Creating New Foods. The Product Developer's Guide - The product development project in the company

CREATING NEW FOODS
THE PRODUCT DEVELOPER'S GUIDE

CHAPTER 1
The Product Development project in the company

1.5 STAGE 3: PRODUCT COMMERCIALISATION

At the end of this stage, the top management decision is to go on or to stop before committing to the large expenditure of the launch.

Management study the feasibility of production and distribution, the viability of the market strategy, the finance and the other resources needed for the next stage, the predicted returns on investment and the relationship to the other strategic plans of the company. For this they need product and production specifications, a marketing strategy, capital costs, investment returns, predicted operating costs and profits, and again the risk in the further development.

Some of the important pathways of activities, outcomes and decisions in the third stage are:

Product safety, quality

Costs, prices, profits, investments

Returns on investments, risks

*HACCP - Hazard Analysis Critical Control Points - a preventive system to eliminate or minimise potential biological, chemical and physical hazards to the safety and quality of foods. It is the basis for a Food Safety programme. If the new product is an addition to a present product line or an improved product, there may be a Food Safety programme on place, but it is always important to check because there may be a change in raw materials and in the process.

Packaging design is completed in this stage; it is started as part of the product design but the aesthetics cannot be completed until the promotion is planned. Packaging design is based on protection of the product, on consumer needs and uses of the product, and on the market presentation.

At the third stage, the cost of the project in terms of finance, people and time escalates, and many expensive product failures occur because of lack of control at this stage. At the end of this stage, there is enough information to detail the market for the product and to draw up a complete market plan for launching the product including channels of distribution, pricing, methods of selling, promotion and advertising. Process equipment is designed or, if present plant is to be used, the layout and adaptation of this equipment for the new processing conditions is determined. The production method is optimised and a complete plan developed for both production and physical distribution of the product. A more exact costing of production and launching is made, sales revenues predicted and a detailed financial evaluation prepared.

The product can be tested in town market trials where the product is put into the shops in a certain area and sold with the aid of all the pricing, promotional, advertising and selling techniques to be used in the final market. This demonstrates that the product will actually sell in the marketplace and identifies any difficulties which might emerge during marketing. It also gives an opportunity to test the production system at higher production rates, and to improve quality, yields and costs.

At the end of this stage, there is an assessment by senior management of the capital investment, the return on investment, the risk of failure in the market, the human resources needed and available, the possible effects on the society, the effects on their other products and businesses, and the continuing harmony with the business strategy.