Lecture 3: Steps in New Product Development PDF

The Steps to New Product Development JOHN MICHAEL B. YULA Course Instructor Introduction New Product Development (NPD) is the set of design, engineering, and research processes that combine to create and launch a new product to market. Introduction Customer requirement...

The Steps to New Product Development JOHN MICHAEL B. YULA Course Instructor Introduction New Product Development (NPD) is the set of design, engineering, and research processes that combine to create and launch a new product to market. Introduction Customer requirements, behaviors, technology, and competition are changing rapidly, and businesses cannot rely on existing products to stay ahead of the market. They need to innovate, and that means developing and successfully launching new products.  The Stages of Food Product Development Developing a new food product isn’t something you do overnight. There are plenty of steps to take, and sometimes taking a step back is the best decision. Between all the stages, extensive testing and research should be done to make sure you’re on the right track. Keep in mind that these steps don’t simply follow after each other, some will run simultaneously, other disciplines require jumping back and forth. The Stages of Food Product Development Developing a new product takes a lot of time, capital, and resources. It is crucial to divide the process into distinct stages and formulate a detailed plan to keep teams on the same page and set your enterprise up for success. Every step also comes with checks and balances to ensure the development process is on the right track. If your team encounters an obstacle, it must be dealt with or discarded immediately. The Stages of Food Product Development The Stages of Food Product Development 1. Idea Generation (Ideation) The first stage of food product development focuses on generating innovative product ideas that meet customer needs. This is where you brainstorm concepts based on market research and concept testing. The Stages of Food Product Development 1. Idea Generation (Ideation) Ideas can come from anywhere. Sometimes you pick something up from the market, or a consumer or employee has a great suggestion. But you’ll have to make the idea more specific and ideally test it against other similar ideas. The Stages of Food Product Development Key Considerations for New Food Products: Target Market: Identify the specific consumer profile for your product. Understanding who your potential customers are will guide your product concept from the outset. Existing Products: Evaluate your current product lineup and analyze competitors. Are there existing products addressing the same consumer need? Ensure your new concept is distinct enough to carve out market share. The Stages of Food Product Development Key Considerations for New Food Products: Functionality: While detailed specifications aren’t necessary yet, establish a general idea of your product’s purpose. Consider its sensory attributes—taste, texture, and appearance—that will attract customers. SWOT Analysis: Conduct a SWOT analysis to assess your product’s strengths, weaknesses, opportunities, and threats. This will help you ensure your concept addresses a market gap and stands out from competitors. The Stages of Food Product Development Your SWOT table should look something like this and pose the following questions: Strengths: What’s our competitive advantage? What resources do we have? What are our best performing products? Weaknesses: What areas can we improve? What are our worst performing products? Where are we lacking resources? The Stages of Food Product Development Your SWOT table should look something like this and pose the following questions: Opportunities: What technology could we use to improve our operations? Is there scope to expand our core operations? Which new market segments can we explore? Threats: What new regulations could threaten our operations? What do our competitors do well? What consumer trends could threaten our business? The Stages of Food Product Development Key Considerations for New Food Products: SCAMPER Method: Refine your idea using the SCAMPER technique, which encourages you to substitute, combine, adapt, modify, put to another use, eliminate, or rearrange aspects of your product concept.  The Stages of Food Product Development Key Considerations for New Food Products: S = Substitute: What elements of the product can be swapped for something else? C = Combine: How can you combine features, ingredients, or concepts to enhance the product? A = Adapt: What can you adapt from other products or industries to improve your product? M = Modify: Can you change the product’s form, size, or look to make it better? P = Put to Another Use: How can you use the product in a different way? E = Eliminate: What unnecessary features or elements can you remove to simplify or improve the product? R = Rearrange: How can you change the order or structure of the product for better efficiency or appeal?  The Stages of Food Product Development 2. Product Definition After completing the business case and discussing the target market and product functionality, it’s time to define your food product. This stage focuses on refining your product strategy.  The Stages of Food Product Development Important Elements to Define: Business Analysis: Outline your distribution and e- commerce strategies, along with an in-depth competitor analysis. This helps in crafting a clearly defined product roadmap. Value Proposition: Identify the specific problem your product solves and how it differs from others in the market. This clarity is crucial for both market research and your marketing strategy.  The Stages of Food Product Development Important Elements to Define: Success Metrics: Establish key performance indicators (KPIs) early to evaluate success post-launch. Metrics might include average order value, customer feedback scores, or sales growth. Marketing Strategy: Brainstorm a marketing strategy that aligns with your value proposition and target audience. Consider potential promotional channels, such as social media, influencer partnerships, or in-store promotions. The Stages of Food Product Development 3. Prototyping During the prototyping phase, your team will conduct thorough research and create an initial business plan, alongside constructing a prototype of the product. The Stages of Food Product Development Also known as the formulation stage, this involves procuring the ingredients, producing the shortlisted products in small batches, and market testing them. This will help you identify audience interest in the product and gather data you can use for future marketing endeavors. The Stages of Food Product Development Prototype development is essential to gaining an understanding of what procedures will be required and gives you an idea of how to manage the ingredients, processes and storage on a wider scale. Prototypes can also be shared with stakeholders to help them visualise the product and whether it complies with best practices.  The Stages of Food Product Development Market testing will help you identify any defects in product, design or other aspects. It will also help you determine the look and worth of your new product development in a particular market. Based on what you find here, you can make the relevant changes for further development. The Stages of Food Product Development The market test should tell you which products show a good buyer response to continue the development process. You can pick the top performers from the trial products and move on to the next step. This stage will bring to light any issues with the following: Ingredient sourcing and costs Potential shelf life Large-scale production possibility Patent and copyright infringement issues The Stages of Food Product Development Focus Areas: Feasibility Analysis: Assess the practicality of your product strategy, considering timelines and workloads. Adjust plans as necessary and involve relevant stakeholders for support. Market Risk Research: Identify potential risks related to production before physical creation. Document these in a risk register to communicate effectively with your team. The Stages of Food Product Development Focus Areas: Development Strategy: Plan the assignment of tasks and timelines using methods like the critical path approach to ensure smooth progress. MVP Development: Create a minimum viable product that includes only essential features. For example, a basic snack might include core ingredients without additional flavorings or packaging embellishments. This allows for a quicker launch and room for enhancements later.  The Stages of Food Product Development 4. Initial Design In this phase, stakeholders collaborate to create a mockup of the food product based on the MVP prototype, focusing on the target audience and core functions.  The Stages of Food Product Development Steps to Follow: Source Materials: Identify and procure the necessary ingredients and packaging materials. Maintain documentation of material sources for future reference. Connect with Stakeholders: Maintain open communication with team members and suppliers to ensure the design is progressing in the right direction. Receive Feedback: Once the initial design is complete, solicit feedback from senior management and stakeholders. Revise as necessary to finalize the design for production.  The Stages of Food Product Development 5. Validation and Testing Before launching your product, it’s essential to validate and test every aspect of development and marketing. Processing involves scaling production to get an idea of incurred expenses. This stage mainly tests the ability of the manufacturer to produce the product efficiently and consistently. Product changes, specification finalization, food safety, and quality testing are often conducted during this stage.  The Stages of Food Product Development The final step in processing involves testing the product’s shelf life to ensure it will last long enough to go from production to shipping into the hands of consumers and in their pantries. You can check the efficiency of each product’s processing by looking at changes in product attributes: Sensory attributes Shelf life Overall functionality Nutritional profile Product specifications  The Stages of Food Product Development Validation Steps: Concept Testing: Engage team members and beta testers to assess the functionality and quality of the prototype. Gather feedback for improvements. Front-End Testing: Ensure that consumer-facing elements, such as packaging and labeling, meet quality standards and are ready for launch. Test Marketing: Validate your marketing plans, checking for errors and ensuring all campaigns are set for activation.  The Stages of Food Product Development 6. Commercialization This stage involves launching your food product and implementing it across sales channels..  The Stages of Food Product Development Key Activities: Product Development: Finalize the creation of your product, ensuring it meets the specifications established during the prototype phase. E-commerce Implementation: Transition your product listings to a live state, conducting final checks to ensure everything functions as intended.  The Stages of Food Product Development The commercialization phase involves getting the product ready for launch and onto shelves. It includes the following processes: Costing finalization Additional consumer sensory testing Packaging design Label creation (logo, nutrition, facts, etc.) Highlighting attributes Strategizing marketing messaging Product positioning Effect of distribution on the quality The commercialization stage is also an opportunity for manufacturers to evaluate drawbacks and negative feedback about the product.  Challenges of Food Product Development Production Limitations The most common problem you’ll encounter in the initial stages of the food development process is limitations regarding equipment and processing. Resolving this might mean a larger investment from the company, such as purchasing new equipment or introducing new processing mechanisms. This might not be feasible for small enterprises with limited resources.  Challenges of Food Product Development Ingredient Sourcing and Costs Sourcing the ingredients and calculating costs are crucial in determining the future profitability of the product. Problems Encountered During Processing After undergoing the production and processing phases, products may develop unfavorable characteristics. The shelf life might turn out to be too short, or initial marketing tests might not turn out positive. These issues during processing can lead to a negative outcome that stalls development and extends the timeline.  Challenges of Food Product Development Teamwork and Communication Hurdles Due to each department’s different areas of expertise, communication among team members can be challenging. The safety team’s goals might clash with those of the cost management team, or marketing endeavors may interfere with regulatory guidelines. These issues can be difficult to iron out if the enterprise is on a time or budget crunch.  Food Product Development: Latest Trends and Innovations Despite the lengthy process and challenges that must be faced, food companies continuously find opportunities to release new products even in over-saturated markets.  Food Product Development: Latest Trends and Innovations Alternative Proteins One of the most popular trends in the food tech industry revolves around the rising consumer demand for alternative protein sources, such as: Plant-based nutrition Cultured meat Lab-grown meat Edible insects Mycoprotein  Food Product Development: Latest Trends and Innovations Nutraceuticals The nutraceutical trend demands a functional food product that can be used as a nutritional alternative and medicine. It leads to products like: Nutritional supplements Functional foods Medicinal foods Gut microbiome-enhancing foods (prebiotics, probiotics, and postbiotics) Antioxidant vitamins Dietary fiber  Food Product Development: Latest Trends and Innovations eCommerce The eCommerce trend grew exponentially due to the pandemic. Restaurants that continued delivering food through online platforms saw their delivery revenue increase throughout 2020. The best food-related examples are the introduction of ghost kitchens and online food delivery services. Ghost kitchens or virtual kitchens are places consumers can order from that don’t operate out of a restaurant. These kitchens create food for off-premise consumption only. Food Product Development: Latest Trends and Innovations Food Safety and Transparency The increasing number of large-scale food recalls has increased the demand for more transparent manufacturing and supply processes. Consumers are also becoming increasingly aware of the importance of nutritional labels and understanding food grading systems. Overall, the movement has led to technology like real- time food monitoring coming to the fore.  Food Product Development: Latest Trends and Innovations Personalized Nutrition The demand for personalized food products that cater to consumers’ unique beliefs, dietary requirements, and lifestyle is on the rise. One example that satisfies the higher demand and need for personalized nutrition is 3D food printing. This technology allows restaurants to serve food with customized ingredients according to the consumer’s requirements. Food Product Development: Latest Trends and Innovations Personalized Nutrition Some popular products to explore in personalized nutrition include: Plant-based meat Sugar-free items Gluten-free Vegan-friendly Clean Label food products  Food Product Development: Latest Trends and Innovations Robotic Technology Automation is the key to solving a majority of troubles in the food industry. It can significantly reduce waste, enhance traceability, improve quality control, improve productivity, and increase food safety. It also helps solve the labor shortage problem while offsetting high operational costs. Food Product Development: Latest Trends and Innovations Robotic Technology Applications of robotics in the food industry are plenty. Some of them include the following: Autonomous drones and delivery vehicles Agricultural fruit-picking robots Food-handling robotic arms Robotic Chefs to automate food production and cooking Palletizing robots Burger-flipping robotic arms Automated harvesting tractors Barcode reading computer vision systems Robot cleaners Packaging robots Food Product Development: Latest Trends and Innovations Food Waste Reduction Food waste not only involves the waste of consumables but also resources like labor, time, and capital. It also increases operational costs and creates a larger carbon footprint. New strategies being implemented in food waste reduction include: Upcycling or reusing food waste Food monitoring Donating unsold surplus to charities Food Product Development: Latest Trends and Innovations Sustainability Modern consumers are very interested in the impact of their consumption habits on the environment. They’re more inclined to support food products that reduce their carbon footprint. Food Product Development: Latest Trends and Innovations Real and Local Consumers increasingly demand a food experience that enhances the emotional and sensory elements. This is leveraged by trends like local food sourcing. Regional food sourcing also offsets supply chain issues and other concerns from the pandemic. Food Product Development: Latest Trends and Innovations 3D Food Printing 3D food printing is a revolutionary trend in food manufacturing. It involves heating edible ingredients and printing them on a plate layer by layer. The growth of this field is currently restricted by the food products available for extrusion and equipment costs. In the near future, 3D printing will be a suitable solution for personalized nutrition solutions, lower operational costs, and accessible meals created from a sustainable process. Food Product Development: Latest Trends and Innovations Restaurant Digitization Restaurants are embracing digitization to streamline all elements of their operations. This boosts efficiency, reduces labor costs, minimizes errors, and enables data collection on consumer behavior for data-driven decision-making. Applications include: Self-service kiosks QR-based digital menus Cashless payment methods Voice assistants and chatbots Digital inventory management platforms  Food Product Development: Latest Trends and Innovations Restaurant Digitization After the pandemic, the demand for the digitization of public spaces like restaurants has only multiplied. One study reveals the total ratio of consumers who prefer ordering digitally on-premises at a Quick Service Restaurant went up to 64% post-COVID-19. In just one year, the growth of customers that prefer to order from ghost kitchens jumped by 20%. Food Product Development: Latest Trends and Innovations Digital Food Management Digital food management focuses on the following: Optimizing manufacturing processes Supply chain operations Marketing strategies Demand forecasting Overview of emerging technologies and startups Food condition monitoring sensors/digital food fingerprinting AI-driven consumer insights Food Product Development: Latest Trends and Innovations Fair Trade Global societal issues are no longer niche discussions— regular consumers have made them their concern, too. And businesses are quickly capitalizing on the fair trade trend. It focuses on the following issues: International development Social justice Environmental sustainability Equitable economic returns The fair trade trend is most visible in the global sourcing of products like coffee, cocoa, vanilla, sugar, cosmetics, herbs, spices, tea, etc.  Example of Food Development Here are some examples of food startups employing the trends mentioned above in their business operations. SavorEat – 3D Food Printing SavorEat offers a one-stop meat processing solution that incorporates automation, plant- based alternatives, and personalization. The cutting-edge solution offers a customizable meat alternative while lowering environmental impact and food waste and making the food on- demand. Example of Food Development Bear Robotics – Robotics Bear Robotics’ autonomous serving robots bus tables and deliver meals and drinks to customers. These solutions significantly reduce the strain on staff from labor shortages and high customer demand. Example of Food Development Food Drop – Food Waste Reduction Food Drop is a British startup dedicated to reducing food waste. They connect local retailers and food suppliers with charities and organizations that help feed those in need. Example of Food Development Qualizy – Food Safety and Transparency Qualizy provides software solutions to automate food safety compliance without paperwork. Their software enables users to: Deploy digital food safety and health and safety management systems Monitor temperature Track allergens and expiry dates Deploy audits and checklists Example of Food Development NGX – Personalized Nutrition British startup NGX offers personalized meal- shakes created by nutritionists. Their shakes are packed with all necessary nutrients in daily measurements and custom-made for each customer. Example of Food Development Orderscape – ecommerce Orderscape is a voice-assisted service that enables customers to search for nearby restaurants, browse menus, and place orders. Example of Food Development Farmhand Organics – Nutraceuticals Farmhand Fermented Foods offers probiotic farm-to-fork solutions to consumers looking for alternative nutrition. Their product offerings include brands of living, raw, organic krauts, and kimchi. Food Market Hub – Digital Food Management Based in Malaysia, Food Market Hub is revolutionizing digital food management using cloud technology. Their startup offers cloud-based solutions to digitize inventory management, procurement, and all backend operations. Example of Food Development AAHI – Restaurant Digitization AAHI is a Czech startup offering restaurant digitization solutions. Their products allow restaurants to deliver digitized and contactless interactive services to consumers using: Digital menus QR-based ordering Contactless payment methods Feedback tools Sales analytics  Example of Food Development The Protein Brewery – Alternative Proteins The Protein Brewery’s FERMOTEIN is a protein alternative that’s grown cruelty- free in the lab. The food product has a meat-like taste and is made by brewing non-allergenic crops and fungi with essential amino acids and fiber. Example of Food Development Tastewise – Digital Food Management An Israeli startup Tastewise is changing the way restaurants collect and use data to understand consumer behavior. Their food intelligence products gather data from social media interactions and digital restaurant platforms to help restaurants with the following: Prioritize ingredients Identify trending dishes Retain customers Improve marketing strategies Try product innovations Example of Food Development ThisFish – Seafood Traceability Tally, a software solution from Canadian food startup ThisFish, offers consumers real-time actionable data. Their software solutions use AI and machine learning to: Automate tasks Collect data Enable live dashboard monitoring Run predictive analytics Digitize workflows Example of Food Development Voll Sante – Nutraceuticals Voll Sante is an Indian functional food and nutraceutical startup offering nutritious and medicinal food that is also natural, convenient, and tasty. Their offerings cater to consumers seeking: Protein supplements Bone health Immunity support Infection control Example of Food Development Lumitics – Food Waste Reduction Insight is a food waste tracker from Singapore-based startup Lumitics. It helps reduce restaurant waste by tracking the food waste from the kitchen. Their tracker optimizes: Food production based on buffet lines Trimmings Purchasing Menu deliverables based on consumer preferences  Example of Food Development ento – Alternative Proteins A startup from Malaysia, ento, offers a sustainable source of protein made using insects like cricket.