New Product Development
Preparing to Launch
NPD Stages – New Retail Product

Steps in the Process:
1.
2.
3.
4.
5.
6.
7.
Idea Generation
Scoping
Business Case Development
Development
Scale-up
Launch
Evaluation
NPD Stages – New Retail Product

Steps in the Process:
1.
2.
3.
4.
5.
6.
7.
Idea Generation
Scoping
Business Case Development
Development
Scale-up
Launch
Evaluation
Production Costs

Factors to consider:



Raw material costs
Yields – each step in the process
Rework – can you incorporate back in?




#2 Product – with you need to sell for less?
Packaging waste
Labor requirements for each process step
Non-production positions (Human
Resources, Accounting, Purchasing, QC)
Profit Margin for Products
Questions to ask before launching:


How much profit does the retailer
need to make on my product?
How much profit does my company
need to make on my product?
Retailer Margin


Article from Entrepreneur magazine
gives good general information on
profit and margins.
Bizstats.com gives information on
average grocery industry margins.
Grocery Product Profit
Sales Income
100.00%
Cost of Goods
76.62%
Gross Profit
23.38%
Salary/Wages
(6.28%)
Rent/Taxes
(1.61%)
Interest
(1.36%)
Depreciation
(1.29%)
Advertising
(0.59%)
Other Expenses
(6.48%)
Net Profit
Source: bizstats.com (2007 data)
5.96%
Grocery Product Profit
Sales Income
100.00%
Cost of Goods
76.62%
Gross Profit
23.38%
Salary/Wages
(6.28%)
Rent/Taxes
(1.61%)
Interest
(1.36%)
Depreciation
(1.29%)
Advertising
(0.59%)
Other Expenses
(6.48%)
Net Profit
Source: bizstats.com (2007 data)
5.96%
$100.00
Grocery Product Profit
Sales Income
100.00%
$130.50
Cost of Goods
76.62%
$100.00
Gross Profit
23.38%
Salary/Wages
(6.28%)
Rent/Taxes
(1.61%)
Interest
(1.36%)
Depreciation
(1.29%)
Advertising
(0.59%)
Other Expenses
(6.48%)
Net Profit
Source: bizstats.com (2007 data)
5.96%
Grocery Product Profit
Sales Income
100.00%
$130.50
Cost of Goods
76.62%
$100.00
Gross Profit
23.38%
$30.50
Salary/Wages
(6.28%)
Rent/Taxes
(1.61%)
Interest
(1.36%)
Depreciation
(1.29%)
Advertising
(0.59%)
Other Expenses
(6.48%)
Net Profit
Source: bizstats.com (2007 data)
5.96%
Product Labeling

References:




FSIS Food Standards and Labeling Policy Book:
http://www.fsis.usda.gov/OPPDE/larc/Policies/Labelin
g_Policy_Book_082005.pdf
Title 9 CFR – Animals and Animal Products:
http://www.access.gpo.gov/nara/cfr/waisidx_10/9cfr
v2_10.html#301
USDA Labeling Requirements Guide:
http://www.fsis.usda.gov/PDF/Labeling_Requirement
s_Guide.pdf
FSIS Label form:
http://www.fsis.usda.gov/Frame/FrameRedirect.asp?
main=http://www.fsis.usda.gov/fsisforms/72341.pdf
Product Labeling
All labels must include on Principle Display
Panel (PDP):
1.
2.
3.
4.
Product name
Inspection stamp and establishment #
Handling statement (Keep
refrigerated, Keep Frozen)
Net weight (for retail products)
Product Labeling
All labels must include on the Information
Panel:
1.
2.
3.
Name of manufacturer or distributor
Ingredient list
Nutritional information
Raw products must also include:
1.
Safe Handling Instructions
Product Name
1.
2.
Common and usual name for
standard products
Product name vs. Fanciful name
Product Name
1.
2.
Common and usual name for
standard products
Product name vs. Fanciful name
Corn Dog
Product Name
1.
2.
Common and usual name for
standard products
Product name vs. Fanciful name
Corn Dog
Batter Wrapped Franks on a
Stick
Product Name
1.
2.
3.
Common and usual name for
standard products
Product name vs. Fanciful name
All letters in product name required
to be a minimum of 1/3 the height
of largest letter
Product Name
1.
2.
3.
Common and usual name for
standard products
Product name vs. Fanciful name
All letters in product name required
to be a minimum of 1/3 the height
of largest letter
Product Name
Qualifying Statements



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Liquid smoke, if mixed or injected into
product requires “smoke flavoring added”
Artificial colors or flavorings must be noted
Antioxidants (when permitted) must be
included as “BHA, BHT added to help
protect flavor”
Terms or names of geographical
significance must be qualified
i.e. Farm-style, Virginia-brand, etc.
- except some are generic
i.e.: Polish sausage
Genoa salami
Net Weight




on PDP panel
bottom 30%, parallel to base
“net weight”
 less than 1 lb must be as ounces (oz.)
 between 1 lb and 4 lbs must be dual
declaration
 oz. (lbs) or lbs. (oz) {i.e. 24 oz. (1
1/2 lbs)}
size of letters determined by size of PDP
 Ex. 1/16” high for 5 sq inch panel or
less; 1/8” for 5-25 sq inch
Ingredient List

“Ingredients:” - followed by a descending
list in order of quantity used


“spices” - natural spice designation as a
group



“Contains Less than 2% of:…”
onion and garlic must be listed independently
“Flavorings” - spice extractives, liquid
smoke, etc.
Products injected brine - can be prefaced
with “Cured with:…”
Ingredient List

If two meat ingredients such as
beef and pork are used and make
up at least 70% of the meat while
neither is less than 30% they can
be listed as “beef and pork”


can then be interchanged within those
limits without changing the label
does not apply to poultry
Code Dating


Most food products include some type
of code date (Use By, Best Purchased
By, etc.)
Is a code date required on a product?
Code Dating



Most food products include some type
of code date (Use By, Best Purchased
By, etc.)
Is a code date required on a product?
Code dating is only required on
some baby food, infant formula,
and poultry products.
Code Dating


Poultry products require pack
date, but “use by” or “sell by”
are acceptable alternatives.
For all products - If used, calendar
date must express month, day of
month (and year for frozen or shelf
stable)
Questions?