PRODUCT DEVELOPMENT

Importance of New Food PD

Why is PD important? Product Life Cycle (LC) Profit Picture (PP) Technological Innovation (TI) Market Trends (MT) Government Regulations (GR) Corporate Strategies (CS)

Product Life Cycle

All products have a life cycle No one products can last forever Must be replaced by heavy marketing / improved through consumer rejuvenation Introduction of new food products contributes enormously to companys continuing profit.

5 Phases of LC
Introductory Period (Promo, Ad; Volume low) Strong Growth Period Growth Decline No Growth Decline in volume
Case volume Sales

Introductory Period
Heavily supported by promotions, in-store demonstrations, advertising to gain introduction Sale volume low as customer are educated about the product

Strong Growth Period

1st-time customers begin repeat buying & new customers are attracted. +ve acceleration of sale growth Growth continues as new market opens.

Decline in Growth of Sales

Decline in growth of sales volume begins Growth accelerates -vely

No growth
Sales are constant A sign of stagnating market

Decline in volume
Decline in volume begins Newly introduced competitive products adversely affect sales Customers indifferent to old product promotion prove too costly to maintain sale volume

Profit picture
Most important: profit brought in by sales

To maintain viability of the company, replacement product must be ready to launch to continue flow of profits.

Phase 1 & 2
Minimal net profit (cuz bear the past R&D, heavy $ of promotion, market penetration and getting shelf space Inproved profit at later part

Phase 3
Improvement continue, but towards end profit begin to drop off Cost for market expansion & to support product against competition start

Phase 4
Profit barely cover costs to support Product unprofitable Cease of product manufacture

PP
Keep series of new product in various stages of development

TI
Technical pressure force NPD New knowledge & Tech make technically feasible product ideas Preservation? New ingredient tech? Retort tech? Biodegrabale?

MT
New knowledge in health science and nutrition suggest NPD

GR
Government change regulation? Health Programs? Agriculture Policy?
Expand into new geographical markets? New market can be open up with NPD

CS

GR
Government change regulation? Health Programs? Agriculture Policy?