New Product Development in the Food Industry: Identifying Factors Linked to Success

Andrew Fearne, Bryn Walton and Dan Petrovici

The importance of New Product Development to the Food Industry

Innovation and New Product Development (NPD) is the lifeblood of most successful companies and is seen as the key to survival in most industries. In mature markets, successful new product introductions are becoming increasingly important for sustaining profitability and business growth, but evermore difficult to achieve due to increased levels of competition.

There is no lack of investment in research into NPD as a whole – why it is important, how it is used and the key success factors therein – yet failure rates and the cost of developing new products remain prohibitively high. This is particularly true across the food industry, where NPD failure rates in grocery retail have been reported at around 90%, even before the current worldwide economic crisis.

As a response to firms’ continued lack of success, research being conducted by the Centre for Value Chain Research (CVCR) at Kent Business School, UK, is engaging with grocery retailer supplier companies across Europe in a dialogue that aims to improve NPD best practice techniques and raise industry standards as a whole.

Research

As part of our research into NPD, CVCR has identified a number of factors we believe to be critical for the success of new products in the food industry. A better understanding of these factors can help firms across the world develop better NPD processes.

Market research
The food industry has the unique advantage of possessing advanced market research tools such as EPOS, loyalty card and Panel data, all of which allow firms to understand the needs, wants and behaviour of the end user of their product in more depth than has ever been possible before. This should be a major advantage in the development of new products but high failure rates suggest an inability of firms to target their customers in the right way.

CVCR has identified market research as a key factor in NPD success, but we believe that in order for the food industry to turn their unique market research tools into a sustainable competitive advantage, more needs to be known about the application of market research to NPD and how knowledge should be managed by the firm.

Integration and collaboration
Alongside market research, CVCR recognises that integration and collaboration across departments in a company and across organisations in a supply chain are important factors throughout the NPD process. However, the level of integration between cross-functional departments and organisations varies drastically from firm to firm. CVCR’s research aims to develop understanding about collaboration for NPD’s sake, by exploring the levels of success achieved through integration and collaboration at specific stages of the NPD process. Who should be involved? And at what stage should they be involved? Furthermore, CVCR’s research explores the mechanisms that are used to facilitate integration and collaboration and attempts to highlight the most successful methods.

Your chance to be involved

As well as producing an academic study from this research, CVCR’s research into NPD will also be used for industry purposes. All participants will be offered detailed reports on the findings and other “follow up” opportunities will be made readily available.

If you are interested in this research and would like to know more, or are a supplier company and would like the opportunity to participate in this research project, contact Bryn Walton.

Andrew Fearne is Professor of Food Marketing and Supply Chain Management, Bryn Walton is a PhD student and Dan Petrovici is Lecturer in Marketing in the Centre for Value Chain Research at Kent Business School, University of Kent, Canterbury CT2 7PE, UK; E-mail: bcmw3@kent.ac.uk