects selection criteria
54
Product Development and
New Business Strategy
Strategic Plan will identify business
objectives, time frames, and direction
for achieving growth
Marketing decisions made at:
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Organization level
Business unit level
Product line level
Brand level
55
Organization Level
Determine what business the
organization wishes to compete in
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E.g. Kraft
E.g. Proctor & Gamble
56
Business Unit Level
Choose:
1. The market/s to serve
2. Product line that will serve these markets
Decide how to allocate resources to
serve across those product lines and
customers
57
Product Line Level
Which items to carry
How broad or narrow and how deep or
shallow should the line be
Tactical decisions such as positioning,
advertising, pricing, and packaging
58
Brand Level
Monitors product/line performance
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position and advertisement
promotion and pricing
packaging and distribution
59
Strategic Business Plan
Specifies the financial objectives
Specifies the avenue for growth
60
Role of Top Management in
Setting New Product Strategy
Identified as:
Direction setter
Product line architect
Project portfolio manager
Process owner/creator
Team launcher
61
Strategic Approaches in the
Food Industry
Example: Nabisco
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changed it’s vision in order to meet it’s
stated goal
Reviewed its own basic competencies
Renewed emphasis in and growing core
brands
62
New Product Opportunity
Analysis
Involves ongoing environmental
scanning
Systematic procedure for evaluating
whether opportunities fits objectives
Flows from the business plan
Must be disciplined and directed
Ideally started in existing product lines
63
New Product Opportunity
Analysis
Need to expand beyond current
categories in order to locate emerging
needs

May result in potentially higher investment
and greater risk
Must focus on categories that fit
organizational competencies
64
New Product Opportunity
Analysis
Factors to consider in evaluating market
opportunities:
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Increasing interest in a new product benefits
Category size, as measured in sales
Category growth rate, as measured by the rate of
increase in sales
Category margins
Number and rate of new buyers in the category
Degree of brand switching (a measure of customer
loyalty and product appeal)
65
New Product Opportunity
Analysis
Factors to consider (cont.)
Stage of the category life cycle, indicated by rate
of growth in sales, and nature and extent of
competition
 Amount of product/band differentiation
 Recent innovation in the category
 Innovations in related fields that have potential
applications in the category
 Number of competitors
 Market shares of competitors
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66
New Product Opportunity
Analysis
Factors to consider (cont.)
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Technology position of competitors
Barriers to entry and barriers to exit: access to
raw materials, capital requirements, proprietary
technology, economies of scales, customerswitching costs
Advertising and promotional expenses to sales
ratios in the category
Seasonality of sales
67
New Product Opportunity
Analysis
Understand the consumer and what they are
seeking
Opportunity high in:
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Products in early stage if life cycle
Products with high margin and growth
Products with few recent innovations
Products without entrenched and dominant
competition
Avoid categories with high barriers to
entry/exit
68