Knowledge of the food system, industry and markets with their technologies and organisation is basic to successful product development. How the new product and the product development project relate to the total food system from the producer to the consumer is a key issue in food product development. What does the project want from the system? What is it putting into the system? Obviously a minor product improvement such as a flavour change affects the company's place in the system very little - it is just a case of sourcing new flavouring material, and adjusting the process a little. But if the aim is to launch a new line of frozen fish snacks, then supply becomes a major problem:

     How to find the right species in the right quantity.

     How to have controlled temperature distribution to supply the factory
         and then for the distribution to the retailer.

     How to organise freezer space with the retailer.

     Has the target consumer suitable freezer space?

So the whole system from producer to consumer is part of the product development project. It is even more complicated if the new product is live crayfish! Today the food system is an interwoven, international network with raw materials and ingredients going from country to country, so that a formulated product may have ingredients from at least five or six countries and maybe every ingredient except for the basic raw material is from a different country. This makes product development very complex, as materials have to be found from many sources. The food system has regulations and controls which may be different, in fact probably are, from country to country. For international marketing, this means product development has either to be aimed at one country or to work in an amalgam of regulations from different countries.

The sizes of companies in an industry and in particular their related market shares lead to a structure that defines the types of innovation (Ali, 1994). The food industry very often has developed from monopolistic to national oligopoly to international oligopoly with large multinational companies dominating the food system in ingredients processing, food manufacturing and retailing. The small company may therefore be forced into pioneering new products, targeting niche markets, or considering late entry when markets are too small for the large companies. The large company has the resources for innovative product development but its total system may be too slow, so that it often gains innovation quicker by buying the small company. Also it may think it should wring everything from the present products before seeking the innovation - but it may then be killed by the innovation from another company.

The infrastructure of suppliers and distributors also has an important effect on product development; the quantity and quality availability of raw materials limits or enhances product development, as do the buying capabilities and product selection of supermarkets and food service outlets.

The food industry, typical of non-durable products, has fewer pioneering innovations than some other industries such as communications and electronics, and mostly pursues incremental product development. The technology of improvement is comparatively simple but can be easily copied. New technology can be difficult, needs increased knowledge and resources, and can be risky because of the intimate relationship of the products with the consumer (Galizzi and Venturini, 1996). Even large food manufacturing companies with large resources tend to veer away from the pioneering innovation, and take the easier path of competing on simple product differentiation. Many small companies are still near the craft stage in their development and have insufficient knowledge of recent food technology for major innovation. So the technology has only changed slowly in the past, but one wonders what will happen in the future with the developments in genetically modified raw materials and in information technology.

It is important to recognise in product development that there is also an internal company environment for product development practice that sets the atmosphere for product development - management, resources, philosophy, beliefs, skills, knowledge and behaviour. The product developer ignores this at their peril.