You will see what is product and why can we develop the new product.you can also know why some products can fail. Rather than this you can find the product life cycle. New Product Development phases with complete explanation. Reasons for the success or Failure of the product. New business strategies Strategic Business Plan Strategic Approaches in Food Industry.

1. Food Product Development

2. • Product: A good, idea, method, information, object or service created as a
result of a process and serves a need or satisfies a want.
• It has a combination of tangible and intangible attributes (benefits, features,
functions, uses) that a seller offers a buyer for purchase.
• The following points are very important before food product development
1. To understand why new products are developed.
2. To note the key areas of product development in the past 10-15 years.
3. To understand why products may fail.
4. To understand the product life cycle.

3. Why develop new products?
• To remain in business
• retain a competitive position
• companies need to produce new products
• maintain or expand their market share
• know what their competitors are producing
• to supply the needs of the consumer at a profit

4. • For a product to be developed it must be:
• Economically viable
• Technically viable.
Key areas of new product development
• Producing ‘convenience’ foods – in response to changing lifestyles.
• Providing products with altered nutritional content – following the increasing
public
• interest in nutrition, diet and health, e.g. low fat products.
• Increasing the variety of products available – to provide more choice.
• Producing ‘economy’ lines – to appeal to people on lower incomes
• Appealing to the ‘luxury’ market – to attract more affluent customers of those
who wish to give an impression of status.
• Maintaining and improving product quality – to retain customer loyalty.

5. How many products fail?
• will not make it through to final launch, but will fail at an earlier stage
of development.
• 100 ideas, approximately 10 products are launched, giving a 90%
failure rate. 100 ideas, approximately 10 products are launched,
giving a 90% failure rate.
• only one of these ten products will still be on sale
• Spread the financial risk, a company is likely to have a number of
products under development at the same time.

6. Why do some new products fail?
Reasons for failure may include:
• No difference between new and old product (50% failure)
• Tough competition
• Unsatisfactory distribution (very popular)
• Rising cost of ingredients, production and packaging
• Low profits
• Ineffective advertising
• Poor, unattractive packaging
• Food scares
• Environmental concerns
• Bad timing
• Poor product positioning on shelf
• Too innovative (ahead of its time)

7. Product life cycle
The life of a product includes its time in development and the time it
is in the market. It usually consists of the following stages:
Development
Introduction
Growth
Maturity
Saturation
Decline

9. To prevent a decline in sales, companies usually employ marketing
tactics to boost sales, such as:
• Money off vouchers
• Limited edition varieties
• New pack sizes
• ‘New’ and ‘improved’ varieties

10. New Food Product Development Phases
• Several distinct phases
• Phases are not sequential
• They overlap, are concurrent and interactive
• May even return to conceptual phase

11. 11
Phases… (cont.)
Company Objectives Perceived Need of Consumer
IDEAS
Feasibility Studies Consumer Research Financial Review
SCREENING
DEVELOPMENT
Gold standard to Pilot
Production
Consumer Trials
Test Market
Data
Flow

12. Phases
1. Market Research Phase
2. Ideation Phase
3. Feasibility Assessment Phase
4. Development Phase
5. Testing Phase
6. Rollout Phase
7. Evaluation Phase
8. Maintenance Phase

13. Market Research Phase
• Identify market
• Identify the market needs
• Conduct focus groups
Ideation Phase
• Generate new product ideas
• Reduce to management number
• Define the concept
Feasibility Assessment Phase
• Make sure the ideas are feasible meet needs and withstands critical analysis
Development Phase
• Develop the concept

14. Steps of the Development Phase
• Research
• Develop “Gold Standard” or benchmark
• Develop prototype
• Convert to plant friendly formulation
• Document
• Specs and procedures for plant
• Small manufacturing run / Pilot
• In-house and consumer testing
• Packaging
• HACPP plan
• Nutritional info
• Final Spec Sheet
• Legal issues

15. • Data obtained during Development steps can be used to:
• Refine marketing costs
• Source out ingredients and packaging materials
• Draft marketing plans, labels, promotional literature, etc.
• Determine production facilities
• Determine warehouse and distribution needs
• 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

16. • After consumer trials/development process, company can decide whether
or not to go into a test market
• Selection of test market
• Mini-market tests
• Regional launch
• Evaluation of the test market
• correct weaknesses
• recognize strong points
Maintenance
• Make improvements
• Pep up sales
• New use, new niche, added value

17. Reasons for Success/Failure
• Management
• strategic goals, commitment
• Marketing
• Product appropriateness
• Sales strategy
• New Product Failures
• Why?
• Poor planning
• Poor management
• Poor concept
• Poor execution

18. • Poor Planning
• 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
• Failure to understand cost to enter and sustain position in product category
• Failure to perform due diligence in discovering patent and copyright issues
• Poor Management
• Organizational culture
• Support and resources for new product process
• Management’s expectations and focus
• Process used to develop products and determine budget

19. • Poor management behaviors:
• 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
• Poor Product Concept
• Lacks a compelling benefit
• A new 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
• 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

20. • Can add to shelf clutter and consumer confusion
• Fragmented product line, which increases costs in production, distribution, and
inventory control
A fragmented industry is one in which many companies compete and there is no single
or small group of companies which dominate the industry. The competitive structure of
the industry means that no one company is in an overly strong or influential position in
the industry.
• 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
• Introduced too late
• Introduced too early

21. New Product Success
• 4 Basic Consumer Truths
• Product needs to deliver on the concept promised
• Advertising quantity and quality matters
• Distribution drives sales
• Long-term support for new brands are needed
• Other “truths”
• New items adds profit to both category and brand
• Enhances manufacturer’s and retailer’s position
• Launches are carried out with minimum disruption
• Identification of activity-level costs
• These are the back-end of the development process

22. 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
• 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

23. 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
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

24. 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
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

25. 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
Use of a disciplined new product development process
• Need for completeness, consistency, and proficiency
• Realistic but disciplined timetables
• Proper up-front planning is critical
Dedicated development teams plus the willingness and ability to partner and
outsource
• Use of cross-functional teams
• 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

26. 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
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
• Demographic, socioeconomic, and lifestyle changes
• Advances in technology
Identification and specification of what is driving the consumer and what the
consumer wants
• Unsatisfied consumer needs represents potential new product opportunities
• Understanding customers needs, wants, and preferences

27. 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
• Ideation requires encouragement and reward for creativity and excellent market
intelligence
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
A superior and differentiated product and package
• A superior product must be:
• innovative, possessing unique features, meeting customer’s needs better, delivering
higher relative product quality and solving the customer costs.

28. 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
A well executed launch
• Defined as:
• 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
• Success measured in 4 key areas:
1. Production and distribution
2. Sell-in
3. Consumer reaction
4. Overall performance
• Launch must be tracked to determine success

29. 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
• Establishing scenarios of market and competitive reaction
• Monitor reaction
• Having alternative strategies available
Product Policies and Goals
• Needed for new project success
• Consistent approach to new products
• Charter to guide new product development efforts
• Management of a portfolio of development process
• Specific projects selection criteria

30. Product Development and New Business
Strategy
• Strategic Plan will identify business objectives, time frames, and direction for
achieving growth
• Marketing decisions made at:
• Organization level
• Business unit level
• Product line level
• Brand level
Organization Level
• Determine what business the organization wishes to compete in
• E.g. Kraft
• E.g. Proctor & Gamble

31. 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
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
Brand Level
• Monitors product/line performance
• position and advertisement
• promotion and pricing
• packaging and distribution

32. Strategic Business Plan
• Specifies the financial objectives
• Specifies the avenue for growth
Role of Top Management in Setting New Product Strategy
Identified as:
• Direction setter
• Product line architect
• Project portfolio manager
• Process owner/creator
• Team launcher

33. Strategic Approaches in the Food Industry
• changed it’s vision in order to meet it’s stated goal
• Reviewed its own basic competencies
• Renewed emphasis in and growing core brands
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
• 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

34. • Factors to consider in evaluating market opportunities:
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)
• 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

35. • Technology position of competitors
• Barriers to entry and barriers to exit: access to raw materials, capital requirements,
proprietary technology, economies of scales, customer-switching costs
• Advertising and promotional expenses to sales ratios in the category
• Seasonality of sales
• Understand the consumer and what they are seeking
• Opportunity high in:
• 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