Creating New Foods - Earl & Earl - Complete Textbook

CHAPTER 1
The Product Development

Project in the Company
1.1 Introduction
Product development is a basic activity in the food industry. Each company has a
product mix, often including hundreds of products, which is constantly evolving - old
products dying, products reaching maturity, products contributing to rapid growth and
new products being introduced. To achieve a live and enduring product mix requires a
far-sighted and organised product development programme which directs innovation in
line with the objectives of the company's business strategy. The product development
programme encompasses product improvement, product line extension and product
relaunch, as well as product innovation. Product development involves all sections of
the company from top management to the machine operator on the line, and it is only
successful if there is integration across the company and also strong leadership from top
management. As well as integrated company activities, there is a need for integrated
company knowledge based on good communications and sympathetic, informed
leadership. The individuals know not only their specific part in the project, but also what
has happened upstream, what is occurring at the same time and what will happen
downstream in the project.
New product development (NPD) covers not only technical research, but includes the
total technology of the company, that is the company's internal organisation, the market
and marketing, the customers and the consumers, the technological ambience
surrounding the company including competitors, and also the social and physical
environments in which the company operates. It is the company's ability to interrelate
its own skills and knowledge with the complex ambience surrounding the company that
leads to successful product development. Companies recognise that they lack some of
the knowledge of the total technology and the resources to find this knowledge, so they
have to be selective in the knowledge they collect but need still to ensure that decision-
making involves the total technology. The knowledge selected includes the tacit
knowledge already held by individuals in the company, and new knowledge from
outside the company and from research.
The cultures of the company and of the individuals in the company have a strong
influence on the product development programme. Companies may be high risk or low
risk, knowledge seekers or tacit knowledge users, casually organised or bureaucratically
organised, old-fashioned or new-technology driven, democratic or autocratic,
technically driven or market driven - all these different cultures create different types of
product development programmes and different types of innovations. They may be
perfectly correct for the time and the place, but companies need to be fully aware of the
decisions they make and the influences affecting those decisions, and perhaps the need
to change those decisions. This means acquiring new knowledge of the total technology,
improving communication and cooperation, and establishing new criteria for product
development and even for the business strategy regarding innovation.
It is useful in the company, from time to time, to study the degree of product innovation
achieved during the last few years and then to relate this to some of the factors
important to successful product development.
Important factors to check are:
• knowledge-seeking objectives and methods;
• coordination of product, processing and marketing research;
• integration of consumer research into the total programme;
• evaluation of the market, in the early stages and before launching;
• financial soundness of the projects;
• top management involvement in product development;
• 'go/no-go' decisions by top management at all critical points;
• leadership by top management;
• resources for product development.
Think Break 1.1
Product innovation and company culture
From studying the products that your company* has launched in the last few
years place your company and also the company’s competitors on a scale from
'not-innovative' to 'very innovative'.
Not innovative Very innovative
0____________________________________________________________10
From the Introduction, identify some factors on which companies can be

compared and draw basic linear scales for these factors, for example: 'no
market research' to 'continuous market research', 'no consumer research' to
'integrated consumer research'.
Two important factors are resources for product development and top
management leadership.
Resources for product development
Poor Very Good
0____________________________________________________________10
For example, this could be done on percentage of sales, 'Poor' <0.5% of sales
revenue, Very Good >10% of sales revenue.
Leadership by top management

None High
0__________________________________________________________10
'None' could mean management never involved and 'High' top management
leading product development
Score your company on the factor scales (and your competitors if you can)
and decide what the factors are relating to your placement of the company on
the innovation scale.
Repeat this for yourself, giving yourself an innovation rating, and studying
your personal factors.
*If you are not in a company, select a company near you and interview them.
1.2 The Product Development Process
Recognition of the need to coordinate the total technology, the culture and the
innovativeness of the company led to the development of a multistage, multifunctional
and disciplined system – the Product Development Process. The Product Development
Process emerged in the 1960s and there have been many variations, with 6 to 13 stages,
described in the last 40 years. Table 1.1 has four showing how the various stages have evolved.
Table 1.1 Emergence of formal stages in the Product Development Process in the
food industry
Stage 1967 1971 1984 1995

1. Business Strategy Management Develop clear Strategic plan
determination of corporate objectives Market opportunity
product fields - Draft strategies and assessment
improved, new and operating plans Product business
new-look products plan
Product definition

2. Product and R&D Exploration Generate new
process Screening concepts
development Evaluation Screen, test and
prioritise new
concepts
Development Translate concepts Prototype
into optimised development
prototypes
Refine prototypes
with consumer
sensory tests
Scale up production Scale up and
from pilot plant to trial production
commercial
operations

3. Product testing Product testing Testing Conduct in-home
use test

4. Market testing Test marketing Marketing Products in market Market strategy
communications simulation tests and testing
development Test new product
Market testing line

5. Product launch Building production
preparation capacity and
inventories
Readying sales force
and distribution

6. Product launch Limited area Full-scale Product line into Product
introduction introduction national distribution introduction
Full-scale
Introduction

7. Post launch Measurement and Product
evaluation evaluation support
Source: Earle, M.D. (1997) 'Changes in the food product development process', Trends in Food Science
and Technology; 8(1)19-24
There was firstly the recognition in the sixties that product development did not start
with research and development (R& D) but with management, and gradually it was
recognised that it began with the business strategy working through the product strategy
to the new product area definition. The later stages including post launch evaluation
were identified as important, particularly the development of the marketing methods and
organisation. Product concept development and the integration of the consumer into
product design and testing, as well as the integration of market and technical research in
all stages were other significant developments. Critical analysis of information and a
go/no-go decision between each stage was an important addition. There was recognition
that product development is an integrated process which starts with the business
strategy and does not stop at the launch but includes the post-launch activities.
The Product Development Process in this book developed from study of past processes.
There are four major stages, and between each of these stages, there are critical points
where top management should evaluate the project and give go/no-go decisions. At
these critical points, management decides to go on, to stop, or to review the project. A
'go' decision represents a substantial added resource commitment.
Top management CRITICAL DECISIONS between stages

FURTHER ACTION RESOURCE COMMITMENT
Review  ll
Discontinue X l
Continue  llllllllll
The management decisions are made on the outcomes (information) from the activities
in each stage. The outcomes are usually combined for top management in a report
(product report, feasibility report, commercial report, final evaluation report), plus a
product (product concept/product design specifications, product prototype, commercial
product, company product). The flow from activities, to outcomes, to decisions, to
report, to top management decision, to go/no-go, is shown in Figure 1.1.
Note: Figures and tables throughout the book differentiate between:

DECISIONS: OUTCOMES: Activities: Techniques
by typeface as shown, decisions as italic, capital; outcomes as regular, capital; activities
as regular, small; techniques as italic, small.
Figure 1.1 The Product Development Process
Stage 1: PRODUCT STRATEGY DEVELOPMENT

Activity 1 Activity 2 Activities 3, 4, 5........
  
OUTCOME OUTCOME OUTCOMES
  
DECISION DECISION DECISIONS
PRODUCT REPORT, PRODUCT CONCEPT

TOP MANAGEMENT DECISTON
GO/NO-GO
Stage 2: PRODUCT DESIGN AND PROCESS DEVELOPMENT

  
  
FEASIBILITY REPORT, PROTOTYPE PRODUCT

TOP MANAGEMENT DECISION
GO/NO-GO
___________________________________________________________________
Stage 3: PRODUCT COMMERCIALISATION
  
  
COMMERCIAL REPORT, COMMERCIAL PRODUCT

GO/NO GO
___________________________________________________________________
Stage 4: PRODUCT LAUNCH AND EVALUATION
  
  
FINAL EVALUATION REPORT, COMPANY PRODUCT

GO/NO-GO
The four main stages are:
• product strategy development identifies the project and the product area;
• product design and process development create the product and process;
• product commercialisation designs marketing, production, distribution;
• product launch and evaluation organise production, launch, post-launch.
Product strategy is a time of laying the essential foundation; product design and process
development is a time of creativity and innovation; product commercialisation is a time
of integrated forward flow; product launch and post-launch is a time of review and
decision-making. There is no clear division of activities into the stages. For example, in
some companies product design specifications can be at the end of Stage 1, in others the
beginning of Stage 2; the final consumer test at the end of Stage 2 or the beginning of
Stage 3, and the market test at the end of Stage 3 or the beginning of Stage 4. The
demarcation is set by the accumulated knowledge needed by the top management to
take the critical decisions.
Each stage has activities which produce outcomes, and on these outcomes the
management decisions are made. The activities are broad areas in which a number of
techniques are used; for example, 'creating product ideas' includes brainstorming,
product morphology and consumer focus groups; 'screening product ideas' includes
checklists, company focus groups and probability screening. The outcomes are also
umbrella headings for a number of results; for example, product design specifications
could include a profile of the product characteristics as defined by consumers, the
product structure and composition, safety parameters, convenience and aesthetics, and
also indicate the manufacturing/processing variables and their effects on the product
qualities. There are not always straight-line relationships between activities, outcomes
and decisions, but often the interlocking of different activities focussed to give one
outcome. This gives fluidity but also integration to product development.
The stages are controlled by the product development management, who make, in
cooperation with the project team, the management decisions. Involvement by senior
management in the first stage and between stages assures the project is controlled by the
overall business strategy. When planning each stage, the project team identifies the
decisions that have to be made at the end of the stage, then the outcomes, on which
these are based, and finally the necessary activities and the levels of these activities.
In other words, the Product Development Process is not regarded as a series of steps
where you start at the beginning and work through them, but it seeks out firstly the
decisions that have to be made and the outcomes needed for these decisions, and then
the activities needed to produce the outcomes, and finally the techniques to be used in
the activities. When the decisions, outcomes and activities are identified then the
product development process can be planned. From this, the product development
project can be planned by choosing the techniques to be used. Strategically, the Product
Development Process is designed to focus innovation in a direction that achieves the
objectives laid down in the company business strategy. The product development
project is designed to coordinate creative and efficient activities incorporating
knowledgeable techniques so as to achieve the necessary outcomes.
Think Break 1.2

The Product Development Process: knowledge required
The following are two common decisions made in the product development process:
• Select specific product development project.
• Launch the new product onto the market.
Identify the knowledge needed in the outcomes on which to base these decisions.
What activities could be used to build up the knowledge for the outcomes, and how
could the activities be integrated?
1.3 Stage 1: Product strategy development
This stage ends with decisions on the type of product to develop and the viability of the
project for the company; the two main outcomes on which the decisions are based are
respectively the product design specifications (the product concept) and the project
evaluation (the product report). The activities therefore form two interlocking groups -
one developing product ideas and product concepts, and the other gathering the
information and analysing it for the production, marketing, financial, legal,
environmental and social evaluations.
Some of the important pathways of activities, outcomes and decisions in the first stage
are:
Activities OUTCOMES DECISIONS
Business strategy  Product mix strategy  New product areas
Change prediction  PD possibilities  PD plan
Information search  PD project identified  Project aim
Idea generation  Product concepts  Product concept selected
Concept engineering  Design specifications  Technical acceptance
Market analysis  Sales/profits prediction  Market acceptance
Note that these pathways are often interlinked; for example, the product development
possibilities come from the product mix strategy as well as the technological, consumer
and social change predictions. The market and technical information search may lead to
product ideas as well as to the project aim. The product design specifications come from
the product concept through concept engineering. These paths are more of a thought
checklist rather than paths that are taken in every project.
This is a stage of both creativity and evaluation. There is a need to collect information
on as many areas as possible, to determine its accuracy and then to build up the whole
base for the project from it.
At the end of this stage, there is an assessment by senior management of the

probability of success in the market, the time/costs for the remainder of the project
and its continuing harmony with the business strategy. Finally there is the
decision to go on with this product and provide the resources.
The product development project starts with the selection of the project and then
continues to the end of Stage 1 and into Stage 2: product design and process
development. There is not a definite demarcation between the two stages - it depends on
the company and the type of product. Sometimes the decision to go on is taken after the
product concept is completed if design is not technically difficult; at other times it is
taken after the product design specifications. It should be realised that both the product
concept and the product design specifications continue to develop throughout the design
process.
Product strategies change with time as can be seen in Case Study 1 which shows some
of the strategies of McDonald's, the hamburger chain, in the USA in the 1990s.
Case Study 1.
McDonald's: Can it Regain its Golden Touch?
In 1991, Business Week chronicled the millions McDonald's was pouring into
experiments for new products for the US market. In 1998, they listed the flops:
• Carrot Sticks: still available as an optional item in some US restaurants.
• Fried chicken: This was no McNuggets. Though available in much of
Asia, it's off the menu in the US along with the corn-on-the-cob that came
with it.
• Pasta: McDonald's tried the old favourites, spaghetti and lasagne, with
garlic bread. Neither is available anymore in the US.
• Fajitas: The McDonald's version of this popular Mexican dish never took
off, though it's still available in a few US restaurants.
• Pizza: The company devoted an entire annual franchise meeting to talking
up this fast-food favourite. Pizza survives in Canada, but it is no longer in
the US.
• McLean Deluxe: This low fat sandwich debuted in 1991 to woo health
conscious customers. It was erased from the menu in 1996.
Last successful product: Chicken McNugget in 1983.
The company has now emphasised that the heart of the company's menu will
remain the same - the burger. “We will extend our line, rather than going in more
radical, different directions.”
They have been opening new stores, rather than launching new products. They are
developing a new kitchen production system.
Imagine the possibilities: the company uses its powerful brand to figure out a way
to grow in its own backyard. The new kitchen production system allows
executives to think more broadly about high-quality menu additions. Domestic
earnings no longer drag down international growth but add to it. And overseas
markets, upon saturation, have a model for future growth.
(Reprinted from the 9 March 1998 issue of Business Week, by special permission ©1998 by
McGraw-Hill Companies.)
Think Break 1.3
Product strategies: new products from McDonald's
In the 21st century, McDonald’s have continued to introduce new products and
indeed new part menus, such as breakfast, in the USA.
Look up McDonald’s USA Food News on the web site:

http://www.mcdonalds.com/usa/eat/features.html
Suggest the reasons that the company might have in introducing these products –
the consumers and their needs, company strategies, changing environment.
You will see that there is nutrition information provided on this web site for
consumers. Discuss the main aims of this information as regards product and
menu selection...
Visit your local McDonalds and compare the products with those available in the
USA.
1.4 Stage 2: Product design and process development
At the end of this stage the decisions to be made by management can be divided into the
product, the production and distribution, the market, the financial predictions and the
level of risk. Management need to know:
• Is the product satisfying consumer needs and wants?
• Is it safe?
• Is it legal?
• What is the market and can the company service this market?
• Can the present market channels be used or new ones needed?
• Are there raw materials available?
• Will the production be accommodated in the present equipment or is new
equipment needed?
• What are the costs of further development and commercial production
and marketing?
• Can the present storage and transport methods be used or is a new
method needed?
• What are the estimated profits and probabilities of success?
Some of the important pathways of activities, outcomes and decisions in the second
stage are:
Product design  Prototypes  Technical capability
Consumer testing  Acceptance  Market suitability
Product optimise  Final prototype  Company compatibility
Process design  Process conditions  Technical feasibility
Market testing  Sales prediction  Market success
Costing analysis  Costs (capital and  Financial success
operating)
Certain product characteristics are defined in the product design specifications. The
technologist designs, makes and tests the product against these product standards.
Product design specifications cannot be rigidly maintained: there has to be the
opportunity for creative design of the product. Product concept engineering continues in
the design stage, as more information is gathered to define the product characteristics
quantitatively.
The raw materials and the processing conditions are investigated as the product is
developed. Important considerations during this product design/process development
stage are the test procedures used; these are related to the qualities required by the
customer/consumer and not to arbitrarily chosen standards. As early as possible in the
development, some of the future buyers and users of the product use and eat some of the
product prototypes. It is comparatively inexpensive to change a formulation or a product
form at this stage, but expensive if done during the plant trials and even more so during
final production. Therefore, it is important to experiment as much as possible with the
product and the process at this stage.
The basic packaging design is started at this time as it is usually an integral part of a
food product, giving protection and use. This is also related to the proposed physical
distribution, including storage and transport, which really is a continuation of the
processing design. The product prototypes are tested under the conditions expected in
the physical distribution so that the shelf-life of the product can be predicted.
Finally in product design, preliminary production trials are organised and the final
product prototype put through a large consumer test so that the level of technical
success and market acceptability can be predicted.
At the end of this stage, there is an assessment by senior management of the

product, the target market, the compatibility with production and marketing, the
predicted capital investment, the time/costs for the remainder of the project, the
risk of failure in the next stage and the continuing harmony with the business
strategy. The decision - to go on to product commercialisation, a much more
expensive stage - is an important one.
Think Break 1.4

Product design: design methods in food product development
Product design is not often used in the food industry to describe this stage but is
the common name in other industries.
3D design such as furniture and utensils was in the past what people imagined
as design, but design has expanded into electronics, computer soft ware and in
recent years into pharmaceuticals, a process engineering based industry like
food. Food has always had some elements of design for example in baked goods
and in more recent years in extruded foods.
Discover what are the basic factors and methods in design and show how these
would be useful in designing food products.
1.5 Stage 3: Product commercialisation
At the end of this stage, the top management decision is to go on or to stop before
committing to the large expenditure of the launch. Management study the feasibility of
production and distribution, the viability of the market strategy, the finance and the
other resources needed for the next stage, the predicted returns on investment and the
relationship to the other strategic plans of the company. For this they need product and
production specifications, a marketing strategy, capital costs, investment returns,
predicted operating costs and profits, and again the risk in the further development.
Some of the important pathways of activities, outcomes and decisions in the third stage
are:
Marketing study  Market strategy  Market plan
Marketing testing  Buying behaviour  Sales predictions
HACCP* process  Process control  Product safety, quality
Process engineering  Plant, production  Production plan
Financial analysis  Costs, prices, profits,  Returns on investments,
investments risks
*HACCP - Hazard Analysis Critical Control Points - a preventive system to eliminate

or minimise potential biological, chemical and physical hazards to the safety and quality
of foods. It is the basis for a Food Safety programme. If the new product is an addition
to a present product line or an improved product, there may be a Food Safety
programme in place, but it is always important to check because there may be a change
in raw materials and in the process.
Packaging design is completed in this stage; it is started as part of the product design
but the aesthetics cannot be completed until the promotion is planned. Packaging design
is based on protection of the product, on consumer needs and uses of the product, and
on the market presentation.
At the third stage, the cost of the project in terms of finance, people and time escalates,
and many expensive product failures occur because of lack of control at this stage. At
the end of this stage, there is enough information to detail the market for the product
and to draw up a complete market plan for launching the product including channels of
distribution, pricing, methods of selling, promotion and advertising. Process equipment
is designed or, if present plant is to be used, the layout and adaptation of this equipment
for the new processing conditions is determined. The production method is optimised
and a complete plan developed for both production and physical distribution of the
product. A more exact costing of production and launching is made, sales revenues
predicted and a detailed financial evaluation prepared.
The product can be tested in town market trials where the product is put into the shops
in a certain area and sold with the aid of all the pricing, promotional, advertising and
selling techniques to be used in the final market. This demonstrates that the product will
actually sell in the marketplace and identifies any difficulties which might emerge
during marketing. It also gives an opportunity to test the production system at higher
production rates, and to improve quality, yields and costs.
At the end of this stage, there is an assessment by senior management of the capital
investment, the return on investment, the risk of failure in the market, the human
resources needed and available, the possible effects on the society, the effects on
their other products and businesses, and the continuing harmony with the business
strategy.
Think Break 1.5

Product commercialisation: coordination of resources and project timing
In product commercialisation, there is research and development by the

production, marketing, and finance sections of the company as well as the
product development team.
Discuss the problems of coordinating this work, and how this coordination
could best be achieved.
How can times for the activities in the various areas be estimated and an overall
timed plan developed. How can this be managed to prevent time over-runs and
to ensure completion of the stage for a suitable launch date?
1.6 Stage 4: Product launch and evaluation
At the end of this stage, top management decides the future direction of the product and
its acceptance into the company's product mix. Management set standards to judge the
launch before the launch takes place, and also consider their strategy for reacting to
competitors' actions. They plan for the future of the product - will there be further
products added to the product line, or a relaunch with improved product and packaging,
or a reduction in price related to increasing efficiency of production? The launch is not
an end but a beginning and there is a need to plan for the future at the same time as the
mechanisms for a successful launch are being started. Management study the product on
the basis of future product strategy and therefore future business strategy.
Some of the important pathways of activities, outcomes and decisions in the fourth
stage are:
Marketing organisation  Time, people, costs  Effectiveness
Production organisation  Quality, quantity, costs  Specifications met
Distribution organisation  Time, costs, convenience  Efficiency
Launch sales analysis  Sales/customers  Marketing changes
Product, production study  Quality, efficiency  Improvement
For marketing, the next steps are to train the sales staff and to persuade the retailer to
accept the product. The decision of the retailers to accept or reject is based on product
attributes such as strong growth in the product category, a new product or a me-too
product, acceptable product quality and high expected profit contribution, but they are
also influenced by strong promotion and advertising, competition, adequate funds for
the retailer's promotion and discounts. The retailer is very often a supermarket chain
and they may have product specifications which have to be met (and should have been
recognised much earlier in the project). They may also charge for shelf space and have a
pre-determined price range.
For production, the plant is built or organised, the production personnel trained, quality
assurance programme put in place and production begun. The stocks of the product are
built up in stores and finally distributed to the retailers. For marketing, the final step is
to ensure the distribution of the product, its placement on the retailers' shelves with any
in-store promotion and then the release of the advertising. All is then ready to
commence on the product launching date - the advertising is placed in the media and the
product is put on the shelves in the supermarket or the store. The only step remaining is
for the consumer to buy the product so that the retailer will keep on ordering it. The
sales personnel, particularly the merchandisers, have to ensure that the shelves are kept
stocked, the displays are attractive and the retailers' problems with the products are
solved.
In the evaluation after the launch, the sales of the product are monitored, and the
product's performance checked in production, distribution, storage and the supermarket.
The retailers' attitudes to the product and their placement and promotion of the product
in the supermarket are studied - as well as, of course, the consumers' attitudes and
behaviour towards the product. On the production side, the yield of the product and the
quality of the product are monitored, but also important are the raw material quality and
quantity, the equipment functioning and the labour content. This monitoring usually
leads to product improvement, production and quality assurance improvement, and cost
trimming, and often to changes in distribution and in marketing methods. The time after
launching is a time of constant improvement of product and process, of reduction in
production costs and of increase in the effectiveness of the marketing methods.
After the launch, there is an assessment by senior management of the financial

returns and the effect this product is having on the business strategy. Decisions are
taken at set times to either pull the product from the market or adopt it into the
product mix.
Think Break 1.6

Product launch: PD methods for large and small numbers of new product
launched per annum
A household appliance company may only launch two or three products per year,
but a large food company may launch 50-100 products. What effects will these
differences in new product numbers have on the Product Development Process,
the types of products launched and the methods of launching the products?
1.7 Variations in the Product Development Process
This description of the Product Development Process has been based on the
development of a consumer product, but many food products are industrial ingredients
marketed by food processors and primary producers to food manufacturers and food
service companies. There are differences in the Product Development Process because
there is normally a much stronger relationship between seller and buyer in industrial
marketing. Therefore, especially for new ingredients, there is cooperation between the
food processor and the food manufacturer, sometimes in Stage1 but certainly in Stages
2, 3 and 4. The prototypes can be tested by the manufacturer during the design and
certainly at the stage of the final prototype. There is a need for close cooperation so that
the ingredient is not only correct for the manufacturer's process, but also for the final
consumer product. Similarly in the food service industry, the supplier's Product
Development Process and the recipe development by the chef of the meal or snack need
to be coordinated.
This comprehensive outline is intended for the development and introduction of an

innovation, a major new product. If a product improvement or a simple line extension or
a relaunch is planned, many of these activities can be avoided as the knowledge is
already in the company. Also a company, even with a brand new product, may reject
some activities because they judge that the risk attached to a lack of knowledge is small.
The Product Development Process is a guide, not a bureaucratic restriction, and basing
it on the management decisions to be made, ensures it is adapted to the needs of the
company and the project. But it means that there has always to be top management
involvement in innovation and product development.
1.8 Summary
Product development is a complex, multi-disciplinary company procedure, and every

company needs to outline a Product Development Process as a template for product
development in their company. A four-stage process is useful as top management
usually need to make go/no-go decisions at the end of developing the product concept,
the product prototype, the product commercialisation plan and after the product launch.
To make these decisions, they need information which is found during the product
development; these are the outcomes from the activities in the product development.
The product development team select the techniques to be used in these activities. The
important flow in product development is:
Activities (techniques)  OUTCOMES  DECISIONS
The business strategy of the company and the decisions to be made by top management
are the basis for the product development project. The resources and constraints made
by top management determine what techniques can be used.
1.9 Suggested readings
Ali, A. (1994) 'Pioneering versus incremental innovation: review and research

propositions', Journal of Product Innovation Management, 11(1), 46-61.
Cooper, R.G. (1996) 'Overhauling the new product process', Industrial Marketing
Management. Special Issue: New Product Development, 25, 465-82.
Earle, M.D. (1997) 'Changes in the food product development process', Trends in Food
Science and Technology, 8(1), 19-24.
Page, A.L. (1993) ‘Assessing new product development practices and performance:
establishing crucial norms', Journal of Product Innovation Management, 10(4), 273-90.
Rudolph, M.J. (1995) 'The food product development process', British Food Journal
97(3), 3-11.
Some more recent readings

Cooper, R.G., Edgett, S.J. and Kleinschmidt, E.J. (2004) ‘Benchmarking Best NPD
Practices 11’ Research-Technology Management 47 (3), 50-59.
Erikson, P.L. (2008) ‘Partnering for Innovation’ Food Technology 62 (1), 32-37.
Institute for Manufacturing, Engineering Department. Cambridge University.‘Managing
the NPD Process’ http://www.ifm.eng.cam.ac.uk/ctm/idm/resources/npd_process.html
(accessed 15/10/2008)
Inwood, D. (2008) ‘The multinational food business – strategic, organisation and
management issues for product development’, Chapter 2, Case studies in food product
development, by Earle M. and Earle R., (Eds.) Cambridge, Woodhead
Project Break 1
Product Development is a practical subject and learning is achieved by taking an
active part in a project. Therefore readers are strongly urged to work through the
ideas in each chapter in an industrial application. If possible choose a product
development project in your company, preferably a project that is starting but a
completed project can be used. Because some students may not have a company
project, actual projects are included in the book (see Project 1: following). There
is a different project in each chapter and readers can either work with all of them
or carry one through as an individual project.
Company Project
Discover the company's business strategy, the product strategy and the product
development strategy for this product area. If there is no product strategy or
product development strategy write one, and have it assessed by management.
Discuss how the product development project fits in with these strategies.
Study how product development has been organised in the past and select the
method that you think would be the most successful for this project.
Project 1 (at end of chapter)

Compare the four methods of exploring export product development for the
company and then select the method that is most likely to be efficient and
successful. For this method, outline a business strategy for the company, a
product strategy and a product development strategy.
Outline several ways that product development could be organised in the
company and select the most suitable method remembering that this is a small
company without large resources.
For both projects
1. Design a Product Development Process and determine what top

management decisions are to be made at the end of each of the four stages
of the PD process, and then relate these to the outcomes for each stage.
2. From this, write the aim for the product development project and see how
it 'fits' with the company's strategies.
Project 1: Frozen Bakery Snacks
A medium-sized bakery company has essentially built its business on the
domestic consumer market with fresh bakery products, but has also a single
substantial export line in bulk frozen pastry to one overseas country, Malaysia.
It wishes to explore the possibility of marketing consumer packs of frozen,
fryable, pastry snacks to retailers in the same market.
The bakery has a managerial structure of an owner/managing director, a plant

manager, a sales manager and a secretary/accountant. They need their new
export product to stabilise and increase their business. They have concluded
that the product development needs to be done as well as possible and so they
are prepared to commit substantial resources.
The managing director met a Malaysian entrepreneur in an international Rotary

gathering, who indicated that he would like to nominate a product, sort out its
practicalities and distribute it. The plant manager plays squash with a locally
based Malaysian, who has cousins whom he is sure could organise a suitable
product and handle it. The secretary thinks they should employ a firm of
international accountants, which has set up a management/marketing subsidiary
and claims product development expertise, to deliver a complete product,
production and marketing package.
There is debate and indecision. The management committee decide to

temporise and employ a new product development graduate on a short contract
to prepare a structural proposal for a product development team within the
company. This team would not only explore and hopefully generate the
Malaysian frozen product but would also give the company an enduring
capability on which business and product expansion in the future would be
built. The product developer is also asked to comment on the general merits of
the new proposal weighed against the suggested out-of-house alternatives. The
management also want the product developer to develop a plan for the project.
Lai, Pai Wan (1987) Development of a bakery snack for export from New Zealand to Malaysia,
Ph.D. thesis, Massey University, New Zealand
CHAPTER 2
The Organisation of the

Product Development Project
2.1 Introduction
The Product Development Process is the basis from which the project is planned and
organised systematically. From the business strategy, the company develops the product
strategy and hence the product development strategy. This is the basis for the planning of
the individual product development projects. At the beginning of each project, the aim of
the project is set and confirmed by management so that it fits with the company's business
and marketing strategies. It is the integration of the business strategy and the individual
project which often gives problems in organising and controlling the project.
The top management give a clear mission to the project and also set the criteria they will
apply as measures in the evaluation of the outcomes at the various stages. They also give a
clear description of the culture/philosophy of the company, including the risk climate they
will tolerate and the company positioning. They define the company 'fit' expected for the
product, production, marketing, finance. There has to be clear indication of resources,
including the capital, available for the development and for the commercialisation.
The management needs to outline for the project team:
1. business strategy relating to the project;
2. product strategy relating to the project;
3. product development strategy relating to the project;
4. information required for the decision-making at the end of each stage;
5. company resources and constraints on the project.
The product development project coordinates the decisions, outcomes, activities and
techniques from the first stage, product strategy development, to the end of the third stage,
product commercialisation. Essentially there is a group of people, a team, which picks up
the outline of the project from the top management group and eventually hands it on to the
operating departments of the company. This interrelationship of the team with management
and operating departments varies from company to company, and even project to project.
Marketing can tell research to develop a specific product in the laboratory, and then the
remainder of the development is handed onto marketing and production. At the other end of
the organisational spectrum, a multidiscipline project team is organised which carries the
project to the final commercialisation or even through the launch to the post-launch.
Companies have many variations between these two extremes. There needs to be
coordination between individual people in different parts of the company and teams are the
best option in the larger companies. The team can be fixed from the beginning of the
project or it can be a fluid organisation with people changing over time, but there needs to
be a continuous knowledge build up.
The project team will develop the aims, objectives and the constraints for the project.
The project aim is the start of every project and sets the direction of a project - a clear
definition lessens confusions and difficulties during the project. The outcomes desired by
management are developed into project objectives for various parts of the project. If
management also want to set limits on the project, these are identified at the beginning of
the project as project constraints. The aim, objectives and constraints are all confirmed by
management before the project starts. It is important to ensure the connections of the
product development project to both the 'blue-skies' research and also the inventions which
come from the researchers' interpretations of the advances of science. This comes through
the business strategy to the product strategy and the product development strategy and
hence to the individual product development project.
2.2 Project Plan
The first step is to write an outline plan for the project. As shown in Figure 2.1, planning
the product development project is directly related to the company policy and therefore to
the people determining the company policy.
Figure 2.1 Planning the product development project
PROJECT PLANNING COMPANY ENVIRONMENT

Business Strategy  Company policy

Product Strategy

Product Development Programme

Specific Product Development Project
Project Aim
Project Constraints  Company conditions
Project Objectives  Decisions to be made
 Outcomes for decisions
Project Activities  Activities for outcomes
Project Techniques  Resources
 Timing
Company knowledge
Project Plan  Planning methods
Project Management  Management systems
A company policy which states that company growth is through amalgamations and
takeovers is not much interested in product development and is not going to provide much
resource for product development; a company policy to launch a major innovation every
year is the opposite. Company policy is also directed by the environment, the resources
available to the company and the knowledge in the company. In Case Study 2, the company
has a policy to change milk from a single commodity product into multiple consumer
products, and on this policy were based the specific product development projects, some
based on changing the packaging and some involving both packaging and product changes.
Case Study 2.
Reintroducing Milk to Consumers
Dean Foods Co. is hoping to turn milk into a cash cow. In an effort to pump new life
into an old product, Dean is adding new packaging, new products and a $30 million
marketing campaign to convince people that milk can be a cool beverage.
Just as Birds Eye did with frozen vegetables, Dean wants to make milk something
more than a cheap commodity. One way is to combine new products with clever
packaging. For example, the company is introducing a blue-ice freezer pack with six-
packs of milk so people can carry cold milk to work or school. And six-packs, pints
and quarts are packaged in bottles called chugs: lightweight plastic designed like old-
fashioned milk bottles but with resealable twist-off caps.
Adding more flavours in more places also helps, as brands such as Tropicana and
Snapple have found with juice and tea drinks. Dean’s chocolate milk in new chug
bottles has enjoyed brisk sales. It plans to introduce strawberry within the next few
weeks and possibly banana after that.
'Dean is offering consumers choice and convenience,' says Adri Boudewyn, chief
executive of the California Milk Advisory Board which represents farmers.
The new packaging which was introduced last year allows it to charge higher prices.
The chug concept also has won the company new customers in the rapidly
consolidating supermarket industry. Dean's milk volume increased 5%, an enviable
growth rate in an industry marked by stagnation. The milk push comes as
consumption has been declining for much of the past five years, although last year
saw a slight uptick, thanks to the popular 'Got Milk?' ad campaign by Dairy
Management Inc. Dean hopes to increase the consumption not just by packaging
changes, but by distributing chugs to places like convenience stores and school-
vending machines.
(Source: Balu, R. (1998) 'Dean Foods attempts to reintroduce milk to consumers', in Wall Street
Journal, 26 March B3. Reprinted by permission of The Wall Street Journal © 1998 Dow Jones &
Company Inc. All Rights Reserved Worldwide.)
The team takes the general project description defined in the product strategy and the
product development strategy, and determines the aim and constraints for the specific
project. After top management confirmation of aim and constraints and agreement on the
decisions and therefore the expected outcomes at the various stages, the team can identify
the project's objectives and activities. The team plans the project - describing the early
activities in some detail and the later activities in general headings, but defining clearly the
intended outcomes of the different activities and the decisions to be made. There is
agreement on the timing of the project and the resources available, and the team then
decides on the techniques to be used for the various activities.
The plan details how the project is to be managed in the team, and by top management;
both need to be clearly shown so that the responsibilities of each are known and
acknowledged by both groups. Planning can vary from a sheet of paper in a small company,
to a complex report for a major innovation for a large company, but the most important
factor is that everyone understands the project and its organisation, and agrees to the plan.
Think Break 2.1

Project plan: recognising nutritional value
The company policy is the directing influence on the plan for the product
development project as can be seen in Case Study 2. As the years have gone by
nutrition has become an important part of the policy of dairy companies.
Discuss how the product development team can develop an overall product
development plan based on recognising and improving the nutritional value of milk,
in particular identifying the needs of different groups of consumers.
Visit a supermarket and identify the dairy products being sold for their nutritional
value. How would the range of products already on the market affect your product
development plan?
2.3 Project aim, objectives and constraints
At the beginning of the project, the team identifies where they are going overall, what they
are to achieve at different times in the project, and what are the restrictions on the project.
All the people involved in the project discuss and decide on the aim, the objectives and the
constraints.
2.3.1 Aim
The aim of the project is the ultimate outcome desired at the end of the project by the top
management of the company. The aim is definite and not vague, straightforward and not
complex, specific and not general. The aim is recognised by all people involved in the
project, both in the project team and in the operational and management departments in the
company. Therefore it must mean the same to all people and cannot be interpreted by
different people in different ways. It is used as a guide in planning and decision-making,
therefore it is focused but still broad enough to allow for creative thinking. Statements such
as 'increase the profit by 30%', 'use up the slack production', 'a product for the food service
market' are too vague, and statements such as 'identical to the competitor's product' or
'protein increased to 40%, but do not change the product' are too narrow.
Example 2.1 Overall aim for a PD project: to develop a tomato product

To develop a canned tomato product, using low acid tomatoes, suitable for the British
hotel catering market, processed on the present canning line with minor adaption, of a
volume to increase production by 20%.
Example 2.1 clearly states type of product, general target market, method of processing,
raw material, type of plant available and size of the market needed. Sometimes, the
processing is not specified because the aim of the project is to study several different types
of processing, or the target market is not specified because the aim is to study a few
markets and select the most promising. Any general aims such as ‘to diversify production’
or ‘build up an export market’ or ‘compete more effectively on the market’ are focused
through the development of the business strategy, the product strategy and the product
development strategy and then tied into the aim of the specific project. The aim is a most
important step - a mistake in the aim can lead a project into a completely wrong direction.
Think Break 2.2

Project aim: building aims for health foods and processed pet foods
Discuss how you would build an aim for the following product development projects:
• A health food company, which is at present producing and marketing diet foods,
wishes to introduce a diet food for teenagers;
• A processed meat company has decided to enter the pet food market by introducing
a new dog food, a sausage from beef offal and meat off-cuts.
2.3.2 Objectives
Objectives are the goals for the different parts of the project, and are built up from the
major outcomes and decisions at the ends of the four stages, and also from the outcomes
and decisions identified within the stages. Some outcomes already identified in Chapter 1
are product design specifications, project evaluation, target market definition, financial
outcomes and risk, which are all major objectives identified by management and are in
every project. There are other specific objectives which are important for a project as can
be seen in Example 2.2.
Example 2.2 Specific objectives for a PD project: dried fish for Nigeria
In developing a dried fish product for the Nigerian consumer market, four specific
objectives were:
• comparison of competing dried fish products on the Nigerian market;
• process for drying fish in high volumes;
• market potential for dried fish in Nigeria in the next five years;
• comparison of fish deboning equipment as to yields, costs, quality;
It is important not to have too many objectives; only those objectives which are
fundamental to the project and whose completion is necessary for the project are detailed.
Sorting out the objectives at the beginning of the project ensures identification of the
objectives that are important to the company and its environment, and for which company
management is willing to provide money and time.
Think Break 2.3

Project objectives: common objectives for all projects
From Chapter 1, identify objectives which are common to all PD projects, because they
must be achieved as the outcomes are necessary for top management to make informed
go/no-go decisions
2.3.3 Constraints
Constraints are any factors which define the area of the project, and usually fall within
product, processing, marketing, finance, company and environment. Some examples are
shown in Table 2.1.
Table 2.1 Constraints on the product development project
Product Processing Marketing Financial Company Environment

_____________________________________________________________________
Eating quality Equipment Channels Fixed capital Strategy Local
government
Composition Capacity Distribution Working Structure National

capital government
Nutrition Raw materials Prices Investment Expertise, Industry

knowledge agreements
Packaging Wastes Promotion, Project finance Location Farmers'

advertising agreements
Shelf life Energy Competitors Cash flows Management Economic

Status
Use Water Size Profits Innovation Business

policy cycle
Safety Personnel Product mix Returns Size Social

restrictions
There are also organisational constraints for example, time - there is a time to launch every
product, and therefore a time when the development process has to be completed. There are
often people constraints; for example, the market researcher may only be available between
January and March.
Example 2.3 Constraints of a PD project: dried fish for Nigeria

Constraints for the dried fish project in Nigeria were:
• product constraints: contains more than 60% fish, have a storage life of at
least 12 months and contains no preservatives;
• processing constraints: solar drying, capacity 13 tonnes per day, no solid
waste;
• marketing constraints: only ambient storage and transport, retail price less
than 60 cents per 100g pack;
• financial constraints: $200,000 maximum for project, profit margin more
than 10%;
• company constraints: no bacteriologist, no fishing boats;
• environmental constraints: 10% import duty; 20% inflation in Nigerian
currency in three months.
It is important to study carefully all the constraints - are they valid? are they needed? If the
constraints are very tight, then the opportunity for creativity is reduced; in the example, for
instance, having no bacteriologist means that fermented products would be difficult - but
perhaps the company could employ a bacteriologist if fermented dried fish were an
attractive product for the market. The constraints are used in the product screening and
project evaluation, so they need to be as specific and quantitative as possible; for example,
not 'high in fish' but 'fish over 60%' makes screening much easier.
An example of aims, objectives and constraints is shown in Example 2.4

Example 2.4 Aims, objectives and constraints: canned abalone exported to Hong
Kong
1. Aim
To develop a canned product incorporating abalone pieces and so extend the product
range of Goodfood Ltd, a small Australian canning company, for the Hong Kong
market.
2. Objectives
2.1 Identify the products and methods of consumption of abalone in Hong Kong.
2.2 Investigate the market potential of canned abalone products in Hong Kong.
2.3 Identify the specific market segment for the product: caterers, large
households, working couples.
2.4 Define a suitable product concept for development.
2.5 Formulate a product that will meet the need of the chosen market segment.
2.6 Assemble, specify and test a process to produce the product.
2.7 Assess the consumer acceptance of the product.
2.8 Prepare definitive costs and price range for the product.
2.4
2.9 Selecting thestrategy
Plan the market activities andproduct.
for the final techniques
3. Constraints
3.1 Product, processing and company constraints
• The product must be canned.
• The product must be manufactured using the existing processing
facilities.
• The product shall preferably contain raw materials readily available to
the company.
3.2 Marketing constraints
• The product shall be distributed through the usual company marketing
channels.
• The product shall be marketed in Hong Kong as a canned abalone type
product.
3.3 Environmental constraints
• The product must comply with the Food Regulations of Hong Kong.
3.4 Financial constraints
• No capital investment shall be made on any new equipment.
• $200,000 working capital will be available to launch the product.
2.4 Selecting the activities and techniques
The objectives have been defined, and now the activities to produce the outcomes implicit
in these objectives need to be identified. For example, the objective was to have a
comparison of dried fish products on the Nigerian market; this needs some market research,
but what type of market research? The choice of activities is not only determined by the
results needed and the accuracy of the results, but also by how much resources and how
much time is available. The description of the activity defines the outcome expected, the
timeframe to be met and the resources that can be used. In market and consumer research,
it is customary to have a research brief and then a research proposal; the brief sets out what
the outcome is to be, and then the proposal details the type of research, its accuracy, the
time and the costs. In the product design process, product design specifications are
provided, the times and resources available determined and then the design proposal
developed which outlines the design procedure and its time and cost frame. This
combination of brief and proposal could be used for other activities in order to set
appropriate targets, to communicate these clearly to the persons responsible and to get
commitments from these persons to achieve the outcomes.
Many activities were identified in Chapter 1 in the various stages; they can be broadly
divided into product, consumer, production (processing) and distribution, marketing and
finance. They are often interconnected and it is often more useful to group the various
activities into strands according to the outcome that has to be reached. For example, the
initial technical and market studies are connected with the product idea generation and
screening which is connected with the development of the product concept. It is often
useful to look at the outcome from the black box, and then decide what activities are
needed for this outcome and the techniques to be used.
But the question is - what activities? This is directed by the knowledge, resources and time
available, and also by the techniques which can be used. For example, there may be many
product ideas already in the company, so the product idea generation will not involve many
people in brainstorming groups, but one or two people categorising the ideas already
available; or a gap in the market may have been identified and the product ideas have to be
specific to the gap and idea generation is done by a small group of consumers. In other
projects, the consumer needs are studied with consumers in focus groups and ideas
developed in the groups. Other times, it is a technological development that is pushing the
product development, and the ideas for using the technology come from a brainstorming
group of technologists and marketers. Figure 2.2 lists some of the activities, outcomes,
techniques in product concept development.
Figure 2.2 Relating outcomes, activities and techniques in product concept

development
Activities OUTCOMES
Product
which ideabe
could generation
found in product concept development.
Consumer studies
Market study  PRODUCT CONCEPT
Product idea screening
Product concept development
____________________________________________________________________
Activities Techniques
Product idea generation Brainstorming
Product morphology
Consumer studies Focus groups
Consumer surveys
Market study Retail audits
Market channel survey
Product idea screening Checklist screening
Probability screening
Product concept development Product attribute analysis
Consumer groups
In some companies, the same activities are used for every project but they may not be
suitable. For example, the activities can be different for consumer, industrial and food
service products because of the different relationships between product, supplier and buyer;
there is usually minimal interaction between the consumer and the company in consumer
product development but in food service the product is developed by the buyer (the chef)
and the supplier together.
The interactions are:
Consumer Consumer  Product

Industrial Supplier  Buyer
 
Industrial product
Food service Supplier  Food service product Buyer
The activity and the techniques are related to type of product, buyer/product/supplier
relationship, level of innovation and technology available, as well as the knowledge and
skills of the individual and the team. For example, if the team is not mathematical, they will
use neither linear programming in product formulation nor multi-dimensional scaling in
consumer research. The activity delivers the outcome and is efficient and reliable within the
knowledge base and the resources.
Think Break 2.4

Identifying activities in the project: new yoghurt products
Identify seven possible activities in designing three yoghurt product prototypes each
with a different fruit flavour and detail the outcomes expected. (If this is a problem,
read Chapter 1 again for general areas of product design, and for a quick introduction
to yoghurt products see http:/www.foodsci.uoguelph.ca/dairyedu/yogurt.html, and for
more ideas, Pszczola, D.E., (2008) What’s Yonder for Yoghurt, Food Technology, 62
(3), 45 – 54). Score each activity according to:
• its ability to deliver the outcome
• the time it will take
• the resources it needs
• its reliability
on a scale from poor to excellent; for example, poor for time would be months and
excellent a week.
Select the combination of activities that will give the highest score but ensure a
satisfactory outcome.
Study this combination of activities and decide if you or the company have the skills
and knowledge to successfully carry out these activities.
2.5 Project planning and timing
Because of the many activities occurring in a product development project, there is a need
for overall coordination in a project plan. A comprehensive activity/time plan with regular
reviews is an essential feature of the product development project. The complexity of this
plan depends on the size of the project and on the background and skills of the personnel,
and can vary from a one-page outline to a complex computer designed system with a major
plan and a large number of sub-plans. But the essential steps are:
• Identify the product development activities.
• Estimate the time required for each activity.
• Arrange activities in sequence, showing the interrelationships.
• Allocate resources - people, finance, equipment, materials.
Usually the overall activities are identified and then the people working in a specific area
can identify the sub-activities in their own part of the project. Each activity has to be small
enough to be carried out independently of other activities, but not so small as to be trivial.
Activities less than one week are usually not considered as independent activities.
To the person coordinating a project, the management of the product development project
plan can be assisted by use of formal planning aids such as bar charts (or job progress bar
charts) and critical path networks and computer software packages for complex project
planning. These techniques identify the start/finish time for each activity and determine the
sequence of the activities and the activities that can run in parallel. With this information,
logical flow diagrams and bar charts can be drawn and from these are identified the
sequence of activities that are critical to the project timing. If these activities are not
completed at the correct time, then the whole project will run over time. It is essential that
these critical activities are identified at the beginning of the project, and also that, during
the project, any activities going critical are identified quickly. These critical activities may
need more resources of people and finance, or just reorganisation.
The procedure starts by developing a plan which satisfies the project objectives given the
essential constraints while ignoring time and resources, listing all the major activities and if
necessary the sub-activities in a logical sequence; this is called project planning. The
variables of time and expertise are then applied to the project plan and this is called project
scheduling. Then as the project proceeds it is monitored and remedial actions identified;
this is called project control. It is important to have clearly identified the critical points
where top management is to review the project and give go/no-go decisions.
Think Break 2.5

Project planning: development of a dried noodle product
The simple process for producing dried noodles is: mix the flour and water, extrude
the dough through a plate to give the ribbon of noodle, and then dry. In developing a
new, high-protein noodle, the process was studied. There was no production line, so
an extruder and a dryer had to be bought or built. The texture of the extruded dough
and the noodles during drying were to be measured, and a tester to measure the
texture had to be built. The development of the noodle product involved the
following activities in the process development section of the project:
• develop texture tester (design tester, make tester, standardise tester);
• obtain dough extruder (literature search, purchase and delivery of extruder,
installation and commissioning);
• build dryer (drying cabinet converted, drying racks made, racks fixed in
cabinet, cabinet wired);
• trial (experiments on conditions, testing products, optimise process).
Determine the sequence of the activities, what activity must be completed before
others can start, and the activities that can run in parallel. Draw a sketch to show the
activities.
2.6 Project management
The project plan is the basis for management of the project, but it needs to be combined
with the management of human resources, physical resources, financial resources, and
project quality.
2.6.1 Human resources
People are the basis for successful product development; the knowledge, skills, creativity,
enthusiasm and motivation of the project personnel give the project its impetus to lead to a
successful conclusion. Product development is a multi-disciplinary activity, needing a wide
variety of knowledge and skills at different times in the project. The problem is that there
are sometimes wide differences in philosophy and beliefs between the people educated and
working in different disciplines. The engineers want quantitative, accurate information to
make a decision, but the marketers want to move quickly and not wait for accurate
information. The marketers often believe that they know the market and that they should
dictate the direction for the project without any concern for the technical aspects. The
product designers are willing to take risks in design; the engineers want as little risk as
possible. There are often conflicts between marketing and other functional areas in the
company, the marketers looking at the outside environment and the others tending to look
at the internal company environment.
Product development management need to overcome these divisions by good

communication and agreed direction, and avoid dominance by any group. There needs to be
a balance between marketing and technical aspects: too strong marketing can lead to
product improvements, me-too products and few innovations; too strong technical
dominance can lead to products not wanted by the market. Since product development
spans many disciplines, it must not get locked into one “image” of what it is.
Technical achievements of the individuals are important, though staff are seldom selected
for their creative and successful product development. The staff must have an
understanding of the consumer and the market, as well as the process and the product; they
need to be innovative and creative, but all should have the ability to drive the project to a
commercial conclusion. The company may not have the necessary skills and knowledge
and will employ consultants to do parts of the project for example market research
companies to do consumer research, engineering consultants to design equipment. It is
important that the outside experts are also coordinated into the team. Forming this team is a
prime responsibility of management.
Most important are the communication linkages, the formal reporting channels and the
functional inter-department channels of communication for daily working. Any
organisation will require:
• one person to lead the project who has the responsibility and also the skills to carry the
project to a successful end;
• support staff for the leader, to do the work in the project.
Whatever the structure, successful product development requires a balance between

management and innovation. Over-management can stifle innovation, but uncontrolled
development can lead to inappropriate products and the higher probability of commercial
failures.
2.6.2 Physical resources

The tools - space, equipment, raw materials, computers - must be to hand or become
available. The project is sometimes restricted as regards equipment and this can stifle major
new developments. Important are the knowledge resources – today likely on-line though
library availability is still important. The knowledge data bases need to include company
information and knowledge.
2.6.3Financial resources
For product development, finances need to be planned and controlled. Budgeting does not
have to be complex to be good. One straightforward approach is to take each activity in the
plan and look at its resource requirement on a monthly basis, and so build up a schedule of
expenditure. Total expenditure for each activity can be predicted, but then it is useful to
develop monthly expenditures for cash flow purposes and for control of expenditure.
Product development is an area where there is need for control of costs because they can
rapidly escalate. Use of graphs of cumulative expenditure, actual against budget, can be
very informative.
Capital costs, particularly in the later stages of the project, can become significant,
especially if the product is an innovation. They would normally feature in the capital
budget associated with the project, or if the project is in the commercialisation stage they
may be in the budget of one of the functional departments. They should not be overlooked
when planning the project, or in calculating the total project cost.
There need to be cost forecasts for the project where the costs are broken down into the
main activities, so that the balance of the costs in the project can be checked. Surprisingly
this is not always done in industry and there can be a complete imbalance between the costs
of the market research and the costs of the technical research, depending on the dominance
of the functional areas in the product development team.
2.6.4 Project quality

This is ensured by having planned and systematic actions included in the company's total
quality management (TQM). The ISO 9001 model for quality assurance details the system
for design/development as well as production, installation and servicing. This is published
by the International Organisation for Standardisation (ISO) and was updated in 2008 (ISO-
9001:2008). There are also standards put out by national organisations for product design.
2.7 Technology diffusion
The diffusion of information through the company needs to be encouraged if the project is
to be successful, particularly in product commercialisation and product launch. This means
company involvement throughout the project:
• Participation in review meetings of marketing, product development, production,

engineering and perhaps the advertising agency, so that product concepts, attributes and
consumer expectations can be established and refined as the project proceeds.
• Increasing involvement of production, quality assurance and marketing personnel in the
third and fourth stages, as they are gradually taking on the responsibility for the project.
• Organising specific training or familiarisation sessions for production and sales
personnel, developing procedures for the new or modified process, and advising
merchandising staff about the product features.
• Developing production specifications, quality assurance programmes and marketing
strategies. Development of these methods and controls prior to production and
marketing necessarily involves the product development staff and the people who will
produce the product to ensure a seamless transfer from one group to the other.
2.8 Summary
It is clear that successful product development first requires the decisions, outcomes and
activities to be developed into a logical flow plan of activities and critical control points.
This can lead to predicted timings and resources so that a monthly plan can be developed
which can be used to control the quality, time and costs of the project. There is also a need
for management commitment, development of a suitable management and communication
structure, and recruitment of creative, skilled and knowledgeable personnel. An integrated,
managed approach to product development, relating product development, marketing,
finance and production, will provide a better chance of achieving overall goals and
commercial or socio-economic targets. Product development success and project
management are inextricably linked; they must be properly balanced for a successful
venture.
Allen, A.H. (1995) 'Designing for the world? Get the facts first', Food Product Design,
May, 28-50.
Cannon, T. (1992) 'Patterns of innovation and development in the food chain', British Food
Journal, 94 (6), 10-16.
Hegart, W.H. and Hoffman, R.C. (1990) 'Product/market innovations: a study of top
management involvement among four cultures', Journal of Product Innovation
Management, 7(3), 186-99.
Hnat, D.L. (1994) ‘A cross-functional strategy for product development’, Food
Technology, 48(8), 62-5.
Ramujan, V. and Mensch, G.O. (1985) 'Improving the strategy - innovation link', Journal
of Product Innovation Management, 2(4), 213-23.
Houlton, S. (2008) ‘Quality by design’ Chemistry and Industry, (8), 21-23.
Neff, E. (2008) Product design, process development and manufacturing – a roadmap for
the technologist. Chapter 18 Case studies in food product development, by Earle M. and
Earle R. (Eds.) Cambridge, Woodhead.
Pooch, D. (2008) ‘Synlait-making more from milk’, Food New Zealand, 8(6), 10-14.
Van Kleef, E. and Trijp, H.C.M. (2007) Opportunity identification in new product
development and innovation in food product development” in Consumer-led food product
development, by MacFie, H. (Ed.) Cambridge, Woodhead.
Wilson, E. (2007) ‘Working together works’ Food New Zealand, 7(7), 18-20.
Project Break 2
For either your company’s P.D. Project that you started on Chapter 1, or Project 2 at the
end of the chapter:
• Set the aims, objectives and constraints so that they show a clear direction for
the project within the framework of the company’s strategies and resources.
• Identify the activities for the PD Project in Stages 1 and 2 of the Product
Development Process.
• Organise the activities in the sequence of doing them.
Project 2: Take-Away Lamb
A major Australian meat company has decided to develop a lamb product for the fast-
food market. At the time, there are no lamb products sold by a major take-away chain
such as McDonald's but they are sold through ethnic restaurants. The company thinks
that such a product would not only fill a definite gap in the Australian fast-food market
but could be exported to Europe.
• The company does not want to start a fast-food chain and would prefer to sell the
product to an established chain or chains. If necessary, they might go into a joint
venture with a catering company in a new take-away fast-food company that
would only serve lamb products.
• The raw material can be any sheep meat from an animal less than two years of
age.
• The company has facilities for cutting lamb, deboning, mincing, flaking,
chopping, mixing, forming sausages, moulding and vacuum filling. They would
like to use the present equipment and not buy any major equipment. In the
present plant, they can have a throughput of lamb cuts of 25 tonnes per day and
10 tonnes of smallgoods such as sausages and hamburgers. The company has
blast freezers and cold storage and would prefer that the product was frozen. This
would even out production and product could be supplied quickly to the fast-food
outlets as it was needed.
• The product must be suitable for take-away cooking and serving: cook in five
minutes, easily packed to take away, not messy to eat.
• The company does not want to invest more than $1.5 million in this project.
The company already sells chops, roasts and sausages to restaurants and catering
institutions in Australia. These are sold as 'fresh' products and are distributed daily. They
do not sell any branded retail products and do not supply supermarkets. They sell frozen
lamb cuts to Britain in cartons which are sold through meat wholesalers.
CHAPTER 3
Product Strategy Development

Idea Generation and Screening
3.1 Introduction
New product ideas are seldom revolutionary, they are mostly evolutionary. Many develop
from the products of the past, making improvements in quality; convenience, cost or
variety. The truly innovative product starts a new sequence of these evolutionary products.
For example, quick frozen peas were an innovative product which started a sequence of
quick frozen vegetable products. Most often in the past, a new method of preservation -
freezing, canning, drying - was the revolutionary innovation in the food industry which led
to many new evolutionary products.
Idea generation is knowledgeable, creative and systematic. It develops from knowledge of

the consumer, the market, the technology and the general environment, and it creates
newness in product, production and marketing. It systematically develops product ideas to
satisfy the aim of the project and therefore the business strategy. Idea generation in industry
is strategic and not left to chance. Ideas can come from 'blue skies' research or from
inventions, but in product development these are systematically developed into innovations
in the company and the marketplace. Idea generation occurs not only at the initial stages in
developing product concepts but throughout the project - in the design of the product,
package and process, and in developing the marketing strategy. In idea generation, the
field is kept wide so that no possible innovations are ignored, but it is focused within the
aim of the project. This is a dichotomy that can cause problems.
In screening, the many ideas are reduced to smaller numbers and eventually to the one
product concept, prototype product, processing method and advertising plan. The screening
begins qualitatively and gradually develops, as more information is obtained, to a
quantitative evaluation of the predicted outcomes for the product, production, market and
finance.
There is a constant cycling of idea generation and screening throughout the project until the
final market launch. A wide range of ideas gradually becomes focused into the final launch
plans. Control of these activities of idea generation and screening ensures that no good
ideas are lost and that poor ideas are dropped quickly. This is the ideal outcome but it is
very hard to achieve. The extent of idea generation and screening varies with the type of
innovation and the product; it is minor for the product line extension, slightly greater for the
me-too product and product improvements, and is very extensive throughout the company
for the innovation.
After the project's aim has been established, ideas can come from free brainstorming, from
systematically studying how the consumer may use the product, and from developments in
technology, the industry and the market. These ideas are qualitatively screened so that they
agree with the project aims and constraints, using a simple but disciplined system of
judging. The selected ideas are developed into descriptions of the product and the target
markets, and are further reduced in number by a more complex screening method such as
checklist screening and economic evaluation. Then there is the development of the product
idea concepts by the consumers, where the idea generation focuses on the product benefits;
the consumers and company staff gradually reduce the number of product ideas and build
more detailed product concepts. Evaluation at this stage becomes quantitative and more
detailed, and is based on market research, product costing and technical evaluations which
predict if the product is to be a success or a failure in meeting the company's aims.
The activities of product idea generation followed by screening are continued in product
design, product commercialisation and product launch; the product concept becomes more
focused, more detailed and more quantitative. Idea generation and screening are therefore
important skills for anyone working in product development.
This chapter discusses mainly the product idea generation and screening at the initial stages
of the project as shown in the activities diagram, Figure 3.1.
Figure 3.1 Product idea generation and screening
PROJECT AIM
_______________________________________
 
Activities OUTCOMES
Company idea generation

Consumer idea generation
Product ideas classification PRODUCT IDEA NAMES
Company screening on crucial factors

Company product idea development PRODUCT IDEA DESCRIPTIONS
Consumer ranking screening

Consumer product idea development PRODUCT IDEA CONCEPTS
Company evaluation on important factors

Consumer product concept development PRODUCT CONCEPTS
Consumer survey
Market survey THE PRODUCT CONCEPT
TARGET MARKET
MARKET POTENTIAL
Company market evaluation MARKETING METHOD
Company processing evaluation PROCESSING METHOD
Company financial evaluation COSTS, INVESTMENT, PROFIT
Complete feasibility study PRODUCT REPORT
_____________________

Think Break 3.1
Product design: product idea generation and screening for new dried pasta product
• For a new dried pasta product, identify the activities involving product idea
generation and screening during the product design stage, from the product
concept to the final product specifications
• Draw a general product design activities and outcomes diagram in the same form
Think Break3.1 for the idea generation and screening from the product concept to
as Figure
the product specification at the end of product design.
Identify some of the activities in product design which involve idea generation
and screening.
3.2 Draw
Ideaangeneration
activities diagram for the idea generation and screening in the product
design, from the product concept to the product specifications at the end of
Idea product
generation is based
design, onsame
in the the interrelationships between:
form as Figure 3.1.
Company  Product  Consumer
These relationships are constantly changing, and the surrounding environment is also
subject to continuous social and technological change; understanding the changes that are
occurring leads to innovative products which fulfil a need. The product developer needs to
be aware of all these forces and their interactions, from the crudest level where marketing
simply wants a copy of a competitor's new product (a 'me-too' product) to the complex use
of a new technology such as pressure preservation or to a major marketing change such as
the shift from multi-person to single and two-person households. It is the study of the
interactions that identifies and refines the product ideas. Is the consumer increasingly
concerned about waste packaging - can we make an edible pack or a short-term pack? New
low temperature technology produces a tomato powder with a fresh tomato flavour - what
new product would consumers want with a fresh tomato flavour, a tomato soup or a fresh
breakfast drink?
The creation of all new product ideas - revolutionary or evolutionary - can only be
successful if there is an atmosphere which stimulates innovative thought and the search for
new ideas. If the company does not encourage the process of generating ideas, then new
ideas will not be produced. To many individuals in the company trained in logical and
systematic thinking, free idea generation is frequently difficult. It seems to be almost a fact
of life that a company has very few really creative ideas to work on. Product development
is often improvement, needed because of technological or marketing change or increased
knowledge. As marketing and technical research either struggle to look for modifications to
existing products or try to react to a competitor's product, they are often surprised by the
absolute simplicity of some original and successful new product which meets real consumer
needs and which is showing rapid market growth. The true innovation can form a new
product platform on which to build many new evolutionary products.
There are two methods of idea generation: focused or convergent thinking and free or
divergent thinking, and both are useful depending on the company's product strategy.
Focused, systematic thinking is useful for the slow evolution of the product mix. Free,
lateral thinking is useful for the discontinuous major step-changes. In the food industry
where there is pressure to continuously launch new products, there is an emphasis on
focused, systematic thinking. If food companies plan to have innovative new products in
their product mix, there is a need to develop an atmosphere which gives the freedom for
idea generation.
There are always problems in finding new ideas, and also risks in choosing the direction for
product development - either product improvement, apparently low-risk, little research
and low cost or product innovation, high-risk, extensive research and high cost. As can be
seen in Case Study 3, slow failure can occur through making minor product changes, and a
fast crash through choosing the revolutionary new product! There needs to be knowledge
and intelligence in selecting the new product direction.
3.3 Systematic focused idea generation
Ideas come from both a 'technology push' and a 'consumer pull'. The technology push
comes from knowledge of marketing, processing and product technology and their related
scientific bases. The consumer pull comes from knowledge of the consumers and their
individual and societal bases.
Case Study 3.
Food Companies Hunt for the Next Big Thing
About twice a month teams from giant food companies travel along a dusty gravel road
to a large warehouse - the New Products Showcase and Learning Center, Ithaca, a
morgue of sorts storing 60,000 extinct grocery products. They are hunting for ideas for
the next blockbuster.
Food companies are starving for new ideas. Launches of new foods in the USA fell 20%
in 1996, their sharpest decline in at least two decades. After the 1980s' round of mergers,
food research departments shrank, and food patents filed in the USA by foreign
companies began to eclipse those of domestic researchers.
Admittedly, finding a supermarket blockbuster has become much harder; most of the
easy innovations have already been introduced. New demands stemming from
technology and health worries also have generally been met. Essentially the American
companies have mastered the science of mass production and become expert in off-the-
rack edibles. But many 'new' products of the 1990s were just the tweaking of old ones.
Many of the promising up-scale products are percolating in from foreign laboratories.
The American food industry is increasingly looking outside the USA for cutting-edge
technologies.
Breakthroughs have been elusive partly because food companies devote only 0.6 - 0.7%
of sales to research and development - less than half the percentage of other consumer
products such as toothpaste. Also products need to have large markets to be acceptable
to the large food companies; this means large launch costs and also ignoring small
markets which may grow into large markets in the future.
A real innovation requires a clear benefit that can be patented - but that process can take
years, cost a fortune, and for all the trouble end up simply making consumers wary.
Proctor and Gamble suffered that fate with its rocky introduction of snack chips fried
with olestra. Many promising new products have lacked ingredients and processes
innovative enough to win patents, so they end up slaughtered by me-too products.
(From Michael J. McCarthy, (1997)SCIENCE AND TECHNOLOGY

'Food companies hunt the "Next big thing" but few can find one',
Wall Street Journal, 6 May.) Reprinted by permission of the Wall Street Journal© 1997 Dow Jones &
Company Inc. All Rights Reserved Worldwide.
Think Break 3.2
Systematic focused idea generation: new products launched in 1990s
A drop in new food products launched continued through the 1990s, but then started
to rise again after 2000. What do you think started this turn around?
Identify the major new products that were introduced.
Do you think the trend will continue and in what product areas?
Figure 3.2 Idea generation: technology push and consumer pull
SCIENCE AND TECHNOLOGY


Technology push

 Technology opportunities
Idea generation  Synthesis of consumer needs and technological means
 Consumer and market needs

Consumer pull

INDIVIDUALS AND SOCIETY
The consumer needs analysis includes the relation of present products to user needs, defects
in present products, unfulfilled needs. Consumer concerns have been a strong pull in the
1990s, with the proliferation of 'deprivation foods' low in sugar, salt and fat, nutritional
foods offering supplements of proteins, minerals and vitamins, functional foods offering
physiological benefits and/or reductions in the risk of chronic disease beyond nutritional
needs, and pharmaceutical foods (nutriceuticals) offering health benefits.
The technology sources include the scientific and technical literature, R&D scientists in the
company, universities and research organisations, the production, engineering and quality
assurance staff in the company, and the raw material and equipment suppliers. In small
companies, it tends to come from production and engineering staff, in the large company
from the R&D department.
The marketing sources include competition, overseas markets, sales journals, consumers,
consumer books and magazines, advertising agencies, market research companies,
distributors (wholesalers, retailers, food service, agents, brokers), sales personnel and
marketing people in the company. This information includes market trends, new product
introductions, market needs and market analysis. Retailers may see a need for further
brands of a certain product, and they can under their own brands copy a product already on
the market to supply this need. The market can be analysed by studying trends in sales, by
gap analysis to see if there is a product missing, by measuring shelf space to see if a
product line needs to be extended, and by comparison testing with competing products to
see if the company's product needs to be improved. The company can set up a product
matrix of their own and competing products, i.e. product classes, product lines and
individual products, to discover gaps into which the company can introduce a new product.
The company is continuously monitoring the 'feel' of the market by doing market research,
including retail audits and consumer studies. Sales trends and information from
supermarket sales are now extensively available and analysed. More general information
can be found on business and economic trends from banks and consultants, and on social
changes from social studies reports by government or academics.
Think Break 3.3

Systematic focused idea generation: technological changes in the food channel
What innovations in agriculture, processing, packaging, distribution and marketing led

to the production and marketing of canned and frozen fruits and vegetables?
What present-day innovations in agriculture, processing, packaging, distribution and

marketing have led to increasing sales of fresh fruit and vegetable products?
There are two significant groups in food production – the food processors who supply the
food ingredients and the food manufacturers who produce the final consumer products.
Many ideas in the food manufacturing industry come from the ingredient suppliers, the
food processors, who not only supply the ingredients but increasingly supply the
formulation and also the relevant consumer and market research. So where do the food
processors find their ideas for new ingredients? Very often from new agricultural and
marine products and from their studies of the manufacturers' needs and wants, as well as
from their basic research. The food processors cooperate with the agricultural and marine
primary producers in developing new raw materials, and with the food manufacturers in
developing their ingredient products and their applications. Therefore they do much of the
research in the food industry, usually spending a higher percentage of their sales on
research and development than the food manufacturers.
The product improvement, product line extension and me-too product come usually from
the market and the consumers; the cost reduction comes from production; but the
innovation comes from studying long-term technological and social changes. There are
always trends occurring and people predict the outcome of these trends using different
techniques. In econometric forecasting, historical trends of populations, population
demography, household sizes, agricultural production and food production are projected
forward to predict the future. In scenario painting, different scenarios are presented and
future outcomes predicted; for example, possible scenarios could be:
‘A return to living in small towns in 30 years time’ - what effect would this have on the
food industry?
‘China will develop technically and it will be also the largest world market and strongly
influence the international food market’ – noodle soup instead of hamburgers as the global
food take-away?
‘Genetic engineering produces animals with the white meat of chicken and the size of a
beef animal’ - will this see the demise of red meat?
It can be seen that scenarios are searching for long-term social and technological changes,
and there are various methods such as the Delphi technique which are used to develop and
analyse these scenarios.
There is a wide range of sources for knowledge in product idea generation and it is
important to recognise them and not to work in too narrow a knowledge base. Some
important areas are shown in Table 3.1.
Table 3.1 Some knowledge sources for new product idea generation
Consumer:
• Researching consumer life changes
• Researching changes in eating patterns
• Studying what consumers need now and in the future
• Studying what consumers want now and in the future
• Studying the growing consumer concerns
Technology:
• Basic research on food properties and reactions
• Research on processing and manufacturing engineering
• Research on new raw materials and ingredients
• Research on transport and storage methods
• Invention of new types of equipment
• Adaption of other technologies
Market:
• Researching social, cultural, economic changes
• Studying competing products
• Looking for a gap in the food market or a specific target market
• Studying new products on the food market
• Improving present products
• Looking for a different market or market segment
• Studying marketing changes, particularly distribution channels
Think Break 3.4

Systematic focused idea generation: food buying trends
Many of the next generation of women will have lived, as children, in homes where
the adults worked and therefore meals were bought semi-prepared and ready-to-
serve apart from meals for special days, such as Christmas. What effect will this
have on their food buying?
Develop ideas for new food products to serve this market.
3.4 Free idea generation
Free or lateral thinking can be used by the group or the individual. Brainstorming, by a
group of people, is common in companies who want to foster creativity in the company,
and for product ideas it is called the PIG (Product Idea Generation) group to focus it onto
product ideas and away from general brainstorming. The individual, often called the
inventor, is the person who develops their own creative techniques to develop new ideas.
Individuals can be taught techniques to improve their creativity.
3.4.1 The group

Brainstorming (or the product idea generation, PIG, session) is a group technique to
develop ideas concerning a specific problem. It can be either informal, free brainstorming,
where the general problem area is described and then ideas allowed to generate, or a
formal, nominal group technique where the general problem is described, members write
down 3 to 4 ideas and produce these for the discussion. It is useful to use a variety of
people, for example an engineer (knowledge of processing), salesperson (knowledge of the
market), purchasing person (knowledge of the raw material and ingredient market),
customer/consumer (knows their needs and wants), graduate trainee (new to company),
retailer (knowledge of available products). One question is - do you have them in a mixed
group or in separate groups? A variety of people stimulate discussion into a wider area, but
sometimes they can be antagonistic or competitive and this stifles the creative atmosphere.
For example, in food service product development, the chefs can be suspicious of each
other and it can be more useful to have a mixed group of chefs, product developers and
restaurant customers. In developing ingredients for a group of food manufacturing
companies, it may be impossible to bring a group of the companies' product developers
together because of secrecy and competitive influences. It is important to select groups for
each project to give the idea generation required, and not always have the same group -
creativity may go stale. There are various techniques that can be used in idea generation
and they are selected according to their suitability for the task.
Quantity of ideas is wanted, so that original ideas can develop in the discussion.
Modification or combination of one idea with another idea, and development from one idea
to another, are encouraged. Unusual, remote or wild ideas are sought. Wild ideas are useful
because they often open completely new areas of thought. There is no criticism of ideas.
All ideas are valid at this stage. No member is allowed to either pressurise the group to
accept their idea or to make 'fun' of any idea.
Think Break 3.5

Free idea generation: reviving snack bar sales
A confectionery company has two snack bars which have major shares in the snack
bar market. One has a sticky, chewy centre with nuts and is coated with chocolate; the
other is a hard crisp sugar based centre with a chocolate coating. Sales are decreasing,
and consumer research has shown that the bars are regarded as ‘bad for you’, so
although many consumers think they are delicious, they buy them rarely.
Collect a group of people together and ask them to develop new product ideas for the
company to revive the sales of their snack bars.
3.4.2 The individual

The inventor is always important in all areas of idea generation. Such people may be
scattered throughout the company - the consumer researcher, the product developer and the
product designer are expected to be creative, but often the operational people in production
and marketing have original ideas because they are constantly presented with problems
which need solutions. The question is how to collect these ideas and develop them further.
The old version of the suggestion box and its modern version of the e-mail and text
message is an avenue for ideas in the company, but there is also a need for personal contact,
both for encouraging ideas and collecting them. Many senior staff have difficulties in
providing the creative stimulus to the individual and also in keeping the communication
gate open.
The individual can help their own creative ability by ‘doodling’, keeping an ‘ideas’
notebook, ‘playing’ with the products and with equipment. We have all met them in
companies - the person at the Monday morning tea-break who produces the weekend's
inspirations. They can be annoying but they are often the ones with original ideas.
Think Break 3.6
Free idea generation: how innovative are your product ideas?
Either take a product area where your company wants an innovative product.
Or imagine that you are in a dairy company which markets dry ingredients based on
milk to ice cream manufacturers, and it has recently dried yoghurt successfully and
produced a dried yoghurt powder which is still biologically active.
Take a notebook and in the next few days write down ideas for new products. Rank
your ideas, 1 being the most innovative product. Then ask a colleague also to rank
3.5them.
Product
Are therecharacteristics and idea
differences in the ranking? generation
Why are there differences in the ranking?
How many ideas were innovative to you and your friend?
3.5 Product characteristics and idea generation
3.5.1 Product characteristics or attributes

These are the features that identify the product to the company, the market and the
consumer. Each product is a complex of tangible and intangible characteristics which
define the product, its use and value. Product characteristics can be viewed as
technological, consumer and market:
• technological: raw materials, composition, structure, size/shape, processing method,
storage method, product type;
• consumer: convenience, sensory properties, use, nutrition, safety, psychological,
social;
• market: type of market, marketplace, sales, price, promotion.
Variation of the characteristics and addition of new characteristics can make the product
more appealing to the consumer and indeed give a unique product. Comparison with the
characteristics of competitive products can define the positions of the different products in
the market; this can reveal gaps in the market where there are no products, and also give
better direction to 'me-too' products.
A product has a number of characteristics, and they can be ranked in importance not only to
the consumer, but also technically and for the market. The important characteristics are
combined to give a product profile. Each product has a unique product profile with a
number of characteristics, some being more important than others. Some product
characteristics can be needed or wanted by the consumer and are often called consumer
product benefits. Other characteristics can be disliked by the consumer! Product types have
characteristics with different 'strengths', for example fruit juices could vary from slightly
sour to very sour, slightly sweet to very sweet, cheap to expensive, subdued to gaudy
packaging, ordinary to prestigious.
Studying product characteristics is widely used in developing product concepts both within
the company and more often with consumers. Two important uses of product characteristics
for product idea generation are in product morphology and in product positioning.
3.5.2 Product morphology

Product morphology breaks a product area into characteristic types and then into
characteristic descriptions. Ingredients are a type of product characteristic and they can be
varied: in canned beans, the ingredients could be types of beans, sauce, meats, vegetables.
Nutrition could be the focus: in a formulated dairy product, the nutritional characteristics
could be fat, protein, sugars, calcium, vitamins. Psychological characteristics are important:
in a take-away food they could be fun, comfort, prestige. Ideas can be developed under
each heading; in the canned beans, there could be five types of beans, six types of sauces
and they could be combined in different ways to give new product ideas, for example
kidney beans with bacon in a salsa sauce, soybeans with tofu in black bean sauce. Through
product morphology, an individual or a group can develop ideas for product characteristics
and also many product ideas by combining the characteristics in different ways.
3.5.3Product positioning
In product positioning, competitive products are placed on a number of linear scales, one
for each product characteristic. The scales are rated from low (or none) to high for the
product characteristic. Two or three scales can also be combined in a multi-dimensional
space. New product ideas can be found by moving the company's product on the scales,
making its characteristics weaker or stronger. A product characteristic can be magnified or
reduced in strength, the product characteristics can be combined in different ways, or a new
characteristic can be introduced - all leading to new product profiles and new products.
Think Break 3.7

Product morphology and positioning –use in developing new canned beans
products
• List different types of beans, sauces, meats and vegetables which could be in
canned beans. Combine them together in different ways to give ten new
product ideas
• How many new product ideas could be obtained by varying all your
ingredients in different combinations? How could one cope with so many
ideas?
• Identify 5 canned bean products presently the leaders on the market. Rate
them on the following scales: strength of flavour, nutritional value, fun for
children, price, attractive packaging. From this product positioning, develop 5
new product ideas.
3.6 Product ideas screening
The aim in idea screening is to retain the successful ideas and eliminate the ideas which
could be failures - much easier to write than to carry out in practice! If in doubt, keep the
idea until more information is obtained. Idea screening can be based on tacit knowledge of
the individual and of the company, with little new explicit information sought in or outside
the company. But the aim in successive screenings is to build up the necessary information
for the decisions to be made in a quantitative, objective way. Screening is both a reiterative
and a progressive process, so there is a need to relate to the first screening even in the last
screening in case the product description has changed and it no longer fits the screening
criteria first set out.
The components in idea screening are product idea descriptions or concepts, screening
factors and screening techniques. There is a need to have product idea descriptions that
everyone involved in screening understands and is evaluating in the same way. The choice
of screening factors is of course fundamental - obviously the direction of choice is strongly
influenced by the criteria. Lastly the people who do the screening, and the techniques they
use, affect the screening results.
3.6.1 Product idea descriptions

These must be clear and concise. They include:
• a clear description of the product;
• the use of the product;
• the target market segment;
• the relationship to the company's present products;
• the relationship to competing products.
For example, the new product idea in an ice-cream company could be a range of liqueur
ice-creams. What is meant by a liqueur ice-cream - is it a liqueur flavour, or does it have
drops of liqueur embedded in it? Is it targeted at sophisticated diners at home or in
restaurants? Is it to be the top of the company's ice-cream range? Is the nearest competitor
the specialty ice-creams made in high-class restaurants? Should problems be anticipated
from sections of the community such as teetotallers or religious groups or will there be
legal difficulties with excise duties?
The initial description is usually kept broad so that ideas on the product, the market and the
technology can be continually studied, but there is a need to focus the idea in a certain
direction so that the people involved are not taking off in too many directions at once. As
the product idea builds from a product idea description, to a brief product idea concept, to
the final product concept, to the product design specifications and to the product
specifications, the focus is being narrowed all the time.
One product idea description for the liqueur ice-cream was: ‘a line of plain based ice-
creams with little jellies containing concentrated liqueurs, aimed as a gift to be taken to
dinner parties, sold through higher-class supermarkets’
3.6.2 Screening factors

The strong screening factors, with which the product idea must agree, arise from the
project aim and the project constraints. The overall aims of the company always take
precedence over other factors. No matter how brilliant a product idea is in isolation, it is
rejected if it does not fit with the company's business strategy, in particular the product
strategy. There may be an outstanding product idea which may change the direction of the
company's business strategy, but it has to be taken from the project ideas and directed back
into the top management area. This product idea has to be viewed in its scale and suitability
for the company, and decisions within the company must be taken at top management level.
The constraints identified at the beginning of the project are also important screening
factors. A product may be dropped for many reasons: it does not meet the food regulations;
there is not sufficient money to develop or to produce it; the managing director does not
like it! The factors used in screening should be as objective as possible, but sometimes
subjective decisions are made.
Think Break 3.8

Product idea descriptions and screening factors: liqueur ice creams
Develop two more product idea descriptions for the range of the liqueur ice-creams as
discussed in 3.6.1 Product idea descriptions.
What screening factors could be used for these liqueur ice-creams which would reflect
your society’s cultural and religious attitudes to the consumption of alcoholic drinks?
Some product screening factors are shown in Table 3.2.

Table 3.2 Factors for product screening
Marketing factors:
• Potential market size
• Compatibility of market image with company's product lines
• Relationship to competing products
• Compatibility with existing or specified market channels
• Access to suitable physical distribution systems
• Fits into an acceptable pricing structure
• Relationship to promotional methods and resources
• Marketing resources needed to produce success
Production factors:
• Compatibility with existing product lines
• Availability of processing equipment
• Availability of raw materials and ingredients
• Availability of technical skills to produce the product
• Availability of production time
• Agreement with any legal requirements
• Cost and availability of new resources required
Table 3.2 Factors for product screening (cont.)
Development factors:
• Knowledge needed for development
• Available knowledge and skills
• Available time and human resources
• Development funds needed and available
• Compatibility with existing strengths
• Development difficulties and risks of failure
Financial factors:
• Compatibility of development costs with financial resources
• Capital investment resources needed and available
• Finance needed and available for market launch and ongoing product support
• Profits or returns on investment required
Significant factors are many and these are just a few that often occur. The choice of
screening factors depends on the type of ideas, the company and its resources, the
company's environment and the level of innovation. There could be many factors but it is
not humanly possible to use them all, so that the factors are ranked in importance and only
the most critical chosen in the first screening, although others may be checked later. Factors
can be rated as crucial, most important, important and minor.
Think Break 3.9

Product idea screening factors: fruit slice snacks
A bakery company is at present producing wrapped cakes to be sold in supermarkets
on ambient shelves. It has decided to develop a line of fruit slices, such as apricot and
almond, berry fruit and hazelnuts, which could be eaten by the consumer as snacks.
The aim is to launch these products in supermarkets, mainly for adult consumers.
• Identify the factors that could be used in screening the product ideas.
• Rank the factors from most important to least important and give them ratings to
show their relative importance.
• Divide the factors into crucial, very important, important and minor
3.7 Product ideas screening procedures
Screening is usually done in stages. Simple methods may be used in the early stages with
more detailed screening undertaken as the number of products is reduced and more
technical, marketing and financial information becomes available. As screening proceeds,
the number of product ideas decrease, the amount of information increases, the number of
screening factors increase and the accuracy improves. A possible screening sequence could
be:
(25 ideas)
Pass/fail screening using aim and constraints

(10 ideas)
Checklist screening using market suitability and technical possibility

(2 ideas)

Economic evaluation using predicted market size, prices and production costs
(1 idea)
First the ideas are studied to see if they are compatible with the aim, constraints and any
other crucial factors in a sequential, pass/fail screening in which the product idea is
considered against each crucial factor in sequence, and a simple pass/fail decision is made.
If they fail, they are dropped from further consideration. The remaining ideas are scored
against each other on the important factors in a checklist screening, the scores added to give
a total score and the lowest scoring ideas are dropped. The scales used can be 0 - 5 or 0 - 10
depending on the accuracy of the knowledge used. Probability screening is also used;
instead of giving a single score on a factor for the product idea, the probabilities of
achieving the different scores on the scale are predicted. At this point, detailed information
on prices, production and distribution costs, market potentials and investment costs are
collected and an economic evaluation made to select the product which has the predicted
highest sales revenue, profit, rate of return on investment or some other financial criterion.
This economic evaluation is repeated at different stages of the project, together with a
check on all the factors used in earlier screenings. Minor factors are included on a checklist
at the end of the product idea screening to see that they are being met in the final product
concept. The packaging and the promotion can be screened on these factors as well as the
products.
Consumer screening of product ideas is shown in Example 3.1.
Example 3.1 Screening bakery products in Malaysia

A bakery company was investigating the Malaysian market for Western style baked
products. From pass/fail screening, seven product ideas remained which fell into four
categories - cakes, buns, pies, pizza. There are two main ethnic groups in Malaysia,
Malay and Chinese, so it was decided to find out which product categories and which
individual products were preferred by each ethnic group. The consumers ranked the
product categories from 1, the most preferred, to 4, the least preferred, and they also
selected the product in each product category which they preferred. Seven Malay
women and thirteen Chinese women were in the panel.
Rank mean score
Malay Chinese
Cakes 2.1 3.0 5.1
Buns 2.6 3.2 5.8
Pies 2.9 1.3 4.2
Pizza 2.4 2.5 4.9
Example 3.1 Screening bakery products in Malaysia

Number preferring product
A bakery company was investigating the Malaysian
Malay market for Western style baked
Chinese Total
products.
Cakes Carrot cake 2 4 6
Spice cake 5 9 14
Buns Hot cross bun 2 3 5
Cheese bun 5 10 15
Pies Macaroni and meat 4 6 10
Vegetable, mushroom 3 5 8
Vegetarian - 2 2
There was a clear-cut preference by the Chinese for pies, but not for the Malays.
There were no strong preferences by the Malays between the different varieties of
baked goods and only one more woman preferred macaroni and meat pies over the
other pies. The preference of the Chinese for macaroni and meat pie plus the high
scores for this product in the technical screening were the reasons why the macaroni
and meat pie went forward for further evaluation.
Lai, Pai Wan (1987) Development of a bakery snack for export from New Zealand to Malaysia, Ph.D.
thesis, Massey University, New Zealand
The advantages of a systematic screening approach are that it provides:
• uniform method of product idea evaluation;
• point of reference throughout the project;
• systematic approach;
• focus on business strategy and top management decisions.
3.8 People involved in idea screening
A variety of people are involved in screening products. The initial screening is carried out
by company staff with a simple pass/fail on the aim, constraints and other crucial factors.
This may be done by one person but it is preferable to have representatives from different
areas of the company. Once product descriptions are written it is important to involve the
consumer, or in industrial and food service marketing the customer. This usually involves
focus groups initially, but as the number of products is reduced, consumer or market
surveys on three to five products are carried out to give quantitative data on the acceptance
and the predicted market potential. Company personnel are also involved - again in groups
or by a survey. It is often useful to have individual people from different areas of the
company to score the product ideas on several factors, and then bring them together. This
highlights any problems which could occur in further development. Checklist or probability
techniques can be used. The final screening is of course done by top management at the end
of the first stage based on feasibility studies of the final product concept.
3.9 Summary
Idea generation and screening are used throughout the project, although the initial product
idea generation and screening is the most important and has been emphasised in this
chapter. All idea generation and screening needs to be creative, knowledgeable and
systematic. This is not an easy mix to optimise, but it is important as it leads to innovative
and successful products launched on the market.
Creative people are identified in the company and an atmosphere generated to encourage
their creativity and so build a strong knowledge base on marketing, technology and
consumers. The consumers for foods and the customers for ingredients are also involved in
idea generation and screening so that their needs and wants are incorporated. Various
operational areas in the company are actively involved as well as the product development
and R&D personnel. The process is systematic so as to involve all these people and to
develop and optimise the outcomes.
Earle, M.D. (1997) 'Innovation in the food industry' Trends in Food Science and
Technology, 8, 166-75.
Labuza, T.P. (1994) 'Shifting food research paradigms for the 21st century' Food
Technology, 48(1), 50-6.
Rochford, L. (1991) 'Generating and screening new product ideas' Industrial Marketing
Management, 20(4), 287-96.
Steiner, C.J. (1995) ‘A philosophy for innovation: the role of unconventional individuals in
innovation success', Journal of Product Innovation Management, 12(5), 431-40.
Wagner, C. and Hayashi, A. (1994) A new way to create winning ideas', Journal of Product
Innovation Management, 11, 146-55.
More recent references

Pszczola, D.E. (2008) ‘Sniffing out emerging ingredients’ Food Technology, 62(7), 53-62.
Pszczola, D.E. (2008) ‘Developing foods one bite at a time’Food Technology, 62(8), 71-85.
Sloan, A.E. (2008) ‘Top 10 Functional Food Trends’ Food Technology, 62(4), 25-44.
Yek, G.S. (2008) ‘Deconstructing Molecular Gastronomy’ Food Technology, 62(6), 35-43.
Project Break 3.
Either Continue with the company project, taking the project aim and constraints that
you developed in the past Project Break.
Or Use Project 3 at the end of the chapter.
1. Develop 20 product ideas. It is suggested that you try three idea generation
techniques - a PIG session with a consumer group, product morphology with
some technical people in the company, and market analysis with some
marketers.
2. Select the important factors for screening these ideas and rank them as crucial,
very important, important, minor.
3. Using first a pass/fail screening on the crucial factors, remove any ideas that are
unacceptable to the company.
4. With a consumer focus group, rank the remaining ideas.
5. Screen the highest ranking ideas with a group of company personnel, scoring on
the very important factors in check list screening.
6. Choose the products to develop further.

Summary
Project 3: A Soup Company
CEO David Johnson makes Campbell Soup grow again
Richard Hagberg, an analyst of CEO (Chief Executive Officer) personality traits and
performance, believes that many bosses fail at two crucial tasks: communicating
strategy and aligning troops behind a vision. “They get so wrapped up in their own
ideas that they fail to communicate strategies.” His research shows that about 70% of
top executives are introverts. Not David Johnson. Johnson's command of emotional
and quantifiable factors separates him from the CEO pack. His showmanship,
combined with a laser-like focus on financial rigour, has paid off, imbuing the 127-
year-old Campbell Soup with renewed vigour.
Johnson focuses his people on a single goal - increasing net earnings faster than
competitors. He drives managers to search for the next big idea that could produce a
blockbuster. “Bring me ideas supported by how much each will add to earnings”, he
directed. For example, when low-fat cream soups became a hit in Britain, someone
suggested that he transplant the formula to the USA - he did.
Looking to the future, the CEO is counting on his idiosyncratic brand of voodoo to
power Campbell over two major hurdles: tepid sales growth and a limited international
presence. In the USA, the company for all its earnings prowess, has been stewing in a
food market that's been stagnant for years. It has been struggling to adapt to the
American consumer's preference for eating out or bringing home freshly prepared
meals. To boost growth, Johnson has launched a re-examination of the company's
business portfolio that will winnow out hundreds of low-profit offerings, many in soup,
and redirect investment dollars to products with the highest returns. Although
Campbell now commands 80% of the US canned soup market, he lusts after a 90%
share. He plans to achieve this by reinventing old favourites and producing new hits
like cream of broccoli. Last year Campbell added one third more chicken to its chicken
noodle soup and increased sales by 18%.
Growing the business overseas is more difficult. In Europe, the company languishes
behind CPC International and Nestlé, makers of Knorr and Maggi dehydrated soups,
and Heinz who claim 53% of the UK soup market. Campbell has launched beachheads
in Japan, Malaysia, Indonesia and Hong Kong. Unlike that of many consumer-products
companies,
continued
in Japan, Malaysia, Indonesia and Hong Kong. Unlike that of many consumer-products
companies, Campbell's strategy is to customize its brands to local tastes. For example
Campbell's cream of pumpkin has become Australia’s top-selling canned soup, while
in Hong Kong it sells watercress and duck gizzard soup.
The global excursion will require at least 10 years of superior execution before it can
be judged a success. And critics argue that in the US, the company needs to take some
creative quantum leaps to infuse new excitement into soup and to combine brands in
intriguing new ways. Campbell did this last year when PepsiCo's KFC introduced
chicken pot pies made with chicken swimming in what is essentially Campbell's
Chunky Soup, covered by a Pepperidge Farm Crust. The pies are flying out the door so
fast that KFC predicts sales will reach $300 million in 1996.
(From Grant, L. (1996) 'Stirring it up at Campbell', Fortune, 13 May, pp.50-3.)
When using this for the Project Break, it might help you to consider the following
questions:
• What are the different product strategies described?
• What were the new products developed according to each new product strategy?
• What new product ideas can you suggest for each of these strategies and why do
you think these will help develop this product strategy?
CHAPTER 4
Product Strategy Development:

Product Concepts and Product Design Specifications
4.1 Introduction
The development from the simple product idea to the product design specifications and
finally the product specifications is a continually evolving process through the initial
stage of the product development process to the end of the product design stage. It is a
creative but focussed process. There is creativity in developing the ideas for the type of
product and then for the detail of the product, but this is tempered by the aim and
constraints of the project. It is important that the creativity does not lead to a product
that is outside the business strategy.
In the food industry, the product and the packaging are designed together because the
package is an integral part of food preservation and food use. This is different from
other manufacturing industries where the package is designed after the product as a
method of protection and display. Product design in the food industry has also had a
different philosophy and organisation from design in other industries. It has been less
technical and more consumer-oriented for two reasons: product design has come from
recipe formulation in cooking, and food has an intimate relationship with every
consumer. Today there is the knowledge for more technical food design because the
requirements of total quality management (TQM) and hazard analysis control points
(HACCP) demanded more technical product/processing knowledge in all companies.
There is also the pressure from the consumer for safety and nutrition in foods to drive
this technical approach, and for more consideration of their needs to drive the
consumer-oriented approach to design.
Food industry designers could benefit from studying the work of designers in other
industries and vice versa. The industrial designers do little consumer research during the
design and could benefit from studying the techniques of the food designers; the food
designers could benefit from the more technically rigorous design procedure and also
the aesthetic qualities of the industrial design. The food service industry is leading this
development in food design, with chefs often now calling themselves food designers
and working with other designers.
The product concept develops from the first description of the product idea to the final
product specifications controlling production and to the product proposition that the
marketers present to either the retailers or the industrial customers. Sometimes there is a
confusing use of the term product concept, but this is reduced if different names are
given to the various stages of the product concept development: product idea concept,
product concept, product design specifications, product specifications, product
proposition as shown in Figure 4.1
In product concept development and product design, there is cooperation between the
consumer, the marketer, the production and engineering staff and the product developer.
This interaction is important and needs to be coordinated so that there is translation of
consumer needs and wants into both a technical product and process, and also a
marketing plan. Figure 4.1 shows the most important participants at each stage in the
Product Process, but there also needs to be interactive discussions with other people in
the company and in the market throughout the project to achieve integration. In
consumer marketing of food, it is important to recognise that there are two groups – the
people who buy the products (sometimes called customers) and the people who eat the
products (the final consumers). There is often a tendency to group them all together as
“consumers”, but the reasons that the person chooses food to buy for the household can
be different from why the consumers want to eat the food.
Figure 4.1 Evolution of the product description in the PD Process
DESCRIPTION MOST IMPORTANT COMPANY PARTICIPANTS
Product idea name Company PD group, consumer research group


Product idea description Company PD group

Product idea concept Consumer research group

Product concept Consumer research group, marketing,
technical, company PD group

Product design specifications Technical, marketing, consumer research
group, company PD group

Product specifications Technical, company PD group

Product proposition Marketing, consumer research group
During product design in the food and other processing industries, there is an
interlocking of the raw material production, processing and storage with the product
design. The processing and storage conditions as well as the raw material quality
determine the product qualities. So in product design there is systematic optimisation of
product quality by experimenting with the raw materials, processing and storage; these
technical details are also included in the product design specifications. The activities and
product outcomes in the development of the product concept and product design
specifications are shown in Figure 4.2
Figure 4.2 Activities in developing the product concept and product design
specifications
MARKETING CONSUMER TECHNICAL
PRODUCT IDEAS
Product ideas descriptions development
Consumer product ideas Product characteristics
screening identification
PRODUCT IDEAS DESCRIPTIONS

Product idea concept development
Desk market search Consumer concept Internal technical search
development
PRODUCT IDEA CONCEPTS

Product concept building and evaluation
Market survey Consumer screening Literature searching
Competitive products Consumer survey 'Mock-up' prototypes
PRODUCT CONCEPT
Product concept engineering
Pricing, distribution, Consumer groups: Processing information
promotion, information product profile Product qualities
PRODUCT DESIGN SPECIFICATIONS
The 'product concept' is not one definition made at the beginning of the product
development project but it changes and develops as the project progresses. It starts as a
consumer-based product concept, which gradually develops into a working brief for the
project, and then develops further as detailed consumer descriptions of product
characteristics based on examination of the prototype products, to the final product
concept related to the consumer and the marketplace which is used for the design. The
product concept at any stage acts as a guide to the product development.
The basis for the operational activities in the product launch is set at this stage; if this
stage is vague and non-technical it causes trouble in the product commercialisation. The
product concept along with the aims, objectives and constraints of the project ensures
that the project does not go off on a tangent.
Think Break 4.1
Evolution of the product proposition: outside input
In the development from the original ‘product ideas names’ to the product
proposition, as shown in Figure 4.1, study where other people involved in the
development and launching of the new product, such as consumers, distributors,
retailers, advertising agency, media companies and the general public could be
brought in to help the development. Add another column to Figure 4.1, labelled 'most
important participants outside the company' and add the titles of the participants.
4.2 Product idea concept development
The product idea concept is first developed from market and consumer research but
with consideration of the technical aspects of the product. Usually, it is a combination of
internal company information searching combined with consumer or, in industrial
marketing, customer discussion groups. In industrial product development, it has been
shown that selecting the most innovative customers for product concept development
reduces the time and improves the product concepts. The product idea concept research
leads to a more detailed description of the product ideas and also includes screening of
the ideas.
The consumer discussion panel, or as it is usually called the consumer focus group, is
invaluable for building up the product concept. About 30-60 consumers can take part in
small discussion groups of 6-8 people. They are given simple descriptions of the
product ideas and are allowed free rein in their discussions. The consumers discuss their
own attitudes and behaviour towards the products and identify their needs and wants in
the products.
The product idea concept developed after the discussions details the 'benefits' that the
consumers want from the product. These 'benefits' can be divided into four types - basic
product benefits, package benefits, use benefits, psychological benefits:
• Basic product benefits include physical characteristics (such as size, shape,
colour), chemical composition, sensory qualities, nutritional value and safety
features.
• Package benefits include price, value for money, ease of storage, use and
disposal.
• Use benefits include convenience in buying and carrying, information on use,
easy preparation, attractive presentation, recipes and nutritional information.
• Psychological benefits include prestige, fun and friendliness, aesthetics,
healthiness.
When writing product idea concepts for use in further consumer panels or consumer
surveys to build up the product concept, there are five things to remember:
• Be brief. Present a picture of the product, with no technical details.
• Use simple, everyday language. Use attractive, interesting and lively descriptions
to keep the consumer interested.
• Start with the product category. Pinpoint the kind of product with the first few
words of the description.
• Give a true picture of the product. State and do not exaggerate the product
qualities. The idea product concept should be both believable and realistic.
• Describe the product's reason. Describe the uses and values of the product.
Answer the consumer's question 'What is in it for me?' Show it has a useful and
needed advantage over existing products.
In Example 4.1, a consumer focus group developed a product idea concept considering
not only their sensory and convenience wants in the products, but also their health and
safety needs.
Example 4.1 Development of product idea concept
A consumer focus group was given the following product idea description:
A new fruit salad topping to be used on ice-cream and other desserts.
The consumer focus group developed the following consumer product idea
concept:
A natural, low calorie, fruit salad ice-cream topping containing real fruit pieces
and no synthetic colours and flavours, to be used on ice-creams and desserts but
also pancakes, breakfast cereals, bread and other baked products. It has the same
viscosity as the present toppings, but has natural colours not strong synthetic
looking colours.
It is packed in a 300 ml 'squeeze' plastic container, and the price is $1-$1.50. It is
bought by families/households and is generally available from the refrigerator.
Think Break 4.2

Development of a product idea concept: chocolate bar
A product idea description is 'a crunchy white chocolate bar'.
Develop this into a product concept using Figure 4.2 by using market and technical
sources, and assuming that the consumers are your peer group.
4.3 Product concept building
To build up the product concept, the important product characteristics are identified by
the consumers, then the descriptions and if possible the 'strengths' of the product
characteristics are determined. The product characteristics and their strengths are
combined in a product profile.
4.3.1 Product profile

First the important product characteristics (the consumer product benefits) are
identified by the consumer. The sensory properties are usually important to the
consumer and there is often an emphasis on the sensory characteristics in building up
the product profile as they are directly related to design. For Madeira cake (a sweet
plain, rectangular cake, soft texture, cut into slices), the important characteristics were
identified as colour, taste/flavour, moistness and crumbliness. But there are other
benefits to the consumer in buying a Madeira cake: the size, the packaging, the storage
life, the availability to produce it quickly for a visitor. Consumers may not consider the
nutritional value of a Madeira cake, but this is an important characteristic for many
other foods. A checklist of general product benefits is useful as a reference during the
consumer focus group discussion.
4.3.2 The ideal product profile

The ideal product profile is developed by the consumers, based on the most important
product characteristics. In ideal product profile tests, the consumers study the
competitive products and/or the product prototypes, and for each product characteristic
score the test products on a scale from low to high. Then they place their scores for their
ideal product (I) on the same scales. The ideal product profile gives a quantitative
measure for each product characteristic which can be built up to the product design
specifications. Part of the building of a product profile for orange juice is shown in
Example 4.2.
Example 4.2 The building of a product profile for orange juice

The consumers in a consumer focus group were asked to:
• visually examine and taste three competing brands of orange juice;
• identify the product characteristics in their own words;
• discuss these characteristics among themselves;
• decide the most important characteristics;
• score each of the three orange juices on the scales for the important
characteristics; (scales went from low (or weak) to high (or strong) on a 7
point scale).
• mark the scores for their ideal orange juice on the scales of the important
characteristics.
The three brands of orange juice were Sweet Orange (SO), Perfect Fruit (PF) and
Natural Juice (NJ).
The mean scores of the three orange juices and the ideal orange juice (I) for some
product characteristics were:
Low High
1 2 3 4 5 6 7
Colour: pale yellow/bright orange : NJ:I : PF : SO : : :
Colour: natural/very synthetic : I : NJ : PF : SO: : :
Thickness: watery/syrupy : : SO : NJ I : : PF : :
Pulpiness: little/lots : :PF SO : NJ I: : : :
Sweetness: not sweet/very sweet : : NJ : I : : PF : SO :
Sourness: not sour/very sour : : SO : I : NJ : PF : :
The Natural Juice was similar to the Ideal, slightly more synthetic colour, less sweet and
more sourness. Perfect Fruit and Sweet Orange were brighter orange, less pulpy and
sweeter. But the Ideal was between Perfect Fruit and Sweet Orange for thickness and
sourness – Sweet Orange too watery and Perfect Fruit too syrupy, Sweet Orange lacking
sourness and Perfect Fruit too sour. So one can see how this comparison has defined
the product characteristics wanted by the consumer.
Think Break 4.3

Building a product profile: orange juice
To the product profile in Example 4.2, add two more sensory characteristics that you
think are important for orange juice and describe their lows and highs.
What benefits can you identify under packaging, nutritional value, use and safety
that the consumer might want in orange juice? What are the most important?
Write low and high descriptions of the scales for these important benefits, for
example low/high vitamin C, dull/crazy.
Ask some friends to score three juices on the scales and place their ideal products.
4.4 Product concept evaluation
In product concept evaluation, several product concepts are evaluated and screened to
find the most suitable product concept. The product concepts can be evaluated by
consumers to see which they identify as winners and losers, and also by the company
personnel to see which can be processed and marketed, and which has the highest
predicted sales potential and profit or/and market share. Initial predictions of costs,
prices and sales have a wide range at this stage but do give some indication of possible
profits. Market share for a new product in an established market can be predicted from
the market shares of the competing products in the present market, but obviously an
innovative product in a new market is hard to predict. As predictions are inaccurate;
pessimistic, most likely and optimistic predictions are made.
The consumer studies can be either a series of focus groups or a consumer survey. Not
only do the consumers indicate their acceptance of the different products, but also their
prediction of buying at different prices. They also need to compare the products with the
competitive products and identify advantages and disadvantages in the new product
concept. The product concepts can be presented as descriptions, drawings, computer
sketches and as prototype products, depending on the availability and suitability for the
product of the different forms. It is useful to give the consumers a number of product
concepts so that they can compare them and then patterns of acceptance can be
ascertained. It is important that the questions asked help to sort out the product
concepts, preferably in a quantitative way. The following are among the questions to be
considered in planning a product concept evaluation by consumers:
Consumers:
• Users/non-users of this type of product or of the company brand?
• Representative of the general population or the market segment?
• Statistically representative of the market or not?
• How many consumers - 30, 60, 200?
Product:
• One product prototype or a group of product prototypes?
• Packaging and the brand included?
Method:
• Do the consumers choose the product they prefer?
• Do the consumers select the product they will buy?
• Do the consumers score the product characteristics for each product?
• Do the consumers assess the product accessibility, price, package size, retailer?
Scoring by the consumers of the product characteristics in a product profile for a

number of prototypes and their ideal product gives the designer a greater understanding
of the product for further development. A simple product preference does not give clear
directions.
Technical and marketing groups also evaluate the product concepts for their suitability
for production and for the market, using some of the checklist or probability screening
methods as described in Chapter3.
Think Break 4.4
Product concept evaluation: snacking products
Select one of the following pairs of new snacking products:

• ice-cream novelty on a stick / a flavoured milk, for children;
• snack bar made from muesli / smoked chicken sausage, for adults.
1. Write product idea descriptions for the two products.
2. Then organise a suitable consumer focus group and build up the two product
idea concepts. Ask the consumers to rate the product idea concepts on a
hedonic (liking) scale from dislike extremely to like extremely, with a centre
point of neither like or dislike. Select the most preferred product idea.
3. For the preferred product, organise a consumer focus group and give them
two or three competing products to study. Ask them to list the benefits and
characteristics they see in the products, and then ask them to rank these from
most important to least important.
4. Using the most important of these product characteristics build up a product
profile. Ask the consumers to score the competing products and the new
product idea concepts on the scales, and finally to score their ideal product.
If it is not possible to organise a consumer panel, work through the adult products
assuming you are the consumer.
4.5 Product concept engineering
In most industries, design specifications are usually set before the design process starts;
yet in the food industry, the food technologists often plunge into formulation and
process development before considering the characteristics desired in the product and
there are seldom any quantitative product design specifications. Product design is not an
easy task if the information that the designer is given are a set of constraints and a few
ideas (often vague and definitely not quantitative) from consumers or the marketers.
Before embarking on the design of a new product or the modification of a product, it is
important that clear concise product design specifications are set so that a specific
product can be developed.
Product concept engineering is the interpretation of consumer needs and wants into
technical terms. The target product is identified in the product concept and product
profile; the target consumers are identified together with their needs, wants and attitudes
in buying, carrying, preparing, eating and disposing of wastes. Based on the target
consumer and the target product, a quantitative design specification is developed with
quantitative values for product characteristics if possible. Product design specifications
in other industries call the quantitative descriptions metrics, and product target values
are set for each metric. In the food industry, they are usually called product quality
standards. It is often useful to define the marginally acceptable target values for
consumer satisfaction, so that the design parameters are not too tight but are set within a
defined range. Metrics also aid comparison with competing products. Three important
areas for research activities are production, marketing and environment, as shown in
Figure 4.3.
Figure 4.3 From product concept to product design specification

PRODUCT CONCEPT

Environment
Social Cultural
Marketing Production
Target: consumer Target: product
Product image Product qualities
Packaging Political Raw materials
Promotion Processing
Market channel Packaging
Price setting Storage, transport
Costing
Physical Economic

A great deal of technical information is needed to change the product concept into
product design specifications - on product qualities, raw materials, processing variables,
storage variables, packaging, marketing. Basically in today’s product development we
are changing the old cooking standards into technological specifications.
4.5.1 Product qualities
Product qualities, which are technically recognised and can be measured, are generated
from the consumer product concept. There is a basic quality and a basic use for a
product that need to be set as crucial quality specifications. The consumers want a high
protein food and that is changed into, say, >10% protein; they want a pale pink colour
and that is changed into a reading on a colorimeter; they want a crisp texture and that is
changed to a force measured by a texture meter. Today there are more and more
correlations between consumer sensory scores and machine measurements, so that these
quantitative standards are more easily set. But sometimes it is not possible for the
product characteristics and the ideal sensory scores to be converted into measurable
product qualities, so sensory panels are trained to measure the sensory characteristics.
Product specifications are set for chemical composition, nutritional value and physical
properties such as size, appearance and viscosity; as well as microbiological standards,
safety standards and standards for price and sensory properties. It is important in setting
standards that they agree with legal standards and that consideration is also taken of
ethical standards expected by the consumers and the society.
An important product quality for design of other manufactured products is the aesthetic
or artistic quality, for example the designer of a chair or an electric toaster relates the
design to the prevailing art of the time. But art is seldom discussed in food design. This
is now changing because consumers are becoming tired of bland processed foods. Food
design is slowly becoming part of product design and accepting the general principles of
design; therefore in setting the product quality, more consideration is being given to the
current trends in design and how the food aesthetics can be developed to create the most
desirable image.
The product quality standards (metrics) are written out clearly, showing the optimum
level for each product characteristic and the limits of divergence from this that the
consumers will tolerate. Sometimes the consumer will accept quite wide variations in
the product quality and still rate the product as acceptable. The product quality
standards must of course agree with any legal regulations that apply and with defined
company policy.
4.5.2 Raw materials
The raw materials are identified which can be used and are available, and the limits on
their use are obtained. The desired quality is related to the product quality standards. For
example, if the product is to contain 5% protein, then it is necessary to know the protein
content of the raw materials; if the colour is to be an orange/red, then the colouring
ingredient must contain that type of red, perhaps defined by standard reference colours
or physical spectra. In raw materials’ specifications, limits (both minimum and
maximum) are set on the quality, for example the chemical composition and the
microbiological counts. There are limits on the quantities of raw materials in a
formulation arising from processing needs, product structure needs, product properties,
the quantity of raw materials available and the cost. In bread, there is a minimum
amount of wheat flour needed to give the required amount of gluten in the structure.
Cost of raw materials is important because the product will be in a certain price range
and it is important to recognise this before the design starts so the design may be
formulated to meet it. The origins of the raw materials also need to be noted, as required
often by regulations.
4.5.3 Processing variables

Product formulation is essentially the selection of a blend of raw materials to give the
desired product qualities, but the processing conditions will affect the transformation of
the raw materials and therefore determine the final product. Formulation cannot be
divorced from the process. Food formulations are often developed on the bench top
using small-scale household equipment, and when this formulation is transferred into
the process the results can be very different. Not only the types of processing but the
conditions of processing need to be identified early in development. It is important that
the processing variables and their limits are set at the conditions to be expected in the
plant before product design starts.
Processing variables are identified together with their predicted limits. The important
variables that affect the product quality, particularly safety, sensory quality and
nutritional value, need to be studied so that limits can be set for them in the process. For
example, the heat treatment required to sterilise the food needs to be quantified, i.e. the
lower limits for time and temperature, but upper limits need to be set to reduce the
deterioration of the colour and flavour of the food. It is important to understand the
effect of the processing variables on the reactions causing changes in the food materials
during processing and how changes in the processing variables affects the rates of
change in the food.
4.5.4. Storage and transport variables

These are defined because a food is not like a button or a bolt which only changes
slowly over time; a food is continuously changing, sometimes very fast, depending on
the conditions. The aim of food preservation is to keep the food within the acceptable
quality range for as long as possible; this duration is the shelf-life of the food. Shelf life
of the food is affected by the conditions of storage - the temperature, humidity, time,
atmosphere, packaging. The desired shelf life, the method of deterioration and the
storage/transport conditions are specified at the outset of the design. The transport
method (road, rail, sea, air), the transport conditions (time, temperature, humidity,
vibration, handling, costs), the storage (ambient, chilled, frozen) and the storage
conditions (time, temperature, humidity, handling, costs) have all to be considered.
Again costs can be a restriction, and they need to be in the design specifications.
4.5.5 Packaging
Packaging is based on either the consumer’s or the industrial customer’s needs and their
uses of the food product, but it must also protect the product, fit into the processing and
packaging lines, and meet the cost criteria. There may also be promotional needs for the
packaging, and although during commercialisation, the final aesthetic design is
completed, the needs of marketing have to be considered in the early design. For the
product design specifications, the first factors to consider are the consumers' needs for
the packaging and the preservation of the food by the packaging. For example, if the
food is to be heat sterilised in the pack, then a can or a retortable pouch is the only
packaging. If the consumer wants to heat the food in the container, this limits the types
of materials that can be used.
Often packaging types and packaging methods are limited by the packing line, the costs
and the availability of the packaging. For example, polyethylene may be the only film
available at the price; only a pasteurisation packaging system may be available and not a
UHT (ultra high temperature) sterilisation packaging system. These restrictions need to
be identified before the design starts.
4.5.6 Marketing
Marketing is defined by the market segment(s) and the marketing methods to be
employed, including the market channel, the desired promotion and promotional
methods and of course the price. The product design can be affected by the type of retail
display, the retailers' needs for the product and certainly the price range. The market and
marketing specifications to consider are the market channel (retail outlets, wholesalers,
agents, product flow), the market channel requirements (size, weight, availability, price,
display information), the promotional method (TV; radio, newspapers, magazines,
sampling) and the promotional message (exciting, new, sophisticated, natural,
nutritional, low calorie). In particular, there is a need to define the image that the
product is to have in the market and to the consumer, and also the promotion of this
image by the packaging.
Study of competing products is important in setting the product's position in the market
and in determining the possible price range. The positioning of the product against
competing products needs to be specified so that the designer can appreciate the product
characteristics needed. Also the prices, margins and discounts in the market need to be
studied so that a price range for the new product can be set.
4.5.7 Legal requirements

Any legal requirements for the product, packaging, processing and marketing need to be
carefully researched and specified. There are many legal regulations for product
standards, which vary from country to country and also change with time, so these must
be checked carefully during the development of the product specifications. There can be
TQM and HACCP requirements for the processing, and nearly always Food Hygiene
standards. There may also be limits and sometimes bans for raw materials and product
movement into and out of a country, and often duties which affect the costs and prices.
4.5.8 Summary of product concept engineering

In product concept engineering and the building up of the product design specifications,
it is useful to have a checklist to see that important factors are considered in all projects.
There are usually similar conditions in many product development projects in a
company unless the project is aiming at an innovation completely new in all aspects to
the company, or a new product platform. Usually the production equipment, the
distribution method and the market channels remain the same and so follow standard
specifications. New specifications are only developed for specific aspects of the project,
usually the product qualities, but it is always important to check the standard
specifications as they do change with time. Products that are major innovations will
require extra consideration especially of their novel features.
In studying marketing and the consumer, there is always a need to watch any changes
that may be occurring, particularly any long-term consumer changes as described for
consumers in Denmark in Case Study 4. Such changes can be seen in many markets
where consumers are switching from traditional foods to products that are more
international in orientation.
Case Study 4.
Consumers' Desires for Change in Denmark
Clearly, there is a change in dietary patterns and consumer consciousness from
generation to generation. The generation that ate porridge has now almost died out.
The generation whose diet consisted mainly of Danish dishes, such as 'boller i karry' (a
dish with meatballs and spiced with curry), meat, potatoes and gravy, and
skibberlabskovs, is still going strong, but is otherwise much like the older generation.
The generation that has been inspired by foreign food traditions and which eats a lot
more pasta and pizza is now passing its dietary pattern onto the next generation.
The cultural modernisation processes are emancipating the consumer from 'old
traditions' and give the consumer the freedom to acquire new food habits and new
knowledge about how to cook. Future consumers will be more aware of the
environmental considerations of food production and the health value of products.
They will again eat more vegetables and less meat, and they will pay more attention to
the fat content. Consumers have grown used to the fact that the market is no longer
confined to the local hinterland, with the relatively few products it can offer, but now
embraces the whole world. While this has made some consumers worry about the
growing energy and environmental implications, there is nothing to indicate that the
tendency is going into reverse again. Last, but not least, the new consumer will find
the quickest and most direct way of making his/her influence felt - perhaps as a
political consumer!
(Source: Land, B. (1998) Consumers' Dietary Patterns and Desires for Changes Working paper No.31,
MAPP (Centre for Market Surveillance, Research and Strategy for the Food Sector), Aarhus School of
Business, Aarhus, Denmark)
Think Break
Think Break 4.5
Product concept engineering – snacking products
Using the product concept you developed in Think Break 4.4, develop product
design specifications using Figure 4.3.
How has this use of product concept engineering improved the basis for the product
design?
What do you think are the advantages and disadvantages of increasing the
application of product concept engineering in the food industry?
4.6 Product design specifications
In summary, a general outline for a product design specification is as follows:

1. Product concept: general statement on the product
2. Product qualities
3. Target consumers
4. Production design specifications:
- Raw materials/ingredients
- Processing/formulation
- Packaging
- Storage, transport
5. Marketing design specifications:
- Packaging
- Promotion
- Market channel
- Price setting
- Competition
6. Environment:
- Social
- Cultural
- Legal
- Economic
- Physical
7. Costs:
- Production
- Marketing
In some industries this outline is called the product design brief.
In the first attempt at the product design specification all this information may not be
available. The product design specification develops as more information is obtained
and the first prototypes are developed in 'ball park' experiments. There is no specific
time in the PD Process by which the product design specification has to be completed -
it depends on the type of product and the company, but it should be at or before the
early stages of product design. When the product design specification is completed and
agreed by all the different people in the PD project, including the top management, then
it should be signed by all involved to show their commitment and responsibility. If
major changes are made during the design procedure, then there needs to be a meeting
of all concerned to ensure agreement on the changes. Example 4.3 is an example of a
product design specification for vegetable-based frankfurters.
Example 4.3 Product design specifications: vegetarian sausages

1. Product Concept General Statement
A meatless frankfurter type product, similar to the meat sausage with respect to
flavour, slightly smoked and mildly spiced; it has a long slender profile typical of a
frankfurter sausage. The product is packed in a retortable pouch and can be stored
at ambient temperatures. It is targeted at the vegetarian market segment specifically,
yet is acceptable to the general market. It incorporates non-meat source proteins,
fats and stabilisers, and is a protein/fat emulsion extruded into non-animal casings.
2. Product Qualities
Nutritional: high in protein and low in saturated fats and cholesterol.
Sensory: similar flavour, colour and texture to a meat frankfurter, slightly smoked
and mildly spiced. Outer skin brown/orange in colour; inner matrix light pink.
Physical: a long, slender sausage shape, a 'meat like' emulsion matrix.
Chemical: meets with the legal chemical composition for sausages, no
preservatives.
Microbiological: microbiologically stable, ensuring up to eight months' stability at
ambient conditions. Free from Coliforms and Salmonella.
Processing: produces a stable protein/fat emulsion.
Storage: shelf stable under ambient conditions for eight months.
Packaging: pouch contains six sausages, weighs 250 g.
Price: $2.2 to $2.5 per 250 g pack.
3. Target Consumer
The target consumer is the vegetarian segment, as well as health conscious and
innovative consumers in the general market. The main additional consumer benefit
is the convenience factor of not requiring refrigeration. This could be attractive to
outdoor enthusiasts such as hikers and campers. Promote ambient stability and
transportability of pouch.
Example 4.3 Product design specifications, continued
Production design specifications
4. Proposed ingredients and their functions
Ingredient Function
1. Wheat gluten Thermal gelation - texture and structure
2. Whey protein Thermal gelation - texture and structure
3. Hydrogenated vegetable oils Dispersed phase - mouthfeel and
texture
4. Torula yeast Flavour and texture
5. Hydrolysed vegetable protein Flavour
6. Onion and garlic powders Flavour
7. Salt Flavour
8. Flavours Flavour
9. Water (potable) Mouth feel, texture and structure
5. Process
This is a new process for the company and there is no equipment available. A
complete process could be bought from an equipment company, or the canning line
could be adapted with the purchase of a filling line, or the company could design a
new process. A sterilisation process is used, but the times and temperatures needed
are not known.
6. Formulation: not known at present time.
7. Packaging
Preformed retortable pouches. Vacuum-sealed retorted pouches packed in
corrugated cardboard cartons, holding approximately 24 packs of six sausages (6
kg).
8. Government regulations: not known at present time.
9. Marketing design specifications

Distribution: distributed through the present ambient physical distribution system,
mainly to supermarkets, but also to specialty health shops.
Price: price per dozen 250 g packs is approximately consumer price $27.00, list
price $23 ±10%, net wholesale price $18.
Promotion: directed to the general market as well as the vegetarian market segment.
Emphasis is directed to supermarkets, delicatessens, and health food shops, in that
order of priority.
Attributes to be promoted: no meat, no refrigeration needed, no preservatives, low
levels of saturated fats/high protein status, no cholesterol.
Initial competition: slight; if the market should develop well, competitors are
almost inevitable.
Think Break 4.6
Product design specifications: sign off
If you, as the product designer, were presented with these design specifications,
what questions would you ask before agreeing to them?
Search for further information to answer your questions and complete the product
specifications,
If you, as the top manager, were presented with the amended design specifications,
for what further information would you ask before agreeing to them?
4.7 Summary
The development of the product concept and the product design specifications is an
important stage in the product development project. These are filled out in as much
detail as possible while still leaving room for creativity in design. They are formally
agreed by all the participants so that there is no opportunity halfway through or even at
the end of the design for someone to say 'that is not what I meant'. This avoids redoing
of the design procedure, which is so costly in time and money, is frustrating to all, and
often leads to a very confused commercialisation.
The product concept summarises the consumers' needs and wants in a quantitative way
through the product profile. There should if practicable be a study of the first prototypes
by consumers so that as realistic a picture as possible is built up. These prototypes
should display controlled variations of the product characteristics.
The product design specifications are built up by using product concept engineering, in
which the consumer, the product, marketing and production are studied together to give
quantitative descriptions of the product qualities, raw materials, processing conditions,
storage life, pricing, promotion and distribution. At the first attempt, the specifications
may be rather vague in some areas and information needs to be collected during the
design to make them more specific. At the end of the design process, the product
specifications for production and the strategy for marketing are in place.
Herstatt, C. and Von Hippel, E. (1992) 'From experience: developing new product
concepts via the lead user method', Journal of Product Innovation Management, 9, 213-
21.
Hofmeister, K.R. (1991)'Quality function deployment: market success through customer
driven products', Graf, E. and Saguy I.S. (eds.), Food Product Development, From
Concept to Market Place, New York: Van Nostrand Reinhold, pp. 189-210.
Meyer, R.S. (1984) 'Eleven stages of successful new product development', Food
Technology 38(6), 71-8, 98.
Moskowitz, H.R. (1994) Food Concepts and Products, Just-in-time Development,
Trumball, Conn.: Food and Nutrition Press, pp. 1-69.
Ulrich, K.T. and Eppinger, S.D. (1995) Product Design and Development, New York:
McGraw-Hill, pp. 33-75.

Bogue, J. and Sorenson, D. (2008) ‘Consumer research in the early stages of New
Product Development- market-oriented development of meal complement beverages.’
Earle, M. and Earle, R. (eds.) Case Studies in Food Product Development, Cambridge,
Woodhead Publishing Ltd. pp 277-300.
Brunso, K. and Grunert, K.G. (2007) ‘Consumer attitude measures and food product
development’. MacFie, H. (ed.) Consumer-led Food Product Development, Cambridge,
Woodhead Publishing Ltd. pp 197-222.
Earle, M., Earle R. And Anderson, A. (2001) ‘The knowledge base for product
development’. Food Product Development, Cambridge, Woodhead Publishing Ltd. pp
149-193.
Fuller, G.W. (2005) New Food Product Development, 2nd. Ed., Boca Raton, Florida,
CRC Press. pp 208 –218
Wesselingh, J.A., Kill, S.& Vigild, M.E. (2007)‘Lesson 8, Select a Concept’ in Design
and Development of Biological, Food and Pharmaceutical Products, Chichester,
England: John Wiley & Sons Ltd.
Project Break 4.
For either your own project or Project 4 at the end of the chapter:
• Develop the product concepts for the two product ideas.
• Evaluate these product concepts according to consumer, marketing and
technical needs.
Ask some technical people in the company to rate these two product concepts on
important factors such as raw material availability; ease of processing, shelf life,
predicted costs of the products. Ask the marketing people to rate the product
concepts according to what they see as the important marketing factors: suitability
for retailers, ease of promotion, advertising strength, price. Ask the marketing and
the technical people to predict the market and the possible sales.
• With all this information, select the product most suitable for further
development.
• For this product, develop the product design specifications from the product
concept.
You need to collect information on the type of product, the way in which it will be
used, the people who will buy it, the people who will eat it, the market where it will
be sold and the ways it might be processed and packed. The most economical
methods should be used for this research, which is mainly desk research within the
company and also external published information.
For technical information, the sources of information are company processing and
raw material records, textbooks, review articles and appropriate web sites.
For marketing information, the company records and industry information is used,
and there may also be commercial and government statistics.
Project 4: The New Era for Dried Vegetables
Modern dried foods have been on the British market for over fifty years, starting
with chicken noodle soup and leading to the wide variety of soups, gravies, sauces,
snacks and meals available. Consumer demand for healthy, fresh-like and convenient
food is putting some pressure on the manufacturers to improve the quality of these
products. Consumer demand has increased for processed products that retain their
original characteristics. In industrial terms, this requires the development of
operations that minimise the adverse effects of processing. In food drying, there is a
loss of volatiles and flavours, changes in colour and texture and a decrease in
nutritional value. Furthermore, residual enzyme activity and microbial activity in
dried foods affect product quality during storage and the length of the storage life.
Microwave drying is a new process which is starting to be used in the food industry
worldwide, mostly for the drying of pasta and post-baking of biscuits. Microwave
drying of fruit and vegetables is developing, and is used industrially in the UK.
A company has been investigating the use of microwave drying in preparing

flavouring materials such as mushrooms and peppers, and have produced ideas for
two products:
• A mix of dried green peppers, tomatoes and garlic which can be sprinkled on
salads, for consumers who eat fresh foods. The peppers and tomatoes are
chopped.
• A dry tomato/mushroom sauce which can be mixed with cold water. The tomatoes
and mushrooms are in small pieces. The cold sauce can be mixed with chopped
cooked meats, chopped fresh vegetables or cold cooked pasta to give salad type
meals.
Some of the general flavour/aroma characteristics of dried green peppers, tomatoes
and garlic that have been identified are: fruity/fresh, sweet, sour, grassy, cucumber,
earthy, sharp. They also have specific tomato, mushroom and green pepper flavours
and aromas. Texture descriptions for dried vegetables have been juiciness,
toughness.
(Reprinted from Nijhuis H.H., Torringa H.M., Muresan S., Yuksel D., Leguijt C. and
Kloek W. (1998) ‘Approaches to improving the quality of dried fruit and vegetables',
Trends in Food Science and Technology, 9, 13-20 with permission from Elsevier
Science.)
CHAPTER 5
Product Design and Process Development
5.1 Introduction
Product design takes a long time and a great deal of effort. It is important to target the
design programme to minimise time and costs and to plan for it to be successfully
completed within allocated resources. Time is very much of the essence, the minimum
compatible with optimal development.
In a product design plan, there are many activities to be first recognised and then
coordinated; some activities are worked in sequence, some in parallel. In particular,
multidisciplinary activities are focused in the same direction and coordinated in time. The
master plan coordinates the various people and their mini-projects in an overall time and
resource plan so that the product design can be controlled.
The plan begins with the product design specifications. These include a profile of the
product characteristics as defined by the consumer, the structure and composition, safety
factors, convenience and aesthetics, and also indicates the manufacturing, processing and
storage variables and their effects on the product qualities. Many of these product design
specifications start as general descriptions; product design and process development
focuses them into definite, quantitative descriptions.
In the design process, the product and process development are integrated so that at the end
of the design stage there is a product with the optimum qualities, and a process to produce
it. A great deal of time is lost if a food product is designed under 'kitchen conditions' and
then has to be redesigned as the process is developed.
In food product design:

important marketing factors are consumer acceptability, competitive positioning,
legal regulations, ethical requirements, environmental mandates and distributor
requirements;
important technical factors are raw material availability, ease of processing, cost,
attainability and reliability of product quality, shelf life, equipment needs, human
knowledge and skills; and
important financial factors are costs of manufacturing and distribution, costs of
further development and the investment needed.
These are considered at various parts of the design so that at the end of the product design
and process development they can all be included in the feasibility report for top
management.
5.2 The design process
The design activities are grouped into steps: 'getting the feel', screening, ball-park studies,
optimisation and scale-up of production and marketing, leading at the end to product and
process specifications, marketing strategy and financial analysis as shown in Figure 5.1.
This allows control of the design process as the consumer, product and process activities
are coordinated into small mini-projects with specific objectives.
The activities and some of the experimental techniques in the various stages of product
design and process development are shown in Figure 5.1. The stages used in this book are
‘getting the feel’, screening, ball-park studies, optimisation, scale-up (production) and
scale-up (marketing).
Figure 5.1 Activities and experimental techniques in product design and process
development


'Getting the feel' Recognising the variables
Setting the limits
‘Ad hoc' experiments

PRODUCT 'MOCK-UPS'
Screening Importance of variables
Interrelationships of variables
Simple experimental designs

ELEMENTARY PRODUCT PROTOTYPES
Ball-park studies Variables limits
Variables interactions
Basic packaging
Linear programming
Factorial designs

ACCEPTABLE PRODUCT PROTOTYPES
Optimisation Stepwise variable changes in small area
Aesthetic product design
Complete process design
Optimisation designs

OPTIMUM PRODUCT PROTOTYPE
Scale-up: production Process testing in plant
Yields study
EVOP
HACCP
Scale-up: marketing Marketing/product definition

Market channel selection
Pricing analysis
Sales prediction
Consumer panels, large consumer test
Market survey
Sales forecasting

FINAL PRODUCT PROTOTYPE
PRODUCT AND PROCESS SPECIFICATIONS
MARKETING STRATEGY FINANCIAL ANALYSIS
FEASIBILITY REPORT
In the design, both the input variables to the process and the output variables of the product
qualities are identified early in the developments.
The input variables are:
• raw materials: type, quality, quantity;
• processing variables: types of processing, processing conditions.
The output variables are:
• product qualities;
• product yields
The levels of the input variables that are possible in the production are identified and used
in the design experimentation. The level of a raw material (or ingredient) is the percentage
in the formulation. Raw materials and ingredients are sometimes differentiated: raw
materials as the primary products from agricultural and marine sources, and ingredients as
processed materials. In this book, raw materials includes both, and mean all materials used
in the process. The levels of processing variables are related to physical, chemical and
microbiological measurements and also the achievable and necessary limits set by
equipment and environmental conditions. There are limits set on the input variables by the
needs of the product, processing and costs; there may be a lower level and a higher level, or
just one of these. Identifying these levels early in the design reduces the time spent on
experimentation.
The product qualities wanted by the consumer are identified and quantified. Usually a range
is discovered within which the product is acceptable; this sets the range within which the
quality has to be controlled. Again there are usually low and high levels identified for the
product qualities. The yield of product necessary to give acceptable costs is identified early
in the design to direct the raw material and process experimentation.
The design is a continuous study of the relationships between the input variables and the
product qualities, so that the final product prototype is the optimum product under the
conditions of the process. The two main parts of product design are making and testing the
product prototypes, and the two important groups of people are the designers (often called
developers in the food industry) and the consumers. The prototype products are tested
under the standards set by the product design specifications, so that product testing needs to
be organised along with the product design and the processing experiments. Regularly there
is consumer input, to confirm that the product is developing characteristics as identified in
the product concept and not developing characteristics which are neither wanted nor needed
by the consumer.
As discussed in Chapter 1, the product design ends with a final product prototype and a
feasibility report:
• defining the feasibility of the product for technical production, the market and the
company;
• anticipating the technical and market success;
• assessing the financial feasibility; and
• predicting associated impacts on the company and the market of various levels of
product success.
Gathering information for the feasibility report is an important part of the design process.
5.3 Steps in product design and process development
Carrying out the design in the five successive steps listed in Figure 5.1 goes some way
towards eliminating the mistakes of choosing the wrong design and also making the product
on a large scale when very little is known of the processing system.
5.3.1 'Getting the feel'

This is a continuation of the development of the product concept and the product design
specifications. The processing methods and conditions outlined in the product design
specifications are used to make the early product prototypes, and the technical testing
methods are examined for reliability and accuracy in testing both the technical product
characteristics and also their relationships to the consumer product characteristics. There is
a question of consumer involvement at this stage; some people advocate this strongly
because it means that there is control over the design; others say that it is faster and just as
accurate to use the knowledge of the designers. The choice of no consumer testing depends
on the level of consumer knowledge held by the designer. The basic costing used in the
company is also identified so that a simple method of determining costs can be used in the
next stages of the product design. The target market was identified in the product concept
stage and the consumers are selected to represent this target market(s).
5.3.2 Screening
Screening reduces the wide range of raw material and processing variables to the input
variables affecting important product qualities. This hastens the design. Initially the
variables can be reduced using the previous knowledge of the designer and also published
or company information easily available. There can still be a number of floating variables
and these are studied in controlled experimentation, not 'ad hoc' try-and-see
experimentation. Many experimental designs are available to screen the variables but the
most common are partial factorial designs, or Plackett and Burman designs. In a Plackett
and Burman design, it is possible to screen N-1 variables with N experiments. The
screening experiments identify the important variables and their magnitude levels that
affect the product qualities, but they are not statistically accurate and cannot quantify the
relationships between the input variables and the product qualities. Some food designers
have the consumers test many samples in these designs, sometimes for acceptability, but
more usefully in product profile tests. Other designers use trained sensory panels.
At this stage, the raw materials are being selected, and the quality, availability and costs of
those raw materials are studied. There is likely a basic total cost range for the raw materials,
but it is important not to select individual materials only on cost at this stage. Higher
qualities of raw materials may give a unique property to the product, and also the more
expensive materials may not need to be used in the same quantities as the cheaper.
Sometimes there are restrictions in the company on the raw materials that are to be used;
the buying department can often give some indications without restricting the design.
5.3.3 Ball-park studies

In ball-park studies, the aim is to set the limits of the raw materials and the processing
variables which give acceptable product qualities as judged by the consumer. By this stage,
the variables are reduced in number and their outside limits are set. They are examined in
factorial designs, and for raw materials in mixture designs. In factorial designs each input
variable is considered at high and low levels, and the combinations of these high and low
levels for all input variables are tested. In a full design all possible combinations are run,
therefore for three variables the total number is 23 = 8 experiments. In food formulations,
mixture designs are often used because it is impossible to vary one ingredient while holding
all the others constant; in mixture designs, the sum of all the ingredients in the formulation
must add to 100%. The product designer must always be aware that when they change the
content of one ingredient, the proportion of the other ingredients changes, for example
reducing the fat content will increase the proportion of other ingredients: carbohydrate,
protein or water. With factorial designs and mixture designs, the effects of the various
input variables, alone and together, on the product qualities are analysed, and mathematical
relationships developed between the input variables and the product qualities. To set up the
experimentation and to analyse the results, there is computer software readily available for
food product development.
Both technical testing and consumer testing of these product prototypes are carried out. The
consumers are testing for acceptability and the technical tests are examining the chemical,
microbiological, physical and sometimes the sensory properties of the products. Accuracy
and reliability are important considerations in this testing, both for studying the effects of
the input variables on the product qualities and for developing the quality assurance
programme. The total processing costs of these product prototypes are compared to identify
the effects of the input variables on the costs, and to check that the costs are within the
target cost range.
Think Break 5.1

Steps in product design and process development: consumer testing
Discuss the advantages and disadvantages of consumers testing the prototypes in

'Getting the feel', 'Screening' and 'Ball-park' experimentation.
For what types of products – packaging change, product improvement, product line
extension, product innovation – would you use consumer testing and at what stages in
the product and process development?
5.3.4 Optimisation
Here the aim is to optimise the overall product quality by determining the levels of the
input variables which will give the best possible product quality. The problem is that often
when optimising one product quality, another product quality is less than optimum. So it is
a case of setting the relative importance of product qualities, and for the most important
product qualities studying the formulation and processing variables to find the optimum.
But the limits that are acceptable across all the product qualities need to be known so that
during the optimising experiments none of the other product qualities become unacceptable.
. For raw material formulations, linear programming can be used to optimise a number of
product qualities and costs with the amounts of raw materials in the formulation held
between upper and lower levels.
5.3.5 Scale-up
Scale-up (or ramp-up) of both the production and the marketing is the last stage of the
product design and process development. The production scale-up is the in-plant test to
verify that the product can be made at the quality and quantity required, and the marketing
scale-up is a large consumer test to verify that the target consumers will buy the product
and what marketing strategy will encourage this buying.
The aim of the processing scale-up is to determine the optimum production process for
product quality, product yield, process control and costs. If the previous design research has
combined the product and the process, this can be achieved without too many problems.
But if the process has been ignored, then there can be disastrous problems. For example, if
some of the intermediate materials have never been pumped during the design
experimentation, then they could break down during scale-up.
The scale-up can be either on a pilot plant or short production runs on the main plant. If it is
a new process, or there is to be quite extensive experimentation, then the scale-up is
conducted on a pilot or small-scale plant. If the process is only an adaptation of the present
production, then the scale-up is conducted on the main production plant. The decisions on
the type of scale-up are often much influenced by cost; the production trial can cost a great
deal if the product cannot be sold and this restricts the use of the production plant until the
final stage. But if there is no investment money to build a pilot plant then the production
run may be the only scale-up available. The question can often be asked as to when the
scale-up from the laboratory bench to the small plant to the production line should be
carried out. A great deal of time can be spent perfecting a product in the laboratory, only to
find that it is impossible to duplicate this in the plant. If the product is rushed from the
laboratory to the production line, then there can be a great deal of raw material and product
discarded at a substantial cost.
Knowledge of the interrelationship of the processing variables and the product qualities can
reduce these failures. EVOP (evolutionary operations) are used in optimising the process
variables, especially if using the production line in scale-up. EVOP is a way of plant
operation that tests small changes in the process variables in a simple factorial design. It
continuously changes the process variables until optimum product qualities are reached, but
only slowly so that the product can be used for large scale testing or even sold.
The marketing scale-up aims to define the market, describe the market strategy to reach this
market and predict the possible sales revenues for the product. Possible market channels are
studied and the market channel suitable for reaching the target consumers and for the
company is chosen. The price range related to the production costs, competitors' pricing
and company policy is tested with consumers to see how it affects their buying intentions.
Also the final product concept (the product proposition) is built up from the final prototype
product, the packaging design and consumer studies. The definitions of the product, price
and market channel are used not only to develop the aims and methods for the promotion of
the product but are also the basis for planning the marketing mix during product
commercialisation.
The final prototype product from the production scale-up and the various parts of the
marketing strategy are tested in a large-scale consumer test where the consumers test the
product in their usual environment and are interviewed about the marketing strategy.
Think Break 5.2

Activities in product design and process development: rice risotto
The company has decided to produce a rice risotto, a dry flavoured mix to which only
boiling water is added to give a quick snack, similar in use to instant noodles.
Identify some of the important activities in the design of this product.
In Case Study 5 are some comments on food design for the future from an Italian design
journal, to start you thinking about the development of food design. Certainly today there is
a need to determine the direction of food design both for food ingredients and consumer
products, and also for the fresh products which are being designed on the land and in the
water.
Case Study 5.
Towards a Food Design
The food product development project passes from a traditional approach aiming at
the adjustment of natural food, to an approach based on consumer needs, and then to
an approach implying the interpretation of food technology potentialities in the
framework of the food culture of eaters. Food design aims at closing the gap between
what is culturally acceptable as nourishment and the extreme technological situation
of foods consisting of the most artificial nutriments.
It must combine artificiality with quality by integrating into the food development
project all aesthetic, sensory and symbolic dimensions, along with what has been
handed down and the future developments of custom and food culture, to develop
'edible objects' detached from natural products but offering the same degree of quality
and richness.
Besides, it must ensure - between those who eat and make food - a mediation, not just
a formal one or based on a naturalistic food, but a deeper one, asserting the
technological identity of food by seeking, in the ancestral food culture as in the chaos
of present day behaviour, a poetical spirit that may make it more valuable.
(From François Jégou (1996) 'Design and food; object-food and food raw materials',
Stileindustria, 2(6), June, pp. 40-1.)
5.4 Product testing
Product testing is an integral part of the product design and process development as can be
seen in Figure 5.2.
Figure 5.2 Testing activities & techniques in product design and process development

____________________________________________________________________
Technical Consumer Costs
'Getting the feel' Setting up Ideal profiles Company costs
Reliability
Training
Standard tests Profile tests Cost analysis
Correlation of technical/consumer tests

PRODUCT 'MOCK-UPS'
Screening Technical Product comparison Raw materials
Sensory cost limits
Product testing Difference testing Materials cost
comparison

ELEMENTARY PRODUCT PROTOTYPES
Ball-park studies Technical Acceptability Preliminary
Sensory product costing
Statistical testing Preference panel Spread sheets

ACCEPTABLE PRODUCT PROTOTYPES
Optimisation Technical Product Improvement Product,
Sensory packaging,
Storage process costing
Control testing Use tests Cost comparison
Shelf life tests Competitive comparison

OPTIMUM PRODUCT PROTOTYPE
Scale-up Quality assurance Buying predictions Yields
Marketing study Materials
Equipment
Raw material testing Market survey Equipment
comparison
Process study Attitude panel Total costing:
Product study Large consumer test capital and
operational
_____________________________________________________________________

FEASIBILITY REPORT
To achieve the final product prototype, it is very important that the product is tested at all
stages during its design for technical compliance, acceptability to the consumer, and
compliance with cost constraints as shown in Figure 5.2. Example 5.1 lists the types of
tests used in the development of a Thai fermented sausage
Example 5.1 Testing of Thai Fermented Sausage (Nham)

In Thai sausage product design experimentation, there were:
• chemical tests (pH, total acidity, volatile acidity, residual nitrite, reducing
sugars and cooked rice),
• physical tests (Instron compression, shear force and energy, reflective colour,
gas formation, water activity, weight loss),
• microbiological tests (mesophilic aerobic micro-organisms,
Enterobacteriaceae, Staphylococcus aureus, yeasts and moulds),
• sensory tests (appearance, texture, flavour) and tests of consumer acceptability.
The product profile characteristics were: colour, visual texture, air pockets,
firmness, juiciness, smoothness, sourness, saltiness, spiciness, pork flavour.
Wiriyacharee, P.,( 1990) The systematic development of a controlled fermentation process for Nham, a
Thai semi-dry sausage, Ph.D. thesis, Massey University, New Zealand
5.4.1 Technical testing

Technical testing varies a great deal depending on the type of product, the testing facilities
available, safety needs, processing needs and legal regulations. The tests can be chemical,
physical or/and microbiological. The technical testing for consumer acceptance is built up
from the consumers' product profile, and suitable technical test methods are sought which
relate to the product characteristics identified as important to the consumer. In the early
stages of product design, correlating the technical tests on the product qualities with the
consumer product profile is essential. Technical testing is also required to confirm that any
food regulations are being met, that consumer safety is ensured and that any labelling
requirements for example nutritional value are confirmed. At the later stages, technical
testing is developed to monitor the product specifications for quality assurance, and account
needs to be taken of the accuracy and reliability of the results. Consideration also needs to
be given to the costs of testing – Can the efficiency be improved? How much testing is
needed for control of the product quality?
5.4.2 Shelf life testing
Testing shelf life is important in food design because there is usually a target shelf life to be
achieved for transport and storage in the distribution chain as well for storage of the
product by the consumer after buying. From previous knowledge, some predictions can be
made early in the design on the possible shelf life; foods can be divided into short-life
products (up to 10-14 days), medium-life products (up to eight weeks) and longer-life
products (up to 1-2 years). The possible deterioration reactions in the food are identified,
for example chemical reactions like browning and loss of colour, and microbial growth of
food spoilage organisms, moulds and yeasts. It may be necessary to carry out accelerated
tests under severe conditions to identify exactly what the deteriorative reactions are.
Shelf life testing needs to be started as soon as possible in the prototype development,
usually at the start of optimisation experiments. Shelf life testing takes time and can be the
critical activity controlling the completion of the project. The variables need to be identified
- usually temperature, humidity and surrounding atmosphere in storage; vibration, handling
and contamination in transport. Factorial designs are again used so that the quantitative
effects of changes in the storage and transport conditions on product quality can be
measured.
Think Break 5.3

Product testing: shelf life
The 'use by' or 'best by' dates on food products are indicative of the shelf life of foods.
The shelf life is the length of time before the consumer can recognise a change in
quality or the product becomes unsafe. Look at some 'best by' dates in the chilled
cabinets of the supermarkets and note the 'best by' dates for different types of foods
and brands. Did the information on the package include storage temperatures?
How would you use this information for setting the conditions for shelf life testing of
two new products: (1) natural active yoghurt (2) vacuum packed sliced salami?
( See Lewis, H. And Dale, R.H.(2000) ‘’Chilled yoghurt and other dairy desserts’ in
Man, C. M. D. and Jones, A. A. (eds,), Shelf-Life Evaluation of Foods,2nd. Edition,
Gaithersburg, Maryland: Aspen Publishers pp.89-109.)
5.4.3 Sensory evaluation
Sensory evaluation can be carried out by expert sensory panels or by consumers.
Traditionally in product design, the expert panel determined the differences between
prototypes and the direction of the differences, while consumer panels evaluated the
acceptance of products or preferences between products. This meant that consumer input
did not take place until the final stages of prototype development. But with the
acknowledged importance of the early stages of product design, consumer panels are now
used to guide the design. Such panels are used in screening the ingredients, determining the
product characteristics and their strength in the ideal product, developing and optimising
the product profile of the product prototypes, and optimising products for acceptance and
cost. Care needs to be taken when choosing the “consumers” – are they the people who buy
the product, who prepare the meal, who eat it?
A trained panel may consist of between four and ten people, but consumer panels are
larger, comprising at least thirty people depending on the type of testing. The members of a
trained panel after a month or longer training are able to score the product qualities reliably
and accurately. Consumer panels are not trained, but are representative of the users of the
product. Initially consumer panels were considered 'too much work' and expensive, but
experience has shown that this is not so.
The size of the consumer panel increases throughout the design as the importance of
making the right decision becomes critical and the penalty for a wrong decision becomes
larger. In product formulation, it can consist of 15-20 consumers, rising to 50-100
consumers during the final processing trials and 200-300 for the final product prototype,
while in some large markets with greater variability it may be even more. The smaller
panels are useful when some depth of knowledge is needed though they are not a
statistically valid method of determining how many people in the market will buy the
product. But over the years, it has been shown that there are significant correlations
between the verdicts of the consumer panel and the larger consumer test if the members of
the consumer panel have been selected carefully and are representative of the market.
Consumer panels are used for seeking in-depth information about the product's
characteristics and uses. The aim is to obtain as much detailed information as possible so
that informed changes can be made in the product design. The consumer panel gives
opinions on all product characteristics, not just sensory qualities but others such as safety,
nutrition, size, ease of use, transport, storing and convenience. They can also be involved in
the design of the package. The final consumer panels test the packaged product under the
conditions in which they would use it. This would normally be in their home, but
sometimes because of secrecy and also the need to watch their use of the product such trials
may take place in the laboratory. For example, there is a need to check: Is the pack
ergonomically suitable? Does it fit their hands? Can they open it? Is the product suitable for
their equipment and their abilities? Can they prepare and cook the product? Do the other
people in the house like it? Is it acceptable to younger/older people, different sexes?
Think Break 5.4

Product consumer testing: dog food
A company is developing a dog food for the working dogs in the rural market. The
product is a large sausage which can be stored at ambient temperatures. It is, with dog
biscuits, the dogs' only food.
Outline the consumer test programme that you would organise with the dogs and their
owners from the start of the product design to the final selection of the product
prototype at the end of the product design.
5.4.4 Costs
Costs provide a basic criterion for controlling the design; they need to be monitored
throughout development to ensure they are within the target range. At the beginning of the
design, the company's cost structure and the target range of costs for the new product need
to be agreed by all involved. The basic costs for producing and distributing the product can
be subdivided into manufacturing costs, distribution and marketing costs and general
company costs. A simple breakdown is shown in Table 5.1
Table 5.1 Basic costs for producing and distributing a product
Manufacturing costs Raw materials cost

Direct processing costs
Fixed costs
Plant overhead costs
Distribution and marketing costs Physical distribution costs

Market channel costs
Promotion costs
Sales and selling costs
General company costs Administration costs

Development costs
Financing costs
Some of the manufacturing costs comprise raw materials, packaging, labour, depreciation
of equipment, electricity, steam, gas, water, waste disposal and plant overheads. In many
companies, during the product design and process development, the raw materials and
direct processing costs are continuously determined and are part of the design. For
example, in the linear programming models for product formulation there is usually either a
total cost constraint for the raw materials or the aim is to minimise cost. Standard
percentages or ratios on these materials and processing costs are used to predict the
company costs. This has to be carried out with care, especially with innovative products or
new markets where some of the marketing and distribution costs are unknown - these may
be found to be too high only at the later stages of the project and prevent the launch. At the
end of the product design and process development stage, there should be reasonably
accurate forecasts of production and distribution costs and some indication of the probable
marketing costs.
Think Break 5.5
Product testing: fruit drink powder development
Fruit drink powders are dissolved in water to give a refreshing drink. These drinks are
popular with children, and are also used as cheap drinks for large parties.
1.Identify the ingredients in fruit drink powders by reading the labels on some
powders available in the supermarket or by searching in the internet e.g. ‘Ingredient
manufacturers turn powder into health gold’ by David Feder.
http://www.foodprocessing.com/articles/2008/370.html Sighted 14/11.2008.
2. Identify the important product qualities in such powdered drinks, and suggest how
you might test these product qualities with laboratory testing, with trained sensory
panel testing and with consumers.
3. Fruit drink powders are produced by mixing the ingredients so that they are evenly
dispersed and then they are packed into sachets. Identify important factors in this
processing and packing.
Outline the method you would use to develop a fruit drink powder, combining
Figures 5.1 and 5.2 in one diagram.
There are three important general activities in product design: product formulation,
packaging development and processing development.
5.5 Product formulation
Many food products are made by combining raw materials in specific proportions in a
formulation, and research on the effects of various formulations on product qualities is
common in product design.
In systematic formulation there are five steps:

• Set the product qualities required,
• Find data for the raw material compositions, qualities and costs,
• Determine limits on the raw materials and the processing variables,
• Use quantitative techniques: linear programming, experimental designs, mixture
designs,*
• Use product profile tests and technical tests to relate product qualities to changes in
formulations.
(*there are many useful computer software packages to use these statistical techniques.)
The raw materials can be divided into two groups: the basic product raw materials and the
'top' or aesthetic raw materials. This does not mean that the basic raw materials do not give
aesthetic qualities to the product - in fact in modern food design this is recognised as a
fundamental factor. But sometimes there is a need for the addition of colours and flavours
to improve the aesthetic effect. The important properties of the raw materials in relation to
the product qualities are recognised in the product design, as shown in Example 5.2.
Example 5.2 Raw materials for Thai Fermented Sausage (Nham)
1. Meat System: fresh lean pork and pork-skin, held at ambient Thai temperatures
for three hours after killing.
2. Curing agents: sodium chloride, sodium nitrate, sodium tripolyphosphate.
3. Seasonings: white pepper, fresh garlic.
4. Carbon sources for fermentation: jasmine rice (cooked), glucose.
5. Starter cultures: Lactobacillus plantarium, Lactobaccillus brevis, Pediococcus
cerevisiae, Micrococcus varians.
6. Sausage casings: cylindrical tubes, 22.5 mm diameter, 30 cm long, made from
laminated 15 micron uncoated nylon and 50 micron linear low density
polyethylene.
Limits on raw materials

Meat system was set at 80% ground meat 20% sliced pork skin.
The low and high levels for the other ingredients and starter cultures were:
Raw materials % meat system Starter Cultures cfu/g meat system

sodium chloride l ,4 Lactobacillus plantarium 0, 106
sodium nitrate 0.01, 0.03 Lacobacillus brevis 0, 106
sodium tripolyphosphate 0, 0.5 Pediococcus cerevisiae 0, 106
minced garlic 3, 7 Micrococcus varians 0, 106
white pepper 0, 0.05
cooked rice 5, 8
Screening experiments
A Plackett and Burnam experimental design was used to screen these raw materials.
From this, the important raw materials affecting the qualities of the Nham were
identified as the four starter cultures and the rice, and in further experiments these
were studied at different levels and under different processing conditions. Glucose as
another carbon source was also studied. The other ingredients were fixed: sodium
chloride 3%, sodium nitrate 0.02%, sodium tripolyphosphate 0.3%, garlic 7.0%, white
pepper 0.05%.
Wiriyacharee, P.,( 1990) The systematic development of a controlled fermentation process for Nham, a
Thai semi-dry sausage, Ph.D. thesis, Massey University, New Zealand
In formulation studies, the important development in the last ten years has been the use of
the computer. First, there is the raw material database on the computer; this started by
detailing the chemical and nutritional compositions of different raw materials but has
expanded to other properties such as microbiological quality, sensory qualities and to the
effects of raw materials in processing, where this information is available. For companies
with a narrow range of products, this raw materials database can be used in all product
development projects as a starting point for formulation; in other companies with a wide-
ranging product mix there may be need for two or three databases. The database is only
useful if it is kept up-to-date and is also related to the company's buying policy.
The database can be used to build and analyse various formulations to see how they fit the
criteria for the product qualities, the costs and the processing. This can be done quite
simply using computer spreadsheets. There are also expert systems available which provide
a decision support framework made up of two parts: a task part containing the distinct
problem-solving steps involved in creating a formulation, and a physical part with the
specific knowledge about the properties of the raw materials and the processes involved. As
more information is obtained from factorial experimentation, mathematical relationships
between the raw materials in the formulation and the product qualities are developed and
these can be used in such techniques as linear programming.
Think Break 5.6

Product formulation: natural fruit ice-cream
For developing a formulation for natural fruit ice-cream, identify the important raw
material variables and the important product qualities.
Relate each raw material to a product quality(ies); for example, lecithin, an emulsifying
agent, stabilises the oil/water emulsion and gives smoothness to the ice-cream.
See: The Science of Ice Cream by Chris Clarke, 2004 Published by the Royal Society of
Chemistry.
5.6 Packaging development
Packaging design at this stage concentrates on the packaging of the individual product; the
outer packaging research is only related to decisions regarding size and to the protection
required during distribution. The design of the packaging for the individual product is based
on the needs of the consumer and the requirements of product preservation and protection
in the product design specifications, but it also considers the process and the distribution, as
well as the needs of retailers and the environment.
The graphic design is usually carried out during the commercialisation stage together with
the promotional artwork, but consideration needs to be given to any printing and display
needs in the selection of the packaging and the materials to be used.
The needs of the consumer and the retailer dictate the dimensions as the package has to be
stored on retailers' and consumers' shelves, consumers have to be able to handle and open
the package with their hands, the quantities are related to the serving of the food and the
packaging has to stand up to the general conditions of use. The packages have also to fit
into the standard outer container shapes and sizes.
The product may be processed in the package in which case the package must be able to
stand up to the processing conditions and also not interact with the food during processing
and storage, for example packaging constituents leaching into the food. In all cases, the
package needs to fit into the packing line with not too much adaptation.
The factors to consider in packaging design at this stage of product and process
development are summarised in Table 5.2.
Table 5.2 Factors in packaging design
Consumer Buying, transporting, storing, using, eating, disposing

Product Containment
Protection in external environment, distribution
Presentation for communication, promotion, selling
Use by consumer: convenient, dispensable, ergonomic,
information
Legal requirements
Process Preservation of food, processing ability, interaction with
processing,
Product packaging quality
Machine ability in making, forming, filling, closing
Distribution Outer packing, unitisation, transport, storage conditions
Retailer needs
Storage, display, communication, bar coding, tamper-proofing
Environment Resources used: energy, raw materials
Waste: reuse, recycle, or disposable
From the research, the packaging is defined as packaging material (films, cardboard, metal,
glass, solid plastic), packaging type (bottle, carton, pottle, can), packaging size, packaging
method (hand, continuous, automatic, aseptic). The designer does not have a great deal of
room for originality in food packaging except with regard to the graphic design, but there is
still a great deal of originality as can be seen on the supermarket shelves. The use of
computers with design software has made it easier to design packaging.
The package is then put to the test on the processing/filling line, and for shelf life, and
product protection during storage and transport. Finally the consumer has to test the
packaging with the product.
5.7 Process development
Process development is interwoven with product design. For example, in the Thai sausage
example a standard fermentation process was chosen for the Plackett and Burnam
experiments, and then in the later studies on the starter cultures, the processing variables of
temperature and humidity were also studied during fermentation. The Thai sausage
processing was divided into three parts: raw material preparation (mincing of meat, cooking
of rice), mixing of the raw materials and stuffing into the sausage casings, and
fermentation. The first two parts were kept standard throughout and only the fermentation
conditions were varied.
This division of the process into its individual parts is the method used in either analysing a
current process for a new product (process analysis) or for building a new process for a new
product (process synthesis). The individual parts and then the connections between them
are studied to give the optimal overall process. There are three aspects of studying
processing: unit operations, unit processes and processing limits:
• Unit operations. These are the physical processes such as heating, pasteurisation,
sterilisation, freezing, chilling, drying, mixing, emulsifying, tumbling, pumping,
conveying, packing. They can be grouped into separation processes, assembly (or
combining) processes, conversion processes and preservation processes. There are
more than a hundred unit operations used in food processing.
• Unit processes. These are the chemical, biological and microbiological changes such
as gelatinisation, hydrolysis, oxidation, browning, protein denaturation, vitamin
destruction, destruction and growth of micro-organisms, fruit ripening and meat
tenderising. There are a number of these reactions occurring together in a food
process and this leads to a complicated study in design. In the past much of the
knowledge was empirical, but gradually basic quantitative studies of the rates of
these reactions are leading to more directed process design.
• Processing limits (maximum and minimum). These can be temperatures, rates of
increase/decrease in temperature, viscosities, mixing speeds, shear rates and pH, as
well as processing times, availability and cost of equipment and services such as
water quantity and steam pressures.
The combination of basic knowledge of food processing which has been built up over the
last twenty years and the use of computers has led to a great deal of change in food product
design and process development from the recipe testing of the past to systematic design
based on process engineering principles and knowledge of food chemistry, biochemistry
and microbiology.
The development steps are common in all projects, but the relative amounts of time and
effort required for different steps may change considerably. Many food products are
processed in more or less generic equipment so the emphasis in development lies on the
product. If process development is more extensive, the logical sequence remains but the
description of the steps may change, for example detailed design for items of equipment or
a continuous line are included.
Think Break 5.7
Process development: allocation of time and effort for different products
Consider the relative time and effort which you would need to allocate to the various
steps set out in Figures 5.1 and 5.2 when developing each of the following products:
• the risotto product (see Think Break 5.2, Section 5.3.5 );
• the fruit drink powder mix (see Think Break 5.5, Section 5.4.4);
• a new frozen bar in which a soft caramel centre is surrounded with fruit
ice-cream and enrobed in chocolate (see Think Break 5.6, Section 5.5 for fruit
ice-cream).
5.8 Building the marketing
Consumer panels can be used during the product design to devise the best method of
marketing the product; such panels build up knowledge of their relationship with the
product, the acceptable price range and the product image. Distribution testing of the
prototypes builds up knowledge about the physical distribution system and the market
channel possibilities. Costing analysis gives an idea of the basic product and marketing
costs. The marketing researchers then have a great deal of knowledge on which to build the
marketing strategy.
The researchers are then able to determine:

• price range,
• relationship of the product to competitive products,
• product's position in the market,
• various market channels and their suitability for the product,
• target market segments and
• product image.
Having done this, they test the product in a large consumer test so that they can confirm the
marketing method and also determine sales potential and market share.
5.8.1 Market survey
Market survey combines a number of activities whose objectives are to select the market
segment(s) and the position of the product in the market segment, to determine the possible
sales to the market segments, and to find information on which to base the marketing
strategy. The information from the consumer research in the product design needs to be
confirmed and expanded, either by secondary market research using published information
and company information, or by primary market research using consumer focus groups,
retail audits, and studies of the competitors and of the industry.
Focus groups may be organised to collect in-depth information on the target market,
product, price, buying place, promotion, preference, preference over competitive products
and long term buying predictions. Retail audits can be bought from commercial companies
who regularly monitor sales of products in retail outlets, or more likely today, from the
summarised information of supermarket electronic data. This information not only gives the
market shares of the competing products, but continuous sales records, which can be a basis
for sales forecasting. The sales of competing products need to be backed by information on
the qualities of the different competing products, from either technical comparison or
consumer comparison of the products, as well as on the competing companies and their
methods of marketing. For industrial products, there is a need for industry studies to
discover the different customers in the market and their characteristics - size, method of
processing, company organisation, economic status, and present use of raw materials.
There is also a need to study the whole market channel and the physical distribution system.
In consumer food marketing, the retailers have a strong control on the introduction of new
products, so there is a need to study the competing products on their shelves and how they
promote them, their attitudes to new products, and the effects on their new product
behaviour of the prices, discounts, and promotional financing by the manufacturers. One
also needs to investigate any retailers' charges to obtain shelf space for new products.
The place of the new product on the company's and the market's product life cycle is
determined to ensure that a suitable marketing strategy is selected. Internally, the place of
the new product in the company's product mix and product line is studied to see how the
new product will affect the complete product mix and also individual products.
Think Break 5 .8
Building the marketing: a new starch product
A medium sized starch company has developed a new starch product which gives a
clear solution with a high viscosity and a bland taste, which can be used in soups,
sauces and gravies, puddings and desserts, meat and fruit pies. Discuss the types of
industrial market segments that you could use for this product and how you would
conduct a market survey to determine its target market segment and the position of the
product as compared with other starch products.
5.8.2 Large consumer test

Large-scale product testing of the final prototype product is undertaken by consumers, or in
industrial marketing by one or two large customers in their plants or by a number of food
service outlets. To obtain results for the major decision to go into commercialisation, it is
usually preferable to have a statistical sample of the target market so that the accuracy of
the buying prediction is known. However, the sample size is often limited by practical
considerations such as the amount of money available, the time to do the test and the
amount of product available.
The questions to be answered in the large-scale test include:

• Which consumers like/dislike the product?
• Do they prefer it to competing products?
• What product characteristics need improvement?
• Does the product or the packaging need to be redesigned?
• Will they buy the product at the given price?
• In what price range will they buy the product?
• How much will they buy, and how often will they buy at the different prices in the
price range?
The consumer products are tested in a central location such as a shopping mall or in the
home. In the central location test, a stall or a caravan is set up in a central position such as
a shopping mall and people passing are asked to taste the product and give their comments
on a self-administered form or in an interview. This does not give a random sample of the
population but it is quicker and cheaper than the in-home test. In an in-home test, the
consumers are given a sample of the product, either unidentified or with the full branded
pack, and asked to prepare and eat it in their household. The consumer or all the members
of the household can be asked to comment on the product. A problem is the timing of the
test which can influence a food product. It is preferable to do the consumer test at a time of
year when the product would be expected to sell but this may not be possible. If done at a
low acceptance time, this must be taken into account when analysing the results.
Industrial product testing with small processors and food service outlets is very similar to
the organisation of the in-home test. Sufficient product is given to the processor to try the
product in their process, and to the food service chef to develop a dish to put on their menu.
A restaurant may test this dish by putting it onto the blackboard menu and watching their
customers' reactions to the dish. The processors and the food service outlets are usually
interviewed after the test to find how the product has been used, the problems and successes
with the product, the intention to buy, the acceptable prices and predicted quantities to be
bought. With larger processors, pilot plant or small production trials are organised either
jointly by the supplier and the buyer or often by the buying company because of secrecy.
Products for overseas countries should be tested in that country, and international
companies either have their own testing facilities in those countries or contract local market
research companies to conduct the research. International product testing uses the same
techniques but presents problems. First there is the problem of language - the
questionnaires have to be in the language of the consumers and there may be problems in
translation not only into a particular language but even into a particular dialect. Definitions
of products and product characteristics may be substantially different. Scaling methods may
also have to be changed. For example the 9-point hedonic scale from 'like extremely' to
'dislike extremely' may not be acceptable in a culture where expressing negative opinions is
socially unacceptable so the dislike terms have to be removed.
Think Break 5.9
Building the marketing: in-home testing of a baking mix and a dairy cream
Outline how you would organise an in-home test for:

• baking mix for making muffins;
• dairy cream in an aerosol can.
Decide on the questions that you want answered, how you would present the products
and the packs, the target consumers, the distribution of the samples and the
questionnaires.
How would you use the results?
5.9 Product and process specifications and marketing strategy
Outline process plans include raw material specifications and quantities, process flow
charts and processing conditions, product quality specifications, process control points and
product testing methods. From this information, product and process specifications can be
written and an approximate product cost determined. If necessary, legal or governmental
approval is sought for the product or/and the process. An approximate idea of the customer
and consumer acceptance of the products is already known; from this and historical sales
data, sales forecasts can be determined. From the consumer and market studies, the
marketing strategy can developed.
5.9.1 Product and process specifications

Final specifications include the raw material specifications, the product formulation, the
process flow chart, the processing conditions in the individual unit operations, a
preliminary HACCP analysis of the process, the testing of the intermediate and the final
products, and the final product qualities. These are based on only preliminary production
runs and can change during the commercialisation.
5.9.2 Costs and prices
Costs and prices are predicted from the trial production runs and from the consumer test.
These will be ranges at the present time, as the production yields are only based on the
small-scale tests, and the prices are only based on consumer comments, not actual buying.
Usually pessimistic, most likely, optimistic, predictions are made for the costs and the
prices.
5.9.3 Sales forecasts

Sales forecasts are based on the consumer test results: the target market segments, the total
number of potential customers and the potential consumption rate. There will also be a
proportion of potential consumers who will not buy the product and this is also known from
product test results. From this type of data and allowing for direct competition, it is possible
to make an estimate of the probable sales. However, this estimate must only be used in
conjunction with estimates from other sources, since the details of buying intentions given
by consumers to market researchers are notoriously inaccurate.
Sales forecasts for most products can be made by considering sales levels of similar
products in conjunction with past and current socio-economic trends. Past records can, in
general, be used in two main ways. First, a past trend can be directly extrapolated on the
assumption that the causes which led to its occurrence will be maintained at the same level
in the future. Second, an analysis can be made of the chief determining factors of any
trends, and an attempt made to estimate future trends in accordance with any variations
expected as a result of those factors.
A broader approach to sales forecasting includes the factors which have an overall effect on
the economic behaviour of the nation. Most new products are in the non-staple food class;
they are convenience products, impulse products, or alternative food choices, and sales
levels of these can be affected by changes in total consumer expenditure. Detailed
discussion of forecasting is not possible here but all the above factors will need to be
considered to make reasonable forecasts. Sales forecasting is now a scientific technique
which has been developed to make predictions as rational as possible, exploring every
conceivable factor which could affect sales. Sales forecasts are sometimes wrong but all
efforts must be made to ensure they are incorrect only for the most unexpected or unusual
reasons.
5.9.4 Marketing strategy

The marketing strategy is built up, to outline and integrate the product, the packaging, the
price, the distribution methods and the promotional message. At this stage, these are still
general descriptions, and the two most important decisions to be made concern the
objectives of the market strategy, and the product concept developed from the final product
prototype and earlier research. At this stage the product concept is being developed into a
product proposition, which is the basis for the product communications in selling and
promoting the product during the commercialisation.
5.9.5 Financial analysis

This is based on the costs predicted by the processing and marketing research, and the
prices and sales forecasts from the market research. From these, the future cash flows and
profits are predicted. Capital investment for the production plant and maybe the distribution
system are estimated, and the working capital for the commercialisation and product launch
predicted. From this information can be predicted rates of return on investment and also
break-even times for development costs to be recovered. At this stage, these predictions
have quite a high range of inaccuracy, and risk of being wrong; therefore probabilities of
accuracy are placed on the predictions
The product and process specifications, the sales forecasts, the marketing strategy and the
financial analysis, although at this time not exact, give excellent information for a
feasibility study and for the evaluation of the product before the very expensive step of
commercialisation is attempted.
5.10 Summary
Product design and process development is a vital part of the product development project,
combining product, process, market and consumer research. These multi-disciplinary
activities are completely interconnected and form a highly creative part of the project. The
knowledge base is very wide, although sometimes there is little depth to parts of it. At the
end of product design, a factual feasibility study has to be produced from this mass of
information. Therefore, product design needs to be systematically planned and controlled,
while still allowing space for creative behaviour.
In the food industry in the past, this was a rather an ad-hoc, empirical procedure. With the
introduction of computers and the greater basic knowledge becoming available, it is now
developing into a technological process with a strong consumer base element. Consumers
are an integral part of product design, and are included in the testing of the prototype
products.
Three test factors in product design are consumer acceptability, technical feasibility and
costs; these must be considered at all stages of the design.
Product design finishes with the first attempts at defining the product specifications and the
marketing strategy which will be the basis for the commercialisation. The financial aspects
of cost, price and sales potential, are predicted, as well as the investment needed for further
development.
Arteaga, G.E., Li-Chan, E., Vasquez, M.C. and Nakai, S. (1994) 'Systematic experimental
designs for product formula optimization', Trends in Food Science and Technology, 5(8),
243-54.
Bruin, S. (1992) 'Integrated process design: issues and opportunities', Transactions of the
Institution of Chemical Engineers, 70, Part C, 126-30.
Coles, R.C. and Beharrell, B. (1990) 'Packaging innovation in the food industry', British
Food Journal 92(9), 21-32.
McFie, H. (1994) 'Computer-assisted product development', World of Food Ingredients,
October/November, 45-9.
Rowe, R.C. and Upjohn, N.G. (1993) 'Formulation expert systems', Chemistry and
Industry, 6, 15 March, 196-201.
Schaffner, D.J., Schroder, W.R. and Earle, M.D. (1998) Food Marketing - an International
Perspective, New York: WCB/McGraw-Hill, pp. 310-38.

Earle, M. and Earle, R. (2000) ‘Adapting the methods of product design to the changes.’
Building the Future on New Products, Leatherhead, Surrey, LFRA Ltd. pp 79-94
Earle, R.L. with Earle, M.D. (2008) Unit Operations in Food Processing, Palmerston
North, New Zealand, NZIFST(Inc) http://www.nzifst.org.nz/unitoperations/
Earle, R. And Earle M. (2008) ‘Important problems in food processing’ Fundamentals of
Food Reaction Technology http://www.nzifst.org.nz/food reaction technology/
Moskowitz, H.(2008) ‘Consumer-driven concept development and innovation in food
product development’ in MacFie, H. (ed.) Consumer-led Food Product Development,
Cambridge, Woodhead Publishing Ltd. pp342-82
Project Break 5
You can use the product design specifications from the Project Break 4 at the end of
Chapter 4 to start the product design.
In the company project, this will be your final product you selected.
Or if you have used Project 4, this would be a dried vegetable mix.
Instead of using either of these, you can use Project 5 for Delicatessen Salads.. You
will need to select a product and write product design specifications for it.
Now plan the activities in product design and process development as in Figure 5.1.
PRODUCTION
• List the possible raw materials and their functions.
• Identify the limits on the raw materials from the product design specifications.
• Draw a process flow chart for the process.
• Identify the unit operations in the process.
• Select the important processing variables in the unit operations.
• Outline an experimental plan to design the process to give the desired product
qualities.
MARKETING
• Identify the market channel and the distribution methods.
• What are the transport and storage conditions?
• What is the basic package design for processing needs and protection during
distribution?
• What are the needs of the retailer and the consumer in the packaging?
• What are the promotional needs of the package?
• What is the price range for the product?
Now: 1. Describe the final product prototype, including the package.
2. Outline the product and process specifications.
3. Outline the marketing strategy
4. If possible, do a financial analysis
5. Finally write a two page feasibility report.
Project 5 Delicatessen Salads
A logical development for the mayonnaise-based salads industry is the production of

entire mini-meals based on the salad concept. Such products are in keeping with the
image of a healthy diet, and they offer the manufacturer an opportunity for added value.
What has limited this progression has been the inherent difficulty in making a product
that is both bland (not too acidic) and safe. The product must be bland in order to allow
consumption of the quantity needed to constitute a mini-meal, and yet a mild product
would not have sufficient concentration of anti-microbial acids to ensure either
microbiological safety or a sufficiently long shelf life.
The important constituent that controls the microbial growth and therefore the safety of
the product is the concentration of un-dissociated organic acid, usually acetic acid,
remaining in the aqueous phase of the mayonnaise, but this gives an acidic taste to the
salad. Buffer systems, for example acetic acid and sodium acetate, have sometimes
been used which can control the acidity in the food. Fermentation of the vegetables also
develops acidity, and the flavour is not usually as harsh as acetic acid. An attractive
feature of many mayonnaise-based salads is the incorporation of high protein
ingredients such as cheese, chicken meat, corned beef, crab meat, egg, ham, herring
meat, mycoprotein, prawns and sausage. These ingredients give a less acid food;
standard salads are pH 3.2-4.5, but with cheese are 4.0-4.5, fish 3.6 -4.4 and meat 4.0-
5.1. There are suggestions that the protein components could confer some protection on
the contaminating bacteria from the hostile environment of the dressing and therefore
preservation and shelf life would be reduced.
Storage conditions that can affect the shelf life of the salads are temperature, packaging
and modified atmospheres. In modified atmospheres using nitrogen and carbon dioxide,
the CO2 atmosphere can cause unattractive flavour changes.
(Source: Brocklehurst, T.E. (1994) 'Delicatessen salads and chilled prepared fruit and vegetable
products', in Man, C. M. D. and Jones, A. A. (eds,), Shelf Life Evaluation of Foods, London: Blackie
Academic and Professional, pp.87-126.)
CHAPTER 6
Product Commercialisation
6.1 Introduction
The aim of commercialisation is to change the final product prototype into an

innovative commercial product that can be launched onto the market. This is still a
creative procedure but it is extremely focussed so that the marketing is integrated with
the production, and finance is making the funds available but controlling expenditure. It
is an expensive stage and needs good financial control to ensure that resources are
available at the right time and that costs do not overrun.
Time also needs to be planned and controlled so that there is no delay. Time is of the
essence because there is now a launch date to be considered, and once that is determined
then activities are timed and their timing controlled. The aim is to launch at a specific
time. If the length of time for commercialisation is increased, either the launch may
have to be delayed perhaps up to a year in order to market at the correct season, or
everyone rushes to launch and the product is not of the correct quality, or production
cannot produce it in sufficient quantities or marketing cannot obtain the correct
distribution.
6.2 Outcomes and activities in product commercialisation
From the product specifications, the marketing strategy and the final prototype product,
commercialisation builds into three important functional plans (marketing, production
and finance) and then into an overall operational plan. These are combined together as
shown in Figure 6.1, which shows the different outcomes needed in each plan. The
outcomes from the three plans are combined in an operational plan for the launch. After
the launch there is a review of the final outcomes.
Figure 6.1 The outcomes from product commercialisation

__________________________________________________________________
.
MARKETING PLAN PRODUCTION PLAN
OBJECTIVES PRODUCT QUALITIES
PRODUCT DESCRIPTION RAW MATERIALS
MARKET STRATEGY PROCESSING
MARKET CHANNELS PROCESS CONTROL
PHYSICAL DISTRIBUTION STORAGE & TRANSPORT
PRICING QUALITY ASSURANCE
SALES PLAN EQUIPMENT
PROMOTION SERVICES
PERSONNEL PERSONNEL
COSTS COSTS
TIMING SCHEDULES TIMING SCHEDULES
FINANCE PLAN
COSTS, PRICES
PROFITS
CASH FLOWS
CAPITAL INVESTMENT
WORKING CAPITAL
RETURN ON INVESTMENT
RISK ANALYSIS
_____________________________________________________________________

OPERATIONAL PLAN
PRODUCTION CAPACITIES AND INVENTORIES
SELLING ORGANISATION
PROMOTION ORGANISATION
FINANCE AND FINANCIAL CONTROLS
FULL SCALE INTRODUCTION
POST-LAUNCH EVALUATION

DETERMINATION OF RETURN ON INVESTMENT

COMMERCIAL REPORT
During commercialisation, the knowledge required to formulate these plans has to be

found, organised and integrated. It starts with information from the product design and
process development: product and packaging qualities, product concept, target market,
price range, market channel, physical distribution, process flow sheet, process
conditions, product testing. At this point, final adjustments are made to the product so
that it is acceptable not only to the consumers but also to the company’s operational
divisions, the retailers and other people in the distribution system. With industrial
products, it has to be acceptable across the different groups in the buying company -
product development, quality assurance, production and buying.
The product and its inner and outer packages need to be tested through production and
distribution to determine if the packaging provides the necessary protection to the
product and also meets the expected demands of distribution, sale and use. Some of the
product prepared during the small plant tests can be tested in large consumer/customer
'use' tests. In industrial marketing, it is important not only that the new ingredient is
acceptable in the manufacturer's plant but also that the manufacturer's product is
acceptable to the consumers. In consumer marketing, there are further consumer ‘use’
tests and sometimes a small test market in a few supermarkets representative of the
overall market to test the effects of different prices and promotions. There is constant
comparison with competitive products on the market to confirm that the product has
advantages to the users.
After these studies, there is enough information to detail the market for the product and
to draw up a complete market plan for launching the product, including market trials,
methods of selling, promotion and advertising, and methods of distribution.
The production development differs if the present plant is to be used or if a new plant is
to be built or if new equipment is to be bought or built. A preliminary process
equipment design can be made or, if current plant is to be used, the layout and
adaptation of this equipment for the new process determined. The production is ‘fine-
tuned’ and quality assurance developed.
Costs and prices are studied, the investments needed for marketing and for production
are estimated and a financial analysis is made. Then the decision is taken to stop, or to
test the market and production plans, or to allow the product to go forward to launching.
The production and the marketing are integrated first in large-scale production and
market testing, and then in an operational plan. A final commercial report, based on the
information collected, analyses whether the product fits in with the commercial and
financial aims of top management.
The steps and some of the activities in commercialisation are shown in Figure 6.2.
Figure 6.2 Activities in product commercialisation


_____________________________________________________________________
Knowledge of the product, production and marketing
Product
Product qualities optimised
Final packaging design
Final product concept
Marketing Production
Target market finalised Plant design
Preliminary market/sales prediction Plant commissioning
Price, promotion, place studies HACCP analysis
Process control
Yields and costs studies
Quality assurance designed, tested
Transport/storage testing

Planning marketing, production and finance
Preparation of: Preparation of: Preparation of:

Market strategy Production specifications Final costing and pricing
Market plan Production plan Investment finance plan
Market forecast Physical distribution plan Operational finance plan
MARKETING, PRODUCTION AND FINANCE PLANS

_____________________________________________________________________

Integration of marketing, production and finance
Prepare marketing material Production on large-scale Study of cash flows

Test market Variability of production Finance sources, costs
Analyse marketing and production testing Analyse financial feasibility
Improve marketing Improve production Improve costs

_____________________________________________________________________

OPERATIONAL PLAN
DETERMINATION OF RETURN ON INVESTMENT
COMMERCIAL REPORT
Think Break 6.1
Outcomes from commercialisation: marketing plan objectives
Compare the marketing plan objectives in launching the following new products:
• high protein bread by a group of small bakers with their own retail shops
• a tomato flavoured potato puffed snack by a potato chip company with
national distribution
• a line of salami products by an Italian meat processor into supermarkets

in Britain
6.3 Knowledge required for the marketing plan

The following operating functions are included in the marketing plan:
• market information - market research and analysis, particularly the targets to be
set for the launch and post-launch and the methods to monitor these;
• product - product proposition (product concept), packaging, branding, image;
• market channel and distribution - choice, control and development of market
channels, transportation, storage;
• pricing - price range, relation of price to demand, margins, discounts, specialing;
• promotion - retailer and consumer promotion, advertising, public relations;
• sales - methods of selling, terms of sale, sales reporting, analysis and forecasting.
6.3.1 Market information

The aim of information is to provide knowledge of both the consumer and the retailer as
the basis for a successful marketing strategy, and also to predict the number of units that
will be sold and revenue generated in order to set the targets for the post-launch analysis
of the success of the marketing. The questions to answer are:
• What will be the consumers' purchasing and repurchasing behaviour?
• What will be the consumers' reactions to the prices, the promotions?
• What are the predicted pessimistic, most likely and optimistic sales units and
revenue over the next months, years?
• What are the predicted competitive reactions?
• What are the predicted market shares?
Before the marketing plan is developed, there should already be a comprehensive
description of the potential consumers in the target market segment. With the 'line-filler'
type of product, the company will know the consumer from previous marketing efforts.
For the innovative product, market research, using either a survey or a product test or
both, will provide information to predict the potential consumption rate. For the purpose
of sales forecasting, the company needs to know the total number of potential customers
and the potential consumption rate. From this type of data and allowing for direct
competition, it is possible to make an estimate of the probable sales in conjunction with
estimates from other sources.
There are short-term or launch forecasts and also monthly or yearly long-term forecasts.
The intervals of forecasting depend on the predicted product lifecycle. If it is a one-
season product with a life between three and six months then monthly sales at least need
prediction. For the longer life product of five to ten years, then monthly sales for the
first year and yearly predictions after that are often used.
Think Break 6.2

Knowledge required for the marketing plan: customer information
For the industrial marketing of a new fat ingredient, compare the introduction of
the new product to large bread bakers and to small bakers and confectioners.
Contrast the needs of the two different types of customers, their possible buying
methods, the types of products they make, the services they need.
Discuss the marketing methods the company could use for each group of
customers..
6.3.2 Product
The aim is to have a product the consumers will buy. Some of the questions to answer
are:
• Is the product what the consumers want?
• Does it have the benefits wanted by the consumers?
• Does it have the desired characteristics wanted by the consumer (sensory, ease of
use, safety, nutrition, psychological)?
• Is it packaged correctly?
• Is the pack the right size?
• Is the pack attractive at the point of sale?
• Are the product and the pack legal? ethical?
• Does the brand suit the product?
The product characteristics, benefits, packaging type and size, brand and packaging
aesthetics, product image and the final product proposition to be presented to the retailer
or the industrial customer are identified and then integrated into the complete product
description for the market plan. The services provided for the industrial customer need
to be identified such as delivery, packaging, technical help.
6.3.3. Packaging
The aim of packaging is to present a unique design which will stand out on the retailers'
shelves and in the kitchen, encouraging consumers to buy and use the product. The
packaging design consists first in choosing a brand and a product name, and then
developing a graphic package design. In choosing the brand, there is the decision
whether to use a family brand name or a product brand name or both. Products have
been seen on supermarket shelves with three brand names, but this is confusing to the
buyers! A family brand name gives recognition and reassurance to the consumer but
must have strong associations with the new product. The product name needs to be
readily recognised by the target consumers and instantly related to their food
preferences and also related to the benefits they see in the product. Name selection is
achieved through the typical process of idea generation and screening, with strong
involvement by the consumer. The graphic design should be attractive but also
informative, giving details on the ingredients, the nutritional value and how to use the
product. There are also legal requirements from the Food Regulations which must be
followed.
6.3.4 Market channel and distribution

The aim is to make the product available at the right price at the right place at the right
time. The questions to answer on the marketing of the product are:
• Who will sell it?
• How will it be sold?
• How much will be sold?
• How will it be transported?
• How will it be stored?
• How will it be displayed?

• How will it be promoted by the retailer?
The type of market channel will have been identified but there is also a need to analyse
the people/organisations involved so that the product can be sold effectively with
control over and integration of selling and buying.
The overall system of food production is so complicated today, with international

movement of raw materials, ingredients and consumer products, that the whole system
from the agricultural and marine producers to the final consumer needs to be studied,
not just the immediate market channel of the product from the company to the retailer.
The domination of large multinational agricultural companies, processing companies,
supermarkets and fast food restaurants means that they control or at least strongly
influence the market channels. But there are still many small companies such as family
bakeries, restaurants, coffee shops, market stalls, family stores, which need to be
reached and the distributing company has to decide if they do this themselves or work
through agents and wholesalers. Small companies, especially in food exporting, need to
have agents or distributors to organise their market channel.
In studying the market channel, the coverage of the target market achieved is
determined, the costs estimated and the sales predicted for the different types of outlets
in the market channel. The logistics are important, especially in export marketing. The
locations of the plants, storage facilities and the customers in the distribution system,
the transport available, the inventory held in the total distribution system and the losses
in quantity and quality of product in the system need to be investigated so that the
optimum system for quality of product, sales and costs can be determined.
Most companies have an established distribution system and cannot change it to suit one
new product. However, the launch of a new product is a good opportunity to study the
alternatives if there are any. In the marketing of pre-packaged consumer food products,
the supermarket has become the all-important means of achieving distribution, but there
may be an opportunity to look at alternatives such as home selling.
Think Break 6.3
Knowledge required for the marketing plan: market channel and distribution
A company is planning to export frozen fish fillets from New Zealand to

restaurants in California. Discuss the advantages and disadvantages of the three
possible methods of distribution:
(1) their own salespeople,
(2) a frozen fish distributor/merchant and
(3) an import agent.
6.3.5 Pricing
The price aim is to have a product giving 'value for money' for the consumer but at a
price that will produce the desired sales revenue and profit for the company. Company
pricing issues include the list price, discounts, allowances, payment period and credit
terms. The list price is based not only on the company costs plus the profit and the
advertising budget, but also on external factors that affect price. The questions to answer
are:
• What price range will the consumer accept?

• Does the consumer have any psychological attitudes to price?
• What is the relationship between sales forecasts and prices?
• How does the price relate to competitors' prices?
• What are retailer and wholesaler margins, agent percentage?
• What price specials, discounts may be needed?
• What are the subsidies, the taxes, the exchange rate?
• What are the basic company costs, the advertising allowances, the company
profit? Do they vary at different levels of outputs and sales?
Pricing is not a simple matter for a new product because of the many factors to be taken
into account, but in food marketing there is little scope for a great deal of movement in
price once the company has decided on its basic cost structure, pricing policy and the
position of the product on the market. A major decision is where to position the product
in the price range for this type of product: at the top as high quality, in the centre as
good quality or at the bottom as 'cheap'. In launching new products, two pricing policies
are particularly important: market skimming, where the price is set high to recover
development costs quickly, and market penetration where the price is set so that the
consumers will buy quickly and the main market is penetrated before competitors can
react.
Think Break 6.4

Knowledge required for the marketing plan: pricing
Discuss the following two pricing situations and decide which of the two pricing
strategies you would choose in each situation:
• market skimming or market penetration in launching an environmentally
friendly, nutritionally acceptable soft drink by a large soft drink manufacturer;
• top of the market pricing or bottom of the market pricing for a new blue vein
cheese from a small dairy company.
6.3.6 Promotion
The aim of promotion is to make the consumers aware of the product and encourage
them to buy the product at the rate of sales growth desired by the company. Promotion
includes advertising, personal selling, sales promotion and publicity. The questions to
answer are:
• Who are the target consumers?
• What is the product image?
• What is the message that has to reach the consumers?
• What promotion is needed to convey this message?
• What promotional methods are available?
• What budget is there?
For a food innovation, the consumer is made aware of the product, educated about its
use and benefits, and encouraged to try it. Although TV advertising is often used for
new food products because it reaches a large number of consumers very quickly, it may
not be the most effective choice. Demonstrations and tasting can encourage the
consumer to try the product and to remove some of their doubts about it because of its
‘newness’. Promotion is also to the retailer, an important intermediary on the way to the
consumer. Because of the difficulty of persuading supermarket managers and owners to
give shelf space to a new product, retailer promotion is being given a larger proportion
of the promotional budget.
The promotional budget is the sum of money available for spending on the launch and is
usually calculated as the amount needed for a given annual sales target rather than a
fixed percentage on expected sales. Promotion as percentage of turnover may be as high
as 30% or 40% in the initial stages of a product's life; this may be justified as being
necessary to achieve maximum distribution quickly and to bring notice to the company's
other products as a whole. How much should be allocated to a new product for the
purpose of the launch is difficult to decide rationally - there is seldom a model
correlating sales with promotion for a new product. The next step is to assess whether
or not the product is worth such a promotional budget, taking into account the purpose
for which the product is being introduced. If it is not, then either work on a reduced
sales forecast and budget or leave the market to someone who will find it worthwhile.
As can be seen in some of the Case Studies throughout the text, even some large
companies have not learnt this lesson. The whole situation is rather unsatisfactory but
there are techniques to put the promotional budget decision on an analytical footing if
the company and the industry has collected the requisite data.
Selection of the advertising mix presents similar problems to budget determination, and
sometimes precedes it. Decide what you want to do and then allocate the budget to do
it! The obvious prerequisites to the selection of methods of promotion are to know
whom the promotion is aimed at and what it is trying to do. The people to influence are
usually the purchasers and all those who affect their decisions, and of course the final
consumers who eat the food. The aims of the promotion may be to produce immediate
sales, to stimulate brand recognition and to 'educate' the consumer on a new type of
product benefit or characteristic. When the target people and the reasons for the
promotions are decided, logical selection of media can commence. There are reasonably
good quantitative techniques for this task, but it is still frequently left to experience and
value judgements.
Think Break 6.5
Knowledge required for the marketing plan: promotion
A dairy company is launching a new high protein, high calcium, reduced fat, fresh
milk which is to be sold under the brand name Active', and has asked you for a
promotional brief.
• Prepare a promotional brief clearly describing the product concept, the
people to whom the milk is to be promoted and the advertising objectives.
• From this develop a theme for the promotion.
• Discuss possible methods of promoting the milk, and outline a
promotional campaign.
6.3.7 Sales
The sales aim is to achieve the sales targets that have been predicted at the budgeted
costs. This needs organisation of the sales areas and the sales personnel. Sales targets
are set for the sales areas and the individuals, and the sales people are organised to
achieve these sales. Training is provided before the market launch, so that sales people
have knowledge of the product, the market research, pricing and promotion and know
how to sell the product. Sales calls before the launch and merchandising (shelf display
organisation) during the launch are needed to achieve the necessary shelf space for the
new products. In the marketing plan the number of such special calls must be detailed to
allow adequate planning by the area managers.
The product proposition is the material presented to the buyer by the sales person. This
will include the product itself, written and oral details of the research behind the
product, the advertising programme, the margins and suggested retail price and any
introductory offer. In supermarkets, the sales person will contact the buyer who then has
the choice of whether to recommend the product to the new products selection
committee or to make the decision themselves. Some companies will sell through a
wholesaler, a food broker or a manufacturers' agent. The sales person has to be
equipped with facts which will convince the buyer, the wholesaler or the agent that the
product is a 'must' to enable them, in turn, to 'sell’ the product to the buying committee.
6.4 The marketing plan
There are several factors that need to be considered when developing the market plan:
• product position in the market;

• stage of the lifecycle for the product class, and therefore the position of the new
product on the product class lifecycle;
• relationship of the new product marketing mix to the overall company marketing
mix;
• interaction of the parts of the marketing mix - market channel with price,
promotion with price, product with promotion;
• quantitative relationship between sales volumes and the various parts of the
marketing mix;
• marketing profitability and efficiency of the marketing mix;
• reactions to the marketing mix of the industrial, social, legal and political
environments.
A summary of the parts of the market plan is shown in Table 6.1.

Table 6.1 Summary of a marketing plan for a new product
Overall Marketing Plan

Objectives: volume of sales, market area, profit.
Predicted environment: economic, political, social, industrial.
Place of product in product mix (product line): type of product, quality level, price
range, place in line (leader, minor product).
Market segment(s): type(s), location, size, characteristics.
Market channel: type of channel, retail, food service, institutional, industrial;
intermediate organisations (wholesalers, agents, brokers); geographical positions of
all organisations in the channel.
Marketing strategy: strategy outline, target markets, marketing mix, marketing
expenditure level.
Product plan
Product: proposition, uses, characteristics.
Packaging: branding, information, legal requirements, size(s), aesthetics.
Costs and prices
Costs: fixed and variable costs, marginal costs.
Prices: company list price, distributors' margins, retail price.
Sales and distribution plan
Sales organisation: personnel, training, launch, post-launch.
Physical distribution: transport, store location, inventory plan.
Sales: reporting, analysing, forecasting.
Sales targets and budgets: area targets, sales persons' targets, areas and sales
budgets.
Sales promotion: merchandising, sales communications.
Sales evaluation: targets and costs analysis.
Advertising and promotion
Message selection: creative development.
Consumer advertising: press, television, cinema, radio, outdoor posters, public
relations, internet
Consumer promotions: price specials, reduced price offers, competitions, coupons,
free samples
Point-of-purchase: display material, tasting, cooking demonstration.
Trade promotions: incentive schemes, display competitions, sales contests.
Trade advertising: trade journals, trade displays, conferences, publications.
Schedules
Production: times, quantities, quality, losses
Distribution:times, quantities, quality, losses.
Selling: times, launch quantity, future predicted quantities.
Promotion and advertising: times.
An example of a market plan is given in Example 6.1.
Example 6.1 Low-calorie chicken hotpot

A medium-sized canning company decided that it would move into the nutritional
diet market. The general manager thinks the present products - beans in tomato
sauce, soups, spaghetti, meat and vegetables - have a poor nutritional image. The
product designer has produced a low-calorie chicken hotpot and the marketing
manager has produced the following market mix plan.
Marketing objectives
• Enter the diet food market segment emphasising the nutritional/low calorie/
convenience aspects of the product.
• Recover development costs within two years.
• Maximise profits.
Predicted Environment
At present, the country is in an economic recession but there is predicted to be a
minor resurgence in the economy. This will justify the product launch in this year.
The social environment is changing, with an increased awareness of the nutritional
value of foods, personal fitness and weight control. If the market follows overseas
trends, this trend could continue affecting a greater proportion of the population.
This means the product should be readily accepted with little social resistance.
At present, there are no calorie reduced, nutritionally balanced, canned
convenience meals on the market. This could be expected to change rapidly once
the product is launched. Thus the company must have a flexible marketing plan to
adjust to the changing competitive environment.
Product
The product has the appeal of being:
• a balanced meal of nutrients and minerals;
• low in calories;
• convenient.
These factors were established from the market trial and from this a product image
developed of 'calorie reduced, highly nutritious, convenience meal'. Factors such as
'good for you', 'balanced', 'quick' and 'healthy' could be emphasised as product
benefits.
Product name
As the sponsoring company is diversifying into the product area of diet foods, it
could be preferable to establish a new brand with a 'health' image. Brand
suggestions include 'LITEWEIGHT', 'VITALITE' or 'NUTRILITE'. The latter
brand name tends to be better suited to the product image of a calorie reduced,
nutritional product line.
The product name decided on is 'CHICKEN HOTPOT' as this describes a chicken
and vegetable mix suitable for a quick but special meal. It also implies the product
is different from competing canned meat and vegetable products. This distinction
must be emphasised as the developed product is establishing a different product
image
As the product is to be canned, it is important that the label be distinctive to attract
consumer attention. The label must meet the Food Regulations.
Example 6.1 Low-calorie chicken hotpot – continued
Consumer
The product has to appeal to two distinct consumers:
• consumers on calorie reduced/health food diets;
• general consumers of convenience foods who would buy the product for the
reduction in calories, nutritional attributes and possibly taste preferences to
competing convenience products on the market.
Price
There are three alternative pricing strategies:
• price high, to the upper end of the diet market;
• price intermediate, to the low calorie/convenience market;
• price low, to the convenience canned meals market.
One of the marketing goals set was to maximise profits. To achieve this, the
company's demand, cost and profit functions were analysed. The production cost
was estimated at $1.71 and to cover company costs and profits the wholesale list
price was set at $3.22. If there was a retailer mark-up of 30%, this would give a
retail price of $4.19. As the product would have to be promoted, it was decided that
the price should be first set to the upper end, i.e. the diet market, and then as
production increases and development costs are recovered the price should be
dropped to the low calorie/convenience market.
The price set allows for 'specials', 'discounting' and other retail discounts that may
be necessary in the marketing of the product and establishing good relationships
with retail outlets.
Market channels
The alternative market channels are:
• market through supermarkets and convenience stores via a wholesaler;
• market direct to major supermarket chains (eliminating wholesaler);
• market to smaller health food shops and delicatessens via wholesaler;
• market to all retail stores directly.
It was established from the market trial that the main retail outlets at which the
consumer would expect to buy the product were supermarkets and convenience
stores. A smaller proportion of the respondents indicated buying the product at
health food shops and delicatessens. The company could use the latter if they
adopted the high price strategy (i.e. price to the upper end of the market).
The market channel for sale of the product through a wholesaler to supermarkets
and convenience stores is already established. Using this would minimise the cost
and marketing effort required in moving the product through the channel.
Marketing to delicatessens and health food shops requires marketing through a
wholesaler or using a manufacturers' agent to a large number of retail outlets in
small volumes. This may suit the initial small volume produced. Alternatively,
during the initial low throughput, it may be more useful to market the product only
to one or two supermarket chains in one of the major cities.
On considering the effectiveness, experience and cost of the alternatives, the first
alternative (supermarkets and convenience stores via a wholesaler) would appear to
have the greatest potential.
Example 6.1 Low-calorie chicken hotpot - continued
Physical Distribution
The product is canned and has an estimated shelf life of two years at ambient
temperatures. Due to the nature of the product, damage is restricted to dented cans
and torn labels, occurring only with excessive handling.
The existing company's physical distribution system is by road or rail, which can be
adapted to the Chicken Hotpot. The product is distributed to warehouses in main
city centres. On analysis of transport costing, it would appear rail is the cheaper
method for this initial distribution. Distribution to the smaller centres could be by
road or rail as dictated by local costs and availability of the transport.
The company adopts a policy of minimising the level of capital invested in

inventory. During the initial product launch, it is estimated a three-month supply of
product is required to fill the market channel. As the market establishes, this level
of inventory in the warehouses can decrease to approximately a two-month supply.
This does not allow for any possible seasonal trends such as increased consumption
during winter; these can only be established during the initial years of marketing
the product.
Promotion
The promotional mix consists of a combination of four promotional methods:
• advertising; • personal selling;
• sales promotion; • publicity.
The mix must be coordinated and conform to the overall market plan.
The theme for all promotional work is:
CHICKEN HOTPOT a calorie reduced, highly nutritious, convenience meal
This theme emphasises that the product is a convenience product giving a balanced
meal of essential vitamins and nutrients for those people on calorie-reduced diets or
interested in weight control. It is felt that the main product benefit to emphasise is
convenience: quick to prepare, calorie-reduced meal.
Advertising aims are to stimulate sales, and generate the new product image and the
NUTRILITE brand image.
The advertising media available for marketing the product, in order of increasing
cost and increasing penetration, are:
1. newspapers; 4. radio;
2. magazines; 5. television.
3. mail pamphlets with discount offers;
Due to limited finance, the possibility of television as a promotional medium is

eliminated. Radio tends to be specific for local regions and has intense competition
and short attention span. Thus it was also eliminated. The final media are within the
company’s budget allocation. Newspapers have a wide coverage but date quickly
and have a short attention span. Magazines reach a specialist target audience and
have a longer life due to magazine circulation. The mailing of pamphlets provides a
rapid means of informing the public (important during the product launch) but is
relatively expensive.
Example 6.1 Low-calorie chicken hotpot - continued
Two possible magazines for advertising the Chicken Hotpot throughout the market
could be: • a high circulation women’s magazine;
• a high circulation general magazine.
Both magazines have a high reach (i.e. a large number of people exposed one or
more times to the advertisement). The frequency of exposure will be determined by
the number of times the product is inserted.
Coordinating the advertising schedules is important to achieve a high reach at

product launch. A possible schedule is outlined below:
• Delivery of pamphlets to householders with a discount on the product.
• At the same time, concentrated magazine advertising in both magazines.
• Periodical burst advertising in magazines as the product is established on the
market.
Personal selling in the company consists of a sales force of two area managers with
eight sales persons. The sales persons establish contact with potential customers.
To ensure the presentation is effective, sales staff must be informed of the product,
sales method, any possible discounts, trade benefits, advertising and promotion to
be used.
Sales promotions are to gain retailer and consumer confidence in the product. To
gain trade acceptance of the product and achieve prime shelf space and in-store
displays, cooperative advertising and buying allowances could be offered.
In-store displays portray the calorie reduced, convenience, health aspect of the
product, for example a poster with a slim, healthy young couple eating the
casserole and a caption underneath stating the ease of preparation. The displays
could show methods of serving the product and, if possible, in-store cooking
demonstrations will be used. Samples could also be given. In-store promotion is
important to show the attractive eating qualities and to emphasise the lower calories
than the existing canned meals.
Publicity is to gain widespread awareness of the product in the trade and among the
consumers. At the product launch it may be possible to obtain media coverage of
the revolution in food - a calorie reduced, convenience meal balanced in nutrients
and vitamins. This is justified by the fact that the type of product is not presently
available but corresponds to the new awareness in health and fitness. Promotion of
this type would require careful planning to be effective but in general publicity has
a high level of truth attached to it, i.e. consumers tend to believe it is more
authentic than advertisements.
Overall, the promotional mix will be informative, building up an awareness of the

product at the time of launching. As the product establishes a market, the mix will
become more persuasive.
Example 6.1. Low-calorie chicken hotpot - continued
Timing and test market
The most suitable time for launching of the product is prior to winter. This is
because the hotpot may show a seasonal trend with increased demand in the winter
months for a hot meal. The extent of the trend can only be determined by actual
marketing, but it will probably not be very marked due to the ‘light’ sauce.
Prior to national launching of the product, it may be advantageous to test market

the product in a small region. The cost of this is justified by the newness of the
product.
It is essential the product is launched soon to obtain maximum benefit from the
change in consumer awareness of health and fitness combined with the increasing
demand for convenient, quick-to-prepare foods.
Think Break 6.6

A marketing plan: low-calorie chicken hotpot
Imagine you are the general manager of the company and you have been presented
with this market plan.
1. Do you think this should be a single product launch or a product line launch?
2. Do you agree with a new brand name? How would you test the suggested name?
3. Do you want to sell high priced, top of the market product when you only go to
the cheap convenience market at the moment?
4. What changes would you suggest to the market plan?
5. Would you give permission for the product launch?
In preparing the marketing plan, there are some points to remember:

• The promotional artwork must be completed before the package manufacture.
• There must be sufficient capital to finance the stocks of product and the
introduction costs - the money available will set the limits on your marketing
plan.
• The sales force must be adequately trained before product stocks are built up in
the different distribution centres but after the promotion has been designed.
• Adequate stocks of the product must be available at the time of introduction.
hotpot continued
Timing and test market
The most suitable time for launching of the product is prior to winter. This is
because the hotpot may show a seasonal trend with increased demand in the winter
months for a hot meal. The extent of the trend can only be determined by actual
• The promotion should give sales which are related to the sales forecast but also
the production capacity of the plant.
The marketing plan is summarised in a marketing programme, which is an integrated

plan of all activities together with their timing and costs. It includes a marketing budget
with the sales forecasts - volume, revenue and the costs and the gross profits. The plan
is evaluated before final approval. Is it feasible, comprehensive and flexible? Does it
include a schedule, a budget? Is it in written form, in line with company policy? Does it
provide for effective implementation? Has it been carefully reviewed and agreed by the
people who will carry it out? Is it integrated with the production plan?
Think Break 6.7

Marketing plan: differences with innovation level
Discuss the differences between the market plans for an innovative product, an
improved product and a me-too product.
Show diagrammatically the main sections of the three plans.
6.5 Knowledge required for the production plan

A production plan is developed along the same lines as the market plan to ensure that all
the tasks are carried out and completed in time. The main areas in production planning
are:
• raw materials;
• processing;
• quality assurance.
6.5.1 Raw materials

The aim here is to ensure that the raw materials are delivered at the right time and in the
right quantities and of the right quality and at the right cost so that the process runs
successfully. The factors to be considered when sourcing raw materials for both the
product and the packaging are:
• location of the source relative to the plant;
• level of quality required for the raw material;
• price that the product can afford;
• reliability of the supplier regarding specifications and delivery;
• services provided by the supplier;
• uniqueness of the supplier for this raw material.
These factors are listed in order of importance. The most important factor is met first
and so on down the list to determine the most suitable supplier(s) for each raw material.
The raw material might need to be of a specified quality but as it is highly perishable it
needs to be sourced near the plant. Therefore quality and location would be considered
first when choosing suppliers. An important decision is to have either a long-term
association with a supplier or to choose the supplier according to the factors as
conditions change.
It is important to determine the timing and the quantities of ordering, arrival, storage
and use of the raw materials. Some raw materials have very long lag times before
delivery, especially packaging materials and imported ingredients, therefore a schedule
for ordering materials is made out and followed so that all the materials arrive in time to
start production. It is also important that the materials do not arrive too early as this can
cost the manufacturer a great deal for inventory and also materials may deteriorate in
storage. There has been a great deal of emphasis on ‘just-in-time’ production in recent
years, but this can cause a great deal of trouble when starting production for a new
product. It is easier to manage a less tight schedule as it is never certain what is going to
happen. The quantity to be ordered and held in stock depends on the time from order to
delivery, the costs of delivery and storage, the quantity required for a production run
and the number of experimental runs planned. It is preferable to have the same raw
materials for all runs so that the processing effects can be studied.
Another important factor in raw material planning is to study if alternative raw materials
can be used and also if raw materials from different suppliers can be substituted for the
first choice. Then if there are any problems in supply, there are alternatives which can
be obtained quickly. If the product is a greater market success than predicted, it would
be embarrassing and might even kill the product if production had to stop because of
lack of a raw material.
The ways of handling, sorting and preparing raw materials are very important in the
food industry. There is a need to study the materials handling so that it is not labour
intensive and fits into the main process. Also in-line sorting equipment gives a tighter
control and reduces human sorting and judgement.
6.5.2 Processing/manufacturing
The aim of processing/manufacturing is to produce the right quality and quantity of
product at the right time and cost, not only for the launch but for the months ahead.
After the production trial at the end of product design and process development, many
problems will have been identified and discussed with production staff and hopefully
solved in order to make 'start up' as trouble-free as possible. However, just because it
works, it may not be the most efficient and effective way of producing the product. The
factors which need to be studied in processing can be grouped under technical,
economic and human reactions.
Technical factors to consider are the plant design and commissioning, and the process
analysis and control. New plant or new equipment may be needed and this has to be
designed and built or bought; in both cases there need to be engineering specifications
based on the processing requirements, mechanical/electrical design and computer
control. The plant layout and supply of services is important. Sometimes imaginative
new thinking in this area can increase product quality and yields and improve the
overall efficiency and conditions of the plant. It is too easy to be complacent, so look
carefully at movement of materials, employment of staff and bottlenecks in production.
Economic factors in processing can be summarised as initially setting the lowest

practicable capital and running costs and the required financial returns from the project,
and then ensuring by constant monitoring and fine-tuning that the budget is
implemented. Experience during the development may show a need for reconsideration
of the budget; if a change is required then it is essential that all implications for prices,
profits, predictions and so on are fully explored, understood and taken into account.
Human reactions in a processing line are critical both in getting a new development off
the ground and in the evolving stages. Commitment is a most important ingredient in
implementing change, and development always means change. If the staff want to make
it work then they will, and often this means an extensive selling job to staff at all levels
from the most senior manager to the floor operators. This needs to be done
systematically and comprehensively, and the more effectively it is done the more
smoothly the product development project will move.
In commissioning new plants, several points to remember are:
• Does the product meet specification in terms of quantity, quality, consistency?
• Can the plant be operated and controlled reliably, conveniently, without stress?
• Are the running costs for services, staffing and maintenance as planned?
• Do the plant components match the design stipulations, pricing schedules?
• Has adequate information material been prepared for the instruction of operating,
quality assurance, trouble shooting and maintenance staff?
• Have arrangements been made to remove ‘out of spec' products and other waste
materials from the plant without loss of secrecy?
Think Break 6.8

Knowledge required for the production plan: processing and manufacturing
In planning the production of the Chicken Hotpot in Example 6.1:

1. Identify the raw materials that could be used in the Chicken Hotpot,
including a nutritional mix to give the balanced nutrition.
2. Identify the unit operations in a processing flow sheet.
3. The present canning line is to be used which includes washing equipment

for vegetables, sorting belts, mixers, canning line, steam jacketed pans,
stationary autoclaves/sterilisers, water cooling stands, labelling machines.
Plan how you would use the equipment.
4. Develop a check list for all the activities needed before the trial runs.
5. How would you communicate your plans with the factory staff, engineers
and quality assurance staff?
6.5.3 Quality assurance

The aim of quality assurance is to ensure a product correct for its intended use. Quality
and safety are absolutely essential elements which must be built into new products. The
first step in analysing product safety and quality is to set up systems for Hazard
Analysis Critical Control Points (HACCP) or Hazard Analysis/Risk Assessment
(HARA) or Hazard Analysis and Operability (HAZOP). The steps in studying a process
using HACCP are as follows:
• Establish full specifications for raw materials, processing, product, packaging and
distribution.
• Identify and quantify risks.
• Prepare a full flow diagram for the process.
• Identify critical control points (CCPs) along the processing and distribution line
using risk assessment techniques.
• Establish measurements and set points and limits necessary at each CCP for
adequate and safe control.
• Establish and define criteria for tolerable departure from set points, and corrective
action to be taken to maintain control.
• Establish a monitoring regime; review the procedures for the HACCP system.
HACCP was originally introduced to ensure the safety of food, but it is now also used to
ensure product quality. Process control is based on the HACCP system, using computer
controls, total process modelling systems and process optimisation, and in-line testing.
Process control techniques are improving rapidly and will make this area of the product
development process more quantitative and less empirical. The process study also needs
to ensure that there is integration of the new process technology into the existing system
with minimum disruption and cost.
From these studies a quality assurance plan is developed, which includes the controls
and testing required during the process and the testing of the final product. Quality
assurance includes the sampling, testing and control procedures, the targets for each,
and the statistical control methods needed to study any changes that are occurring.
Companies must decide how far to take these when choosing the quality assurance
standard (ISO 9001, 9002, 9003) for their production. There may be a need for new
testing equipment and certainly for the training of staff. Once the plant is running,
tolerance limits will be finalised but they should be provisionally set well before then.
Production as well as quality assurance staff need to know the new requirements as they
are often the first to notice ‘out-of-specification' product. Quality assurance is integrated
into the company's TQM (total quality management) which takes into consideration all
aspects of the business that affect quality. Process analysis is one of the most important
tools in TQM.
The most important factor in building quality into production is the staff and the
communications between them. There is a need to have regular exchanges of
information both verbal and written between production and marketing, but especially
between the designers of the process and the production and quality assurance staff.
There should be cooperation between staff. Nothing is more likely to be disastrous than
the design team running the production trials. The production staff needs to run the
production with back-up and technical advice from the designers. Accurate and timely
information is not only crucial for effective management control, but it also improves
staff commitment and morale across departments.
A set procedure is needed; the production trial will require details from the design and
production managers on:
• quantity required, plant capacity/capability;
• reasons for trial;
• trial control methods;
• review methods for problems;
• personnel involved and contact methods.
• contingency plans;
• contamination and safety potential.
Other useful communication methods include factory trial requests, production sheets,
quality assurance sheets, product costing and a planning schedule, as well as the
production specifications and an outline marketing strategy. The regular critical
decision points should be identified so that all understand when production development
is to continue and when it is to stop. Staff education about the new process is important.
There are information security problems during these trials, as there is a need to keep
information away from competitors, so there will be constraints on communication and
staff must fully appreciate and respect the need for confidentiality.
6.6 The production plan
The production plan includes careful consideration of:

• product specifications,
• raw materials,
• processing,
• distribution,
• quality assurance,
• personnel,
• costs,
• timing schedules.
The production trial is developed after trial runs have solved any problems with the raw
materials and processing. This may be just two or three runs if a standard process is to
be used but many months even years for an innovative process. The initial production
plan usually is gradually changed as the production outputs are increased. The product
developers should cooperate with the production staff in developing the plan, but
responsibility for the production plan is with the production/technical manager.
Think Break 6.9

The production plan: fruit drink powder
For the fruit drink powder described in previous Think Breaks in Chapter 5,
Think Break 5.5 (Section 5.4.4) and Think Break 5.7 (Section 5.7), study your
information.
What further information would you need to develop a production plan, using the
areas listed above?
Whom would you contact to get this information?
Outline a production plan for the fruit drink powder, showing the stages in the
production plan development.
6.7 Knowledge required for the financial plan
From the marketing and the production studies comes information on the costs, prices,
quantities and investment needed to launch the product and to continue producing and
marketing the product in the future. There are predictions on the relationship between
production outputs and costs, the fixed costs and variable costs, the price range and the
relationship between price and demand, the capital investment for new plant, the
investment needed for launching both by production and marketing, and the working
capital needed during the launching and post-launch.
section 5.7 write down under the above headings the information that you would
From this information the finance team, with its knowledge of loans, interest rates,
taxes, subsidies, import duties and exchange rates, can determine inward and outward
cash flows (sales revenue and costs) for future years and the investment costs during the
same periods. From this, they can determine the profits and the total investment, and
then determine the return on the investment. The cash flows are usually discounted so
that future cash flows are brought to present-day values. These predictions are
compared with the company's financial targets and constraints. As these are predictions,
it is important that the probabilities of achieving them are estimated.
6.8 The financial plan
This consists of the prediction for the next few years of:
• costs;
• prices;
• profits;
• inward and outward cash flows;
• investments, both investment capital and working capital;
• returns on investment;
• predictions of financial variations due to product, market, company and economic
changes.
Possible changes in technology and consumer expectations also have to be taken into
account in developing the production and market plans (see Case Study 6).
Case Study 6.
Consumer Expectations of the Food Industry
The food industry's primary mission is to convert raw materials into safe, high
quality, consumable food products. As we do that we add value - reflected in price,
and hopefully always in meeting consumer needs in increasingly better ways. In our
early history; added value meant preservation to allow food to be stored between
growing seasons; later preservation techniques allowed food to be distributed and
consumed away from the growing region; more recently added value has focussed
on food safety, convenience, better taste and nutrition. Each of these increased added
value over prior inventions.
But today's consumer? Firstly there is a growing, but changing concern about health.
The negative aspects are concerns about additives, excess calories and food safety;
however, a newer interest in diet as a source of improved health and well-being is
emerging. Secondly there is a yearning for what is called 'essence’. That is a longing
to strip away the unnecessary, the superficial; to refocus on the genuine and
authentic, the simple and basic. Is this a start of a move from the added value of
processed food back towards the original agricultural raw material?
There are two other consumer aspects. Firstly food is consumed away from home,
which has implications for food safety. Secondly are the changes in where food is
being purchased for home consumption, which has resulted in growth of alternative
channels, such as home sales and delivery, mail order, and interactive media and
computer linkages.
So what does this mean for the future?
(Source: Ruff, J. (1995) 'Consumer expectations of the food industry - a vision for
the 21st century', Food Science and Technology Today, 9(4), 195-205.)
6.9 The pre-launch trial
The next stage is to integrate the production, market and financial plans in one pre-
launch trial. Once the results of this are known, the final overall operational plan for the
launch can be organised. With a product which is using the existing production and
marketing facilities, there may not be a need for additional test production and
marketing and the product will go straight into the launch; or if there is some doubt
there can be a 'rolling' launch, with the product introduced into a series of areas. But
there is still a need to research the production and the marketing so that it can be
improved as the launch proceeds.
Test marketing is not undertaken when:

• time into the market must be as short as possible because the product is vulnerable
to competitors who can easily copy the product and launch their competing
product onto the market;
• research is convincing that the product will be successful and it does not justify
the extra expense;
• the new product is a line-filler or a me-too; the launch costs will not be high and
so the losses are small in the event of a failure;
• there is confidence that any technical problems will not affect the product quality.
Production and market testing brings the product through the production sequence in the
production plan and puts the product on the market under the market plan in controlled
conditions in a restricted area. On the production side, the raw material quality and
quantity need to be monitored along with, most importantly, the yield and quality of the
product. Any equipment problems such as breakdowns and the staff needed also need to
be monitored. Also there is a need to monitor the process variables and to identify any
tendency to wander outside the set limits, either intermittently or in a set pattern.
It is very important to monitor not just the sales of the product, but to check how the
product is performing in distribution, storage and in the supermarket, the retailers'
attitudes to the product and their placement and promotion of the product in the
supermarket, and of course the consumers' attitudes and behaviour towards the product.
Are they buying again? How much are they buying? What do they like/dislike in the
product?
This monitoring usually leads to improvements in product, production and quality

assurance and also often signals desirable changes in distribution and marketing
methods. The pre-launch trial is a time of constant improvement of the product, of
reduction in production costs and of increase in the effectiveness of the marketing
methods. In industrial marketing, the general stages are the same but the product is
being developed for use by a customer in their process or the chef in food service, so
there has to be knowledge of how the ingredient is behaving in the customers' processes
and their products. Product testing is preferably undertaken with the customer in their
own plant, but because of the customer's needs for secrecy it may have to be undertaken
in the supplier's pilot plant.
Other factors to consider are the area of market testing and the length of time the
marketing and production testing will last. The test market area needs to be
representative of the total market in terms of the consumers, the retailers and the
marketing mix. The time for the market test depends on the average repurchase period,
the competitive situation and the cost. It is necessary to observe a few repeated
purchases of the product to see if the product will be a long-term success. If this period
is likely to be very long, then buyer interviews can be used to predict repeat purchasing.
Competition may come in very fast and either launch their product or upset the market
by pricing specials, forcing the test to be shortened. Production testing is continued until
the process stabilises.
The test market can be in one or two market areas, or just in one or two supermarkets.
The sales of competitive products are determined before the new product is introduced
and during the test both the competitive products and the new product sales are
monitored. With two areas, one area can have the product introduction and the other
area does not; this gives some idea if the observed effects arise from the product or from
some other cause in the whole market. Usually as well as undertaking a retail sales
audit, consumer panels or buyers' surveys are conducted to determine consumer
reactions.
From the production and market tests, information can be found on production
efficiency, product quality variations, costs, market share, and relationship of new
product to main competing products in terms of consumer acceptability and sales, and
also the predicted sales for the total market. The company will then have a realistic idea
of how the product will fare in the national market, and of any minor improvements
needed to the production and the marketing.
6.10 Overall operational plan
The overall operational plan gives the final directions for the production and marketing.
It contains information on:
• building production capacities and inventories,
• organising selling and promotion
• organising financial controls,
• full-scale introduction,
• post-launch evaluation.
The different activities in the operational plan are shown in Table 6.2.
Table 6.2 The operational plan
Building production capacities and inventories

▪ Complete production facilities and organise raw materials
▪ Organise warehouses, stores and shipping patterns
▪ Determine inventory levels
▪ Ensure production is operating to specification
▪ Ensure quality assurance is operating to specification
▪ Produce and distribute the required volumes
Organising selling
▪ Organise the market area
▪ Organise the selling method
▪ Set targets for areas and individuals
▪ Decide on approach to buyers
▪ Train the sales people
▪ Make introductory visits
Organising promotion
▪ Finalise promotion design
▪ Book television and radio time
▪ Prepare television films and radio sound tracks
▪ Design and print in-store promotional material
▪ Design newspaper and magazine advertisements
▪ Negotiate space in newspapers and magazines
▪ Distribute final material to merchandisers and media
Table 6.2 The operational plan (cont.)
Organising finance and financial controls

▪ Organise capital investment funds
▪ Organise working capital
▪ Set cost targets
▪ Set price targets
▪ Set sales revenue
▪ Set profits
▪ Set returns on investment
Full-scale introduction
▪ Organise sales meetings
▪ Introduce generally to trade
▪ Introduce to specific retailers by sales people
▪ Deliver stock to retail stores and ensure it is displayed correctly
▪ Start advertising and promotions
▪ Release the product
Post-launch evaluation
▪ Quantitative targets
▪ Qualitative targets
These marketing, production and financial activities need to be coordinated, and time
and resources allocated to them. The development of a critical path network of the
activities ensures the completion of the launch at the correct time as the critical
activities can be recognised and taken into account. It is important to set the standards
and methods for the post-launch evaluation before the launch that is in the operational
plan.
6.11 Financial analysis
By this stage costs are more accurate. Predictions can be made of costs at different
production levels and of the sensitivity of costs to changes in raw material prices,
energy prices and personnel wages. The price range and the different types of discounts
necessary will have been confirmed. This means that the profit per unit can be
predicted. Also the sales of units at the launch and in the future will have been predicted
from the test market, so the total sales revenues over time can be forecast. From the
sales and costs, the profits can be determined and the cash flows for the next few years
set out.
Financial analysis is vital before the decision is taken to launch the product. Product
development requires adequate resourcing, paid for through financing which has to be
planned.
Both the capital investment and the working capital investment are determined for the
launch and also to support the future. It may take some time before the cash flow
becomes positive and there needs to be cash available to overcome this. For small
companies failure in new product introductions is often the result of insufficient cash
reserves or an inability to borrow money to sustain the project through this period of
loss.
The return on investment can be predicted and compared with the company's policy.
Usually discounted cash flows are used in analysing the return on investment. The risk
is also assessed by setting probabilities on the most pessimistic, most likely and most
optimistic cash flows.
Important aspects of financial analysis are:

Finance quantity, in that sufficient capital or credit has to be assured to meet the total
costs of the project as they arise and as the project progresses. In a large organisation,
this may be met from R&D budgets, by effectively borrowing resources from other
operational parts of the company, through short-term credits from suppliers, overdrafts
and so on. Smaller organisations may have to formally borrow from outside, even set up
a new corporate structure and raise external funds by the sale of shares. In any event,
what can be thought of as the project balance sheet has to balance. In the longer term it
is expected to generate profits and pay its way in full.
Finance quality, in that the cash is provided when the need occurs. Each time a
decision is made to proceed a further step with the project, new resources are
committed, and when these are actually bought, appropriate payments must be made at
that time. It should be borne in mind that new steps are generally more costly than those
taken already, that the launch is probably the most costly, and that income only comes
after sales. Negative cash flows will accumulate and accelerate and the debt balance is
expected to peak around launch time.
Working capital must be adequate to pay for work in progress, production, marketing,
storage, distribution, wages and overheads. It is easy to underestimate and if insufficient
can lead to cutting the very corners which are essential to the speedy conclusion and
success of the project.
6.12 Summary
Commercialisation is difficult and costly; mistakes can be made and these can be major
hurdles for the project. The aim is to set out the details of the production, marketing and
financial plans, and then integrate them into one operational plan and so produce
success in launching the product on the market. There are many people involved in
commercialisation and therefore communication and coordination are vital.
Bringing in a commercially viable new product is the object of the product development
project, but it is only fully successful if it comes in on-time and on budget. Well
organised and resourced commercialisation can ensure that this happens. Only when the
launch is fully successful can the development managers be satisfied, and the general
managers have the confidence in development to commission the next project. Finance
is the yardstick whereby this confidence is measured.
Banks, J.G. (1994) 'Process control and quality assurance through the application of
HACCP and predictive microbiology', in Singh, R.P and Oliveira, F.A.R. (eds),
Minimal Processing of Food and Process Optimisation: An Interface, Boca Raton, Fla.:
CRC Press, pp. 191-99.
Hisrich, R.D. and Peters, M.P. (1991) 'The new products marketing program',
Marketing Decisions for New and Mature Products, New York: Maxwell Macmillan
International Editions, pp. 319 - 411.
Hood, L.L., Lundy, R.J. and Johnson, D.C. (1995) 'New product development: North
American ingredient supplier's role', British Food Journal, 97(3), 12-17.
Rizvi, S.S.H., Singh, R.K., Hotchkiss, J.H., Heldman, D.R. and Keung, H.K. (1993)
'Research needs in food engineering, processing and packaging', Food Technology,
March, 26S-35S.
Taniguchi, R. and Nihmura, M. (1994) 'Quality design and plant operation in food
processing', in Singh, R.P. and Oliveira, F.A.R. (eds.), Minimal Processing of Food and
Process Optimisation: An Interface, Boca Raton, Fla.: CRC Press, pp.243 - 49.

Earle, M. and Earle, R. (2000) ‘Adapting product commercialisation to the changes’
Building the Future on New Products, Leatherhead, Surrey, LFRA Ltd. pp 95-110,
Fuller, G.W. (2005) ‘Going to Market: Success or Failure’ New Food Product
Development, 2nd. Ed., Boca Raton, Florida, CRC Press. pp 219-239
Mayes, T. and Mortimore, S. (eds.) (2001) Making the Most of HACCP, Cambridge,
Woodhead
Russell, A. (2008) ‘Process innovation from research and development to production in
a large company – development and commercialisation of a low temperature extrusion
process.’Case studies in food product development, by Earle M. and Earle R., (eds.)
Cambridge, Woodhead, pp 202-222.
Project Break 6
Either for your company project or for another Project you have been using in
earlier chapters or for Project 6 at the end of the Chapter.
• Identify the marketing, production and financial knowledge that is needed

to develop the plans for commercialising the product(s).
• Outline the production, marketing and financial plans.
• Describe how the various plans can be integrated to give a successful

launch.
• Do you think the launch will be successful?

Project 6: Splash: Water in a Bottle
Spring, distilled, purified or enhanced, there's no purer packaging problem than
bottled water!
What is the product? What is the packaging?
The basic waters are:
• distilled and purified water which has been treated by distillation,
deionization or reverse osmosis to remove particles and minerals - most
notably chlorine - leaving almost no detectable taste;
• mineral waters from geologically and physically protected underground
sources;
• ordinary drinking water, carbon filtered;
• artesian water, basically spring water drawn from a well above the aquifer.
Most products are 'naturally pure' but some recent ones have had artificial additives
such as caffeine and herbs, and have been mixed with fruit juices.
The most important distinction between products is the packaging, mostly plastic or
glass. The packaging is mainly cylindrical bottles, but top market products have
unusual shapes. Many bottles have nipples so that the consumers can drink directly
from the bottle. At the same time, bottle and label designs have become more
fashionable and eye-catching.
The brands also bring variety. Most products have a mania for attaching themselves
to a distinctive place of origin. One of the simple strategies for grabbing the attention
of shoppers is to give their products a fanciful or downright silly name.
The gesture of indulging in bottled water has switched from one of sedentary
contentment, poured in a glass, to chin-cocked confidence swigged from the bottle.
And yet drinking water retains its sense of self-denial, rendering it a promiscuous
display of abstinence.
A company is now planning to introduce a Water of the Month Club, each month an
exotic water shipped straight to your home.
(Source: Pratt, S. and Nemerov, A. (1997) 'Splash', Internationa1 Design Magazine,

November, 6-9. Reprinted with permission. © 1999 Aspen Publishers, Inc.)
CHAPTER 7
Product Launch and Evaluation
7.1 Introduction
The product launch is both the end and the beginning. It is the culmination of all the
effort and thought that has gone before. It is also the start of a new product cycle if it is
an innovation, the revival of a product cycle which appears to have levelled off, or just
another product in the total product lifecycle causing a change in market share and
perhaps a faster growth pattern.
The new product affects the company's product mix. It may increase sales in one
product area and decrease sales in another, but hopefully it will increase the total sales
of all products. It can change the balance of sales in the industry and in the marketplace
and affect the consumers' behaviour and attitudes, and also influence change in the
social and economic environment. So once the product is launched, it is not just a case
of tracking the sales to see that they are reaching the target, but also of following
consequential changes in the company, the consumer and the environment.
The targets for success need to be carefully recorded and recognised by all before the
launch starts. The targets should not be moved unless they are discussed and again there
is agreement.
The success or failure of the product in the market depends largely on the skill with
which the operational plan is conducted by the production, marketing and finance
departments, but of course also on the market and the environment into which it is
launched. The plan may be good and the operation efficient, but suppose on the day the
product was launched either there was a food poisoning scare with this type of product,
or the competition started a massive price reduction campaign, or the government
announced that all benefits and pensions were to be cut, or the importing country
imposed massive import duties for this type of product. There need to be emergency
plans in place to react to such unpredicted problems - how to stop or change plans
quickly
7.2 The steps in the product launch
Once the top management decision has been taken for the launch, the product has to be
launched to several groups of people, the most important being the company, the
retailers, the consumers and the general public. The product launch can be regarded as
three steps: launch to the company, launch to the market and launch to the consumers,
and these are followed by the launch evaluation.
The activities are the typical operational activities of the company in departments such
as marketing, sales, production, quality assurance, finance, but the new product causes
changes and sometimes problems. The launch to the company has as its outcome the
completed company organisation. The launch to the market involves the production and
distribution of the product combined with the marketing to the retailers and the outcome
is the complete set up ready to launch, and the final stage is the launch to the consumer.
For the industrial products, the launch can be just to the company and to the customers,
but there may also be distributors and agents in the chain.
The outcomes from the three steps are important, both in their quality and their timing.
In timing, the company organisation for the launch needs to be completed before the
launch to the market starts, or disaster can ensue; for example:
• product that has not arrived at all the retail stores,
• TV. advertising that cannot be booked for the launch date, and
• printing of in-store promotional material that is two weeks behind.
Most people in product development have met these crises, and scrambled to solve
them.
The quality also needs to be correct or again disaster ensues:

• instant powder that does not dissolve in the correct time,
• T.V. advertising that does not mention the product name, and
• in-store promotional material that is a different colour from the packaging.
Once the product is launched to the consumers, there is not time to sit back and relax;
there is constant checking of product, production, distribution, marketing, sales and
costs. The checking will show up any problems that are occurring so that they can be
rectified quickly. Are the sales increasing more slowly than predicted? Is this caused by
lack of consumer interest in the product, consumer lack of acceptance of the product or
retailers' lack of promotion or shelf space? The checking also collects the qualitative and
quantitative information needed for the post-launch evaluation.
The post-launch evaluation leads into the final analysis which will decide the product's
future - to be dropped, improved, or accepted immediately into the company's product
mix. But during this time of evaluation, there is a need to continue the improvement and
the stabilisation of the product qualities, the marketing, the production and the costs.
The activities and the outcomes in the four stages of launch and the post-launch
evaluation are shown in Figure 7.1. Within these stages, the activities are organised as
suits the company and the project, but the marketing and product organisation are not
separate as shown in the Figure but are integrated and coordinated.
Figure 7.1 Activities and outcomes in the product launch and post-launch
Marketing organisation Production organisation

OPERATIONAL PLAN
____________________________________________________________________
Launch to the company
Finalise promotion Design, build, commission plant

Media advertising contracted Quality assurance finalised
In-store material prepared Raw materials contracts
Sales presentation to staff Physical distribution contracts
First introduction to retailers Production finalised
Market channel/physical distribution organisation
COMPLETED COMPANY ORGANISATION


Launch to the market
Launch targets finalised
Complete selling to retailer Produce the product

In-store material distributed Distribute the product
Merchandising in supermarket Check product quality
in supermarket
Release advertising Check product safety
Release product for sale
PRODUCT LAUNCH
____________________________________________________________________
Launch to the consumers
Merchandising Improving production efficiency
Advertising Reduce product quality variation
Sales recording Checking product in distribution
Buyers' surveys Checking product in retailers
Competition study Production costing
Marketing costing Distribution costing
Financial analysis of costs, revenues
Analysis of production, distribution, marketing
Comparison of actual results with targets
PRODUCT LAUNCH EVALUATION

____________________________________________________________________
Post Launch
New phase of advertising Standardising production
New phase of in-store promotion TQM in place
Pricing revamping Raw material procurement
revised
Sales recording Future costing
Sales analysis
Buyers' studies
Future developments of product, production, marketing
Financial analysis of investment, costs, revenues and profits
Future returns on investment predicted
FINAL EVALUATION REPORT

__________________________________________________________________________________
7.3 Internal company launch
ADOPTION OF PRODUCT INTO PRODUCT MIX
The internal company launch is made to all who are to work on some aspect of the
launch. This is most important because if staff are not enthusiastic, the whole launch
can fail. Even the smallest launch has a certain stress, and a large launch with plant
commissioning and new market channel organisation can cause major stress to people
in the company. There are constant problems which have to be solved such as time
overruns and not enough resources, which mean that people are working long hours at a
high level of intellectual and physical effort. The product must be launched to the raw
materials buying staff, store persons and the production staff, the accountants and the
clerical staff; the quality assurance technicians and the plant engineers, the area sales
organisers and the sales people. The people concerned are properly briefed and
motivated to produce the best results. These launches will take place at different times
during the preparation for the main launch and will be presented in different ways.
The raw materials, production, distribution and quality assurance people are usually
presented, at a technical conference, with the details of the:
• product,
• raw materials,
• production method and controls involved,
• physical distribution method including predicted shelf life and storage
conditions, and
• quality, quantity and timing targets and the allowable variations.
All this information is also presented in print form and on the computer so there is ready
access to it during the initial production runs. There are usually discussions about the
problems that might occur and about any improvements on yields, quality and costs
expected during continuing production. There is also a clear responsibility for the
various tasks, the cooperation required and the actions during emergencies. It is
important that there is free discussion during these briefings so that new ideas can
develop and everyone is knowledgeable about what is to happen and feel a member of
the team.
The sales people must be able to answer questions put to them by customers, be skilled
in the merchandising and in-store promotions and understand the sales targets that they
have to meet at certain times. The sales force conference is usually a lively occasion
because it is a presentation of the total product and the promotion to be used. The brand
name, product name and aesthetic packaging are all presented and the sales people are
given a final product proposition which they can use to convince the retailers about the
unique benefits of the product, and its improvements over competing products. The
final product proposition includes not only the product description, but also the
promotional programme, the list price, the retail margins and suggested retail price, and
any introductory offers, discounts and specials. The product needs to be presented with
an overwhelming image of success!
The sales communication is also presented at the sales force conference. The sales
communication is the sales person's convincing delivery of the product proposition to
the buyer. This is related to the type of product and the type of buyer, in particular the
selling of consumer products to retailers, and industrial products to food manufacturers
and food service operators. Retailers are interested in the types of consumer promotions
to be used and the budgets involved, manufacturers and food service operators in how
the product will perform in their processing and cooking, its effect on their end product
and the technical help provided.
Think Break 7.1

Internal company launch: frozen fish fillets in sauces
A fish processing company is preparing to launch a line of frozen fish fillets in

sauces, packed in boil-in-the-bag packs. These are small packs of 250g for an
individual snack, and the target consumers are older people living by themselves.
They will be sold through supermarkets and convenience stores.
Discuss how you would introduce this new product line to the production and
marketing staff in the company, discussing the presentation and the information
given to the staff.
7.4 External launch to the retailer and other distributors
The launch to the retailer is of course crucial. Supermarkets today have strong control
over the introduction of new products with their decisions affecting how much shelf
space will be allocated, the costs of the introduction, the length of time allowed for sales
to grow and the potential introduction of their own-brand products. Supermarket buyers
rarely use formal analysis to make their new product decisions because of the low risk
in giving shelf space to new products - a failure can soon be dropped from their shelves,
and if a rejected product is a success in other supermarkets, it can then be purchased
with confidence.
Some of the questions supermarkets ask when reviewing a new product are:
• Does the product look as if it will sell?
• Is the manufacturer going to promote the product strongly enough to produce the
sales?
• Are the 'deals' offered in line with the product type and past experience with the
manufacturer?
• Will the product increase profit because it is a superior replacement to an existing
product on the shelves?
For some products, there are advantages in launching the products only to strategic
retailers, especially if the product is particularly new in some way and requires special
cooperation from them to sell to the consumers. The product may be launched in a
'party' atmosphere with free food and drink, promotional gifts, samples presented in
attractive ways, and information presented in easy-to-read form. These parties can be
great publicity if they are covered by the media, and thus can give the company a
chance to reach the public before the actual consumer launch.
Industrial products are often launched in a similar manner at trade fairs, where they can
be presented to a large number of manufacturers at the same time. But often industrial
products are launched to a few manufacturers, or even one manufacturer with a long
association with the company so that there is the opportunity to solve that
manufacturer’s problems and gain knowledge of the effects of the product in their
processing.
Contract Launch is where the new product is contracted to a retailer under their own-
label brand or where a new ingredient is contracted to only one or two manufacturers. A
significant proportion of food manufacturers, particularly small manufacturers, are
approached by the retailers and asked to produce products to the retailers' specifications
or to agreed specifications developed by the manufacturers. These are mainly me-too
products or product improvements or line extensions. This means that the prices and
quantities are known and there are no promotional expenses, but of course there are no
guarantees for the future when the contract is finished.
A few large retailers, usually national or international supermarket chains, will
undertake the product development themselves and then contract out the production of
the new products. Other retailers look out for small innovative manufacturers and will
absorb the company or just the products into their organisation.
An industrial marketer may plant an idea for a consumer product with a manufacturer or
a large retailer and provide some “know-how”, hoping that they will sell their
ingredient(s) for the new product if it is developed.
There may be a need to launch to other people in the food system, such as primary
producers, agents and other facilitators in the market channel.
7.5 Consumer launch
The launch to the consumer depends on the type of product, the budget and the general
policy of the company. Products can vary in the consumers’ minds in terms of newness,
the amount of 'learning' needed to adopt them and also the costs of trying them. If all
three are high, the growth of sales is likely to be slow unless there is a very high budget.
But there is also an element of risk, which could discourage the use of a high budget,
favouring instead the use of a gradual launch through the market. At the other extreme,
for example for a line-extension or an improved product, the product can be introduced
quickly to as wide an area as possible.
There are three types of consumer launch:

• National Launch: the product is distributed to the total market area. This method
is used if the competition is very close to launching a product that is similar or if
the product change is minor. It does give a good start over the competition if the
product is a success, but is very costly if the product is a failure.
• Area Launch: the product is launched in specific areas. Areas with the best
potential are chosen: for example a wealthy area when it is a high priced or luxury
food, and a strong ethnic area for an ethnic food. Some companies will choose to
launch only in certain areas because they have neither the production capacity nor
the distribution system to cope with a national market.
• Rolling Launch: this is much the same as an area launch in that it starts with one
or two areas, then when the product has proved successful after a certain time, it is
launched into another area(s). This is continued until it is selling through the
whole market. The rolling launch is used when the product is innovative and the
production and marketing are still under trial. This gives an opportunity to
improve the product or perhaps prepare a line of products to make the production
more efficient in terms of quality and quantity, and to make the marketing mix
more effective. In other words, if the company needs a learning period, a rolling
launch is preferable. But of course care needs to be taken that it does not give the
competition time to come in and take a major part of the market.
Example 7.1 International launch of cranberry juice

Ocean Spray, the cranberry king, is about to become a missionary for the American
holiday favourite, marketing it in 25 countries in the next five years. Transforming
Ocean Spray into a global brand could be akin to trying to declare Thanksgiving a
world-wide holiday.
Several years ago, efforts to introduce the Japanese to cranberry juice fizzled. The
company shortened the name to Cranby to make it easier to say and served up a
bland version for the Japanese palate. But the sales were disappointing, and the
company pulled out quickly, though it recently introduced several cranberry drinks.
Ocean Spray's new strategy: Be patient, give away lots of samples to help people
acquire a taste, and use market research to listen to the natives.
There are name problems: the brand name Ocean Spray, and the product name,
cranberry. Ocean Spray sounds like a perfume. In Taiwan, the name used for
Ocean Spray is Hoshien Pei which sounds similar but translates as healthy
refreshment. In France the closest translation for cranberry is ‘airelle de myrtille',
which sounds awkward. As a result, despite the French uproar about the invasion of
English words, the company is leaning towards using 'le cranberry'.
Britain has already provided humbling lessons. Shortly after the juice was
introduced there a decade ago Ocean Spray discovered that Britons don't like
bottles. Instead they like to use juice boxes. But progress was made in Britain after
Ocean Spray began to mix cranberry juice with blackcurrant juice, a f'ruity drink
popular with British children in the 1950s and 60s And sales shot up after extensive
publicity about a Harvard University study, sponsored by Ocean Spray, said that
cranberry juice helps to prevent and treat urinary tract infections.
(Source: Pereira, J. (1995) 'Unknown fruit takes on unfamiliar markets', Wall

Street Journal 9 November, B1. Reprinted by permission of The Wall Street
Journal. © 1995 Dow Jones & Company; Inc. All Rights Reserved Worldwide.)
Think Break7.2
Consumer launch: local and overseas markets
Using the cranberry example, list the factors that need to be considered when
launching a product into an overseas market.
What are the differences in introducing a product to your local market and to an
overseas market with which you are familiar?
Brand and product name are always important in introducing a new product.
Discuss what should be considered when developing a brand name (1) in several
languages and (2) for one general international brand.
What do you think are the important factors in choosing a product name?
7.6 The coordinated launch
The activities in the launch are highly coordinated as in the operational plan.
Logistic aspects of distribution are of prime importance in the launch. Failure in any
part of the market channel will upset everyone from the primary producer to the
consumer and can do irreparable damage to the product image. The product must be on
the retailers' shelves when it is wanted by the consumer. There is nothing more
annoying to the consumer than seeing advertisements and then failing to find the
product on the supermarket shelves, or for a food manufacturer to get very excited at a
trade fair only to discover that the food ingredient will not be available in their area for
6-12 months.
The time schedules in the operational plan are of prime importance to ensure that
distribution takes place at the right time for production, the sales force, the supermarkets
and the consumer. The company should have the product in central storage at the plant
and in distribution centres at strategic points in or near the markets; the inventory held
in each and its transport needs to be recorded and controlled. If the stocks are not in the
retailers and the distribution centres when the product is launched, many potential sales
and profits may be lost.
Promotion and advertising needs to be coordinated in time and presentation. TV
advertising needs to be coordinated with the in-store promotion so that they are
reinforcing each other. The packaging and in-store promotions need to be telling the
same story. The TV advertising may have a simpler message than the in-store
promotions because it may be aimed at awareness and the in-store promotions at
education, but the linkage needs to be strong. Timing of the promotions needs to be
well planned and maintained, but there must be readiness to act when unexpected
happenings occur in the market.
7.7 Timing the launch
Should the launch be a frantic rush or a well planned exercise? The latter takes longer
but entails much less risk. When the product looks a success, everyone involved is
itching to get it out on the market, and this may be intensified by rumours that
competitors are ready to flood the market with copies of the new product. What is
important is that the launch should be planned for the right time of the year for this
particular type of food, just before the beginning of the high sales period. Problems may
be caused by unusual climate changes, for example if temperatures are staying high and
winter is taking some time to come when you are launching a line of winter soups; or
vice versa, in summer, temperatures do not rise and ice-creams are not selling but you
have a new frozen novelty which will only last a season. Usually, however, the timing
of the launch can be calculated reasonably accurately, and the timing of the activities in
the launch can be controlled on a critical path network or a job progress bar chart.
The company also needs to decide, as policy, if the new product is to be the first of this
type of product on the market, or if they want to follow another company’s product as
second or even third. . The first product on the market may have a problem convincing
the consumers to buy, while the second and third product can be improved and launched
later at less expense and still take the larger market share.
The product in the project may be of course only one of the company's new products,
and its timing has to relate to the timing of any other launches.
7.8 Evaluation of the launch
It is very important to monitor not just the sales of the product, but also to check how
the product is performing in distribution, storage and the supermarket, the retailers'
attitudes to the product and their placement and promotion of it, and of course
consumers' attitudes and behaviour towards the product. How much are they buying?
Are they re-buying? What do they like/dislike in the product? Would slight
modifications improve it?
So there is a need for qualitative research on the product, production, distribution and
marketing as well as the technical research on product quality and the quantitative
research on the efficiency of the launch. Many of the studies on the efficiency of
production, distribution and marketing are carried out continuously for the company's
day-to-day activities. If there is only a small change in the new product, then this data is
sufficient. But a major change of product, production, distribution or marketing needs
more detailed evaluation of the launch. Timing is most important and there is a need to
check the timing and schedules detailed in the operational plan to see that they are being
met and nothing is falling behind – raw materials, production, distribution or marketing.
Quantitative analysis should be undertaken to determine the success or failure of the

launch. The company will have set targets for the launch: short-term targets of volume
of sales units, sales revenue and market share, and long-term targets of a certain profit
and return on investment and a time to recover the launch and development costs.
Obviously as the launch proceeds, the evaluation will become more definitive as more
accurate data accumulates and better predictions of future cash flows can be made. The
data which are necessary for the evaluation include production and distribution costs,
prices, unit sales, sales revenues, marketing costs, company costs and finance costs.
The evaluation after the launch needs to consider carefully the operational, marketing
and product plans detailed in Chapter 6, but some important areas to consider are
identified in Table 7.1.
Table 7.1 Important evaluation areas
Production and marketing: quality and efficiency
Product and marketing: quality and efficiency
Nutrition, health and safety
Environment: physical, social and legal
Production andCustomer response
distribution: quality and efficiency
Company-fit
Sales
Finance
Company organisation
7.8.1 Production and distribution: quality and efficiency

On the production side, the raw material quality and quantity must be monitored, the
process variations studied and, most important, the yield and quality of the product
checked. Equipment breakdowns and the response of employees need to be monitored.
Distribution and marketing are also monitored. This monitoring usually leads directly to
improvements in the product, in production, in process control limits and in quality
assurance, and also often to changes in distribution and marketing methods. The time
after launching is a time of constant improvement of the product, reduction in
production costs and increase in the effectiveness of the marketing methods.
Measurements of these factors are followed in many companies during the launch. The
raw materials and direct processing costs are continuously watched to check if they are
improving and are within or better than target. The variation in the quality of the raw
materials, the process conditions and the distribution conditions are recorded and
analysed, and most important the technical standards for the product continually
monitored. The wastes from the production and costs of their disposal also need to be
measured.
The distribution costs, delivery times and product losses are recorded so that
improvements can be made. Also retailers can be surveyed to see how they regard the
distribution. An important consideration is the return of product because it is damaged,
too near the use-by date, or not as specified. Such returns are costly in terms of both
money and company reputation, but also the acceptance of the product in the market as
summarised in Example 7.2, and the production and distribution has to be controlled to
reduce them to a minimum.
Example 7.2 Failure of production in small and medium sized companies
Failure was caused by:

1. A lack of understanding of the properties of the raw materials used,
and an inability to control or monitor these materials. A company
producing surimi (finely ground fish paste) from fish waste did not
understand that the raw materials varied due to the season and the type of
fish and they had no method of testing the properties of the fish waste. So
the frozen surimi was rejected by the market because of variability in
quality.
2. A reluctance to invest in resources not seen to contribute directly to
the bottom line, and an inability to control the production
environment. A new small company built up a strong market for their
pies during the winter months but during the summer, there were
complaints and they lost orders. This was shown to be caused by lack of
control of the temperature and humidity in the processing area causing
problems with the pastry when made at the summer temperatures.
3. Undertaking projects with requirements that exceed the skills and
knowledge of the development and production teams. A small company
developed a range of tomato sauces packed in sachets for individual use.
Sales increased and they adapted the production, but then they received
customer complaints regarding blown product, due to microbiological
contamination. They did not have a food safety programme and had no
controlled shelf life testing because they did not technical staff to do this.
(From Sorensen, T.(2008) ‘Up-scaling from development to production by small

manufacturers – fishing, baking and sauce industries’ in Case studies in food product
development, by Earle M. and Earle R., (eds.) Cambridge, Woodhead, pp 222-243.
7.8.2 Product and marketing: quality and efficiency

The advertising and promotions are checked in consumer surveys, usually by telephone,
to determine if they have been seen, whether the message was remembered, and
whether consumers were encouraged to buy. Prices are monitored continuously to
record what the actual retail prices were and whether any price specials had taken place;
these are then related to sales. A more practical relationship between price and demand
can be developed, in particular if there are any psychological effects of pricing on
consumer buying. The total marketing costs also need to be recorded and reviewed,
particularly the sales and promotional costs.
The sales analysis only provides the overall sales, and if there is a need to know who is
first-buying and who is re-buying, then information compiled from buyer diaries can be
obtained. Consumer panels record purchases, and from this data companies can
determine the re-buying pattern, the timing and the amounts for each purchase. They
can also determine from what particular other brands it is gaining customers, to what
other brands the product is losing customers, what types of customers are showing the
most interest in the new product, and which type of customer has never bought it, and
so on.
There is also need for information on consumers' behaviour and attitudes towards the
product and the marketing mix. A survey of buyers can be made either just outside the
supermarket after they have made a purchase or later after they have used it. Another
method is to attach a return card on the package, perhaps with some inducement such as
a free sample or a discount voucher. This survey will indicate how the product can be
improved and how the marketing mix can change to improve sales.
The competitors' reactions to the new product should be constantly surveyed to see what
tactics they are using either to prevent success or to attach their products to the success.
Also the reactions of the retailers should be studied - are they enthusiastic, or do they
only want to give the product a month's shelf space? How can their aspirations for the
product be fulfilled?
7.8.3 Nutrition, health and safety

These are important evaluations as regards both the consumer and society. If the
nutrition is not what is expected of the product, then suspicions about the product may
be raised. As shown in Case Study 7, the nutritional value of a product is becoming
more and more important, and the company needs to have sufficient knowledge to
recognise, control and communicate the nutritional value during the launch. Are the
right values being emphasised to fit current market aspirations or should they be re-
jigged? Are the claims backed by scientific evidence? Do they agree with changing
regulations?
Today with the increase in specific health claims, particularly with functional foods and
nutriceuticals, there is a need to carefully monitor any changes that are occurring in
acceptance, both by the consumer and the society. There may arise disagreements
between individual nutritionists and health professionals on the validity of some health
claims as more research results become available. This may become serious and the
food regulators may ban a product or at least not allow claims.
Case Study 7.
Understanding the Food Market
To understand the food system in this day and age and, more importantly, to
predict future markets requires a thorough knowledge of the factors which
influence the food habits of whole populations. It is important to understand that
the modern world is a rapidly changing environment, particularly with respect to
the harmonisation of international trade boundaries. The dynamic changes which
are occurring in Europe, for example, will significantly affect the food system,
even in markets as far away as Australia.
What is changing about the food system? Issues such as urbanisation, the changes
in hours spent at work, how food is distributed within a family, family size, and
who provides the food within the family are all very important. In addition, there
has been a wide range of technological innovations which affect, for example, the
way in which food is preserved, packaged, transported and promoted. There is less
seasonal market variation because of the delocalisation and internationalisation of
the food supply. All of these factors have contributed to a possible destabilisation
of traditional food habits.
The difficulty for the producers is that they must respond to a market which is
much less stable and predictable than in the past. In a situation where the food
producers remain isolated from the consumer, they are less able to respond to a
market which is becoming more selective and segmented.
A major role for nutritionists in the food industry is therefore to establish a new
knowledge about what people are eating, and why, and to communicate this both
to the operational (sales, marketing, production, etc.) and innovative
(technological) sections of the industry. It is equally important for nutritionists to
communicate information in the other direction along the food chain, translating
new technological information into a form that is readily understood and usable by
the consumer.
(Source: Somerset, S.M. (1991) ‘Nutrition: a driving force behind food industry
innovation', British Food Journal, 93(6), 7-11.)
Safety is of course a factor which needs to be checked very carefully. Obviously, it will
have been considered during the development, but it must be monitored in the
distribution system, in the retail outlets and in the home. If there are any doubts, then
the product has to be withdrawn. Any adverse effects of the product on the consumers'
health will 'kill' a new product, perhaps forever. In the USA, a product liability study is
especially important in new product development.
Think Break 7.3

Food safety: raw materials control
Recently, there have been two serious food safety breakdowns which have been
identified as from the raw materials used – melamine in liquid milk and food
poisoning micro-organisms in peanut butter. This emphasises the need in product
development to identify the sources of raw materials and the safety of the raw
materials at all times.
(1) What precautions would you take in using in product formulation
• Raw chicken pieces or mince in delicatessen meals
• Non-pasteurised liquid milk in cheese-making
• Dried coconut in children’s breakfast muesli
• Dried protein chunks in pet food
(2) How would you advise distribution and marketing staff in selling so as
to ensure safety of:
• Aseptic packed pouches of sauces stored at ambient temperatures
• Shaved ham sold in delicatessen counters
• Custard filled squares or tarts sold at ambient temperatures
• Non-pasteurised fruit drinks sold in self-service units
7.8.4 Environment: physical, social and legal

These include assessments of the effects on the physical, social and legal environments.
Are there waste/effluent problems which are affecting the community? Is the new
technology in some way threatening to the society, for example biotechnology at the
present time? Are the products obeying the legal regulations and known cultural or
religious taboos for foods, for environment, for the geographic area? These especially
must be monitored when launching in an overseas country with which the company is
not very familiar.
The wastes are not only the wastes from the production facilities but the waste
occurring in the distribution and also with the consumers. Packaging is a waste area
which causes controversy and there are regulations in some countries to control it.
Another type of waste today is ‘energy’ – some supermarkets may view foods which are
transported over long distances as wasteful.
‘Technology’ may cause suspicions about the product, especially if this is a new
technology which the consumers and the society do not have a great deal of knowledge.
Genetically designed products may be accepted in some countries and be banned in
others.
7.8.5 Customer response

The most basic analysis is to study the consumers and customers’ responses as the
acceptability is what will make this a long-term product or just a ‘one day wonder’. In
the case of industrial and food service products, the service as well as the product has to
be studied. Who are buying the product? How much are they buying? Are they re-
buying once, two, three times? What is the interval between re-buying – a week, a
month, a year? These are the important demand questions to ask so that one can predict
future sales. But it is useful to know which customers are migrating to the new product
and what are the products that the new product is replacing,
Especially with an innovative product, it is important to survey the consumers and

discover what are the product attributes and benefits that have caused them to buy the
product and if the product delivered their expectations in cooking, serving and eating.
Was there anything that they disliked about the product? What improvements would
they like to see in the product? How does this product compare with other products they
have bought? eaten?
It is useful to know how the consumer heard about the product – advertising, in-store
tasting or from a friend - so that the communication can be improved and made more
noticeable and attractive.
7.8.6 Company-fit
Such an evaluation includes how the product is affecting the total product mix or the
category product mix, the product's relationship to the other new product introductions,
its relationship to the company image and the effect on strategic planning. Any
launching difficulties or problems should be studied and the method used to overcome
then recorded for future use.
An important consideration for the company is the future for the product - is it to
become a long-term member of the product mix? Will it be either an important member
giving a large share of the profits or only a minor product as regards sales but useful for
marketing and maybe filling production capacity?
Think Break 7.4

Evaluation of the launch: market channel and distribution
A new variety of apple was developed over many years, taking into consideration
the product qualities (sensory, nutritional, composition, use, safety), production
qualities (ease, disease resistance, yields), handling qualities (deterioration after
harvest and storage). It has now been launched on international markets – Europe,
U.S.A. and Asia – through overseas agents, who distributed them to wholesalers and
retailers.
• In evaluating the launch, on what important areas would you concentrate?

• How would you find the relevant information?
• What results would trigger an emergency and how would you deal with this?
• How would you analyse the information?
(From Earle, M. and Earle, R. (2000) Food Product Development, pp 319-26
Cambridge, Woodhead Publishing)
7.9 Sales measurement
Sales measurement involves not just making a record of what has been produced.
Shipment data from the plant initially records product made to 'fill up the distribution
line' and then to satisfy retailers' orders. But because of the inventory effects in the
system, shipments may not relate to retail sales. The most efficient method is to buy
supermarket audit data which has been recorded electronically, i.e. the quantity of the
product that has actually been sold in the supermarket. This is up-to-date actual retail
information. Commercial sales research companies will provide sales not only of the
new product but of competitive products so there is a control on analysing the sales.
Sales may be analysed as follows:

• Share of total market of the product category. This is usually measured in units,
tonnes, dollars, pounds, but it is also interesting to measure the percentage of the
target consumers who buy and how much they buy as this is a fundamental
measure.
• Share of market in individual supermarkets or other point of distribution. This
is useful because it identifies the type of supermarket and/or the area in which the
product sells.
• Ratio of sales of new brand against competitors. This gives an indication of how
the product stands in the market.
• Per capita sales rates. The new product's sales divided by the number of people or
households in the geographical area or in the population of the target market. This
can be used as a basis for predicting sales in other areas. Also it can be compared
with nutritional surveys on food eating to give an idea of the importance of the
product in the diet.
7.10 Financial evaluation
This consists of two parts: first the collection and control of the costs of launching, and
second the recalculation of financial predictions to include the new information on sales
revenue and costs from the launch.
A launch is always expensive. Costs can run away as people try to solve problems in
production and marketing, while sales may grow more slowly than predicted. In small
companies with inadequate working capital, this is where the company's outgoings
exceed the limits to which the bank has agreed and the bank may place the company in
receivership. But even with larger companies it may cause the product to be withdrawn
before it has had time to develop a position in the market.
The short-run profitability can be determined, that is the payback time for the
development and launch costs. If the launch has been a success the payback time may
have been reached already, but in all cases the predicted time for payback will have
become more accurate than the pre-launch predictions. If the launch is not going as
predicted, an estimation of the additional working capital, additional capital expenditure
and additional production and marketing costs is required, together with another
calculation of the payback time to determine how much further it will be extended into
the future. Balancing the further expenditure, the payback time and the financial
condition of the company are crucial at this time. When deciding to remove the product
from the market altogether or to continue at reduced or full expenditure, up-to-date and
accurate financial information is critical to the decisions.
The long-term financial analysis, carried out in the product commercialisation stage, can
now be refined. The difference between the predicted pessimistic, most likely and
optimistic cash flows will have become closer, the costs are becoming stabilised, the
initial sales growth is history and the competitive reactions are apparent. With this
information, the costs and sales revenues in future years can be estimated with some
confidence.
Market predictions based on the earlier data and on the actual sales are made, using
techniques such as time series analysis and moving averages. There are also predictions
from the buyers' surveys, and from the company staff as a result of their experience in
the launch. Comparing all these predictions is a good basis for forecasting the
pessimistic, most likely and optimistic sales potentials for the next five years with their
associated probabilities of achievement. The net present value, or the return on
investment, can be calculated using discounted cash flows.
Very simple examples of payback time analysis and net present values are shown in
Tables 7.2 and 7.3. There are two predictions in Table 7.2, one made before the launch
and one two months after the launch, to show how predictions need to be updated when
actual sales and costs are available. The payback period is defined as the length of time
required to recover the cost of the project. This is useful to control the cash flows but it
is not helpful in choosing the project in the first place, as a project with long-term
profits could be dropped.
To take into account the timing of the investment, costs and profits, discounted cash
flows are used as in Table 7.3. Timing has a direct bearing on the profitability of the
project. The objective of discounted cash flows (DCF) is to relate cash flows arising
from the project to a common base year, normally the present; hence the name 'net
present value’ (NPV). For a project, the discounted investments are subtracted from the
discounted earnings to give the present value of the project as shown in Table 7.3.
Table 7.2 Predicted payback period for new product ‘A’
Prediction Actual
Before launch Two months after launch
Project cost up to launch 400,000 380,000
Launch costs 2,000,000 2,500,000
Profits 350,000 250,000
Prediction Prediction
Before launch Two months after launch
Profits per 2 month
4 months after launch 500,000 400,000
Total profit after 1 year 3,550,000 3,250,000
Pay back period

Project costs ~3 months ~4 months
Project + launch costs ~9 months ~11 months
Table 7.3 Predicted cash flows and present value for new product ‘B’
Years after introduction

Total
0 1 2 3 4 5
Investment*
Actual 6.0 1
Present value factors a - 0.93
Present value 6.0 0.9 6.9
Earnings
Revenue 0 2 4.5 6.0 4.5 2.5
Costs 0 2.1 1.5 2.0 1.8 1.5
Cash flow 0 -0.1 3.0 4.0 2.3 1.0
Present value factorsb 0 0.89 0.80 0.71 0.64 0.57
Present value 0 -0.1 2.4 2.8 1.5 0.6 7.2
Net present value 0.3
*Values are millions of dollars. Interest rate: for a investment 8%, and for bearnings12%.
The computation uses present value factors, which are calculated for various rates of
return. Present value = future value/(1+i)n where i is the interest rate and n the number
of years; 1/(1+i)n is known as the discount factor. In Table 7.3, 12% was used and the
factors calculated using this gave a positive net present value, showing the project
returned more than 12%. The actual DCF rate of return can be calculated by finding the
rate where the earnings and the investment cash flows are equal, i.e. profits will just pay
back the capital and the interest over the life of the project.
Think Break 7.5

Financial evaluation: DCF rate of return
Using the cash flow in Table 7.3, calculate the present values at different interest
rates using the following present value factors.
Year 0 1 2 3 4 5
Interest rate
10% 1.0 0.9091 0.8264 0.7513 0.6830 0.6209
11% 1.0 0.9009 0.8116 0.7312 0.6587 0.5935
12% 1.0 0.8913 0.7972 0.7118 0.6355 0.5674
13% 1.0 0.8850 0.7831 0.6931 0.6133 0.5426
14% 1.0 0.8772 0.7695 0.6750 0.5921 0.5194
1. Determine the actual DCF rate of return.

2. If the investment in year 1was $2 million dollars instead of $1 million,
what would be the DCF rate of return?
7.11 Company Organisation
There also needs to be an evaluation of the company organisation for product

development after a product launch; the depth of evaluation related to the size of the
project. Some important areas are:
• knowledge and skills available – in house and out sourcing
• team functioning
• integration with other company functions –production, distribution, marketing,
finance
• management decision making – project leader, top management
• resources
• timing
• control of costs and revenue
• level of risk
• PD Process effectiveness
• company structure for innovation.
Although every project is different, there is a continuing organisation which is central.

After every project is completed, this organisation needs to absorb what was learned so
that the product development knowledge in the company is increased and improvements
can be made.
7.12 Summary
The launch needs clearly set targets or objectives, skilled technical and marketing
people, good coordination and time control, fast and correct financial analysis and good
problem-solving skills. It needs to have continuously updated knowledge of consumer
needs, attitudes and behaviour; the retailer needs, attitudes and behaviour; and
competitors' skills and knowledge as well as their reactions to new products. It is an
expensive stage in the product development process and needs good financial control of
the costs and the revenues.
There is continuous evaluation, not to cause alarm and quick withdrawal of the product
but to improve performance and to lead towards the absorption of the new product into
the company's product mix and the general company organisation. The research
includes consumer, market, product, production, quality assurance and distribution
research, sales data collection and analysis, as well as research into the environmental
reactions to the product, including the physical, social, cultural and legal environments.
The financial analysis is essential because it can form a very strong basis for the
decision to either continue or stop the launch.
The type and amount of research depends on the resources available, the budget for
research, the risk-taking attitude in the company and company policy. Some companies
do little research apart from sales data, but this means working by intuition or
guesswork and having no knowledge of why these sales trends are occurring.
Hisrich, R.D. and Peters M.P. (1991) 'Managing the product in the early stages:
introduction and growth', Marketing Decisions for New and Mature Products, 2nd edn,
New York: Maxwell Macmillan International Editions, pp. 413-31.
Karagozoglu, N. and Brown, W.B. (1993) 'Time-based management of the new product
development process', Journal of Product Innovation Management, 10, 204-15.
McLaughlin, E.W and Fredericks, P.J. (1994) 'New product procurement behaviour of
US supermarkets', Agribusiness, 10(6), 483-90.
Shanklin, W.L. (1987) 'Six timeless marketing blunders', Journal of Business and
Industrial Marketing, 2 (2), 17-25.
Usunier, J.C. (1993) International Marketing: A Cultural Approach, Englewood Cliffs,
NJ.: Prentice-Hall, pp. 340-84.

Anderson, A.M. (2008) ‘A framework for NPD management: doing the right things,
doing them right, and measuring the results’ Trends in Food Science and Technology,
19(11), pp 553-561
Declerck, F. and Ottowitz, T.(1997) ‘Brioche Pasquier S.A.: industrializing traditional
French Baking’ in Product and Process Innovation in the Food Industry. Traill, B. and
Grunert, K.G. (eds.) London: Blackie Academic and Professional, pp 75 -90
Earle, M., Earle, R. and Anderson, A.(2001) Food Product Development pp 123-131,
348-70, Cambridge: Woodhead Publishing Ltd.
Fuller, G.W. (2005) ‘Going to Market: Success or Failure’ New Food Product
Development, 2nd. Ed., Boca Raton, Florida: CRC Press. pp 228-239
Project Break 7
Either using your company project or the example in Project 7 at the end of
the chapter or a project you have been doing in earlier chapters:
• Decide on the product image and a suitable brand and product name.
• Develop the graphic design and information on the package.
• Discuss the company’s qualitative and quantitative targets for the
launch.
• List the activities in the launch and discuss their coordination
• If possible time the activities and organise them in a job progress bar
chart or a critical path network.
• Decide what knowledge is to be collected during the launch and the
research activities needed. Place the research activities on your launch
plan.
• What areas are you going to study to evaluate the launch?
Project 7: A Junior Cereal
A company, manufacturing baby and infant foods, markets a variety of infant
formula and weaning foods. It was considered that a market gap was present in the
follow-on food category beyond weaning. An idea evolved for a high-protein
refined cereal to fill this gap, to complement their product range and to enable
competition on a wider product base in the food market. In focus groups with
parents, it was clearly indicated that they wanted a product to fill the gap between
the weaning food and children's/adult's cereals but did not want a highly refined
product. They also rated muesli highly as a product, naming the benefits 'ease of use'
and ‘nutrition'.
In the formulation and processing studies, ground oats were mixed to a slurry and
roller dried. This coarse powder was mixed with wheat germ, dried fruit and coconut
for the final product. The roller dried oats were used as they increased milk
absorption and so improved texture and use. There is a consumer awareness of the
importance of fibre, but care needs to be exercised in infant nutrition; so some
modifications were made in relation to fibre. The fruit pieces and coconut were
reduced because of digestibility and safety concerns.
The product was accepted by the consumers - parents and children; this research
indicated that the consumers' age group was 8-18 months. The benefits they
recognised were: nutritional contribution, convenience, taste, versatility. The
production trial had no major problems, and the financial review was acceptable to
management.
The company management has now agreed to the launch of this follow-on food
product for toddlers - a Junior Muesli, which is a dried high-protein cereal food
based on rolled oats, wheat germ, fruit and coconut. There is no added sugar or nuts
and it is much finer in texture than adult muesli. It can be served with cold or hot
milk. Nutritionists have confirmed that it is nutritionally acceptable, and mothers
and children have confirmed that they find it acceptable because of the nutritional
contribution, convenience and versatility.
The product is to be sold through supermarkets and pharmacies in 150 g packs

which have an aluminium foil laminated pouch in a cardboard box.
CHAPTER 8
Summary: Bringing It Together
8.1 Introduction
Product development and launching are complex operations yet they are happening
every day in every food company, from producer, processors and manufacturers to food
service organisations and retailers. The food system changes all the time - as we find in
the fascinating histories of food and its production. Nowadays changes take place faster
- it has taken many of us thousands of years to develop from a hunter-gatherer society to
a supermarket society but some have done it in 30 years. Food product development is
not new, but what we are trying to do is to fit it into an information and technology age.
The aim of the industrial age - to produce large quantities of foods in continuous
processes, using marketing techniques to distribute those large quantities, and so
providing basic energy needs at low prices - may not be the correct aim for the
information and technology age.
If the aim is to provide a balanced and healthy diet, then the methods of food product
development need to change - they need to be based on the knowledge that is now
widely available. It is a knowledge-based technology not an empirical craft. It is a
complete technology based on science, engineering, nutrition and the social sciences,
with an understanding of the global technology of food production and food eating.
Product development requires knowledge of society and consumers as well as of the
technical aspects of production and products.
8.2 Systems and success in product development
New food products have always been developed and this will continue. When the
products are successful, certain basic principles occur often, some almost universally, in
this development.. These principles transcend particular products and circumstances,
and their adoption helps all companies to move towards the methodology of the best.
As food enterprises grow from the small company with a few entrepreneurial
individuals running or indeed comprising it, the need for a more technology-based
organisation increases and with that the need for explicit frameworks to maintain and
expand the activity. Increasingly activities in the company, including product
development, need new organisation and management methods. Systems emerge, are
tested, and the best become widely accepted and formalised. Thus in product
development, methods that succeed are noted and copied. This copying leads towards a
tried and tested Product Development Process. Adapted to circumstances and improved,
it evolves continually. A logical pattern emerges which is efficient and workable and
which can be implemented by industry with a high probability of market success.
8.3 The Product Development Process
This book has attempted to demonstrate the Product Development Process as the overall
technology for product development. It includes and integrates activities, outcomes and
decisions. There are a variety of techniques which may be used in the activities, but
these have only been mentioned in this small book and further details can be found in
the textbooks listed at the end of this chapter.
The Product Development Process in this book is divided into four stages: product
strategy development, product design and process development, product
commercialisation, product launch and evaluation. The four stages give a direction and
a focus to the product development project, setting a clear direction for the product
strategy, creating the product in the product design, building this product into an
operational system in product commercialisation and bringing it to fulfilment in the
product launch.
It also recognises that the Product Development Process is one of decision-making, and
the need to make decisions is part of the product development project. How and on what
basis these decisions are made identifies the outcomes needed and therefore the
selection of activities in the process. Decisions are made sometimes without full
knowledge or only with the tacit knowledge in peoples’ heads and are not necessarily
based on explicit activities, but they must be recognised in the product development
project. The selection of the knowledge needed for decision-making is related to the risk
policy in the company and also to the particular aim of the product development,
whether it be original product innovations, adopted product innovations, a new product
platform, product improvements, or product line extensions. So there are no necessary
set activities in the product development project, but there are generic activities that
occur in so many projects that they are almost universal. These have been identified
throughout the book.
8.4 The product development project
The product development project in many companies starts from the company's product
development programme and finishes at the end of product commercialisation. But for
major innovations in a company, it can include the whole Product Development Process
from the initial building of the business strategy to the post-launch analysis. So the
Product Development Process is the company framework on which are hung the
individual product development projects according to their needs for knowledge.
The project always comes from the business strategy, either directly or indirectly
through the general direction of the company. Its aim, objectives and constraints are
developed from the business strategy, the company policy on the product development
project and the decisions to be made by top management at the critical points in the
project. At the core of the project aim are the type of new product and the target
consumers. The outcome, what the product is to achieve for the company, is also stated,
for example to encourage growth in a product area, to enter a new market, to extend a
product line. The aim focuses the project while it does not restrict it.
The outcomes needed for decision-making by top management at the end of each stage
are identified, and in large projects there may also be intermediate outcomes within the
stages because of the risks and costs in the project. There are always constraints on a
project: company, economic, social, legal and technical. These are recognised at the
beginning of the project so that design time and resources are not wasted.
Important outcomes from the product strategy stage are the product concept and the
product design specifications. The consumers, or in the case of industrial products the
customers, are directly involved in building these from the original product ideas. The
consumers identify the benefits they need and want from the product and combine them
in a product concept. From this, the consumers describe a product profile, defining the
important product characteristics which are developed, with product and processing
knowledge, into quantitative technical properties in the product design specifications.
Food design is developing from an 'ad hoc' recipe-trying procedure to a systematic,

knowledge-based design procedure. The product design and the process development
are integrated because the product characteristics are built from the raw materials and
their changes in the process. Also there is a recognition that the consumers need to be
involved in the testing of the product prototypes, to measure acceptance as well as
changes in the technical qualities. During food design, the basis of the marketing
strategy is also researched so that the product qualities and the production are related to
the product image, the market channels and the promotional methods. There needs to be
careful incorporation of any legal standards and also any ethical needs of the
community. Costs are an important feature of the design from two aspects - the costs of
the project and the predicted costs for the product as related to the targeted product price
range.
In product commercialisation, these costs become even more important because the
project costs increase markedly at this stage and the feasibility of going on with the
project depends on the predicted costs and sales revenue. In commercialisation, the
major factor is the coordination of the product, production, marketing and financial
research. There are obvious areas needing coordination, for example between
researching product preservation in the physical distribution system and researching the
market channel needs in selling the product. But there are other areas for coordination in
research: production costs with pricing, product and packaging qualities with the
product image for promotion, production capacity with sales revenues. Finally all the
production, marketing and finance operations for the product launch are coordinated in
an operational plan, providing specific targets for the launch.
The product launch is a time of ending the product development project and beginning
the absorption of the new product into the company's product mix. It is still
experimentation, but using the company's whole operational system, or if this is a new
venture, the new company's total system. To follow what is happening in the company's
production and marketing, there should be monitoring of sales (where, how many),
consumer and retailer reactions, costs, needs and shortcomings in the new product. The
problems in the product launch can show up the company's weaknesses and strengths in
knowledge, skills, organisation, finance, personal relationships and technology. Most
importantly it can show strengths and weaknesses in the company's product mix,
especially if it has been some time since the last product audit.
The product launch is a time to build up concepts, image, impact, momentum and
enthusiasm in the company, which can be observed by the company's environment from
the consumer to the banker to the politician.
8.5 Managing product development
In food companies there are various ways of managing product development:

1. Top management can organise and control it; it can be planned as part of the
business strategy and then the different groups are either organised in project
teams or the activities of the various departments is combined, and reporting is
to top management.
2. Top management can give a budget for product development and then leave
middle management to organise it; reporting can be to the marketing manager or
the research and development manager.
3. It can be completely left to the people responsible in the product areas, usually
the product or brand managers.
The importance and urgency of new product development to the company determines
which method is used.
There are two major considerations in managing product development, the integration
of the multi-disciplines involved and the control of the timing and resources in the
product development project. Failures usually result from poor integration or poor
timing. In the larger food company, there is often not just one product development
project but several running side by side. This needs very good coordination and control
so staff and facilities are not cycling through quiet and busy periods. The timing and the
resources of all projects have to be carefully controlled so that efficiency and quality are
maintained in the overall programme as well as in the individual project.
Although all the stages in the Product Development Process should always be
considered, the type and quantity of research in each stage varies. This is related to the
degree of innovation in the product, the resources available, the knowledge and
expertise in technology and marketing, the size of the company and the risk-taking
attitude in the company. Low-risk takers do more research, high-risk takers do less
research; this is usually dictated by the top management through the amount of
resources they give to product development.
Decisions to be made by top management at the end of each of the four stages in the
Product Development Process have to be clearly identified as in Figure 8.1, so that the
product development team knows exactly what information they have to produce and in
what form. If management want comprehensive information at other times in the
project, this needs to be specified at the beginning. There should also be a system for
warning top management if there are overruns in time or resources or difficulties in
producing a suitable product, or if the quality of the project is below standard, so that
quick actions can be taken to identify and rectify the problem.
Basically all product development is the four stage process in Figure 8.1, but there are
differences in activities, organisation and management according to the type of product:
agricultural and marine materials, industrial products, food service products and
consumer products, and for different levels of innovation: me-too, product line
extension, product improvement, product re-launch and product innovation. The
product development process should be regarded as a framework, on which the
company builds the organisation of their own specific product development projects.
Figure 8.1 Decisions by top management and the relevant information need
OUTCOMES DECISIONS
(KNOWLEDGE NEEDS)
__________________________________________________________________________________________
Stage 1: Product Strategy Development
PROJECT AIM, OBJECTIVES, CONSTRAINTS PROJECT ACCEPTANCE
RESOURCES FOR INITIAL INVESTIGATION
PRODUCT DESIGN SPECIFICATIONS PRODUCT IDEA ACCEPTANCE

(OR PRODUCT CONCEPT)
PRODUCT REPORT RESOURCES FOR DESIGN

- technical feasibility PROGRAMME TIMING
- marketing suitability HARMONY WITH BUSINESS
- consumer acceptance
-project costs, risks
______________________________________________________________________________________________________
Stage 2: Product Design and Process Development

FINAL PROTOTYPE PRODUCT ACCEPTANCE AS NEW COMPANY PRODUCT
FEASIBILILTY REPORT RESOURCES FOR COMMERCIALISATION

- target consumers
- product qualities TOTAL COMPANY INVOLVEMENT
- processing method
- marketing strategy HARMONY WITH BUSINESS
- predicted sales
- predicted costs
- project costs, risks
__________________________________________________________________________________________
Stage 3: Product Commercialisation
COMMERCIAL PRODUCT ACCEPTANCE AS NEW PRODUCT IN PRODUCT MIX
COMMERCIAL REPORT LAUNCH AGREEMENT

- production plan CAPITAL INVESTMENT
- distribution plan ACCEPTANCE INTO COMPANY ORGANISATION
- marketing plan
- financial plan
- risk analysis
- capital investment
- human resources
- effect on company
- effect on society
______________________________________________________________________________________________________
Stage 4: Product Launch and Evaluation

MARKETED PRODUCT LONG- TERM ACCEPTANCE INTO PRODUCT MIX
FINAL EVALUATION REPORT FEEDBACK TO FUTURE BUSINESS STRATEGY

- product quality and position FUTURE PRODUCT DEVELOPMENT
- production efficiency RESOURCES FOR FUTURE PRODUCT DEVELOPMENT
-distribution efficiency
- costs against targets
- sales against targets
- indicative return on investment
- effect on company
- market acceptance
- society acceptance
__________________________________________________________________________________________
8.6 The diffusion of innovation
In product development, there needs to be an understanding of how an innovation

spreads through a company, a market, a society, so that the new product is not presented
with an insurmountable barrier such as the managing director's lack of future vision or
fear of risk-taking, fierce and unprincipled activity by competitors, retailers' inability to
accept a concept outside their experience, consumers' fear of a new technology, and so
on. Examples are the initial failure of liquorice ice-cream because retailers could not
accept black ice-cream, the divestment of aspartame as a sweetener from the original
company because it did not fit, and consumers' fear of biotechnology in Europe which
slowed down the introduction of genetically modified foods.
There is a need when studying diffusion to look at the total food system for the product
from farmer/fisher to consumer, as the blocks to diffusion can occur at any place in the
food system. Diffusion occurs through the complete channel from the land and sea
production, to ingredient processor to food manufacturer to distribution to retailer to
buyer to consumer and even to the waste disposal organisation. Change at any point
reverberates along the channel, may be mildly but often strongly. So in studying
diffusion there is a need to consider the whole channel.
Timing is very important for a new product, not just the season but the time to market in
relation to a change in society. This is sometimes a problem - the product may be too
early or too late. Consumers can sometimes be ahead of the food manufacturers and
sometimes it is the reverse. Consumers may have changed their life style or ideas, for
example consumers were interested in the ingredients in foods and their nutritional
values, but food manufacturers took some time to realise this and labelling regulations
were introduced. Also they may have new cooking methods or/and appliances, for
example the introduction of microwaveable food products lagged behind the
introduction of microwave ovens. Sometimes the food manufacturer can be ahead with
some new technology and consumers cannot adapt their lifestyle or their basic
philosophy to accept it, for example food irradiation never became a widespread
preservation method because of consumer fears; vegetable protein products did not
replace meat because of their low class image and today, the introduction of genetically
modified cereals in Europe because of consumer doubts.
Also there is a need to consider the time that people take to adopt a product, whether it
is the factory staff, the salespersons, the retailers or the consumers. There is a learning
curve and this needs to be factored in when planning product development projects.
There are five crucial aspects of diffusion which need to be considered when designing
and marketing new products:
• nature of the new product (raw materials, production, packaging, marketing);
• communication about the new product;
• social system and the place of the target consumer in the social system;
• timing of the new product and of the consumer’s acceptance of it;
• fit of the product to the current market culture.
In product improvement and me-too products, the barrier to innovation is that the
consumers are often perfectly happy with the present product and do not want to make
the change because they do not see that it has any other benefits that they want. So they
have to be shown and convinced that there are new benefits so that they do not grow
resistant not only to the product but the brand. If it is a new product they may be
suspicious, they may not see how they can use it, or they may not even want to change
their cooking and eating habits for it. The communication in this case needs to be
educative, reducing unease and promoting ease of use. Recipes and cooking
demonstrations are common methods of doing this.
8.7 The climate for innovation
For successful innovation to occur, an encouraging climate is required both inside the
company and in the environment surrounding the company. The level of innovation and
type of innovation are also determined by the attitudes, wants, behaviour and
knowledge in both the internal and the external environments. There are people who can
break through both these environments; we are all familiar with the stories of the
enthusiasts who started in the garage and built up a completely new area of technology.
But even they have problems maintaining the truly innovative atmosphere once the
initial waves have passed and they have a successful company.
Vision is important, the ability to be aware of the present situation and to look ahead
into the future - where society is moving, where industry is moving, where consumers
are moving, where technology is moving - and to relate these visions to an achievable
future for the company. The company has to decide if it is to be:
• an innovator at the beginning of the market;
• an improver of present products once the new market starts to evolve;
• a 'me-too' copier of what is already on the market; or even
• a die-hard, ignoring innovation completely.
The company has to decide if it wants to make significant jumps in technology, or to

develop slowly from the base it has. How the company organises and resources the
product development project depends on these decisions, which should be made explicit
so the team can work effectively in its own environment.
The outside environment also affects the method of innovation and the type of
innovation. There is movement and change in the food system and its different parts. At
the present time, the structure of the food system consists of a few large multinational
companies with large proportions of the market together with lots of little companies. In
some cases, there is vertical integration from the producer to the retailers and sometimes
even to the consumers. Often in the past, innovation in the food industry has started in
small companies which then amalgamated into large companies. With the present
structure, more of the innovations will come from the large companies, which therefore
need to develop new products for large markets. This is not always easy for a product
innovation may take several years to grow into a large market.
A global philosophy and management are appearing in the design, development,

production and marketing of foods. Although central product development is still
important in the large companies, there is increasing tendency for products to be
designed, developed and produced in the most suitable geographic area and then
transferred to the other market areas of the company. The chemical and pharmaceutical
companies are introducing new food ingredients and their methods of product
development may move into the food industry. They spend very large amounts of
money on research to find the successful innovation, which can make large returns with
high prices in the short term and because of patent protection can also make substantial
profits in the long term. This is the opposite of food product development practice, but
maybe the development and experience of nutriceuticals and functional foods may lead
the food industry towards the methods of pharmaceutical companies.
Increasing population and urbanisation are also leading to larger-scale manufacturing
which needs new technology.
Consumers pull the Process by their wants and needs as their knowledge grows from
education and the media. They are increasingly polarised by their economic status into
two groups:
• the over-fed affluent and comfortable;
• the poorly-fed underclass.
In some countries the gap between the two is decreasing, in others widening. It is
largely related to the proportion of food costs to total income in the family unit. These
groups present different targets for food product development. The affluent are worried
about obesity and are increasingly concerned about the nutritional value of food, the
safety of food, the health effects of food and also being bored by food. Product
development for them puts an emphasis on difference - it has to be more knowledgeable
and creative. For the other group, perhaps product development should be a
continuation of much of the product development of the past - aiming for quantity,
cheapness and sufficiency.
8.8 Ethics in product development
Ethics basically refer to a systematic study of moral choices, and it is related to, but
distinguished from, morals and laws.
• Morals are a set of principles used to distinguish right from wrong. Ethics
conform to these moral principles.
• Ethics constitute a system of principles of personal behaviour that a person and a
company adopt in daily life. Laws are developed politically based on the ethical
pressures of the society.
• Laws are a set of rules passed by a government, consisting of both restraining and
enabling legislation which is interpreted by courts and regulatory agencies.
The food industry has been slow over the last 100 years to move with society needs and
have been subjected to many food regulations which are being constantly up-dated.
Workers in food product development have the dilemma of aligning what is 'right'
according to cultural standards with company policy. Generally speaking, each person
in product development has their own set of standards which comes from their society
and usually abides within them in their work practice. Why then is some of the
behaviour of the food industry considered by society as unethical, so that many food
regulations are imposed? The problems are that society lacks commonly accepted
standards of behaviour and often the unethical behaviour can be profitable in the short
term. Standards vary from country to country, industry to industry and even from one
situation to another. The product developer has a responsibility to evaluate society's
ethics and abide by them, and sometimes taking account of more demanding standards
which may be asked in the future. There may also be a dichotomy between the society's
ethics and the company's ethics which the product developer has to reconcile.
There is a need for social responsibility by the company and by the individual in
product development based on the ethical standards of both the company and the
society.
8.9 Summary of the book
This book is only an introduction, a bird’s eye view of product development. The aim
was to show someone coming into food product development the Product Development
Process and the aims, activities, outcomes and decisions as the product development
project moves through the Process. Some notable points to remember are:
• Companies must set long term goals for product development and aims for
individual PD projects.
• A systematic Product Development Process increases the likelihood of product
success.
• The generic Product Development Process of four stages - product strategy,
product design and process development, product commercialisation, product
launch and post-launch evaluation – can be adapted for different levels of
innovation; consumer, industrial and food service product development; and
tailored to company resources.
• Technological knowledge of product, production, distribution and marketing is
the basis of product development.
• Consumers’ needs, wants, attitudes, behaviour and ergonomic requirements are
studied at the beginning and throughout the product design process.
• Product design and process development need to be integrated in the product
design process.
• Product commercialisation needs to be effective in launching the optimum
product and efficient in controlling costs and time.
• Product commercialisation is not technology transfer but technology integration.
• Coordination of the product, marketing and processing technologies throughout
the project is essential.
(From Earle, M. and Earle, R. (2000) Building the Future on New Products:
Leatherhead, LFRA Ltd.)
Product development is a major activity in a food company, because of the consumers

constantly seeking new foods for either satisfaction or nutritional purposes or just for
variety and interest. Successful new products can also generate profits and growth for
the company. Top management has to recognise the need for product development,
provide a climate for it and the necessary resources, and an organisational structure.
They need to be actively involved in the decision-making.
Everyone needs to accept the knowledge and skills of the other people involved and to
cooperate in a controlled, efficient system with the opportunity for creativity. The
Product Development Process can achieve this when it is used to guide the product
development project.
Changes in the food industry and also the needs of the consumers are changing
internationally and companies need to recognise this in their product development
strategy. Technological knowledge needs to increase to face the challenge of the future.
8.10 Textbooks in product development
General
Allen, D. (1993) Developing Successful New Products: A Guide to Product Planning,
London: Pitman Publishing.
Andreasen, M.M. and Hein, L. (1986) Integrated Product Development, Berlin:
Springer-Verlag, Bedford: IFS (Publications) Ltd.
Bray, S. (1995) Total Innovation: How to Develop the Products that Your Customers
Want, London: Pitman Publishing.
Cooper, R.G. (2001) Winning at New Products: Accelerating the Process from Idea to
Launch, 3rd edn, Cambridge, Mass.: Perseus Books
Crawford, C.M. and Di Benedetto, A.(2008) New Products Management, 9th edn, :
Burr Ridge, Ill: Irwin/McGraw-Hill.
Drucker, P. F. (1993) Innovation and Entrepreneurship: Practice and Principles, New
York: Harper Business.
Hisrich, R.D. and Peters, M.P. (1991) Marketing Decisions for New and Mature
Products, 2nd edn. , New York: Maxwell Macmillan International Editions.
Lehmann, D.R. and Winer, R.S. (2005) Product Management, 4th edn., Burr Ridge, Ill:
Irwin.
Magrab, E.B. (1997) Integrated Product and Process Design and Development, Boca
Raton, Fla: CRC Press.
Nystrom, H. (1990) Technological and Market Innovation: Strategies for Product and
Company Development, New York: John Wiley & Sons. (paperback 1993)
Twiss, B. C. (1986) Managing Technological Innovation, 3rd edn, London: Pitman
(paperback 1992).
Ulrich, K.T. and Eppinger, S.D. (2007) Product Design and Development 4th edn., New
York: McGraw-Hill/Irwin.
Urban, G.L. and Hauser, J.R. (1993) Design and Marketing of New Products, 2nd edn,
Englewood Cliffs, NJ: Prentice-Hall.
Wesselingh, J.A., Kill, S.& Vigild, M.E, (2007) ‘Design and Development of
Biological, Food and Pharmaceutical Products, Chichester, England: John Wiley &
Sons Ltd.
Food
Baker, R.C., Hahn, P.W. and Robbins, K.R. (1988) Fundamentals of New Food Product
Development, Amsterdam: Elsevier.
Brody, A.L. and Lord, J.B. (2007) Developing New Products for a Changing
Marketplace, 2nd Edition, Florida: CRC Press
Earle, M.D. and Anderson, A.A. (eds.) (1985) Product and Process Development in the
Food Industry, New York: Harwood.
Earle, M. and Earle, R. (2000) Building the Future on New Products, Leatherhead:
LFRA Ltd.
Earle, M., Earle, R. and Anderson A, (2001) Food Product Development, Cambridge:
Woodhead Publishing Ltd.
Earle, M. and Earle, R. (eds.) (2008) Case Studies in Food Product Development,
Cambridge: Woodhead Publishing Ltd.
Fieldhouse, P. (1995) Food and Nutrition: Customs and Culture, 2nd Edition, London:
Chapman and Hall.
Fuller, G.W. (2004) New Food Product Development: From Concept to Marketplace,
2nd. Ed., Boca Raton, Florida: CRC Press.
Galizzi, G. and Venturini L. (eds.) (1996) Economics of Innovation: The Case of the
Food Industry, Heidelberg: Physica-Verlag.
Graf, E. and Saguy, I.S. (eds.) (1991) Food Product Development from Concept to the
Marketplace, New York: Van Nostrand Reinhold.
Grunert, K.L., Baadsgaard, A., Larsen, H.H. and Madsen, T.K. (1996) Market
Orientation in Food and Agriculture, Norwell, Mass.: Kluwer Academic Publishers.
MacFie, H. (ed.) (2008) Consumer-led Food Product Development, Cambridge:
Woodhead Publishing Ltd.
Moskowitz, H.R. (1994) Food Concepts and Products, Just-In- Time Development,
Trumbull, Conn.: Food and Nutrition Press.
Moskowitz, H.R., Poretta, S. and Silcher, M. (2005) Concept Research in Food Product
Design and Development, Ames, Iowa: Blackwell Publishing Professional.
Schaffner, D., Schroder, W. and Earle, M.D. (1998) Food Marketing: An International
Perspective, Boston: WCB/McGraw-Hill.
Shaw, R. (1996) Product Development Guide to the Food Industry, Chipping
Campden: Campden and Chorley Food Research Association.
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CHAPTER 1

The Product Development

From the Introduction, identify some factors on which companies can be

Leadership by top management

Stage 1967 1971 1984 1995

Top management CRITICAL DECISIONS between stages

Note: Figures and tables throughout the book differentiate between:

Stage 1: PRODUCT STRATEGY DEVELOPMENT

PRODUCT REPORT, PRODUCT CONCEPT

Stage 2: PRODUCT DESIGN AND PROCESS DEVELOPMENT

FEASIBILITY REPORT, PROTOTYPE PRODUCT

COMMERCIAL REPORT, COMMERCIAL PRODUCT

FINAL EVALUATION REPORT, COMPANY PRODUCT

Think Break 1.2

1.3 Stage 1: Product strategy development

At the end of this stage, there is an assessment by senior management of the

Last successful product: Chicken McNugget in 1983.

Look up McDonald’s USA Food News on the web site:

1.4 Stage 2: Product design and process development

At the end of this stage, there is an assessment by senior management of the

Think Break 1.4

1.5 Stage 3: Product commercialisation

*HACCP - Hazard Analysis Critical Control Points - a preventive system to eliminate

Think Break 1.5

In product commercialisation, there is research and development by the

1.6 Stage 4: Product launch and evaluation

After the launch, there is an assessment by senior management of the financial

Think Break 1.6

1.7 Variations in the Product Development Process

This comprehensive outline is intended for the development and introduction of an

Product development is a complex, multi-disciplinary company procedure, and every

1.9 Suggested readings

Ali, A. (1994) 'Pioneering versus incremental innovation: review and research

Some more recent readings

Project 1 (at end of chapter)

For both projects

1. Design a Product Development Process and determine what top

The bakery has a managerial structure of an owner/managing director, a plant

The managing director met a Malaysian entrepreneur in an international Rotary

There is debate and indecision. The management committee decide to

The Organisation of the

2.2 Project Plan

Figure 2.1 Planning the product development project

PROJECT PLANNING COMPANY ENVIRONMENT

Think Break 2.1

Example 2.1 Overall aim for a PD project: to develop a tomato product

Think Break 2.2

Think Break 2.3

Product Processing Marketing Financial Company Environment

Composition Capacity Distribution Working Structure National

Nutrition Raw materials Prices Investment Expertise, Industry

Packaging Wastes Promotion, Project finance Location Farmers'

Shelf life Energy Competitors Cash flows Management Economic

Use Water Size Profits Innovation Business

Safety Personnel Product mix Returns Size Social

Example 2.3 Constraints of a PD project: dried fish for Nigeria

An example of aims, objectives and constraints is shown in Example 2.4

Figure 2.2 Relating outcomes, activities and techniques in product concept

Consumer Consumer  Product