NEW FOOD PRODUCT DEVELOPEMENT

MODULE 1

INTRODUCTION TO NEW FOOD PRODUCTS :-

Before understanding new food product development, let us understand the meaning of
“product”. In general, a product is defined as a “thing produced by labor or effort” or “the
result of an act or a process”. The word “product” stems from the verb “produce”, that means
to lead or bring forth. ” Since years, the word “product” has referred to anything produced. In
marketing, a product is anything (object, service or system) that can be offered to a market that
might satisfy a want or need of a customer.

It need not always be a physical product. In retail, products are called merchandise. In
manufacturing, products are purchased as raw materials and sold as finished goods. The final
product of an organization can also be a raw material for any other organization. Food product
development is an integrated system involving expertise in the fields of marketing and
manufacture. The food product development process applies knowledge and skills developed
through study of a range of areas, including nutrition, food properties and food manufacture.

The need for product development came very strongly from the growth of supermarkets for a
constantly changing, extensive mix of products and for continuous price promotions for the
growth of business. Social and technological changes have also caused major product
development; for example the increasing number of working women which sparked the need
for convenience foods and eating out, and the development of spray and freeze drying which
was the basis for instant foods. When one looks at overall success and failure in the food
industry during past years, socially there has been success in providing sufficient cheap food in
developed countries. When looked on the failure aspect, it could be due to lack of innovations,
high prices or even poor quality.

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The following points are to be considered to understand what food product development
actually is:-

 To understand why new products are developed

 To note the key areas of product development
 To understand why products may fail
 To understand the product life cycle
 Role of creativity and strategy in product development

DEFINING AND CHARACTERIZING NEW FOOD PRODUCTS:-

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

There are various new terms that come along the way in new food product development and
these terms must be understood well. When talking about any product the following factors
must be clear and concise. They include:-

 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 product

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NEW PRODUCT:-

A new product is product that has a totally new concept. It is a product that has not been
presented before in any market place anywhere, which is indeed a rare occurrence.

A new product may be defined as:

 A product which has never before been manufactured by that company

 A product has never before been distributed by that company
 An old established product manufactured by a company is introduced into a
geographically new area by that company
 An old established product manufactured by a company is introduced in either a new
package or a new size or a new form
 An old established product manufactured by a company is introduced into a new market
niche, i.e., positioned as one with a new function

A new product can be broadly classified into:

 A totally new product

 Innovative /creative form of the existing product

On the basis of technology and ingredients, some examples are given below:-

NEW TECHNOLOGIES NEW INGREDIENTS

 Biotechnology (e.g: GM Foods)
 Packaging developments
 Extrusion
 Domestic appliances (e.g: Microwave
Ovens)
 Soy derivatives
 Traditional indigenous foods
 GM ingredients
 Food additives (e.g: Olestra)

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The following table gives a very brief introduction of types of new products:

TYPE OF PRODUCT NATURE OF PRODUCT

 New-to-the-world  Products are innovations to society
 New product lines  Products are new to the company
 Product line extensions  Additions to company’s existing
product lines
 Product improvements  Replacement of a present product with
an improved version
 Product repositioned  Products are targeted for a new use or
application and usually a new market
segment or as a cheaper product

NEW TO THE WORLD PRODUCTS:-

New-to-the-world products are those which are completely new and different to pre-existing
products, and have not been on the market before. New-to-the-world products are far less
common compared to any other types of products. The alternative expression for new-to-the-
world products (really new products) already indicates that this is what most people would
define as a new product. These products are inventions that create a whole new market.
Examples: Nestle instant latte coffee and MTR instant poha.

NEW PRODUCT LINES:-

A product line is a group of related products all marketed under a single brand name that is sold
by the same company. Companies often expand their offerings by adding to existing product
lines because consumers are more likely to purchase products from brands with which they are
already familiar. These products are not new to the world, but are new to the firm. Examples:
Maggie’s tomato sauce and ketchup, P&G’s first shampoo or coffee Hallmark gift items ,Ninja
tech. is a company that only makes spy gear, computers, tablets, phones, etc. and has recently
entered the food industry with the manufacture of “Ninja tech nutrition bars”.

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PRODUCT LINE EXTENSION:-

A product line extension is the use of an established product or brand name for a new item in
the same product category. Line extensions occur when a company introduces additional items
in the same product category under the same brand name such as new flavour, package size,
package features, colour, health and diet-related variations.

For example, a potato chip manufacturer extends its product line to the manufacture of corn
chips or corn puffs or roasted peanuts or popcorn. These are not simple line extensions. The
new products have in common only the snack food element.

PRODUCT IMPROVEMENTS:-

Product improvement is the process of making meaningful product changes that result in new
customers or increased benefits realized by existing customers. It is done in order to increase
the likeability and acceptance of the product in the market .For example P&G’s Ivory Soap and
Tide power laundry detergent have been revised numerous times throughout their history, and
there are countless other examples.

PRODUCT REPOSITIONING:-

Repositioning refers to the major change in positioning for the brand/product. To

successfully reposition a product, the firm has to change the target market's understanding of
the product. In simpler terms, it is changing the way people perceive an existing product.

For example Cadbury India Ltd now named, Mondelez India Foods Pvt. Ltd is the largest
chocolate brand in the country. Currently the brand operates in five categories such as
Chocolate confectionery, Beverages, Biscuits, Gum and Candy. But earlier in 2006 the company
had to fight a lawsuit since its chocolate products were found plagued with worms. But they
came back strongly with an advertisement casting ‘Big B’, which explained the functioning of
their factories and the new packaging also contributed in repositioning their brand.

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The following table with the help of examples will give a better and clearer understanding of
the types of new products:-
TYPES OF PRODUCT
 Line extensions
 Repositioned existing product
 Reformulation of existing products
 New packaging of existing product
 Innovative products
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EXAMPLES
 A new flavor for a line of wine coolers
or for a line of flavored bottled waters
 New varieties of a family of canned
ready-to-serve soups
 New flavors for a snack product such
as potato chips
 New flavored bread-crumb coating
 A coarser or more natural peanut
butter
 Oatmeal-containing products
positioned as dietary factors in
reducing cholesterol
 Soy-containing products repositioned
as dietary factors combating cancer
 Soft drinks positioned as main meal
accompaniments
 Low calorie (reduced sugar, fat)
products
 Hotter, spicier, zestier, crunchier (e.g.,
peanut butter), products
 Lactose-free milk products
 All-natural (“greener”) products,
organic products
 High-fiber product
 Single-serving sizes of, for example,
yogurt
 Branded fruits and vegetables
 Pillow packs for snack food items
 Squeeze bottles for condiment sauces
 Pull-top containers of snack dips
 Canned snack food dips
 Frozen dinners
  Creative products  Reformed meat cuts
 Extruded products
 Surimi and kamaboko-based products
and soy bean

OBJECTIVE OF NEW PRODUCT IDEAS

The objective of new product development is to create a competitive advantage in market,
promote innovation and meet the needs of the market. On meeting some or all of these goals
combined with a good design and marketing, the product should be well received on the
market.

The main objectives of new product development are listed below:-

 Planning and developing specific products

 Ensure the new product meets customer needs

 To create a product that will fix a problem, address a need, make a task easier, and/or
improve someone’s life

 To achieve commercial success and profit

 To improve marketing strategies and fame building

SOURCES OF IDEAS FOR NEW PRODUCT:-

Idea generation is important because it enables you to expand your range of ideas
beyond your current range of thinking. We believe that you must first expand thinking
to include more questions, more variables, and more ideas before you begin the
refinement process. The final idea chosen is only as good as the potential ideas
available. For example BlackBerry (a line of smart phones and tablets) was a smashing
success in 1998. They changed the game in the mobile industry by offering a device with an
arched keyboard. Their encryption even into the early 2000s was second to none but they
weren’t thinking of user experience.

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Just a few years later the entire mobile industry started focusing on bigger touch screen
displays, while BlackBerry was more concerned about protecting what it already had. Failing to
adapt to changes, in 2017 the CEO John Chen announced that BlackBerry was out the smart
phone manufacturing business and that the company has built a new strategy.
Ideas must be such that they are implementable. Idea generation is knowledgeable, creative
and systematic. It mainly sources from knowledge of the consumer, the market, the technology
and the general environment, and it creates newness in product, production and marketing.

General Sources for New Food Product General Source Specific Impetus
Ideas Providing Inspiration
 The marketplace  Market research to identify customer
and consumer needs; results of
customer profiling
 Retail data of buying habits of
customers
 Distributors expressing their
requirements for products and
problems they encounter with
handling and in-store customer
interfaces
 Customer and consumer
communication through complaint
letters etc.
 Within the company  Sales force’s interaction with retail
buyers, with individual customers in
stores and from observations of
competitive products and their
placement within stores
 Government pressure or incentives to
innovate
 Spontaneously generated ideas from
employees

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  Environment outside the marketplace  National and international trade
exhibitions where new machinery/food
products/ingredients are displayed
 Competitors’ new products requiring
marketplace retaliation
 Food and cooking literature providing
ideas on ethnic cuisine and new
recipes
 Technical, trade, and scientific
literature opening new horizons for
development

GETTING IDEAS:-
The seed of an idea must come from those who will need and use the product .Idea generation
does not occur 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.

New product ideas are often revolutionary and mostly evolutionary. Many develop from the
products of the past by improving 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 and drying - was the
“revolutionary” innovation in the food industry which led to many new evolutionary products.
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.

Ideas are a result of creativity generated through techniques and the organization’s internal
and external sources.

•Internal sources: Research and development team.

•External sources: Customer feedback, supplier, competition in market, consumer forms,

complaints.

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When working for a new product, thinking up ideas is not the problem. The problems are as
follows:

• The ideas must satisfy the needs and desires of a company’s targeted consumers and
therefore must attract customers

• The ideas must also satisfy the financial and expansionist goals of the company and be within
the skill level, technical capabilities, and managerial and financial resources of the company

Food companies or industries have three main sources (the market place, environment within
the company, environment outside the company) for ideas generations for new products and
these sources together with skilful market research will uncover the perceived needs of the
targeted customers and consumers, will define the marketplaces where these customers and
consumers are, and will suggest product concepts that satisfy these needs.

Driving factors of a food company into new food product development are largely the sources
of ideas outside the marketplace. New technologies or new applications of established
technologies can open a wide vista of ideas for new products. For example, greater
understanding of the principles of water activity and hurdle technology allowed the
development of new product opportunities leading to semi moist foods ranging from dog food
to fruit leathers to chilled food etc.

CRITERIA FOR SCREENING IDEAS:-

Screening of ideas is process used to evaluate innovative product ideas and strategies before
they are commercialized. It involves:-

•Idea filtration to pick out good ones & dropping the poor ones.

•A preliminary elimination process in which a large number of product ideas are screened in
terms of the organization’s objectives, policies, technical feasibility, and financial viability.

During screening ideas, the companies usually face two types of errors & they must try to avoid
them:

1. A ‘drop error’ occurs where a business makes a mistake in deciding to abandon a

product idea or innovation which in hindsight would have been successful if developed

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 to contribute towards profit and shareholder value. Too many drop errors indicate a
conservative approach towards product screening.

2. A ‘go error’ occurs when a business fails to correctly analyze a new product idea or
innovation. It moves into development and commercialization which in turn is a failed
product and with proper analysis the likelihood of a failed product could have been
predicted. Too many ‘go’ errors indicate perhaps a young ambitious and inexperienced
approach to innovation and product screening, analysis and protection

Most idea-generation techniques are accessible to all companies, and now the ideas must be
evaluated against criteria (usually financial) established by senior management, the findings of
market research about the desires of the customer and consumer in the market niche the
company has targeted, and the competency of the company to meet the criteria.

These criteria are generalized should be applied only loosely as each product presents a unique
situation that requires individual application.

Factors for product idea 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 system
 Fits into an acceptable pricing structure
 Relationship to promotional methods and resources
 Marketing resources needed to produce success
 Marketable profitability of the company.
 Marketing skills for in-house marketing
 Technical feasibility

 Production factors:

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  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 requirement
 Cost and availability of new resources required
 Availability of manufacturing facilities for an efficient product

 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
 Financial stability

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STAGES OF NEW PRODUCT DEVELOPMENT:-
Product development processes vary according to the level of product innovation, the
company’s knowledge and resources, the time constraints and the level of risk taking in the
company; but there are basic, necessary activities in every stage of the process.
Stage 1: Product strategy development
There is a need for a clear focus; a business definition and a product definition have to be
developed in the early stages. Food product development research in this stage is often
recognized as vital for successful product development. The product concept and if possible the
product design specifications plus a report on the feasibility of the project are the outcomes of
this stage. It has been stressed that there should be early definition of what the new product
should offer the consumer/customer, that is the benefits, desired product characteristics, uses,
safety, value. With the consumers/customers, a product concept is developed describing the
product as the consumer sees it and wants it.
This product concept is developed into more quantitative descriptions by relating the product
concept to both the product metrics, which can be measured by physical, chemical,
microbiological or sensory tests, and also the processing, production and marketing methods.
The resulting product design specifications give clear directions to the designer. There is an
interaction often between the building of the product concept and the product design
specification and the initial design of the product.
Stage 2: Product design and process development
Product design a blend of creativity, research and testing Product design is the central, creative
part of product development and it is important that the different factors influencing it are
recognized and integrated into the design process.
This stage is important because a unique product is a key element in product development
success. It all depends how one defines uniqueness, but it is mostly a noticeable change that is
being achieved rather than a completely new product. In the food industry, where thousands of
new products are placed on the shelves in a year, the newness can be quite minor such as a
different flavor, a package face change, a different slice thickness.

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Industrial designers are also moving into the area of food design, bringing their more aesthetic
attitudes in design. Also because of the close connection between the process and the product
qualities, they have often a closer interrelationship between product design and process
development, using computer-based experimental designs and analysis. For successful product
design there need to be multidisciplinary skills closely integrated, consumer involvement and
creativity, combined with the functional areas of marketing and production.
Stage 3: Product commercialization
This has two activities identified as related to product development success –
business analysis and marketing the product to the people in the functional areas, but there are
many other aspects of product commercialization that lead to product success. Business
analysis is essential for the decision making at this stage but amazingly there are still companies
who never do this before spending large amounts of money in commercialization and
launching.
Communication between the design team and the functional groups that will carry the product
into production and marketing is essential – this is often called technology transfer, but is
better called technology cooperation or technology integration. There are two important facts
to recognize in commercialization it is still a design process.
Integration of the functional areas is vital.
The key issues are:
 maintenance of the product qualities at the same standard as in the design through the
process and the distribution;
 produce and distribute at the quantities needed;
 develop a total product concept for marketing that agrees with the consumer
 needs and wants and creates unique value for the chosen target market;
 organize a distribution channel which ensures quality, quantity and costs;
 reduce uncertainty and risk in the launching;
 reach the predicted sales and profits.

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Stage 4: Product launch and evaluation:
This is the most expensive and risky part of product development. The key issue is to have a fast
and effective launch as this can generate the same or more incremental profits as reducing the
time for the early stages of the PD process
The targets for the launch should be clearly set to provide the basis for the evaluation. It is
important for the company to decide on the measures for the launch so that success and failure
are clearly defined and measured. The environment is also important; competition and possibly
social, political or economic changes should be monitored. The operational plan for the launch
is a key for success but it needs to be sensitive to the situational and operational conditions.
Another key factor is the launching to the company and to the trade (distributors). People can
easily slow or divert a launch and on the other hand can quickly and successfully overcome any
problems that may arise.

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