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NEW PRODUCT DEVELOPMENT

This guide focuses on new product development from a small business perspective. It highlights the essential steps in strategic planning, such as defining objectives, identifying target markets, and developing a marketing mix. Emphasizing the importance of consumer satisfaction, the guide offers insights into market segmentation, product life cycles, and best practices in R&D. It also addresses common challenges small businesses face and provides solutions, including funding resources, consulting services, and the significance of staying flexible and responsive to market needs.

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NEW PRODUCT DEVELOPMENT

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  1. NEW PRODUCT DEVELOPMENT A SMALL BUSINESS PERSPECTIVE IDHC - 4/06/01

  2. STRATEGIC PLANNING • WHAT YOU WANT TO DO • HOW YOU ARE GOING TO DO IT • WHO IS GOING TO DO IT • WHEN IT WILL BE DONE • WHAT IT WILL COST • WHERE YOU ARE GOING TO GET THE MONEY • HOW MUCH IT WILL RETURN ON INVESTMENT IDHC - 4/06/01

  3. WHAT IS MARKETING? • DEF: PROCESS OF PLANNING AND EXECUTING THE CONCEPTION, PRICING, PROMOTION AND DISTRIBUTION OF PRODUCTS TO SATISFY BOTH BUYER AND SELLER OBJECTIVES • MARKETING CONSISTS OF IDENTIFYING A TARGET MARGET AND DEVELOPING AND IMPLEMENTING A MARKETING MIX WHICH POSITIONS A PRODUCT CONSISTENT WITH THE CONSUMER’S IDEAL IDHC - 4/06/01

  4. THE CUSTOMER... • IS THE MOST IMPORTANT PERSON IN A BUSINESS • DOES NOT DEPEND ON US, WE DEPEND ON HIM • IS THE PURPOSE OF OUR WORK • IS NOT AN OUTSIDER BUT A BUSINESS PARTNER • IS NOT A STATISTIC BUT A PERSON • CANNOT LOSE AN ARGUMENT • IS A PERSON WE MUST SATISFY SOURCE: FRANK FORRESTAL, BORDEN, INC. IDHC - 4/06/01

  5. MARKETING STRATEGIC PLANNING • IDENTIFY TARGET MARKET • TARGET MARKET + 4Ps = MARKETING STRATEGY • FACTOR IN ENVIRONMENTAL INFLUENCES • DEVELOP POSITIONING/ DIFFERENTIATION • PREPARE PRO-FORMA P& L • DEVELOP BUSINESS/MARKETING PLAN IDHC - 4/06/01

  6. MARKET SEGMENTATION • SEGMENTATION IS IDENTIFICATION OF GROUPS WITH SIMILAR BUYER BEHAVIOR • TARGETING IS IDENTIFYING AND SELECTING SEGMENTS WITH BUSINESS POTENTIAL • POSITIONING IS DEVELOPMENT OF A MARKETING MIX CONSISTENT WITH A MARKET SEGMENT’S IDEAL PRODUCT. IDHC - 4/06/01

  7. TARGET MARKET IDEAL CRITERIA • GROWING FASTER THAN THE ECONOMY • FITS FIRM CORE COMPETENCIES • ACCESSIBLE • MEASURABLE • SUBSTANTIAL • PROFITABLE • RESPONSIVE IDHC - 4/06/01

  8. BUSINESS CATEGORIES • CONSUMER • BUSINESS TO BUSINESS IDHC - 4/06/01

  9. CONSUMER SEGMENTATION BASES • GEOGRAPHIC • DEMOGRAPHIC • PSYCHOGRAPHIC • PRODUCT BENEFIT • USAGE IDHC - 4/06/01

  10. BUSINESS SEGMENTS • GEOGRAPHIC • CUSTOMER TYPE • CUSTOMER SIZE • PRODUCT USE IDHC - 4/06/01

  11. PRODUCT LIFE CYCLE INTRODUCTION GROWTH MATURITY DECLINE SALES TIME IDHC - 4/06/01

  12. R & D SPENDING BY INDUSTRY INDUSTRY % SALES DRUGS/PHARMACEUTICALS 11.1 AGRICULTURAL CHEMICALS 8.7 INSTRUMENTS 6.7 ELECTRONICS 3.1 SOAPS/TOILETRIES 2.9 WOOD/PAPER 1.2 FOOD PRODUCTS 0.9 INDUSTRY AVERAGE 3.2 IDHC - 4/06/01

  13. NPD BEST PRACTICES • CROSS-FUNCTIONAL NPD TEAMS • NPD PROCESS IN PLACE • SCREEN NEW PRODUCTS AT EACH NPD STAGE • USER INVOLVEMENT IN PROTOTYPING • CEO/CHAMPION ON NPD TEAM • TEAM REWARD SYSTEM • TEAM LEADER WITH SPENDING AUTHORITY • LEARN FROM EXPERIENCE IDHC - 4/06/01

  14. NEW PRODUCT DEVELOPMENT PROCESS = DECISION POINTS/STAGE GATES IDEA GENERATION IDEA SCREENING CONCEPT GENERATION CONCEPT SCREENING PROTOTYPE DEVELOPMENT FINANCIAL ANALYSIS CONSUMER TESTING TEST MARKET MARKET LAUNCH IDHC - 4/06/01

  15. NPD ORGANIZATIONAL OPTIONS • FUNCTIONAL • CROSS-FUNCTIONAL • DEDICATED TEAM • VENTURE GROUP IDHC - 4/06/01

  16. NPD ISSUES • PRODUCT PERFORMANCE • PROFIT MARGIN • ESTIMATING DEMAND • TEST MARKETING OF MARKETING MIX • LAUNCH COORDINATION • INITIAL NEGATIVE CASH FLOW • PRE-EMPTION IDHC - 4/06/01

  17. US FOOD INDUSTRY TRENDS • INSTANT COMMUNICATIONS • GLOBALIZATION OF MARKETS • INCREASING COMPETITION • CHANNEL MIDDLEMEN ELIMINATION • DECREASING PRODUCT/NPD CYCLES • POWER SHIFT: MANUFACTURER-->RETAILER • INCREASING CONSOLIDATION • INCREASING NUMBERS OF NEW PRODUCTS • FOOD SAFETY CONCERNS • NUTRACEUTICALS/ORGANIC FOODS IDHC - 4/06/01

  18. NEW PRODUCT INTRODUCTIONS (SKUs) Year 1990 1995 1999 Food9020 10816 11626 Beverages 1621 2581 3069 Total 10641 13397 14695 Product Types 4131 4744 4731 Source: Marketing Intelligence - 2000 IDHC - 4/06/01

  19. AREAS OF OPPORTUNITY * MANUFACTURING INNOVATIONS * CONSUMER MARKET NICHES * REGULATORY/QA COMPLIANCE SERVICES * FOREIGN MARKETS * LICENSING * WASTE BYPRODUCTS/DISPOSAL/SERVICES * CONSULTING SERVICES IDHC - 4/06/01

  20. SMALL BUSINESS ISSUES • BUSINESS FOCUS - INTERNAL VS. CUSTOMER • AVAILABILITY OF CAPITAL • LIMITED HUMAN RESOURCES • RECOGNITION • STAYING POWER • CREDIBILITY/RELIABILITY • FLEXIBILITY IDHC - 4/06/01

  21. HELP FOR SMALL BUSINESSES • FUNDING - FRIENDS, INVESTORS, GOV. AGENCIES • CONSULTING - SCORE, CORNELL EXTENSION, FOOD NETWORK, MARKETING INTELLIGENCE • FACILITIES - CORNELL UNIVERSITY, FOOD NETWORK, INCUBATOR CENTERS • PEOPLE - TEMP. AGENCIES, CONTRACT SERVICES. IDHC - 4/06/01

  22. GENERAL COMMENTS • SEEK MARKET NICHE GROWING RATES FASTER THAN THE MARKET AVERAGE • DO UPFRONT HOMEWORK • GET AMPLE FUNDING • LISTEN TO CONSUMERS CONSTANTLY • PLAN FOR THE LONG TERM • MINIMIZE INFRASTRUCTURE IDHC - 4/06/01

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