The New Product Development Process

WHAT IS PRODUCT DEVELOPMENT?

Life cannot be sustained without adequate nourishment and foods of different types and in different forms are consumed to provide this very nourishment. Today, the consumers are much aware and expect better choices to be available. Changed life styles have led to the development of new products and improvement of current products. There is an increased demand for higher added value and product performance creating novel technologies for the design and development of food products.

Increased application of technologies from other areas such as engineering, agriculture marine resources has also contributed to large and continuous production, for new preservation method for a large variety of ingredients and for new food products.

We can say that development of a new product is a continuous process and is also required owing to:

1) Change in consumer preferences

2) Price advantage

3) Increased shelf life

4) Convenience New Product

5) Nutritional awareness

6) Demand for specific foods – food targeted towards specific demographic groups such as diabetic foods, reduced fat and fat-free items and foods for specific health requirements.

Ideally a new product is defined as “development and introduction of a product not previously manufactured by a company into a market place or presentation of an old product into a new market not previously explored by a company”.

The development of a product can be in terms of:

1) Line extension

2) Repositioning of existing product

3) Reformulation of existing product

4) New packaging of an old product

5) Innovative or creative products

Let us learn about the product life cycle next.

PRODUCT LIFE CYCLE

Every food product passes through different phases throughout its life and therefore, the need for development of a new product arises. Each product shows introduction, growth, maturity and decline during its period of existence. The various stages of product life cycle are shown in Figure.

Let us review these phases in the product life cycle one by one.

1) Introduction phase

The introduction phase, as is evident in Figure , marks the launch of the product in the market.

2) Growth phase

Once the product crosses the introduction phase, it enters the growth phase. Generally, about 95% of the products fail at the introduction phase. Thus, a mere 5% are able to enter the growth phase. The growth phase involves strategy of product modification, enlarging distribution and maintaining a competitive price level. The strategy also involves one of extending product to different use situations and considering newer packaging alternatives to attract more and more new customers.

3) Maturity phase

Maturity phase is characterized by slowing of growth of sales and profits, as depicted in Figure. It also sees a boom in the market demand as more and morecustomers are now willing to accept the product. This phase is also marked by strong competition.

4) Decline phase

Decline phase, as is evident from Figure, is the phase when sales decline because customer preferences have changed in favour of more efficient and better products. Customer’s value perception of the product also undergoes a change. It leads to the gradual withdrawal of the product from the market.

FACTORS AFFECTING DEVELOPMENT OF A NEW PRODUCT

Product development and marketing is not just selling a product but is a highly multi-disciplinary domain comprising of technology, management, packaging specialized product positioning, regulation, advertising, promotion, distribution, infrastructure support, pricing and customer feedback.

The product should create an image that is consistent with what it can deliver to consumers. The right image is most essential to match consumer’s expectations from the product.

Some elements that must be considered for product development are listed below:

• Emerging trends: recognizing trends as they emerge, a number of demographics, social and economic factors must be reviewed.

• Product quality, including taste and texture: the product design must conform to the expectation of the consumers with regard to its sensory qualities.

• Flawless execution: even the best product will fail if positioning, packaging or marketing is flawed or inefficient.

New product development is a proactive process. Products should be fully conceptualized before actual product development is undertaken. The industry not only has to take care of the sensory attributes like appearance, taste, aroma of the product but also has to look into the important issues of manufacturing, retailing and marketing along with the development. Research and development of any organization plays a pivotal role. Research and development involves a broad spectrum of activities of planning, organizing, developing and offering reactive, as well as, proactive solutions.

The main function of Research and Development in the food processing operation is the development of new products, which can contribute to the overall profitability of an operation. The main factors to be considered in evaluating proposed projects include:

• Feasibility

• Historic Background

• Approach and timing

• Cost of project

• Compatibility with company’s objectives

• Patent position

• Market potential

• Availability of raw materials

• Estimated investment to capitalize and estimating returns

• Sales promotion required to introduce a new product

• Legal problems New Product

• Distribution channels

• Operational and microbiological hazards involved

• By-product utilization

• Competitors aspect

With a brief review of the factors, let us now study the actual process involved with the development of any product.

THE PROCESS OF DEVELOPMENT

Figure below shows the process of new product development in the form of a flow chart. As is evident, the process of development starts with the idea generation stage followed by idea screening, concept development and testing to marketing strategy development and finally to product development. Let us look at these processes.

1) Idea Generation

The process of new product development starts with the search for new ideas. The common sources of new product ideas being:

• Customer expectation

• Estimating market demand through market research

• Competitors

• Research journals and magazines

• Research and development scientists

• Media

• Top management

Idea generation is a stage characterized by creativity. It not only involves getting the product idea but also the concept development and product image should be hypothesized.

After the idea is generated, we move on to the idea screening process. Let us see what this process involves.

2) Idea Screening

Idea screening involves the acceptance of formulation of the idea by doing cause and effect analysis. This stage usually identifies the success and failure factors in different product ideas. It requires strong decision making and usually involves the top authority. After the idea is screened, the concept is developed and tested.

3) Concept Development and Testing

A concept is an elaborated version of the product idea. The concepts are developed to the extent of the new product satisfying consumer needs, the price strategy involved for positioning of the product in the market, purchase intentions at a given price level and so on. This exercise of concept building helps to face and understand the situations better and is a proactive approach.

4) Market Strategy Development

Market strategy development would require the study of the markets for potential consumers. It would also involve the study of the market for existing products and their moving sale volume, product positioning and identifying the test markets.

Next is the feasibility analysis.

5) Feasibility Analysis

Once the product concepts have been formed, the feasibility studies are conducted. This study involves the following:

1) Estimation of demand in the target market at different price levels.

2) Forecasting sales based on demand estimation and competitive analysis.

3) Cost benefit analysis.

4) Calculation of the break-even point and sales volume.

Once the product concept seems feasible, the firm now takes the concept to the next stage of product development.

6) Product development

The product development involves various stages of development. The stages being:

a) Studying the ingredient characteristics

b) Technique standardization

c) Variations

d) Product standardization

e) Product development

f) Sensory evaluation/consumer acceptance

g) Product modification

h) Final product

The development of the product involves vigorous functional and consumer tests.

product feasibility. Consumer testing involves various sensory evaluation tests to study consumer acceptance.

7) Market Testing and Commercialization

The new products are tested in the markets on four parameters: trial, first purchase, adoption, frequency and volume. This test marketing can be done on the pilot or small scale level. Once the test marketing is completed and the firm has favourable results, it is then ready to commercialize the product. The process of commercialization includes timings, place and strategy for marketing and distribution.

Product positioning in the market can determine the success or failure of products.

We have reviewed the various process involved in the new product development in our discussion above. You will find this information useful when you get down to developing a product.