INSIGHT FOR INDUSTRY

FACTSHEET NO: 7

A SIMPLIFIED NEW PRODUCT DEVELOPMENT PROCESS FOR THE FOOD INDUSTRYINTRODUCTION

New product development (NPD) and existing product development (EPD) are vital to the food industry because:

• Customers’ needs and wants are constantly changing• Trade customers want new products• Technical developments• Legislation• Commercial pressures• Competition• Shortened product life-cycles

As NPD can be a time and resource consuming process it is recommended that companies follow a structured process, which will enable cost-effective and timely product launches.

A SIMPLIFIED PROCESS

There are a number of potential NPD processes but not all appropriate for smaller companies because of the resource required to manage the process. The process shown below provides a simple framework in which to develop new products:

The process is not a smooth, linear process and some stages will have to be repeated as the product formulation changes due to market research or cost changes.

Eight stages of NPD:

1. Ideas: Most companies probably have a surplus of potential product ideas, which can come from study tours, restaurant visits or analysis of competing products and categories.

2. Filter/market analysis: The long list of potential product ideas can be filtered by checking that the proposed new products are either better value or different to existing products. A simple market analysis may identify potential gaps in the category and give an indication of the potential size of the opportunity.

3. Financials: Before too much resource is invested in the project, an initial financial analysis will determine if the

products have potential (i.e. is it competitive in the market and will it make the company and trade partners any profit). Costings and trade partner’s margin requirements invariably increase as the project progresses so be very realistic at this stage.

4. Product development: This is the enjoyable stage as recipes are developed and new ideas are brought to life. A detailed product brief should be written (containing details such as the cost requirements, size/weight, target consumer, ingredient requirements etc.) to help the product development team remain focused.

5. Market research/evaluation: Testing potential products with consumers is essential. Ideally, this should be a controlled sensory consumer panel to ensure objective feedback. However, initial taste tests with groups of consumers are a good start. On-line questionnaires (e.g. Survey Monkey) are a good method of collecting feedback from in-home testing. This stage is likely to result in a return to the product development stage as weaknesses are addressed and recipes improved. Any changes should also be reflected in the costing model.

6. Ready to launch: By this stage, the packaging, branding, ingredient specification and numerous other elements of a product launch are ready.

7. Trade presentations: After many months of hard work, a 45 minute trade presentation will often determine whether the product reaches the market. Don’t under-estimate the importance of these meetings and ensure as much preparation as possible. Remember, the trade buyer will not be as excited as you are about the new product and may be looking for reasons not to list it.

8. Launch: This is the start of the hard work. Once on the shelf or on the menu, it is essential that there is focus to ensure the product sells at the required rates. Marketing and account plans may have to be adapted and additional investment required to increase production capacity. Regular performance and product quality reviews will help ensure the product has the best possible chance of succeeding.

A factsheet series providing insight to the food and drink industry from the ZERO2FIVE Food Industry Centre

For more information, please contact: ZERO2FIVE@CardiffMet.ac.uk │ 029 2041 6306 │ cardiffmet.ac.uk/health/zero2five

IdeasFilter/

Market analysis

FinancialsProduct

development

Market research/

evaluation

Ready to launch

Trade presentations

Launch

INSIGHT FOR INDUSTRY

FACTSHEET NO: 7

A SIMPLIFIED NEW PRODUCT DEVELOPMENT PROCESS FOR THE FOOD INDUSTRY CONTINUEDSuggested guidelines to follow:

• Kill projects early: If there are sufficient warning signs that a project is not going to succeed, end the project as things will probably not improve. For example, an unacceptably low gross margin is unlikely to improve and don’t be tempted to increase the selling price to achieve the required margin.

• Be honest: Just because the recipe is from the MD’s Grandmother, it may not be appropriate for consumers. It is difficult as NPD can be personal but be honest.

• Listen to the consumer feedback: It may hurt to be told by 100 consumers that your premium, outdoor reared pork sausage roll isn’t as good as Greggs’ but they may be right.

• Don’t launch just because of the time and resource already invested: The consumer does not care how much resource you’ve invested and if the product proposition isn’t good enough, don’t launch.

• Make a Go/Stop decision at each stage: Formally sign off the decision to proceed at each stage. This will focus and align the team and ensure that any concerns are shared before progressing.

SUMMARY

• Despite following a good NPD process, there is no guarantee that a new product will be successful. However, following a process will give your products a better chance of success and should reduce the resource cost and time required to develop new products.

A factsheet series providing insight to the food and drink industry from the ZERO2FIVE Food Industry Centre

For more information, please contact: ZERO2FIVE@CardiffMet.ac.uk │ 029 2041 6306 │ cardiffmet.ac.uk/health/zero2five