Food Product Development Geoff Walker tes/mscnotes/

New Product Development  Why NPD?  Types of NPD  The NPD cycle

The need for new product development  Product Life Cycles  Remain competitive  Consumer/Customer Needs  New Technology  Government Regulation

Product development  Essential to the survival of a company  Thousands of “new” food products are launched every year  Most new products are “line extensions”  Only a few hundred will survive for a year

Product development adds value in several ways PRODUCT DEVELOPMENT GROWTH PRODUCTIVITY IMPROVEMENT BRAND MAINTENANCE QUALTITY Line Extensions New Products New Packages Reduce Cost Formulas Packages Manufacturing Procedures Quality of Design Competitive Advantage Conformance Special Situations Regulatory Environmental Specifications

Product Development  Complex - generally market driven  Requires the integration of marketing, R&D, processing and legal functions of a company  Success only comes with careful planning and execution  Teamwork absolutely essential

To avoid chaos, a hierarchy must exist to guide product development Company Mission Company Objective Company Strategy Company Plans Why Do We Exist? Where We Want to Go? How Will We Get There? What Do We Do Now? >Programmes >Product Development >Projects Tasks

To ensure success, you need good strategic management and good product development execution PRODUCT DEVELOPMENT EXECUTION STRATEGIC MANAGEMENT SDG 8/18/95

Companies Need to Address Strategic Planning on Several Levels Mission Objectives Mission Objectives PRODUCT STRATEGY Technical Competencies Strategic Principles Organization Alliances Project Mix Milestones Resource Levels PRODUCT PORTFOLIO STRATEGY Resource Allocations Technical Approaches Timing Deliverables PRODUCT DEVELOPMENT STRATEGY Business Units Categories Brands Projects Identity Company Strategy Business Strategy Portfolio Strategy Project Strategy

Product Development Cycle  The idea  Technical and commercial feasibility  Product formulation and testing  Costing  Production requirements  Commercial launch

The idea  Ideas generation  brainstorming,  focus groups  the MD wants it,  Types of new product  uniquely innovative,  Line extensions,  repositioned products.

Technical & Commercial feasibility  Commercial feasibility  What is the market?  Regional/national preferences.  Market size vs. consumer preference  Personal likes/dislikes  New trends  Technical feasibility  Can we produce the product?  Will it need significant investment?  How does it compare with existing products?

Product formulation and testing  Recipe development  Sensory & consumer acceptance testing  Product specification  Pricing & preliminary costing  Nutritional value

Production requirements  Process flow,  Equipment types,  Risk assessment,  Shelf life,  Product quality,  Packaging, storage & distribution

Costing  Fixed costs  Variable costs  Break even point  Profitability

Commercial launch  How and where to launch?  Local acceptability trials  publicity & advertising

What can go wrong?  New products can fail at every stage of the development cycle  Inadequate consumer research  Lack of management support  Poor communications  Inadequate documentation  Inadequate training  Technical reasons  Legal reasons  Insufficient financial return  Costs too high  Price too low

Critical success factors  The success or otherwise of a new product can be due to a number of factors, but ultimately it comes down to  PEOPLE  and their understanding of all aspects of the product, process and package requirements  Product failure can occur at any step in the development and final product stage  Communications and vigilance and management support are key factors in ensuring success

Acknowledgement A number of slides in the presentation have been based on material produced by Prof W. James Harper of Ohio State University.

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