Read Aloud Activity: Steps in the Food Product Development Process   

Syllabus Link:               Steps in the Food Product Development Process include;

1. D_______________ B_________________

2. Idea G______________________ and S_____________________

3. M__________________ R___________________

4. P__________________ S________________________

5. F______________________ S___________________

6. P_______________________ P__________________ D________________________

7. Development of a P________________________

8. T___________________ P_________________________

9. Introduction to the Market

   

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Step 1: Design Brief A design brief should be established for individual new products once concepts for these are developed. Without a design brief, product development staff would be like explorers without a compass. A useful design brief will enable a food manufacturer to define consumer market requirements and the price the market will pay for a specific food product. A key component of the design brief is a manufacturer’s mission statement . In general terms, the mission statement of a company sets out corporate goals and policies, and provides guidance for new food product development. Mission statements are relatively brief and relate to company policy, product range and target markets. Larger companies, and smaller ones, may make their mission statements accessible to consumers on their web sites.

Design Brief: A simple statement of the task to be done which indicates the constraints under which the product designer must work; that is, what consumers want and how much they are willing to pay for it. Mission Statement: The broad, long-term business goals of a company.

Figure 1: Features included in a design brief.

   

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Figure 2: Kellogg's Mission Statement

At Kellogg, we LOVE breakfast. To us it’s so much more than just a meal. We passionately believe in the power and promise that comes from eating the right breakfast. It’s the first fuel for our bodies—nourishing us for today, tomorrow and for life.  For more than 100 years, we’ve been working to serve the world a better breakfast. Whether it’s through the creation of cereals such as Corn Flakes and Special K or our more recent breakfast drinks, we want everyone to have the advantage that can come from eating breakfast.  We know that beginning the day with you is a privilege so we’ll continue to do our best to earn a place at your table every morning. 

Step 2: Idea Generation and Screening Idea Generation: Where do new food product ideas come from? Sometimes they will arise from market research, where feedback from consumers can provide useful insights into market needs, and gaps in the food product ranges available. Large companies often employ market research firms to inform them about consumer preferences and eating habits. Sometimes new product ideas can originate from sources as commonplace as recipe books or media items about foods in general. Other frequently used sources of new ideas are internal company brainstorming sessions. These sessions ideally should involve not only research and development staff, but also production, purchasing, marketing and management personnel. It is the intuitive skills, cooking expertise, production technology, consumer market knowledge and artistic traits of staff involved in the brainstorming sessions which combine to create successful brainstorming sessions. Ideas from these sessions will include the obvious, the ridiculous, technically impractical and those which are potentially useful. All ideas, even the ridiculous and impractical, should be recorded. These may be of interest and have

Consumer Preferences: What consumers want and need. Eating Habits (food habits): Why and how people eat, which foods they eat, and with whom they eat, as well as the ways people obtain, store, use, and discard food.

   

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greater potential later when, for example, advanced technology becomes available. Idea Screening: Idea screening of new product concepts involves assessing the feasibility of developing a specific new product as early as possible. There are a number of factors that can interfere with food product development (see Table 1 below). In addition, there are issues relating to screening new food product concepts in the context of the type of food product being considered (see Table 2 below).

Feasibility: The state or degree of being easily or conveniently done. Screening: The evaluation or investigation of something.

Table 1: Constraints on Product Development

Table 2: Some constraints to development of new concepts based on the type of new food product being considered.

   

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Step 3: Market Research Market research is a very useful tool for assessing the likelihood of consumer acceptance of those new food product concepts that have been considered worthy enough to continue to this next stage of the product development process. Market research involves asking consumers what they want and whether they would accept the new product being considered by the manufacturer. In a very real sense, manufacturers should then be able to decide whether to go ahead with the development of a new product concept, whether they should consider modifying the concept or whether they should discontinue with the entire project at this early stage. What aspects are investigated during market research and how is this important activity conducted? Dealing first with how it is conducted, market research usually involves market surveys. These surveys may use organised consumer discussion groups, or focus groups as they are often called. Field reports may be undertaken; for example, interviews with salespeople who can advise about what products consumers are buying from retail outlets, and levels of market acceptance and satisfaction with existing similar product ranges. Market research may also involve taste panels and consumer testing of specific products in places like supermarkets and major shopping centres. Companies often have their own marketing staff or employ external, independent market research companies to carry out market research during the second step of new product development. Whether internal company staff or independent marketing personnel are used for this step, their functions and outputs are essentially the same:

Market Research: Involves asking consumers what they want and whether they would accept the new product being considered by the manufacturer.

   

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● Identifying consumer wants and needs for new food products.

● Design of methods for data collection. ● Managing and organising data collection. ● Analysis of market research results. ● Communication of their findings to the

manufacturer. It is customary to classify market research as either primary research or secondary research. These two classes of market research differ in that primary market research involves collection of original data by market research personnel, while secondary market research involves investigating what others found during primary research. For example, a company may analyse research undertaken by the Australian Bureau of Statistics and that would be considered secondary research. Secondary market research is less expensive than primary market research because design and implementation of survey methods are not required as they are in the case of primary market research. Secondary market research can often be best achieved, for example, through internet based surveys or from public sources such as library resources. Government publications are also excellent sources of market information regarding specific product types. However, when dealing with new-to-the-world products, primary research is the more useful technique for the collection and generation of useful, relevant, consumer market information. One vital component and major problem of market research is ensuring that a sufficient number of consumers are interviewed so as to be statistically meaningful. This is not always feasible and, therefore, sampling methods are of two main types: non-probability sampling and probability Sampling (see Table 3 below). Once market research is undertaken, a company may use a marketing information system in order to

Primary Market Research: gathering original data through research methods such as; experimentation, consumer surveys, store audits, observations and trade surveys. Secondary Market Research: Investigating what others have done in a certain area.

   

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gather the data and draw the appropriate conclusions from it. Properly designed market research will reveal factors that a company can use for decisions to proceed with, or discontinue the development of, a new product idea. For example; development of new products may be discontinued if the market research reveals one or more of the following:

● The size of the market for a new product idea is too small.

● There are many companies already competing to market a new food product

● The development costs are higher than the company can afford.

Table 3: Types of market research sampling and procedures used for each.

Step 4: Product Specifications Product specifications are derived from the outcomes of the first few steps in the new product development process. Product specifications can be complicated to establish; they may include formulations, processing methods, packaging, sensory characteristics such

Product Specifications: An accurate and detailed description of what the product will be.

   

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as; colour, flavour, texture, portion size and storage life, the form of packaging, quality assurance and quality control, costs to consumers and even the target market.

Step 5: Feasibility Study Financial Feasibility The purpose of a feasibility study is to determine whether the new product idea will be profitable and if its manufacture is technologically possible. If the answer to either or both of these aspects is negative, then it would be sensible to discontinue development of the new product idea. A vital component of financial feasibility studies is the determination of a break-even point based on costs of development, marketing, production and delivery of a product versus the volume of sales needed to generate enough income for the company to recover its costs and to make a profit (see figure below). Technical Feasibility Technical feasibility assessment requires knowledge of whether processing methods and equipment for the product exist at the time of developing the new food product, and whether the company is capable of manufacturing the product using its current staff and technological resources. Specific issues which must be analysed include:

● Availability and access to ingredients. ● Access to appropriate staff, manufacturing

technology and equipment. ● If new technology or equipment is needed. ● Costs and time to develop and establish

Feasibility Study: Undertaken to establish whether an idea will be profitable; includes financial and technical feasibility. Profitable: Making profit or financial gain. Discontinue: Stop making. Break-even point: The sale price of a product that covers all expenses related to its development, production, promotion, storage and transport, and the amount of product that needs to be sold in order to reach this point.At a price or quantity greater than this point, the firm is making a profit ; below this point, a loss.

   

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quality assurance procedures.

Figure 3: Break-even point XYZ Restaurant example.

   

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For example, at XYZ Restaurant, which sells only pepperoni pizza, the variable

expenses per pizza are:

Fixed Costs Variable Costs

General

Labor

$1,500 Flour $0.50

Rent $3,000 Yeast $0.05

Insurance $200 Water $0.01

Advertising $500 Cheese $3.00

Utilities $450 Pepperoni $2.00

Total $5,650 Total $5.56

Based on the total variable expenses per pizza, we now know that XYZ Restaurant must price its pizzas at $5.56 ($0.50 + $0.05 + $0.01 + $3.00 + $2.00) or higher just to cover those costs. But if the pizzeria charges $10 for the finished product, then it receives $4.44 per pizza to contribute to the fixed costs and ultimately the restaurant’s overall profits.

How many pizzas does XYZ Restaurant need to sell at $10 each to cover all those fixed monthly expenses? First we must add up all the fixed expenses ($1,500 + $3000 + $200 + $500 + $450) which the total comes to $5,650. And then we simply divide this amount by the $4.44 left over after the variable costs are covered ($5,650 / $4.44 = 1,272) XYZ must sell 1,272 pizzas in order to break even for the month.

   

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Step 6: Production Process Development Production process development involves the changes necessary to adapt the manufacturing resources to produce the new product. For some new product types, changes required will be minimal. For instance; line extensions based on such things as new flavours may require only minimal changes, however, the required changes can be extensive and expensive for the manufacturer who wishes to introduce new products quite different from those in its existing range. Changes to production facilities may involves factory layout, processing equipment and methods, as well as production staff and their level of training. Quality control and quality assurance must also be considered here.

Production Process Development: The manufacturing processes that will need to change for a new product to be manufactured. Quality Control: Conducting tests to check the standards of raw materials or products before, during or after production. Quality Assurance: Putting process in place within an organisation to guarantee the standards achieved during processing.

Figure 4: Conveyor line and work cells factory layouts.

   

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Step 7: Development of a Prototype Development of a prototype involves the creation of a model of the new product concept for broad - based market testing. At this stage, extensive product and market research can establish whether the ingredients will perform satisfactorily under the proposed manufacturing conditions. Any modifications needed to formulations and processing conditions should become apparent during this step. There is a big difference between producing small batches under kitchen conditions and those needed for larger production batches. During this step, the aim is to convert the smaller scale production to commercial batch sizes. This will enable sufficient product to allow for widespread testing of the new food product concept by consumers, and aid the optimisation of ingredient formulation, processing conditions, product specification, and related matters such as form of package and portion size, and storage conditions.

Prototype: Model of a prototype that can be tested to see if it meets the needs of users of the product. Modifications: A change made.

Step 8: Testing of Product Prototype Relatively few new product concepts reach this step because their development may be discontinued after any of the earlier steps for a variety of reasons. During this final step, the prototype is tested to ensure that it satisfies Australian Food Standards requirements, export regulations (AQIS), as well as consumer and market needs. At this stage, the new product concept is now available in a tangible form which can be seen, felt and tasted in consumer evaluation, and subjected to laboratory testing and modification

Tangible: Physical.

   

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if required. During prototype testing, there may be the need for many decisions. This requires consideration of many factors as well as a broad and deep knowledge of the market, consumers and the product concept itself. During this step, packaging and label design can be redesigned, nutrition and ingredient information panels are formulated, the ability of the packaging to preserve the product and protect it from physical damage during storage and distribution is confirmed, and storage conditions regarding temperature and shelf-life are established. Consumers evaluate the full range of sensory properties and general satisfaction with the product, usually by small group (focus groups) assessment. Manufacturers of food products must understand consumer perceptions of products and their packaging if they are to be successful. Frequently, manufacturers will use a small- scale Product launch to perform larger-scale consumer testing and estimation of market acceptance of the new product. During this step, the appropriateness of the selected target market is confirmed or revised and manufacturers may fine-tune formulations, packaging and sensory properties of the product. After successful prototype testing, the next step is full national market launch. Along with commercialisation of the new product, a final marketing/promotional strategy is chosen to assist continued success in terms of competitiveness and sales in the consumer market.

Fine-tune: Make small changes. Commercialisation: Process of introducing a new product.

   

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