Keys to new product success and failure 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 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 comp 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
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
4 Food product development 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 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 us home breadmaker a new product in one part of the food system can cause new products in other 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
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 improvement 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 fastfood outlet as a meat replacer, or to a supermarket as an ingredient for homeprepared 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
Keys to new product success and failure 5 Industrial ingredients processor → Food service Primary production Consumer products manufacturer Consume Consumer Fig. 1.1 The food system 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 innovaton Agricultural and now marine farming are also major sources of 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 nd 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 segment 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 e 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
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
6 Food product development 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 998). 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 gro 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 asfresh, 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 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 nutritio health. Provision of calories has dominated the food industry for many firstly the basic need was to provide calories and then in recent years, the push to
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 fastfood 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
Keys to new product success and failure 7 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 becalorie' 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 leveloped 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 isease,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'(Aldrick, 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 atforms(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 oroduct 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 tegy for the company, and also for creating ideas for new products. If platform is started, derivative products can be based on this platform, and ther
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 highenergy 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