EDITORIAL: New Product Proverbs
For our Cover Story this month, Senior Technical Editor Linda Ohr examines advances in flavor technology--unique sourcing strategies, analytical methodologies, chemosensory science and extraction techniques (See p. 45).
Food companies recognize that taste is the No. 1 factor in determining the success of a new or existing product in the marketplace.
Taste alone, however, will not guarantee that a product survives past its first birthday. Many factors play a role in the vitality of new food and beverage products.
At the recent Institute of Food Technologists' Chicago section meeting this past January, John Ruff, senior vice president of technology, Kraft Foods, discussed the strategies that Kraft employs in developing new products.
New product ideas stem from several different sources, said Ruff. They include consumer research, off-the-shelf technology, outside sources, combining several smaller ideas and niche products.
To sift out the best ideas, the company sponsors "innovation days" to "fuel big ideas." All functional groups of the company participate, and innovation teams are organized based on technology, consumer research, packaging, etc. Meeting about every other week, these teams can "play" for up to a year as they search out the next big idea.
New products must deliver a real consumer benefit and connect to the consumer at an emotional level, noted Ruff. Successful product innovation puts the consumer first through personalization, customization and experience. Execution is also important, and some innovations require a dedicated champion.
In addition, a new product should leverage an innovation in technology, such as packaging, processing and/or formulation. Advanced technology prevents a competitor from quickly entering the market with a "knock-off" product.
Although functional foods and nutraceuticals have a lot of growth potential, Ruff believes that there are two major obstacles to their success today. First, it's too hard for the consumer to tell what kind of benefit that they're actually getting. Secondly, most nutritional products do not have enough of the "functional" ingredient to make a difference.
A new research study, Schneider & Assoc./Boston Univ. New Product Launch Report, provides a roadmap on how companies can successfully navigate the complex launch process. Highlights from the two-year collaborative study include:
- The Internet is not viewed as a marketing tool. Only 17% of the products studied had an Internet strategy as part of their launch plan.
- Don't let the CEO run the product rollout. Brand managers are critical to launch success. When brand or product managers ran the show, the launches were highly successful 84% of the time. In contrast, when CEOs/presidents or marketing vice presidents managed the rollout, they were less successful 65-70% of the time.
- Consumer-focused spending spells success. Companies have four distinct strategies of budget allocation: consumer-focused, trade-focused, consumer/trade, and diverse. Highly successful products were more likely to be affiliated with the consumer-focused segment than less successful ones (35% vs. 22%), while the less successful tended to fall within the trade-focused and diverse segments.
- Focus on the truly new products. Of the highly successful products studied, 63% were entirely new to the company, compared to 46% of the less successful products. Furthermore, highly successful products were four times more likely to feature breakthrough technology (20%) than less successful products (5%).