The aim of this chapter is to identify the important factors in food product
development to be studied in detail in the succeeding chapters. Firstly the
different groups of food products are identified as a basis for organising product
strategy. Then the published research on the factors in product failure and
product success in all types of industries is used to identify the key factors in
food product development. This leads into the management of product
development at three different levels:
1. Business strategy.
2. Product development programme.
3. Product development project.
Finally specific aspects of food product development are identified as the basis
of the book, and the structure of the book is outlined.
1.1 Food products – the basis of innovation
What are food products? What are new food products? Everyone agrees that a
food is material eventually consumed by humans to satisfy physiological and
psychological needs, but the food company and the consumer can have quite
different descriptions of the food product presented for sale. The company
defines a basic functional product to which it has added packaging, aesthetics,
brand, price and advertising, to give a total company product. The consumer
describes the product as a bundle of benefits, relating its tangible and intangible
attributes to their needs, wants and behaviour. For a basic food product, for
example flour, the description can be simple and pragmatic, but for products
1
Keys to new product success and failure
such as a meal at a restaurant, it can be complex and emotional. The company
defines a new product as having some difference in the basic functions and
aesthetic presentation; but consumers compare it with the ‘old’ product and
competing products and if they recognise a difference then it is a new product to
them (Schaffner et al., 1998). Product development is all about reconciling these
two points of view.
There are many thousands of food products and they can be grouped together
into product categories according to:
? food system position;
? market they serve;
? processing technology used to manufacture them;
? basic common characteristics such as nutrition and health;
? product platforms;
? level of innovation.
Grouping products is a useful method of developing new product ideas using
techniques such as product platforms, product morphology and gap analysis.
One can identify spaces for new developments, methods of product improve-
ment and indeed innovation related to changes in food system or technology.
1.1.1 Food products and the food system
Products interact with every part of the food system from primary production to
the consumer as shown in Fig. 1.1. The new cereal, high in protein, may go to
the processor to produce a specialised protein product for bakers, or to a food
manufacturer to make a high-protein breakfast cereal, or to a vegetarian fast-
food outlet as a meat replacer, or to a supermarket as an ingredient for home-
prepared muesli or directly to the consumer for use in a home breadmaker. A
new product in one part of the food system can cause new products in other
parts.
There is a need to distinguish the three groups of products:
1. Primary products from sea and the land.
2. Industrial ingredients from food processors.
3. Consumer products from food manufacturers and food service.
They basically have the same product development process, but there are
activities and techniques specific to each area.
There is a need to recognise the total product in each case. There is a formal
product with its associations such as service, know-how and image as identified
by the company (Crawford, 1997), and then the product concept of the consumer
or customer. A McDonald’s hamburger may seem a simple product but it has
strong associated benefits such as convenience, price, fast service and hygiene,
along with a very powerful allure especially for young people of the good things
in American life. Food service products usually have a high proportion of
services, but so do industrial products and increasingly primary products.
4 Food product development
The industries upstream from the food manufacturer are important
contributors of innovation (Rama, 1996). Both the ingredient suppliers and
the equipment suppliers can have a pivotal role in innovation in the food
industry. Agricultural and now marine farming are also major sources of
innovation both of fresh products, and of materials designed for processing. So
the innovation spectrum broadens and deepens.
1.1.2 Food products and the markets
The basic principle of product development is to identify the needs of the buyers
and the users, and design the products towards meeting these needs. This means
that the market segments for the products are an important basis for grouping
products. There are five main market segments:
1. Consumers: mainly branded products.
2. Retailers: branded products, ingredient mixes.
3. Food service: partially prepared meals, meal ingredients.
4. Industrial processors and manufacturers: differentiated ingredients.
5. Primary processors: commodities, undifferentiated raw materials.
It is important to recognise that there are major differences in the development
of products for these different segments. If a company moves from differentiated
ingredients for food manufacturers to consumer products to be sold through
retailers, there is a need for new knowledge and new resources in the company.
Each of these five main segments can be divided into further segments. There
are five common consumer market-segmentation categories:
? Geographic.
? Sociocultural.
? Demographic.
? Psychographic.
? User behaviour.
Regions, social classes, ethnic groups, households, age, sex and income are
typical groupings for which statistical census data can be found, but consumer
targeting can be more accurate if psychographic segments based on life style,
behaviour, personality and attitudes are used. User behaviour segmentation on
usage rates, brand loyalty status, purchase occasion and benefits sought are
useful for targeting product development. In industrial segmentation, two stages
Fig. 1.1 The food system.
Keys to new product success and failure 5
can be used: firstly companies are grouped according to location, size and type
of processing, and secondly by company factors such as technical expertise,
product needs and service needs. It is important that both the product and service
needs are recognised in segmentation for industrial product development. Food
service is divided into two broad groups – commercial and institutional; but of
course there are important internal segments in these such as large chain fast-
food companies, fine food restaurants, family restaurants (Schaffner et al.,
1998). The segmentation strategy depends on the company’s overall business
and marketing strategies. But it is important that the market segments are clearly
recognised in developing groups of products for product strategy.
1.1.3 Food products and processing technology
Food products in the past have often been grouped according to their
preservation technology – frozen foods, canned foods, chilled foods, dried
foods, ambient foods. For example milk products are grouped as ‘fresh’, UHT
(ultra-heat treated), canned, dried; fruits as ‘fresh’, canned, dried, frozen. The
main reason for this grouping was that the preservation method was dominant in
processing, distribution and retailing; and therefore to change the preservation
method was a major undertaking in resources. The first three, freezing, canning
and chilling, are thermal processes controlling food quality by temperature and
time. Non-thermal processes, controlling water activity, atmospheric gases and
packaging, preserve dried and ambient foods. In recent years, there has been
increased interest in non-thermal preservation of food for example by irradiation
and by high pressures (Knorr, 1999). Both processes have arisen in an effort to
avoid damage to food quality in processing, but both have their own difficulties.
Products are also grouped according to processing technologies such as
baking, extruding and fermentation, and according to the form of the food such
as liquids, emulsions and powders. This is useful because it recognises the basic
technologies and the knowledge of them in the company. If the greatest
knowledge in the company is in emulsions, then the product groups include,
cooking oils, salad dressings, margarines, ice creams, sauces, and new products
can be developed from basic emulsion knowledge. Other typical groupings are
bread, rolls and cakes; biscuits and crackers; confectionery; sauces and pickles.
A new process technology can start a family of products and indeed several
families of products. For example, extrusion technology was the basis for many
new snack products from flavoured, puffed snacks to muesli bars. Knowledge of
products and processing is important in product development because it can lead
to major innovations – the ‘new-to-the-world’ products.
1.1.4 Nutrition and health
An important grouping is related to the function of the products in nutrition and
health. Provision of calories has dominated the food industry for many years:
firstly the basic need was to provide calories and then in recent years, the push to
6 Food product development
reduce calories. Early products in small groceries at the beginning of the 20th
century were bread, butter and margarine, sugar, jam, bacon, beef suet – all high-
energy foods. In contrast at the end of the century, supermarkets now sell low-fat
milks, diet colas, trimmed pork and so on. There will always be ‘calorie’ foods but
the question is what calories they should provide in the next 50 years? Together
with calorie foods, came protein foods – legumes, dairy products, meat and fish. It
has taken some time to raise the amount of protein in the diet and even in the
developed countries there are poor people who are not getting adequate amounts
of protein. Legumes and cereals are the cheapest protein foods and these may be
stronger areas for protein product development, but of course dairy products, meat
and fish will remain major areas for product development for more affluent
consumers. There are many more nutrients needed as well as the basic calories and
protein, and there have been specific foods designed with fibre, vitamin and
mineral enrichments. There is recent re-emphasis on what might be termed the
older deficiencies such as calcium, iodine and iron. There will always be foods
designed with this supplementation as there have been in the past (Deutsch, 1977).
Recently, the emphasis has shifted from foods supplying the essential
nutrients to sustain life and growth to foods for prevention or indeed curing of
disease; what have been termed nutriceutical or functional foods (Sloan, 1999).
These functional foods have expanded from the health-food stores to the
supermarkets, but there is some difficulty in defining what they are. One British
definition is ‘processed foods containing ingredients that aid specific bodily
functions in addition to being nutritious’ (Alldrick, 1997) and an American
definition is ‘foods that encompass potentially healthful products, including any
modified food or food ingredient that may provide a health benefit beyond the
traditional nutrients it contains’ (Platzman, 1999). These definitions are very
broad and cover a wide variety of products. If functional foods are to survive in
the future they need to be based on scientific evidence and not emotional effects.
1.1.5 Product platforms
A useful method of organising food products is to link them on product
platforms (Meyer and Lehnerd, 1997). This is based on the fact that families of
products can be grouped together because they have a common architecture or
common morphology (Schaffner et al., 1998). Product morphology is the
breakdown of a product into the specific characteristics that identify it to the
consumers, by analysis of the product family and the individual product. A
product platform is formed by a set of linked products, which are distinctive but
also have a strong common linkage, such as fresh fruit juices, nutritional breads,
cold breakfast cereals for children. The product platform is defined as ‘a set of
subsystems and interfaces that form a common structure from which a stream of
derivative products can be efficiently developed and produced’ (Meyer and
Lehnerd, 1997). Product platforms are a useful basis for developing a product
strategy for the company, and also for creating ideas for new products. If a new
platform is started, derivative products can be based on this platform, and then
Keys to new product success and failure 7
the next generation of products is started on a new but related platform. They
can be considered as Generation 1, Generation 2, Generation 3 of the Product
Family. In Case Study 1, Chapter 7, the development over 15 years of a new
product platform in the apple industry is described.
The first stage is to identify the present product platforms and to show how
they have developed in the past; clearly showing the generations of product
platforms and the derivative products on each platform. It would be useful if
these were identified as successful and failed product changes, so that a
historical picture could be built up as a basis for the future. The second stage
relates each product platform with the different market segments to which the
products were aimed and to which they were finally related in sales. The third
stage identifies the building blocks that were used to achieve these changes in
the product platforms: consumer insights, product technologies, manufacturing
processes and organisational capabilities. An example of a general systematic
grouping is shown in Fig. 1.2.
Fig. 1.2 Systematic grouping of food products for use in product development
(Source: After Meyer and Lehnerd, 1997).
8 Food product development
The company can combine this product knowledge with knowledge of the
predicted social and technological changes to identify the changes in the product
mix for the near and distant futures.
1.1.6 Level of innovation
In product development, there is a variety of ‘new products’ and it is necessary
to define ‘newness’ at the beginning of the project since the activities, risks,
costs and indeed the product development process vary with the type of new
product. The designation of a product as new is used to cover a wide range of
product changes from major innovations to cost reduction leading to a lower-
priced product (Fuller, 1994). Some of these categories are shown in Table 1.1.
Generally the major innovation is followed in time by product improvements as
product quality increases with production improvements, then perhaps new
packaging, followed perhaps by repositioning in another market segment or a
relaunch of the product, and finally ending in price reductions.
New product development provides a wide range of product changes, many
of which may not be very marked either technologically or to the consumer.
Innovation is most dramatically represented in the ‘new-to-the-world’ product.
Even in cost reduction, however, there can be major innovations in processing to
achieve the lower costs. In considering new products, it is necessary to look at
the total product mix and to decide how this could be changed over time to
maximise growth or return on investment or some other company objective.
There is a need to develop a product strategy for the future. The innovation
strategy defining the overall new directions for the company, and the product
strategy defining the product changes and additions, are the bases for the new
product development strategy. Both the product strategy and the innovation
strategy need to be embedded in the company’s business strategy. In this book,
we talk about product development and not new product development, as the
company always needs to be aware of the effects of new product development to
the product mix.
Table 1.1 New product categories
New-to-the-world Products are innovations to society.
New product lines Products are new to the company.
Product line extensions Additions to company’s existing product lines.
Product improvements Replacement of a present product with an improved
version.
Product repositioned Products are targeted for a new use or application and
usually a new market segment.
Product cost reductions Repositioning as a cheaper product, with similar
benefits but cheaper costs and therefore lower price.
Source: After Cooper, 1993 and Crawford, 1994.
Keys to new product success and failure 9
1.2 Measures of product success and failure
If a company is to build a successful product mix and product strategy, there is a
need to study the company’s history and current performance and also the
history and current performance of the industry and indeed of other industries.
The food industry can learn from successes and failures in other industries. The
measures for determining success and failure can be for:
? individual new products (financial, market, production, consumer accept-
ability, targets);
? product development projects (efficiency and effectiveness);
? overall product development programme (success rate, sales and profits from
new products, innovation level).
The measures are detailed in Table 1.2.
1.2.1 Individual product success
Individual product success can be measured by financial success, consumer and
market success, production success, product/consumer (customer) success.
Financial measures are usually the profits and return on investment. These
appear quantitative but they are often fraught with problems. How is the
measurement made? Is it the return on investment over one, five or ten years?
Does it include the basic research that preceded the product development and
perhaps spreads over several present and future products? What is the method of
discounting the returns over the 10-year period? There is a great deal written in the
product development literature about predicting financial success before launching
but not a great deal on financial evaluation after the launch (Crawford, 1997).
Obviously at the company level, the annual balance sheet for shareholders is where
Think break
1. ‘Innovation is a predictable process.’ Do you agree or disagree with this
statement? How can a company organise to give 70–80% predictability to
product development but allow 20–30% for the unknown?
2. Take one product family in your company, and identify the generations in the
product platforms, and then the derivative products on each platform. What have
you used as the basis for the family and for each platform – preservation
method, other technology, nutrition and health, place in the food system or some
other general family characteristic? If you have not used nutrition and health, try
building up the platforms on this basis.
3. Identify the market segments that your company targets for this family of
products, and relate them to the different platforms and if necessary particular
products.
4. What building blocks has the company used to form these platforms?
10 Food product development
the company is judged. But how does this relate specifically to the product
development? If it has a product family financial analysis, showing different
product families as percentages of the profits, then how the product changes are
affecting profitability can be analysed. If the investments in the various product
families are recorded then the return on investment in various product families can
be determined. But it is seldom possible to track individual products from the annual
balance sheet. In product development, a financial benchmark is set which takes
into consideration not only the company’s own financial needs from a product
family but also the financial standards being set by other companies. All the
individual products in a product family are often set, for simplicity, the same
financial targets, but this may be a false assumption as specific products may have
different aims.
Table 1.2 Measures for product development success and failure
Individual new product measures
Quantitative targets
Sales volumes and revenues
Market share
Profits
Financial performance
Qualitative targets
Product qualities
Customer acceptance
Competitive position against other companies’ products
Extending or completing a product line
Aiding a promotional effort
General company benefits
Product development project measures
Efficiency in time and cost
Effectiveness in achieving product success
Overall product development programme measures
Comparison between old and new products
Number of new products in the last five years
Number of improved products in the last five years
Growth of market due to new product introductions
Proportion of sales related to new and improved products
Profitability of new products compared to old products
Contribution to net margins of new products
The effect on company innovation level
Newness of production technology compared with the industry norm
Newness of marketing technology compared with the industry norm
Newness of markets for the company’s products
Innovative advance of company’s new products on competing products
Customers’ view of the company as innovative
Source: After Earle and Earle, 2000.
Keys to new product success and failure 11
Market success, achieving target sales volumes and revenues, is often the
measure of success and failure for the overall company, the product families and
the individual product. They are usually easy to measure – or are they? Sales are
related to time, the marketing effort and the conditions in the market. A simple
yearly sales achievement may not relate to the quality or the uniqueness of the
product, nor give a true indication of the product development success. Sales
over time need to be measured, along with any competing products in the
market, and also the other products in the company’s product family, together
with a breakdown to the different market segments. In industrial marketing to
the food manufacturer and the food service company, not only are the actual
ingredient sales monitored but also the sales of the resulting consumer products
to confirm if the company is achieving its percentage of a growing or static
market. The efficiency of the marketing effort to achieve these sales is also a
product success measure – the costs of the marketing effort including
distribution, advertising and promotion and selling are measured and related
to the sales achieved.
Production success is usually analysed by quantity, quality and costs. It has
to achieve the product quality in the product specification consistently with only
a prescribed variation, to ensure product safety, and also to produce at the
correct quantity and time. It has basic production costs that have to be achieved,
and the investment capital and the working capital of the process and production
development have to be within budget and time. One of the most important
measures is the production yield, the ratio of the product output to the raw
materials input. The distribution losses and the returns from the retailers are also
measured and are very important in the food industry.
Product and consumer (customer) success is measured by the level of
consumer or customer acceptance and also by the position of the new product
against the competing products. The total product success is determined by how
quickly it is bought, how often it is bought and how much is bought, but there
needs to be more detailed analysis. The product is set target standards in the
product design specifications, and its success is rated according to how it
achieves these specifications. It is not just a consumer rating of the product’s
acceptance but in particular how much it has incorporated the benefits identified
as the consumer needs, how much it has achieved uniqueness to the consumer,
how much value it is to the consumers. There will also be specific quantitative
measures of the product characteristics as identified in the company’s product
specifications – have they been met? The consumer and the manufacturer’s
benefits as shown in Fig. 1.3 need to be identified and measured.
In the case of the industrial product, the criteria for success are based on how
the product performed in the buyer’s process and how it related to the quality of
the final consumer product. Very often for industrial ingredients for food
manufacturers and for large food service companies, there are strict product
specifications and the product quality has to be within a specific range.
12 Food product development
1.2.2 Product development project success
The product development project is also part of the success analysis – its
efficiency and effectiveness. The project’s efficiency as regards time and costs
and use of resources is a basic part of product development. But it is also judged
on its effectiveness – the success in developing the product. How often is the
product not quite the right quality, does not have the optimum product
characteristics, is not what the consumer needs and wants? How near does the
new product come to meeting these targets? Companies need to evaluate the
success of the product development process (PD Process) at the end of each
project, so that they can learn from success and failure, improve their PD
Process and achieve better outputs.
1.2.3 Product development programme success
The long-term success is related to the changes in the company’s product mix –
the structure of the product mix, the sales and profit relationships between old
and new products, the growth of the market and the market share. It affects the
company value in terms of goodwill, product range depth and potential, brand
power, market impact and morale. Product success has also an effect on the
innovation level in the company and the technological standard of the company
compared with competitors (Campbell, 1999). Weak product development has a
long-term effect on the production facilities, which are not renewed or updated
regularly, and also on the marketing technology, which tends to become
conservative. Most important is the slow growth in company knowledge. With
little active product development for a number of years, the knowledge in a
company is certainly less than the knowledge in the most innovative companies,
and may even be less than in the direct competitors. Griffin (1997), in surveying
Fig. 1.3 Benefits as seen by the consumer and the manufacturer.
Keys to new product success and failure 13
nearly 400 companies in America, used four product programme criteria to
measure financial and market success of their product development programmes
– product success rate, financial success rate, sales from new products (NPs),
profits from new products and the number of new products in the last five years.
Figure 1.4 shows a comparison of the best 85 firms and 298 other firms.
The best companies had a higher percentage of successful new products, and
also higher percentages of sales and profits from new products. In research with
800 companies in 26 industry sectors in seven countries, the food and drink
industry as a whole had 21% of its turnover as new products and services, far
below the leader, technology, with 69% (Anon., 2000). This survey showed that
a 10% increase in the proportion of turnover generated from new products and
services led to a 2.5% increase in revenue growth, year on year.
1.2.4 Selecting success measures for product development
The measures selected are related to the company’s business strategy and the
level of knowledge and skills in the company. The company must be clear about
the measures and if possible choose quantitative measurements (Beaumont,
1996; Hultink and Robben, 1996). The degree of detail in a measure can be very
specific, such as the time taken for product design, or can be general such as the
percentage of sales that are new products, but it needs to be appropriate,
considered, specified and agreed. There is a need to set the measures,
Fig. 1.4 Long-term success of a product development programme.
Success rate: % of products categorised as successes in the last five years.
Financial success rate: % of products categorised as financial successes in the last five years.
% Sales from new products: $ sales of products commercialised in the last five years as % of total
sales.
% Profits from new products: $ profits of products commercialised in the last five years as % of total
profits.
(Source: From Griffin, 1997 by permission of Product Development and Mangement Association,
Moorestown, New Jersey.)
14 Food product development
benchmarking and targets before the product development programme and the
individual product development project are started, so that everyone involved
realises how the final success and failure is to be judged (Zangwill, 1993).
Benchmarks set beforehand tend to be less influenced by particular events and
circumstances.
Performance measures C33 Benchmarking C33 Targets against performance measures
There is a need to look forward, to set up measures for the project’s likely
success; and also to look backward to assess actual performance against the
predicted targets. Once the targets are set, they need to be communicated to all
the people and departments involved in product development. At the end of the
project, the data from the project are collected and analysed, and improvements
identified. For every project, the measures need to be reviewed and set again
(Beaumont, 1996). The aim is to have one of the highest success rates for
product development in the industry and measures, benchmarks and targets have
to be set for the product development programme to achieve this.
The balance of products in the product portfolio, on which the product
development programme is based, is also another important measure. The product
portfolio is the collection of products manufactured and/or marketed by a
company, and it needs to be analysed to give the maximum long-term effects from
scarce company resources. The long-term success of the company depends on
having some products that generate cash now and other products that use cash to
develop the future. All product portfolios include the new product, the growing
product, the present breadwinner and the dying product; this succession needs to be
preserved for long-term company viability. The product development programme
needs to be measured to see it is ensuring the entry of new products and helping the
growing product by quality improvements and variety, the mature product by
major relaunches, and the dying product by cost reductions.
The techniques used to measure success depend on the knowledge already in
the company and the amount of information that can be collected during the
project and product launch. Obviously some large companies have detailed
databases, extensive staff knowledge and money to collect and summarise the
project data. Their measures are more quantitative than with the small company,
but for a specific market, the small company can have as accurate a success
measure because of close relationships within the market and the company.
Think break
1. Speed to market is the most important performance measure for product
development. Do you agree with this or are there other performance measures
that you think are important or maybe even more important?
2. For two product families in your company, mark the relative success of their
product development programmes on the following scales (from Griffin,1997):
Keys to new product success and failure 15
1.3 Key factors in product success
In the past 30 years, there have been many studies on the factors causing success
and failure in product development (some reviews are Ali, 1994; Balachandra
and Friar, 1997; Cooper, 1996a). Balanchandra and Friar’s review in 1997 of
R&D and new product development studies found:
? there were many different factors identified;
? the magnitude of the effect and even sometimes the direction varied in
different studies;
? the meaning of similar factors in different studies varied.
They did state there were three common contextual variables, which need to be
considered when identifying important factors for product success:
1. Nature of the innovation.
2. Nature of the market.
3. Nature of the technology.
The importance of the market, technology and organisation factors varies
according to whether the product is an incremental or radical innovation, the
technology is low or high and it is a new market or an existing market as shown in
Table 1.3. The market factors are more important in the incremental innovations
than in the radical innovations. The technology factors are important in products
that have high technology, and the organisational factors in products with low
technology in existing and new markets, and high technology in new markets.
Balachandra and Friar noted that this was their best guess in 1997, but certainly it is
a good basis for starting analysis of product successes and failure in the company.
Many of the factors either identified as leading to success or differentiating
between success and failure are under the control of the company. Some overall
company factors in the product development programme are:
Programme is a success 123456789
Programme meets objectives 1 23456789
Completely Neutral Completely
disagree agree
Are the scores similar? If not, what has caused the difference?
3. Now studying the individual products in each family, calculate the percentage of:
(a) financial, market, production, product/consumer successes in each family
for the past 5 years,
(b) the sales, and the profits, from new products in each family for the past
year.
4. What are your conclusions on these two product families? How would you
develop measures to guide the future product development in each product
family?
16 Food product development
? product development integrated with a clear business strategy;
? systematic PD Process;
? relating the product to the consumer and the marketing;
? knowledge and skills of people;
? regular evaluation.
Many studies have shown that the product development programme needs to be
built from the business strategy of the company, and detailed in the innovation
and product strategies. If this is not done there is a lack of direction and focus in
product development that leads to failure. Over the last 20–30 years, a
recognised product development process has developed which is the basis for
successful product development; specific activities may vary from company to
company but the overall structure is the same. A basic factor that the company
needs to recognise is that the product is being designed for specific consumers or
industrial customers, and success will be realised if a strong consumer
relationship is built up with the product. Several studies have confirmed that
the product qualities are important to success, and that there is indeed demand
for a superior product that delivers unique benefits to the user (Cooper, 1993).
Knowledge of the people in the company is important, with factors identified
such as ‘marketing and technology are strengths’, ‘training and experience of
own people’, ‘commitment of project staff’. The product development pro-
gramme is a complex mixture of specific product development projects that
need to be integrated for overall success of the programme and the programme
needs to be evaluated regularly for overall success of products as well as
efficiency in the running of the programme.
There are also important factors for successful products in the successive
stages of the PD Process:
Table 1.3 Important factors for different levels of innovation, technology, market
Technology Market Factors
Market Technology Organisation
Incremental innovations
Low Existing Very important Less important Very important
Low New Very important Less important Very important
High Existing Very important Very important Important
High New Important Very important Important
Radical innovations
Low Existing Important Important Important
Low New Less important Important Important
High Existing Important Very important Important
High New Less important Very important Very important
Source: After Balachandra and Friar, 1997.
Keys to new product success and failure 17
? Stage 1: Product strategy development – integration of the product
development programme with the business strategy, clear description of the
market and consumers, identification of market and consumer needs.
? Stage 2: Product design and process development – quantitative design
specifications, multidiscipline integration, use of new techniques, feasibility
analysis.
? Stage 3: Product commercialisation – multifunctional integration, planning
and scheduling, market testing, business analysis.
? Stage 4: Product launch and evaluation – organisation and control, fast
problem solving, evaluation of launch, production, distribution and market-
ing, evaluation of outcomes.
Throughout the PD Process there is a need for clear direction at the beginning of
each stage, for example at the beginning of Stage 2: Product design and process
development, the product design specifications state the consumer’s product
concept, the quantitative targets for the product qualities, processing parameters
and marketing needs. There is also a need for integration of people with different
skills and knowledge from different departments. Most important there is a need
for constant evaluation throughout the project in feasibility studies, business
analysis and post-launch studies.
Fundamental factors in the planning and organisation of the product
development project are:
? on-going communication;
? clear aims, objectives and constraints;
? quality assurance of the development;
? final evaluation of the project.
The people in the project need to know what is to be achieved and what other
people are doing; this gives an integrated focus to the project, which will lead to
success. Studying the quality of the project in its execution and in the end results
will increase the chance of success in the future.
To summarise, there are many company-controllable factors related to product
development success; the importance of each can vary from project to project.
Some important factors, shown in Table 1.4, are common to many projects.
Although the company’s capability factors are the dominant factors related to
product success, they need to be combined with the environmental/situational
variables, such as the market characteristics, in selecting products for
development (Cooper and Kleinschmidt, 1987). The interrelationships of the
product development with environmental factors such as society, consumers and
technology need to be considered not only in project selection but also throughout
the project and particularly before the product launch. Environmental factors are
more important with pioneering innovation than with incremental product
development, because often the environment is unknown (Ali, 1994).
18 Food product development
Table 1.4 Company-controllable factors in product success and failure
Consumers and markets
Consumers
Closeness to the customer/consumer in product development
The product designed for the consumer’s needs, wants and value
Marketing
A strong market orientation
Product
Product
The product superior to competitors
The product has different, unique benefits
Project development process
PD Process
Multistage, multifunctional disciplined process with clear decision points
Integration of product, marketing, production, testing and evaluation
Stage 1. Product strategy development
Product strategy related to business and market strategies
Clear and early product definition
More predevelopment work before product design
Product evaluation and screening to give sharper project selection decisions
Stage 2. Product design and process development
Clear product design specifications
Creativity in design
Integration of product design and process development
Consumer/customer involvement in design
Stage 3. Product commercialisation
Pre-commercialisation business analysis
The new product marketed by the design team to the production and marketing personnel
Integration of production, distribution and marketing planning
Costs definition and reduction
Product quality sustained
Stage 4. Product launching and evaluation
A well-conceived, properly executed launch with a solid marketing plan
Evaluation measures set before launch
Timing of launch optimised
Good control methods
Post-launch evaluation and follow-on.
Product development management
Good technical/manufacturing/marketing interfaces
The right organisational structure and environment
Project evaluation and decision-making procedures
Completeness, consistency and quality of execution of project
Good project leaders and a core group
Time and cost control; continuous evaluation of project and process
Company
Company management
Top management support
Product development in business strategy
Resources in place – time, money, people
Top management in major decision making
Company knowledge
PD project synergy with company’s resources/skills/knowledge
Technological synergy and market synergy with company resources/skills
Keys to new product success and failure 19
1.4 Product development process: the basis for success
The PD Process is important in the food industry, as in all other industries. There is
a need for a multidiscipline, multifunctional, well-defined process frame on which
the company’s different projects can be planned (Rosenau, 1996). In an American
survey (Griffin, 1997), 60% of the firms surveyed used formal stages with inter-
stage reviews and recycling such as the Stage-Gate
TM
process (Cooper 1990,
1996b), but most companies had developed relatively flexible gates and stage
structures. Earle and Earle (1999) suggested a simpler version of four stages –
product strategy development, product design and process development, product
commercialisation and product launching and evaluation which more clearly
delineated the skill and knowledge areas required as shown in Fig. 1.5.
Decisions between the stages are identified and then the necessary knowledge
outcomes from the stages for these decisions are identified. Then the activities
within the stages are identified and finally the techniques for these activities
chosen. This gives a clear basis for planning the project:
Decisions C33 Outcomes C33 Activities C33 Techniques
which will give the sequence leading to the critical analysis and decision making:
Results C33 Analysis C33 Reporting C33 Decisions
In other words, at the start decide on where the project is going, identify the
resources available in people, equipment, time and money, then decide how to
get to the successful outcome and have an efficient PD Process.
1.4.1 Stages in the PD Process
PD Processes vary according to the level of product innovation, the company’s
knowledge and resources, the time constraints and the level of risk taking in the
company; but there are basic, necessary activities in every stage of the process.
Stage 1: Product strategy development
This has received a great deal of attention in recent years – as one might say taking
the ‘fuzziness’ out of it has been the aim. There is a need for a clear focus; a
business definition and a product definition have to be developed in the early
stages (Kmetovicz, 1992). The activities of product, market and technology
Fig. 1.5 The fundamental PD Process.
20 Food product development
research in this stage are often recognised as vital for successful product
development. The product concept and if possible the product design specifications
plus a report on the feasibility of the project are the outcomes of this stage. Many
times it has been stressed that there should be early definition of what the new
product should offer the consumer/customer, that is the benefits, desired product
characteristics, uses, safety, value. With the consumers/customers, a product
concept is developed describing the product as the consumer sees it and wants it.
This product concept is developed into more quantitative descriptions by relating
the product concept to both the product metrics, which can be measured by
physical, chemical, microbiological or sensory tests, and also the processing,
production and marketing methods. The resulting product design specifications
give clear directions to the designer. There is an interaction often between the
building of the product concept and the product design specification and the initial
design of the product.
Stage 2: Product design and process development
This stage is important because a unique product is a key element in product
development success. It all depends how one defines uniqueness, but it is mostly
a noticeable change that is being achieved rather than a completely new product,
as illustrated by Griffin’s (1997) comments from the Product Development and
Management Association (PDMA) survey in Box 1.1. In the food industry,
where thousands of new products are placed on the shelves in a year, the
newness can be quite minor such as a different flavour, a package face change, a
different slice thickness. It may be opportune to look at the degrees of product
Box 1.1 Efforts target product improvements
Over the last 13 years, firms have increased slightly the percentage of
projects which improve the performance of already-commercialised products
at the expense of projects which merely reposition current products, extend
product lines, or reduce product costs, although these trends are not
statistically significant. Over half of all NPD [new product development]
projects undertaken today represent significant efforts rather than incremental
ones. The goal of over
1
3
of all NPD projects is to add performance capability
to current products. There has been no change in the proportion of the new-
to-the-world projects, which has been constant at 10% of the total or in new-
to-the-firm (but not the world) projects, which has been constant at 20%. The
consistently small proportion of new-to-the-world projects may reflect the
difficulty of uncovering and delivering radically new solutions for unmet
needs, or a bias in firms against very high risk projects. This research was not
designed to resolve which alternative is more likely.
Source: From Griffin, 1997 by permission of Project Development and
Management Association, Moorestown, New Jersey.
Keys to new product success and failure 21
difference being achieved in food design and to decide if the expensive launches
are worthwhile for such minor product changes.
It has been noted many times that a unique, superior product is a key issue, but
seldom have the methods to achieve it been identified. Industrial design in general
is moving away from the traditional belief that it is the creative workings of one
person, to the concept of a design team. Industrial designers are also moving into
the area of food design, bringing their more aesthetic attitudes in design. The food
designers (often called food developers) are much further ahead than other
designers in bringing consumers, or at least consumer needs, into the design
process. Also because of the close connection between the process and the product
qualities, they have often a closer interrelationship between product design and
process development, using computer-based experimental designs and analysis.
For successful product design there need to be multidisciplinary skills closely
integrated, consumer involvement and creativity, combined with the functional
areas of marketing and production. In the food industry, the term product design is
seldom used, it is more commonly called food product development. Increasingly,
there is a need to recognise the principles of design, as the industrial designers
become more involved in food design. ‘Design and food have decidedly embarked
on a union that will forever change the course of both’ (Pearlman, 1998). As an
example ‘Snackitecture’, with shapes and colours such as Trix wildberry corn
puffs, Heinz Barbie Pasta Shapes in tomato sauce, or pizza-flavoured goldfish, is
recognised in design journals (Kalman, 1998).
Product design is the central, creative part of product development and it is
important that the different factors influencing it are recognised and integrated
into the design process as shown in Fig. 1.6. Product design is based on the tacit
knowledge of the designers but it has input from many disciplines and functional
areas. It is a blend of creativity, research and testing.
Stage 3: Product commercialisation
This has two activities identified as related to product development success –
business analysis and marketing the product to the people in the functional areas
(Cooper, 1993; Crawford, 1997), but there are many other aspects of product
commercialisation that lead to product success. Business analysis is essential for
the decision making at this stage but amazingly there are still companies who never
do this before spending large amounts of money in commercialisation and
launching. Communication between the design team and the functional groups that
will carry the product into production and marketing is essential – this is often
called technology transfer, but is better called technology cooperation or
technology integration. There are two important facts to recognise in commercia-
lisation – firstly it is still a design process and secondly integration of the
functional areas is vital.
The key issues are:
? maintain the product qualities at the same standard as in the design through
the process and the distribution;
22 Food product development
? produce and distribute at the quantities needed;
? develop a total product concept for marketing that agrees with the consumer
needs and wants and creates unique value for the chosen target market;
? organise a distribution channel which ensures quality, quantity and costs;
? reduce uncertainty and risk in the launching;
? reach the predicted sales and profits.
In product commercialisation, the product prototype and the preliminary product
specifications and marketing strategy have to be developed into a commercial
product and production and marketing plans.
Stage 4: Product launch and evaluation
This is the most expensive and risky part of product development. The key issue
is to have a fast and effective launch as this can generate the same or more
incremental profits as reducing the time for the early stages of the PD process
(Ottum, 1996; Stryker, 1996). The targets for the launch should be clearly set to
Fig. 1.6 Design components in food product development.
Keys to new product success and failure 23
provide the basis for the evaluation. It is important for the company to decide on
the measures for the launch so that success and failure are clearly defined and
measured. The goals might be selected revenues over time, or the market share
over time, or profits over time, or for the product to be long term in the product
mix. The environment is also important; competition and possibly social,
political or economic changes should be monitored. The operational plan for the
launch is a key for success but it needs to be sensitive to the situational and
operational conditions. Another key factor is the launching to the company and
to the trade (distributors). People can easily slow or divert a launch and on the
other hand can quickly and successfully overcome any problems that may arise.
In industrial product development, it is important to have different departments
in the buying company knowledgeable and enthusiastic for the product, and in
consumer product development, the retailer as well as the consumer must not be
fearful or bored about the product, but encouraged to buy it. Evaluation is
continuous so that improvements can be made quickly. The key factors for the
launch are shown in Fig. 1.7.
Fig. 1.7 Key factors for launch
Think break
1. ‘The launch is designed for the end user, but considers also the company
personnel, the distributors and the society.’ Discuss how these people may have
24 Food product development
1.4.2 Product development processes for different products
Products can be classified as business-to-business (or industrial), service and
consumer. All have the same basic product development but there are significant
differences, and the food industry has added differences to each type of product
development.
In business-to-business product development there are usually only a few
customers, but each customer is a company with a group of people interested in
the product, who usually have technical knowledge of the product and its
relationship to their processing and product. Not only has the immediate
customer to be considered but also the ultimate customer/consumer of the
buyer’s product. Product specifications are very important and the customer may
detail the product design specifications that will then limit the area for product
design. The total product of quality, quantity, delivery, price, service has to be
recognised in the product design, but the product quality and price are usually
the dominant factors. The PD Process has four important features: detailed,
quantitative, product design specifications; customer testing of product
prototypes; pilot plant and then production testing with the customer; final
contracts for supply (Earle and Earle, 2000; Fuller, 1994; Haas, 1995).
Food service can be divided into two parts – marketing of the ingredients or part
meals to the food outlet and of the meal/snack to the consumer. Both types of
different aspirations for the launch. How can the launch be planned and
organised so that the aspirations are integrated to give a successful launch?
2. Choose two of your company’s recent new products that were successes. What
were the key issues in leading to these successes?
Not important Very important
Market orientation ___________________________________
Consumer focused ___________________________________
Product design specifications ___________________________________
Product design creativity ___________________________________
Product commercialisation integration ___________________________________
Product launching organisation ___________________________________
Business strategy ___________________________________
Knowledge of product technology ___________________________________
Other ......................... ___________________________________
Other ......................... ___________________________________
3. What do you identify in your company as product design? How do you think food
product design will change in your company in the future?
4. What do you think is the quality of the execution of the product commer-
cialisation in your company? Do critical activities happen as they should, or are
they slow and late or sometimes do not happen at all? Do you see any changes
that could be improved in the product commercialisation to improve the
outcomes?
Keys to new product success and failure 25
marketing are a mixture of product and service; but in the restaurant, the service can
be the major component. Eating meals in a McDonald’s or a fancy restaurant is an
experience for the individuals and includes intangible experiences such as fun and
sophistication. The service is produced and delivered in close proximity, and there
are direct reactions between the supplier and the consumer. In both types of food
service development, there is participation of the supplier and the buyer in the
product concept development and in the product design, because the interaction with
the product and each other need to be part of the design (Johne and Storey, 1998;
Shekar and Earle, 1997; Terrell and Middlebrooks, 1996). There is a degree of
heterogeneity in food service development because people are different but as can be
seen in McDonald’s product design this can be reduced if the complete product plus
service is developed. In developing ingredients for the food service customer, there
are fundamental product qualities such as price, quality and safety, but also one must
consider the buyer’s food preparation and storage facilities and use of labour and
energy. The consumer buying the meal or snack has the needs shown in other
consumer products but also wants a social eating occasion. ‘Food must please; food
must entertain; food must satisfy; food must comfort’ (Fuller, 1994).
Developing consumer products for marketing in supermarkets is the product
development usually described in textbooks (Stinson, 1996). The development
of the consumer products is mostly concerned with the design of the physical
product, and there are minimal services for example information on the package;
so that there is concentration on the consumer/product relationship in the design.
Management has to recognise the difference between the different types of
product development and develop the product strategy and the company
organisation to work efficiently in each area.
1.5 Managing for product success
There are two very important management inputs for product development
success (Cooper, 1993; Crawford, 1997):
1. Company management’s involvement in product development.
2. Direct management of the product development programme and project.
General management needs to provide direction from the business strategy,
resources and major decision making on the programme and the individual
project. Product development management needs to provide the plan, the
multidisciplinary cooperation and the quality assurance to product development
that will result in an effective outcome and efficient procedures.
Many textbooks have been written about PD management in general (Twiss,
1986; Cooper, 1993; Zangwill, 1993; Crawford, 1994, 1997; Urban and Hauser,
1993; Jackson and Frigon, 1996); a list up to 1995 is in the PDMA Handbook of
Product Development (Rosenau, 1996). Some key elements identified by three
different authors are shown in Box 1.2. From all of these books and research,
and also from Griffin’s 1997 summary of the PDMA survey on American
26 Food product development
companies, there are some fundamental needs in product development
management in general which are also applicable in the food industry. Firstly
there is involvement of the general management, which is crucial and then there
is the management of the product development programme and projects.
1.5.1 Company management and product development
Top management leads product development by defining the focus, setting up a
system and organisation, ensuring resources and making the critical decisions. It
Box 1.2 Some key elements in product development
management
After Vrakking & Cozijnsen (1997)
Failed scenario Success scenario
Lack of strategic control Enhancing strategic control
Vague innovation objectives Clear innovation objectives
Competence conflicts between Cooperation between disciplines
disciplines
Defective decision making Effective decision making
Company culture: survival of Company culture: consensus about
the fittest objectives
Weak role of marketing Initiating role of marketing
After Zangwill (1993)
Expertise and technological foundations, cultural foundations, managerial
foundations, planning foundation and risk management
Eradicate fumbles, place customers first
Develop a business strategy, design the product, improve continuously
After Kmetovicz (1992)
Make new product development a controlled process
Keep an eye on the world
Involve all relevant people from the start
Collect information together
Use information cooperatively
Have a representative object of the end product in view
Learn how to make decisions quickly
Work with competitive tools and methods
Entrust execution to competent people
In the event of problems, adjust only the affected areas
Maintain the ‘can do’ vitality in the organisation
Keys to new product success and failure 27
needs to include the innovation strategy and the product strategy in the business
strategy, and also to identify any deficiencies in innovation culture, knowledge,
management and resources.
In company planning and in the building of the business strategy, the changes
that drive innovation are predicted so as to give a long-term direction for the
business strategy (Earle and Earle, 2000). It is important to study technological
changes and social changes, including political and economic changes, and these
give the basis for the innovation strategy. A checklist for analysis of the
company and the industry, as shown in Table 1.5, is the basis for the changes to
be made in the product mix and the associated services. These two studies –
innovation and products – lay the basis for the product development strategy
within the business strategy. This analysis is balanced by the company’s
capabilities – the market position, the supply position, the product, production
and marketing knowledge and skills, the plant, marketing and financial
resources. Then the product development strategy and the plan for the future
can be developed. Planning in this way ensures that the strategic management of
product development is connected with the company’s overall business strategy.
The product development strategy is then an amalgam of the company’s
innovation, product and technology strategies and gives direction to the whole
product development programme.
From the strategy is developed a product development programme and top
management sets the budget and the other resources for this programme. The
question is how to set this budget. For example on past sales and profits, on the
predicted sales and profits if the product development is successful or on the
predicted costs? This is an important decision as too tight a budget restricts the
project and also the breadth of changes in the final product; too expansive a
Table 1.5 Product analysis in developing the product development programme
Demand for products and services
Long-run growth or decline
Stability of demand for products
Stage in product life cycle
Supply of products and services by the industry
Capacity of the industry
Availability of processing technology
Availability of raw materials
Food regulations and other industry constraints
Social constraints
Competitive conditions of the industry
Structure of the industry
Market shares
Finance availability
Relative technologies
Analysis
Probabilities of sales volume and revenues
Key factors for success of the product development
28 Food product development
budget can lead to a wandering programme and too much research for research
sake and not for development of the product.
The top management has to be ultimately responsible for setting up an
organisation for the product development programme, a diverse activity involving
general management, production, marketing and finance, with the product and
process development team. Today product development is recognised as an
integrated multifunctional process, which combines and coordinates the work in all
departments and groups as shown in Fig. 1.8. The organisation has to be structured
to give an efficient process with an effective outcome. Companies often place the
incremental improvement projects in functional areas or in a strategic business unit,
and the major innovation projects in joint committees or separate venture groups
(Griffin, 1997). The top management introduces integrated procedures, aims,
attitudes and methods into product development. It also indicates the decisions that
it will take at specified times and the knowledge it needs for these decisions.
1.5.2 Product development programme management
There are two areas of product development management – of the whole
programme and of the individual project. If there is a focused product
development strategy, the projects in the programme are more clearly defined
and there is less need in the initial stages to do a great deal of research to cull the
projects that will not be successful. There is an interaction between the product
Fig. 1.8 Management for product development.
Keys to new product success and failure 29
strategy and product development strategy in which there is product, market and
production analysis, and this eliminates projects before they are absorbed into
the product development programme.
Management of the product development programme involves the effective
use of the available skills, knowledge and other resources between the different
projects. Timing is vital not only for the efficient use of resources but to ensure
that the outcome – the product – is launched at the optimum time. Planning and
control and costs within the programme budget are not always easy when there
is a variety of projects whose progress cannot be exactly predicted. But the most
important facet of programme management is to ensure the quality of the
development and in particular the total outcome of product, production,
marketing and finance.
1.5.3 Product development project management
Management of the individual project has the same overall parts of the programme
management, but it is very much ‘hands-on’ management with day-to-day super-
vision of the development as regards the activities, the techniques and the quality
of the results. This is the basis for the quality of the outcomes and the project
management’s responsibility is to organise the team and its work to ensure this
quality. It is a skilled task, as the project manager has to balance the quality of the
outcomes against the costs and time. Also personnel management is very import-
ant, as the creative designers have to be integrated to work harmoniously with the
more pragmatic functional groups. The leader is usually a formal project manager,
but sometimes a project champion with a less formal position leads the team.
To summarise, there are some key questions to be answered by management
especially when organising the product development programme, but also at the
beginning of major projects, as shown in Table 1.6.
Think break
1. ‘Product development is a top management responsibility.’ Discuss this
statement and delineate top management’s areas of responsibility and how it
can coordinate this responsibility with other people in the company.
2. In your company, identify the management roles in product development and the
various people in these roles – their positions in the company, their expertise
and knowledge.
3. Draw a diagram to show how these people interact in the overall product
development programme and in the individual product development projects, to
ensure project coordination and staff coordination.
4. What methods do top management, product development programme managers
and product development project managers use to ensure the quality of the out-
comes from product development and the efficiency of the product development?
30 Food product development
1.6 Relating to consumers and markets: the key to product
success
There is no doubt that in the food industry the consumer’s concept of the product
and the relationship of the product to the consumer’s needs, wants and
behaviour, are critical to success of the product (Saguy and Moskowitz, 1999).
There needs to be a clear target market segment(s) identified early in the project.
The interaction of the consumer or customer with the product must be identified
in the early stages of the product development project, and then followed
through each stage of the product development process and finally evaluated
after the launch. Knowledge from the evaluation needs to be built up as a
knowledge base for incremental product changes, so that a great deal of
knowledge on the product/consumer relationship is known at the start of the next
project. With a major innovation, there is a need for a great deal of research on
the consumer/product relationship in the early stages and constant consumer
testing throughout the project.
Relationships between the manufacturer/supplier/user vary a great deal
between industrial selling of ingredients, the food service selling of meals and
Table 1.6 Key questions in product development management
Business strategy: does it focus on product strategy and innovation strategy?
Product strategy: is it a predicted, continuous development of the product mix? Does it
show the product improvements and the major product innovations, which will be the
basis for the product development programme?
Product development programme: is it based on the business strategy and on predicted
social and technological changes? Does it specify outcomes needed, time and costs? Are
there clear objectives?
Product development organisation: is there a multifunctional, integrated organisation
uniting teams and functional groups? Are there identified organisations for incremental
product improvements and for major innovations?
Top management control: has top management agreed to the programme and the
individual projects? Has top management set the decisions it will make throughout the
project and indicated the information it needs for these decisions?
Has top management identified the resources needed for the programme?
Knowledge: is there the level of product, processing and marketing technologies for the
planned product development? Is there product design knowledge and creative abilities to
create unique products?
Consumer/product relationship: does the company recognise this relationship as a
major factor in product development success? Are the consumers integrated into the
product development process?
Systematic product development process: has the company recognised the important
stages in its planned product development and designed a suitable basic PD Process, and
identified variations for different products?
Product design and process development: are there clear definitions of the product
concept and the product design specifications? Is there integration of the product design
and process development?
Keys to new product success and failure 31
snacks, or the retailing of consumer products in the supermarket. In each there is
a blend of product and services, but the proportion of each varies. In industrial
and food service product development, there is a need to combine product
development and service development, as both are related to the product
success. In marketing meals in a restaurant and ingredients to a food
manufacturer, there is usually personal involvement of the supplier with the
user. Food manufacturers may not have much direct contact with the consumer
of their products who experience the product in a supermarket or other retail
setting. Therefore the product/consumer relationship is all-important in product
development. The level of manufacturer/user involvement is related to the ratio
of product quality to services in the total product, and to the blend of product and
service development.
Grunert et al. (1996) showed, by extensive studies in the European food
industry, that a strong marketing orientation is vital for successful product
development. Grunert et al. (1997) found in examining a number of case studies
in the food industry that sometimes innovation was driven by process
development and sometimes product development, but the common need was
for a marketing focus.
1.7 Knowledge of society, industry and technology
Product development practice is surrounded by a complex environment, which is
constantly changing (Earle and Earle, 2000). A product development
practitioner must have knowledge of the changes that are taking place in
society as a whole, and in the industrial environment including technology and
market environment, as well as the changes that are occurring in the company.
1.7.1 Knowledge of societies and their changes
Societies with their social and political systems and their economic,
environmental and future needs affect the consumers’ behaviours and attitudes
in addition to the legal controls on foods and so need to be integrated into
product development. To ignore these in product development can lead to
product failure and indeed sometimes to violent, anti-product reactions by the
society. Innovation is related to change in society; there may be:
? change in economic status of the society so that there is first increased calorie
and then increased protein consumption;
? decrease in the size of households causing a shift from bulk foods and jumbo
packs to specialised foods and small packs;
? change in knowledge of the consumers causing change in the nutritional and
aesthetic qualities of foods (Earle and Earle, 2000).
It is important to recognise changes that are occurring in economic status,
society’s behaviours and attitudes, so that products can be designed to fit into
32 Food product development
these changes (Earle and Earle, 2000). Specific attitudes can rapidly develop
into political action, which can impose new regulations or indeed ban the new
product. An example of the effect of political country barriers on new product
development is described in Box 1.3, showing the British attempts to stop a new
product – spreadable butter from New Zealand.
1.7.2 Knowledge of industry and technology
Knowledge of the food system, industry and markets with their technologies and
organisation is basic to successful product development. How the new product
and the product development project relate to the total food system from the
producer to the consumer is a key issue in food product development. What does
the project want from the system? What is it putting into the system? Obviously
a minor product improvement such as a flavour change affects the company’s
place in the system very little – it is just a case of sourcing new flavouring
material, and adjusting the process a little. But if the aim is to launch a new line
of frozen fish snacks, then supply becomes a major problem:
? How to find the right species in the right quantity.
? How to have controlled temperature distribution to supply the factory and
then for the distribution to the retailer.
? How to organise freezer space with the retailer.
? Has the target consumer suitable freezer space?
So the whole system from producer to consumer is part of the product
development project. It is even more complicated if the new product is live
crayfish! Today the food system is an interwoven, international network with
raw materials and ingredients going from country to country, so that a
formulated product may have ingredients from at least five or six countries and
maybe every ingredient except for the basic raw material is from a different
country. This makes product development very complex, as materials have to be
Box 1.3 Political effects on product development
Over a number of years, the New Zealand dairy industry developed a truly
spreadable butter. Significant time and effort was put into the technical
development of this product and into consumer testing in the target market,
the United Kingdom. The launch of the product was a great success with
good market up-take and repeat purchases. The signs for on-going market
growth were very good. Then, with only little warning, the UK Customs
banned the import of spreadable butter, based on a claimed non-compliance
with regulatory requirements for butter. Subsequently, after a lengthy court
battle and significant loss of market share, the decision was overturned.
Keys to new product success and failure 33
found from many sources. The food system has regulations and controls which
may be different, in fact probably are, from country to country. For international
marketing, this means product development has either to be aimed at one
country or to work in an amalgam of regulations from different countries.
The sizes of companies in an industry and in particular their related market
shares lead to a structure that defines the types of innovation (Ali, 1994). The
food industry very often has developed from monopolistic to national
oligopoly to international oligopoly with large multinational companies
dominating the food system in ingredients processing, food manufacturing
and retailing. The small company may therefore be forced into pioneering new
products, targeting niche markets, or considering late entry when markets are
too small for the large companies. The large company has the resources for
innovative product development but its total system may be too slow, so that it
often gains innovation quicker by buying the small company. Also it may
think it should wring everything from the present products before seeking the
innovation – but it may then be killed by the innovation from another
company.
The infrastructure of suppliers and distributors also has an important effect on
product development; the quantity and quality availability of raw materials
limits or enhances product development, as do the buying capabilities and
product selection of supermarkets and food service outlets.
The food industry, typical of non-durable products, has fewer pioneering
innovations than some other industries such as communications and electronics,
and mostly pursues incremental product development. The technology of
improvement is comparatively simple but can be easily copied. New technology
can be difficult, needs increased knowledge and resources, and can be risky
because of the intimate relationship of the products with the consumer (Galizzi
and Venturini, 1996). Even large food manufacturing companies with large
resources tend to veer away from the pioneering innovation, and take the easier
path of competing on simple product differentiation. Many small companies are
still near the craft stage in their development and have insufficient knowledge of
recent food technology for major innovation. So the technology has only
changed slowly in the past, but one wonders what will happen in the future with
the developments in genetically modified raw materials and in information
technology.
It is important to recognise in product development that there is also an
internal company environment for product development practice that sets the
atmosphere for product development – management, resources, philosophy,
beliefs, skills, knowledge and behaviour. The product developer ignores this at
their peril.
1.7.3 Creating knowledge for product development
Knowledge is the basis for success in a company and is fundamental to product
development. Although knowledge and information are often used interchange-
34 Food product development
ably, there is a clear distinction. Information is a flow of messages, while
knowledge is created from information received. There is basic knowledge in
the company – both tacit knowledge in people’s heads, and explicit or codified
knowledge that is transmitted in formal, systematic language. Knowledge can be
a major part of the capital structure and is recognised as such in the successful
modern company.
Knowledge is becoming more highly regarded in the food industry, and from
this can develop new synergy with developing technology and markets both
inside and outside the industry. There needs to be inside the company:
? synergy between the knowledge in the differing functions, such as marketing,
R&D and production;
? synergy between the functional knowledge and the knowledge needed for the
product development.
In recent years, there has been increasing recognition that knowledge creation
and management is important in product development (Clarke, 1998).
Nonaka et al. (1996) developed the theory that there is knowledge stored and
knowledge created in individuals; and the organisation can amplify this and then
crystallise it as company knowledge. This bank of individual knowledge in the
company, often called tacit knowledge because it is within individual minds and
not recorded, is the basis for innovation in the company. In product
development, this bank of company knowledge, together with sources of
information, is used to create the ideas throughout the PD Process. There are
different types of knowledge, some from general experience and education,
some from experience in a specific area of the company’s technology and some
from working in the company and the industry’s organisation and environment.
Therefore companies have different levels of company knowledge and this is
directly related to the level of product development that they can undertake
(Court, 1997). Tacit knowledge is important in product development because
much of the experience in projects is not recorded; so experienced personnel
are important in the project teams as well as in the management decision
makers.
Think break
1. ‘The consumer is paramount to product success.’ Is this statement true for your
company? Can you identify successful projects that were based on ensuring an
optimum product/consumer relationship? Successful projects that took little
consideration of the consumers’ needs, wants and behaviour?
2. Take two PD projects that you would identify as failures and two as successes.
Place the four projects on the following scales:
Keys to new product success and failure 35
1.8 Product development management in the food industry
The food industry has its own specific problems in managing product
development:
? Biological raw materials.
? Seasonality of raw materials.
? Complex interactions in the food system.
? Interrelationship of processing conditions and product qualities.
? Direct relationship between the product and the nutrition of the consumers.
? Complex relationships between products and health for different groups of
people.
? Instability of food products.
? Continuous supply and buying of food products.
There are problems in designing new fresh fruit and vegetable products
because it takes time to develop new types, new varieties – by the time they are
developed the consumer may have other needs and desires, or food retailing may
have changed. Predictions have to be long term and there is usually the need to
develop a range so that changes can be accommodated. There is usually only one
season a year, or two by incorporating northern and southern hemispheres, so
that development and testing is difficult. Fresh fruit and vegetables and whole
chilled fish and now live fish, are growing markets and there is a need to study
the management of product development for these fresh products.
Weak Strong
Marketing orientation __________________________________
Product/consumer relationship __________________________________
Knowledge in company __________________________________
Information sources __________________________________
Marketing capabilities __________________________________
Production capabilities __________________________________
Product differentiation __________________________________
PD Process __________________________________
Product development management __________________________________
General management __________________________________
3. What are the differences between the successful products and the failed
products? Can you identify places that the product development could be
improved?
4. What is the level of tacit knowledge (knowledge within the individuals in the
company) in your company of product, production, marketing technologies and
of markets and consumers or customers? How does this restrict or widen what
your company can do in product development?
36 Food product development
Because of the product/process interaction, product design is integrated with
processing development. Often in other industries product design and production
design are two separate activities, done in series; but this is not possible in the
food industry. Hence the second stage is called product design and process
development. The consumer nutritional and health relations with the product are
a vital part of food product development, especially in the future when products
are going to be designed for specific effects in the human body instead of
general nutrition. This will mean an ethical responsibility and will lead to
product development similar to the pharmaceutical industry with a great deal of
ethical testing. Because of food instability, the research on distribution is vital in
food product development. The shelf-life in storage and the change in quality
during transport are important parts of the product development process. Many
products have failed because of a rush to the market without shelf-life trials,
with disastrous quality results – better to spend time on testing than money on
removing from the supermarket shelves.
Finally there is the continuous buying of food which leads to placing of more
new products on the market. There usually is need for a continuous product
development programme, which leads to more forward product planning and a
rolling product mix. This needs efficient and effective planning and control in
product development (Stinson, 1996).
1.9 Basis and structure of the book
Managing innovation is a necessary skill for senior management of all food
companies producing new raw materials, new ingredients or new consumer
products. Company growth and even survival depends on the continuing
introduction of successful new products into old and new markets. Product
success or failure depends on many factors, but the most important are the
product, the skills and resources of the company, the market and the marketing
proficiency, and an organised product development process. There is a vital need
to understand the consumers’ behaviour and attitudes and to be able to design a
product to meet the users’ needs. But it is also necessary to have the technological
knowledge, and the skills, and the organisational ability to bring a product to a
successful commercial conclusion in the marketplace. This book studies these key
issues in product development and outlines the methods of managing them. It
differs from other books on product development because it recognises:
? different approaches to product development at different stages in the food
system;
? supply of biological raw materials that affects food product development;
? central place of the consumer in all aspects of food product development
because of the close, daily relationships between the consumer and food;
? very fast turnover of food products;
? the political effects on food products and their marketing.
Keys to new product success and failure 37
Food product development aims to develop:
? understanding of the place of product development in the company’s business
strategy and how this is related to the technological, political, societal and
economic changes occurring in the environment;
? ability to analyse the complex food system as the basis of delivering food
products to the final consumer;
? understanding of the customers’ needs for food commodities and for
industrial ingredients as a basis for production research and for product
development of ingredients;
? understanding of the food consumer’s needs (nutrition, safety, sensory, social
and psychological) in different cultures and societies as a basis for consumer
product design;
? knowledge of the product development process and the ability to select
decisions and outcomes for the various stages;
? knowledge of the activities in product development and the techniques
related to these activities;
? ability to plan and manage a product development programme and specific
product development projects;
? ability to evaluate the outcomes of product development projects and design
improvements to the PD process so as to raise the level of success.
The material in the book is divided into three sections:
? Part I Introduction
? Part II Key requirements for successful product development
? Part III Managing and improving product development
Part II explores four basic aspects of product development – developing an
innovation strategy, the product development process, the knowledge base for
product development, the consumer in product development. Part III studies
the management of product development in general and in different parts of
the food system and in different types of food companies. It also discusses the
evaluation of the launch of a new product and also the outcomes of a complete
product development programme and how changes can be implemented to
improve the outcomes and the efficiency of product development in the
company.
1.10 References
ALI, A. (1994) Pioneering versus incremental innovation: review and research
propositions. Journal of Product Innovation Management, 11, 46–61.
ALLDRICK, A.J. (1997) Functional foods: assuring quality, in Functional foods:
the Consumers, the Products and the Evidence, Sadler, M.J. & Saltmarsh,
M. (Eds) (Cambridge: Royal Society of Chemistry).
ANON. (2000) Innovate or die, industry warned. Chemistry & Industry (1) 3.
38 Food product development
BALACHANDRA, R. & FRIAR, J. (1997) Factors for success in R&D and new
product innovation: a contextual framework. IEEE Transactions on
Engineering Management 44(3), 276–287.
BEAUMONT, L.R. (1996) Metrics: a practical example, in PDMA Handbook of New
Product Development, Rosenau, M.D. (Ed.) (New York: John Wiley & Sons).
CAMPBELL, H. (1999) Knowledge Creation in New Zealand Manufacturing.
Masterate Thesis, Massey University, Palmerston North, New Zealand.
CLARKE, P. (1998) Implementing a knowledge strategy for your firm. Industrial
Research Institute, July/August, 28–31.
COOPER, R.G. (1990) Stage-Gate System: a new tool for managing products.
Business Horizons,44–54 (May–June).
COOPER, R.G. (1993) Winning at New Products (Reading, MA: Addison-Wesley).
COOPER, R.G. (1996a) New products: what separates the winners from the losers,
in The PDMA Handbook of New Product Development, Rosenau, M.D.
(Ed.) (New York: John Wiley & Sons).
COOPER, R.G. (1996b) Overhauling the new product process. Industrial Market-
ing Management, 25, 465–482.
COOPER, R.G. & KLEINSCHMIDT, E.G. (1987) What separates winners and losers?,
Journal of Product Innovation Management, 4, 169–184.
COURT, A.W. (1997) The relationship between information and personal
knowledge in new product development. International Journal of
Information Management, 17(2), 123–138.
CRAWFORD, C.M. (1994) New Products Management 4th Edn (Burr Ridge, IL: Irwin).
CRAWFORD, C.M. (1997) New Products Management 5th Edn (Burr Ridge, IL:
Irwin/McGraw-Hill).
DEUTSCH, R.M. (1977) The New Nuts Amongst the Berries (Palo Alto, CA: Bull
Pub. Co.).
EARLE, M.D. & EARLE, R.L. (1999) Creating New Foods: The Product Developer’s
Guide (London: Chadwick House Group).
EARLE, M.D. & EARLE, R.L. (2000) Building the Future on New Products
(Leatherhead: Leatherhead Food RA).
FULLER, G.W. (1994) New Food Product Development: From Concept to
Marketplace (Boca Raton: CRC).
GALIZZI, G. and VENTURINI, L. (1996) Product innovation in the food industry:
nature characteristics and determinants, in Economics of Innovation: the
Case of the Food Industry, Galizzi, G. & Venturini, L. (Eds) (Heidelberg:
Physica-Verlag).
GRIFFIN, A. (1997) Drivers of NPD Success: The 1997 PDMA Report (Chicago:
Product Development & Management Association).
GRUNERT, K.G., LARSEN, H.H., MADSEN, T.K. & BAADSGAARD, A. (1996) Market
Orientation in Food and Agriculture (Boston: Kluwer).
GRUNERT, K.G., HARMSEN, H., MEULENBERG, M. & TRAILL, B. (1997) Innovation in
the food sector: a revised framework, in Product and Process Develop-
ment in the Food Industry, Traill, B. & Grunert, K.G. (Eds) (London:
Blackie Academic & Professional).
Keys to new product success and failure 39
HAAS, R.W. (1995) Business Marketing: A Managerial Approach (Cincinnati,
OH: South Western College Publications).
HULTINK, E.J. & ROBBEN, H.S. (1996) A framework defining success and failure,
in PDMA Handbook of New Product Development, Rosenau, M.D. (Ed.)
(New York: John Wiley & Sons).
JACKSON, H.K. & FRIGON, N.L. (1996) Achieving the Competitive Edge (New
York: John Wiley & Sons).
JOHNE, A. & STOREY, C. (1998) New service development: a review of the
literature and annotated bibliography. European Journal of Marketing,
32(3/4), 184–251.
KALMAN, T. (1998) Snackitecture. International Design Magazine, 45(6), 60–63.
KMETOVICZ, R.E. (1992) New Product Development: Design and Analysis (New
York: Wiley).
KNORR, D. (1999) Process assessment of high-pressure processing of foods: an
overview, in Processing Foods: Quality Optimization and Process Assess-
ment, Oliveira, F.A.R. & Oliveira, J.G. (Eds) (Boca Raton: CRC Press).
MEYER, M.H. & LEHNERD, A.P. (1997) The Power of Product Platforms (New
York: The Free Press).
NONAKA, I., TAKEUCHI, H. & UMEMOTO, K. (1996) A theory of organisational
knowledge creation. International Journal of Technology Management.
Special Publication on Unlearning and Learning, 11(7/8), 833–845.
OTTUM, B.D. (1996) Launching a new consumer product, in PDMA Handbook of
New Product Development, Rosenau, M.D. (Ed.) (New York: John Wiley
& Sons).
PEARLMAN, C. (1998) Food for thought. International Design Magazine, 45(6),
47.
PLATZMAN, A. (1999) Functional foods: figuring out the facts. Food Product
Design, 9(8), 32–62.
RAMA, R. (1996) Empirical study on sources of innovation in international food
and beverage industry. Agribusiness, 12(2), 123–134.
ROSENAU, M.D. (1996) Choosing a development process that is right for you, in
PDMA Handbook of New Product Development, Rosenau, M.D. (Ed.)
(New York: John Wiley & Sons).
SAGUY, I.S. & MOSKOWITZ, H.R. (1999) Integrating the consumer into new
product development. Food Technology, 53(8), 68–73.
SCHAFFNER, D.J., SHRODER, W.R. & EARLE, M.D. (1998) Food Marketing: An
International Perspective (New York: WCB McGraw-Hill).
SHEKAR, A. & EARLE, M.D. (1997) Challenges facing consumer research in new
service development. ANZMEC Conference Proceedings Volume II,
Melbourne, 1–3 December.
SLOAN, A.E. (1999) The new market: foods for the not-so-healthy. Food
Technology, 53(2), 54–60.
STINSON, W.S. (1996) Consumer packaged goods (branded food products), in
PDMA Handbook of New Product Development, Rosenau, M.D. (Ed.)
(New York: John Wiley & Sons).
40 Food product development
STRYKER, J.D. (1996) Launching a new business-to-business product, in PDMA
Handbook of New Product Development, Rosenau, M.D. (Ed.) (New
York: John Wiley & Sons).
TERRELL, C.A. & MIDDLEBROOKS, A.G. (1996) Service development, in PDMA
Handbook of New Product Development, Rosenau, M.D. (Ed.) (New
York: John Wiley & Sons).
TWISS, B.C. (1986) Managing Technological Innovation, 3rd Edn (New York:
Longman).
URBAN, G. & HAUSER, J.R. (1993) Design and Marketing of New Products,2nd
Edn (Englewood Cliffs, NJ: Prentice-Hall).
VRAKKING, W.J. & COZIJNSEN, A.J. (1997) Monitoring the quality of innovation
processes and innovation successes, in The Innovation Challenge, Hussey,
D.E. (Ed.) (Chichester: Wiley).
ZANGWILL, W.I. (1993) Managerial foundations: competitive benchmarking, in
Lightning Strategies for Innovation (New York: Lexington Books).
Keys to new product success and failure 41
