Food Product Development - Chapter 6 - Managing the product development process

R&D is often the home for product development in large multifunctional food companies, as it is the base for new scientific and technological knowledge in the company, and also in primary production because of the long time needed to breed new plants and animals.

The first problem is whether to organise product development within the individual scientific disciplines or to have separate product development groups, in other words split the R from the D (Urban et al., 1987). Within the scientific disciplines, there may be a lack of multidisciplinary research and it may be difficult to impose a tight time frame; the project group may have little real contact with the basic research, and none with consumers and production. A large multinational may try to get over this by having the incremental product development with the individual companies or areas, and the radical innovations in R&D. It is obviously a major problem as one sees the large companies cycling back and forth throughout the years.

Engineering is often the home in companies that are based on process development, especially food processing equipment systems. Process development is often strong in European food companies, because this can be an area for radical innovations. Usually the processes and the equipment are sold to food manufacturing companies, so there is not the same need for consumer input into product development.

In the smaller companies, the laboratory or production can be the home for product development. The laboratory can be responsible for quality assurance and product development; product development usually emphasises incremental product improvements. Production controlled product development concentrates on raw material and processing changes, usually with the object of reducing costs, improving yields and improving quality. These are very general categories, and individual companies with different types of enthusiasts for product development can develop radical innovations from the laboratory of a small company.

Marketing
'Marketing' is also often the home for product development, especially in a strongly marketing-oriented company. There may be a product manager who is responsible for a product area, both established and new products or there may be product managers who are responsible for the established products and a product development manager for the new products. The product development manager is responsible for coordinating all the market and consumer research, and the complete marketing mix for the product, and cooperating with the technical and production people in developing the product and producing it. Marketing also has problems in setting up an organisation for product development as is seen in Fig. 6.15 which outlines the development of the product development organisation in a fictional company 'Rainbow Products'.

The advantages of the product manager system are:

familiarity with the product area;

good connections with outside agencies such as advertising agencies,
market researchers and retailers;

real commitment to expanding the product area;

involvement in all aspects of development;

direct concern with day-to-day marketing.

Disadvantages of the product manager system for new products are:

working under great pressure to produce short-term results for all products;

difficulty in handling complex new products;

little or no understanding of technological developments;

difficulty in motivating people in other functional areas.

The product manager often has great difficulty in understanding the radical inno- vation and its relation to consumer needs and wants. Therefore they tend to produce minor product variations and product line extensions. This is also true when other people in the marketing department are responsible for product development.

Think Break

Rainbow Products (Fig. 6.15), 20 years ago was an old-established company selling packaged consumer goods such as special flours, dried peas and beans, baking powder, peppers and spices, when the new general manager decided that the company should increase its range of packaged products. Gradually over the years it has marketed cake mixes, fruit drink powders, dried soups, bread mixes, hot chocolate drinks, health drinks, and recently has expanded into UHT soups and drinks. It has met several product development problems over the past years and reorganised its product development to overcome these problems.

You have been brought into Rainbow Products by the Chief Executive (who started product development when general manager). You have asked him and his staff some questions about their product development:

     · Planning of products and go/no-go decisions: new product
       committee consisting of marketing manager (chairman), new
       product marketing manager, product planning manager and market
       researcher. Sometimes the Chief Executive sits in.

     · PD Process: generation, screening and evaluation of new products;
       feasibility and concept testing; product development and consumer
       tests; marketing plan development; pre-test on product name,
       packaging, pricing, advertising, promotion; test marketing; national
       launch. Emphasis on testing at all stages.

     · New products: product manager's comment that what is a product
       modification is regarded as 'new product' by the new product group.
       They spent two years developing an instant chocolate sponge, which
       was eventually killed because the market did not want it.

     · Control of product development: product planning manager said a
       problem was that on the new product committee, each member's
       vote counts as only 1, therefore technical research has little say. One
       of our new instant puddings never satisfied the committee, and it went
       back and forth with minor changes for two years.

Now as a consultant answer the following questions:

    1. What factors do you think caused the recent problems in the
         company's new products?

    2. Do you think they were caused by:

        (a) lack of knowledge in the company,

        (b) lack of discrimination between incremental and radical new
             products,

        (c) poor collaboration, decision making, project control? Can you
             identify any other factors?

    3. How do you think product development should be planned and
         controlled in the future?

    4. What personnel does the company need in product development in
        the future?

    5. What could be the management structure? Who should be
        responsible for critical decisions, for the effective and efficient running
        of the projects?

This example shows how product development is very much influenced by people, their knowledge, attitudes, beliefs and indeed their culture. It is important to recognise this when managing people in product development.

New product department
A new product department is sometimes used to integrate and coordinate the company's capabilities and bear the responsibility for product innovation (Urban et al., 1987). This can work well where there is already good integration between functional departments, but can be left out on a limb if there is competition among functional departments. It certainly focuses the company's product development and also can combine the product, processing and consumer research in the early stages, but it is never large enough to do the marketing and production development in the commercialisation and launching.

All these formal systems can be suitable for incremental product changes, the choice being dependent on the character of the company and its staff, but they are usually not a successful structure for radical innovations.