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BFJ CASE STUDY

105,7
An evaluation of the NPD
activities of four food
460
manufacturers
Alison Rudder
School of Leisure, Hospitality and Food Management,
The University of Salford, Salford, UK
Keywords Food products, New products, Small to medium-sized enterprises
Abstract Highlights the large number of food product innovations and extensions being
developed across Europe. The types of developments are often represented as ``new
developments''' in their broadest sense. Research was undertaken to ascertain the types of
developments being embarked on by SME food manufacturers and to identify the influences to
which they are subjected when trying to meet the needs of the retailer, and ultimately the
consumer. Concludes that food manufacturers are proactive in making a range of ``adjustments''
to their products rather than developing ``new to the world products''.

British Food Journal
Vol. 105 No. 7, 2003
pp. 460-476
# MCB UP Limited
0007-070X
DOI 10.1108/00070700310497246
Introduction
Food manufacturers strive to meet the changing needs of food consumers who
are increasingly demanding new and better products. It is no longer possible
for a company to rely solely on its existing products. If a company will not
provide new product developments (NPDs) there are plenty of competitors that
will do their best to fill the gap. Allyson (2000) identifies the large number of
product innovations and extensions launched in European countries during
1999. These included 791 desserts; 241 fruit and vegetable products; 796
prepared meals and 360 innovations using fish. Many manufacturers are
therefore actively involved in the development of new food products and in the
extension or enhancement of their present products.
An evaluation of NPD literature highlighted the fact that there are numerous
descriptions of what constitutes a new product. Whether new food product
developments are ``new'' to the world or ``new'' to a manufacturer is very much a
matter of interpretation.
Manufacturers and theorists use the term NPD to describe a range of
product developments, however, there is little consensus as to what actually
constitutes a ``new product''. Fuller (1994) believes a broad definition is the most
useful and should encompass either the development and introduction of a
product not previously manufactured by a company or the presentation of an
old product into a new market. However, he does believe that the definition
should not be applied too rigidly. Kotler et al. (2001) take the view that a new
product should include only original products or product improvements and
modifications that the firm develops through its own research and development
efforts. Booz, Allen & Hamilton (1982, p. 8) were responsible for undertaking An evaluation of
important and highly original work into product development and estimated NPD activities
that, ``Only 10 per cent of all new products introduced over the last five years
were truly innovative or new to the world''. They conducted a longitudinal
study among a number of companies and, from the data collected, concluded
that the majority of products launched by manufacturers could be aligned
within one of the six categories shown in Table I. 461
If these classifications of NPDs are a true reflection of actual practice, then
the introduction of ``new'' products is quite rare. Innovation and the
introduction of new food product developments are essential to food
manufacturers in order that they can gain competitive advantage and be
successful in the marketplace. The drive to gain advantage has resulted in a
spirited response by manufacturers and retailers alike, and they have become
resourceful and ingenious in the manner in which they develop and promote
products as ``new''.
As stated by Booz, Allen & Hamilton (1982), only 10 per cent of products are
``new to the world'' and it therefore follows that 90 per cent are not. Often a
manufacturer offers ``a new product line'' which is not new to market, but rather
is new to that manufacturer. The products will, in all probability, still go
through a development process, which is why manufacturers are inclined to
refer to them as ``new developments''. The utilisation of other manufacturers'
ideas is not new. Indeed, Kotler et al. (2001) refer to the practice of producing
similar products as those of ``imitators'', and these are often retailers making
look-alike own brands. This is seen as a way of getting around the high risks
and costs of NPDs, in that ``me-too'' products give the manufacturer an
opportunity to enter a proven market already developed by someone else. The
grocery retail sector is a significant area of economic activity in the UK and
such is the competition for business that retailers are always on the lookout for

New to the world products 10

New product lines: new products that, for the first time, allow a company to
enter an established market 20
Additions to existing product lines: new products that supplement a company's
established product lines 26
Improvements in /revisions to existing products: new products that provide
improved performance or greater perceived value, and replace existing products 26
Repositioning of existing products that are targeted to new markets or market
segments 7
Cost reduction: new products that provide similar performance at lower cost 11 Table I.
Six categories of new
Source: Adapted from Booz, Allen & Hamilton (1982, p. 8) product development
BFJ new developments to aid them in securing a greater share of the market. One
105,7 way in which retailers determine the types and quality of food products that
are successful in the marketplace is to undertake a benchmarking exercise.
Benchmarking is a process widely practised in the food industry. Rudolph
(1995) refers to the activity of companies benchmarking by undertaking
competitive product evaluations in an attempt to provide objective data
462 regarding a product's attributes. The competitor's products are evaluated
against the company's own product to ascertain whether the standard, taste or
flavour is of the same level or whether improvement or changes need to be
made. Balm (1996) maintains that the tradition of benchmarking has been a
valuable tool for many years, enabling the process of comparing a company
against competition to be undertaken. He maintains that by undertaking
benchmarking activities, an analysis of the gap between the baseline and the
benchmark is identified and the company is then in a position to respond.
Manufacturers have no control over other manufacturers producing similar
products. Only on rare occasions, when manufacturers believe that imitation of
their trademark brand has infringed their brand identity in some way, do they
undertake legal action. An example of this was reported by Collins-Dodd and
Zaichkowsky (1999) when the biscuit manufacturer McVitie's brand Penguin
(chocolate biscuit) was imitated by the retailer ASDA, who marketed a
chocolate biscuit named ``Puffin''. Not only was the biscuit similar to the
``Penguin'', but also the packaging was almost the same. McVitie's estimated
that its sales declined from £40 million to £30 million during a three-year
period, despite McVitie's increasing the amount of money spent on marketing
their product. Collins-Dodd and Zaichkowsky (1999) describe the outcome of
the court action, which resulted in ASDA being instructed to redesign its
packaging as it was judged to be too similar to the original Penguin, although
the actual chocolate biscuit was found to be an acceptable product.
Dacko (2000) believes it is inevitable that, when a firm develops and
introduces a new product, competitors will respond with a similar product. In
the case of food manufacturers, Dacko (2000) suggests that competing
companies need only look at what products are taking up nearby shelf space at
the retailers to become aware of what developments are being undertaken.
Campden and Chorleywood Food Research Association (1996) suggest that
marketplace intelligence is essential and that it is possible to be inspired by
checking on what the competition is doing and by asking questions about what
is happening in other sectors of the industry, if possible trying to identify
trends. Fuller (1994) believes that food manufacturers owe it to themselves to
analyse what their competitors are doing. He maintains that there is a wealth of
information to be gained from evaluating products and from some ``free
association of ideas'' in order to create further products.
Developments that do not come strictly under the term ``new to the world''
are line extensions. Hanna et al. (1995) have reported that the market is being
flooded with line extensions, which can involve efforts to improve existing
product quality, adding value or some feature. Small changes to products can An evaluation of
come under the umbrella of a line extension development that, according to NPD activities
Samli and Weber (2000), is an attractive proposition for manufacturers as it can
involve changes such as a new package size or a new product variation. Harvey
(2000) recognises that the ability of a manufacturer to introduce, for example, a
new sandwich filling, is not so much an innovation but rather an ability to
introduce variety. Amber and Styles (1997) also acknowledge that the 463
launching of line extensions has become a popular growth strategy amongst
manufacturers that are seeking to increase their market share.
Samli and Weber (2000) believe that generating line extensions can be
considered an opportunistic product development activity. They are critical in
that they perceive them as short-lived reactions which, in themselves, may lead
to additional product developments. They believe that it is better for a
company to develop truly new products that will enhance its reputation while
gaining it competitive advantage.
The line extension type of product development has been generally
acknowledged as offering many benefits such as:
. they require limited resources and know-how;
. they are fairly simple and straightforward and may generate, however
temporarily, increased volumes in sales;
. they do not require new production facilities or capabilities;
. they can be introduced to market within a relatively short time span;
. they present a relatively risk-free development;
. they generally only require short-term planning before their
manufacture; and
. they can be introduced to the marketplace relatively quickly (adapted
from Samli et al. (2000, p. 37).
While it is possible to ascertain the amount of money that large companies may
spend on research and development activities (via company reports), the
activities and types of products developed by small and medium-sized
enterprises (SMEs) goes largely unreported.
The vast majority of the 3.7 million businesses in the UK at the start of the
year 2000 could be considered to be SMEs according to the UK Government
figures (DTI, 2001). Some 99 per cent of firms have fewer than 50 employees
and they provide 45 per cent of the UK non-government employment and
38 per cent of turnover. They also show that only 25,000 are medium sized with
a maximum of 249 employees.
In order to ascertain the types of NPD practices being undertaken in SMEs, a
case-study approach was adopted in which a study of the practices of four food
manufacturers (chilled/frozen food sector) was undertaken.
BFJ For purposes of confidentiality the companies will simply be referred to as
105,7 companies A to D.

Company A
Company A is a producer of frozen desserts, ice-cream and ice lollies and
employs some 230 people, which does increase to meet seasonal demands. This
464 manufacturer undertakes the following types of product development.

Type of innovation undertaken

A number of initiatives have taken place, which can be categorised as shown
below:
(1) Brand reformulation. This is described as an ongoing process, with the
following reasons being cited:
. The company is always seeking to improve its products, which is
why it undertakes a monthly review of them all. This enables the
evaluation of raw materials to be undertaken and takes into account
such considerations as the quality and availability of ingredients.
. Most customers (retailers) expect a manufacturer to be proactive in
product management and to offer advice on new ingredients as and
when they reach the marketplace.
. Brand reformulation is also undertaken when retailers request
changes.
Typically, requests have included changes to the colour of an ice-cream,
the sourcing of all raw materials to be from within the EU and the
identification of products which are GM free. This had led to a number
of products being reformulated over the last few months.
(2) Line extensions. These are undertaken in response to requests from own-
label retailers. Typically, line extensions involve a change in flavour.
The company has for many years successfully sold its own label vanilla
ice-cream roll. However, it has recently introduced two new flavours,
namely strawberry and chocolate ice-cream rolls.
Line extensions have been undertaken for retailers who have
traditionally purchased ice-cream cones in three core flavours, chocolate,
strawberry and vanilla. Recently they have requested that they
periodically infill their three core flavours with three alternative
flavours, giving examples such as: banana, toffee and raspberry.
(3) New markets. The company has a range of own label products aimed at
both children and family markets. It is now planning to introduce
products that will appeal mainly to the adult market. This is considered
to be a developing market which will provide a product that has a fairly
high mark up.
(4) New products. This company produces own label products for a An evaluation of
number of retailers and undertakes to put forward one new product NPD activities
per year for each of these retailers, while also introducing new
products under its own brand name. This development is in addition
to supplying new products as a direct result of customers' briefs and
requests.
The company is proactive in undertaking some market research 465
such as utilising Mintel reports and literature from the Ice-Cream
Association. Technical personnel undertake a programme of
supermarket visiting to monitor what products are available and to
aid in determining market trends. Retailers also undertake their own
market research and, on occasion, request that particular products be
developed.
(5) Me-too products. This company does produce ``me-too'' products, which
are generally in response to requests from customers. One retailer is
particularly interested in the company developing ``me-too'' products for
it, as it would like to sell a cornet similar to the one sold by McDonald's.
Further requests have included the development of a high quality ice
cream to be benchmarked against the Carte d'Or ice cream.
(6) Innovations policies. In order to ascertain what influenced its NPD/PD
programme, each company was asked to identify the type of policies it
pursues. This company identified that it was demand driven, in that 75
per cent of its business was in response to retailers' demands. The
company is proactive in developing new products to sell under its own
name and sets targets for NPDs.
(7) Successful products. Once a new product is launched, the company must
have some criteria for measuring the performance of the product so that
a decision may be taken as to whether it will continue to be produced.
Each case study company was asked to identify how it determined
whether a product was successful. In order to be able to compare and
contrast answers the following questions were asked of each company,
in the following order:
* How is success measured? Customer satisfaction was reported as a
good indicator of a successful product. While the product sells, the
company will continue to make it. Repeat orders from retailers
generally reflect consumer satisfaction.
* What constitutes success? A combination of sales and the profits made
is how the company qualifies whether a product is a success.
± Percentage profit. A product is only manufactured if there is a
suitable return on materials/labour. This is considered to be very
important.
BFJ ± Turnover. This is a very important indicator of success and is
105,7 useful as a guide to whether a product extension would be a
useful addition. There are interesting developments with regard
to turnover, for example company A makes products for Iceland,
who undertakes various offers such as two-for-one and eight for
the price of six. Production is increased for these offers, but
466 demand is reduced when the offer is finished. Consumers are
becoming accustomed to paying less for their product and are
then reluctant to purchase at the original market price.
± Contribution to costs. The company believes it is important to have
a core product that works well. If sales are high and constant over
each year then it is possible to sell the product at a price that may
have a lower percentage of profit than some of its other lines.
Products that make very little profit are sometimes manufactured
because they are useful in making a contribution to profits as well
as keeping equipment and people fully employed.
± Why would you withdraw a product? The company would normally
withdraw a product due to lack of sales and/or profit. Sometimes it
will happen for technical reasons when a revamp or modification is
required. The nature of the products manufactured means that a
number of lines are regarded as seasonal, which accounts for some
being withdrawn for a number of months each year. Sometimes a
product will be withdrawn, modified and then re-launched the
following season, i.e. summer or winter.
(8) Relationship with customers/market. Customers of this company are
very involved in keeping up with market trends and are always on the
lookout for new opportunities. Retailers are becoming more involved
with the day-to-day operations. It is becoming the norm for retailers to
receive a monthly technical report on their products itemising any
production difficulties that may have occurred. In general, there is co-
operation between the manufacturer and the retailers in that time is
spent working on some of the projects together. The retailers tend to
send their technical staff to audit and inspect the products on a
regular basis, and in particular when new product trials are being
undertaken.
(9) Marketing strategy of the company. The company maintains a range of
core products, which are very important to it as they provide a reliable
source of income. The company has a competitive strategy in that it will
produce ``me-too'' products, or what it terms as ``copies'' of products
already available in the marketplace, normally in response to a retailer's
request. New products are benchmarked so that it can compare and
contrast its products with other retailers and market leaders. This
company has identified a number of possibilities for me-too products:
 Company A has a marketing strategy that is based on making a range An evaluation of
of good quality products with high specifications. Quality products are NPD activities
very important and at this time there is no intention of introducing an
economy range. The company tends to use the same raw materials for
all products with some minor recipe changes.
Retailers are actively involved in using money off and two-for-one product 467
promotions to boost their sales. While this company does support retailers'
promotions it rarely adopts them for its own products.

Company B
Company B is a producer of chilled and frozen meat/meat products and
employs 60 people.

Type of innovation undertaken

A number of initiatives have taken place, which can be categorised under the
following headings.
(1) Brand reformulations. The company's branded products have remained
largely unchanged over a number of years. This company has
traditionally manufactured pre-prepared meats and cooked meats. Both
types of products have been sold on for further processing or simply for
slicing. This company is actively targeting this movement towards
companies being prepared to pay for a pre-prepared product, which
saves them time and reduces costs.
(2) Line extensions. The company's main area of product development is
centered on the delicatessen industry, to which it has traditionally sold
large joints of pre-cooked meats for slicing. Line extensions are being
introduced on a continuous development programme and generally consist
of changes in product coatings, i.e. colour/spices on turkey breast and legs.
A number of pre-packed meats are sold in a range of pack sizes. Marinated
products are sold on to various manufacturers and retail butchers with
new flavours being added as and when demand is recognised.
(3) New markets. The technical manager is proactive in seeking new
product ideas and markets. The delicatessen market is seen as a
growing market and the company is planning to develop products that
will be suitable for it.
(4) New products. This company has recognised that slicing joints are
becoming an important selling item for the retail market and is
investigating the possibility of purchasing a large nitrogen tumbler to
enable joints to be processed in greater numbers. The company is
interested in the possibilities of selling a range of sliced, cooked meat
products either plain or in a range of prepared marinades to the Chinese
wholesale market.
BFJ (5) ``Me-too'' products. The company is developing a small (375g) cooked
105,7 joint that it envisages being sold in a marinade or gravy suitable for
heating in a microwave and which could be aimed at the convenience
food market. There is a similar product on the market, although it is sold
in a smaller unit size. It is the intention of the company that this product
be sold to a manufacturer of frozen ready meals in order that they can
468 incorporate it into their range.
The company believes that it is very important to be aware of what
the industry is marketing and a watchful eye is kept on new products
with a view to taking up the opportunity to produce a similar product at
a lower price.
(6) Innovations policies. When asked to identity the type of policies it
pursues when undertaking product developments, the company
identified that it was demand driven in that it always responds to
requests for products. The company also has a proactive approach in
searching out new products and markets and considers itself to be
company driven.
It endeavours to bid for one-off contracts as and when it has spare
capacity. The company is restricted on the volume of products that it
can manufacture because of the lack of space available.
(7) Successful products. The company maintains that it will only
manufacture and market products that give a sufficient return on costs.
In order to be able to compare and contrast responses amongst case
study manufacturers with regard to how they define a successful
product the following questions were asked:
. How is success measured? A product will only be made if it makes a
profit and it only becomes successful when high volumes of output
are achieved and maintained.
. What constitutes success? The company believes that a combination
of sales and profits constitutes success. The company takes into
account the margins on all of its products and is quite happy for
some products to have quite small margins if they are a very high
volume product.
± Percentage profit. Very important but should always be linked
to turnover.
± Turnover. This is very important because the turnover of a
product must be sufficient to be viable (factors such as costs
and downtime of equipment are evaluated).
± Contribution to costs. This is useful but only considered if there
is sufficient product volume. Products that make a contribution
to costs are evaluated and are only considered when the volume
of sales is sufficiently high as to warrant their being produced.
 ± Why would you withdraw a product? A product would be An evaluation of
withdrawn if sales were poor or if there is some form of problem NPD activities
with a raw material like BSE, which reduces interest in a
product by the customers. An alternative may be found, but if
not, then the product will be withdrawn. If any of the raw
material costs become too expensive so as to make the product
not viable then it will be withdrawn. 469
(8) Relationship with customers/market. The company liaises with
ingredient suppliers with reference to new products and the
application of new ingredients. Suppliers are very happy to deliver
presentations on new ingredients and their applications as and when
requested to do so.
(9) Marketing strategy of the company. The company has a number of
``core products'' which are considered to be very important in that
they are the ``bread and butter'' that will keep the company and
employees in work. The market for its core products is not seasonal
and therefore sales are very stable. There has been a slow increase in
the sales of most lines, which has meant that the company has been
able to plan ahead in a fairly structured way. Most of the core raw
materials are bought well in advance (i.e. intervention beef) therefore
price fluctuations do not tend to be a problem.
The company has recently developed a reactive style in that it
examines what other similar manufacturers are producing and then
tries to respond. Until fairly recently, the company only supplied pre-
prepared products to other manufacturers, however, it is now taking
a keener interest in what retailers are selling. It believes that it is able
to produce cheaper alternatives to products already on the market,
which will enable it to be able to market to other companies/retailers.
At the present time it is looking at reproducing a Bernard Matthew's
product.
The company does not generally offer promotions on its own
business products. It promotes from a selling point of view in that it
offers various deals on the price. Some products are sold wholesale
from the company premises, while others are sold to order and are
delivered to retailers and food processors.

Company C
Company C is a producer of frozen microwaveable snacks which employs 70
people and undertakes the following type of developments.

Type of innovation undertaken

A number of initiatives have taken place, which can be categorised as shown
below:
BFJ (1) Brand reformulation. Changes to the formulations are only undertaken
105,7 as and when required and are generally in response to a change in the
costs or availability of ingredients.
(2) Line extensions. Line extensions are undertaken, but this is usually a
straightforward process involving the application of a range of fillings
470 and flavours.
(3) New markets. This company is currently investigating the opportunities
available in the cooked component market. It is envisaged that the
market will increase for a product that is totally cooked and is suitable
for microwaves. For example, cooked burgers could be packaged and
sold as a quick easy meal without the mess of home cooking.
(4) New products. This company is always considering new snack ideas.
Quite often its new products are a variation on what is currently
available: for example, a competitor's product may be sold in a chilled
format that the company would develop into products suitable for
freezing.
(5) ``Me-too'' products. The company has developed products for retailers,
who have requested ``economy'' frozen snack products. These are
normally produced and marketed under a name other than the
company's own.
This company acknowledges that other manufacturers' products are
evaluated in order to keep abreast of the market although it states that it
is very rare for it to copy a product.
(6) Innovations policies. The company believes that it is mainly self-driven,
in that the company determines some 80 per cent of its development and
production work itself, while some 20 per cent of developments are
determined by customers' requirements. It manufactures products for
two retailers. A range of microwaveable snack products is supplied to
petrol stations as part of a deal in which a refrigerator, micro-wave and
counter are supplied.
This company is always seeking new customers and ways to expand
present lines. While it is not exporting at this time, it may look towards
this market in the near future. It is also considering the contract catering
industry, which is expanding rapidly, as a possible new market
opportunity.
(7) Successful products. The company measures a product's performance
using a range of criteria and responded to the following questions.
. How is it measured? Customer satisfaction is a good indicator of a
product's success. Repeat purchases are very important and this
company believes that a product can be classified a success when a
customer makes two repeat purchases.
 . What constitutes a success? Any high volume, high margin product An evaluation of
can be classified as a success. NPD activities
± Percentage profit. A high profit margin is judged essential.
± Turnover. The company is prepared to run low, medium and
high output processing lines as long as the profit margins are
there. Small runs are undertaken on products that have a good 471
profit margin.
± Contribution to costs. Generally, products are not thought of in
this manner. Although if the sales volume is enough then the
profit margin for individual products can be quite low.
± Why would you withdraw a product? Poor sales would mean that
a product would no longer be produced. However, the company
does not believe in delisting products and takes the view that
products can often be revamped, reformulated or repackaged at
some later date.
(8) Relationship with customers/market. The company has good
relationships with a number of ingredient suppliers who generally
are proactive in developing new flavours and fillings and undertake
product presentations and supply of samples on a regular basis. At
present, most products are sold under their own label therefore there
is very little input from retailers.
(9) Marketing strategy of the company. A range of core products is very
important for the company. All products are produced for the frozen
food snack market. The company evaluates what the competition is
doing. However, it will only undertake to develop similar products to
those on the market if they can be produced with the available plant
and staff.
The company does not differentiate between the economy type
product they sell and the more up-market products. If it is
manufacturing for retailers what it perceives to be an ``economy
product'' it will use a proprietary brand label rather than its own,
which it does not want associated with the more downmarket
retailers.
The company has, over the last 12 months, been actively involved
in seeking to diversify into other sectors of the food industry. This
has involved buying into a company/manufacturer who has
contracts with a number of companies involved in the bulk catering
industry. It is the intention of this company to market a selection of
its established retail products in bulk under a new brand name to
large catering companies. The supply of food service goods is seen
as a growing market that may be suitable for NPD in the future. The
company does not normally undertake any product promotion,
BFJ however, it is under pressure all the time from retailers to offer
105,7 various promotions, in particular two for the price of one or three for
the price of two. Free packs are generally rejected by this
manufacturer, who will only offer one free product if the additional
product will fit into the original packaging.
472 Company D
Company D is a producer of chicken products, savoury and sweet pastry
products and vegetable grills, and employs 220 people on site undertaking a
range of developments.

Type of innovation undertaken

A number of initiatives have taken place, which can be categorised as shown
below:
(1) Brand reformulation. Reformulation of a product is normally
undertaken as part and parcel of standard operating procedures,
however, at the moment there is a concerted effort being undertaken to
reassess all own label products.
(2) Line extensions. Line extensions are undertaken on occasions. The
nature of some of its products means that it is not always an easy option.
For example, a sweet frozen fruit pie is produced, and while new
varieties have been introduced at various times, experience has shown
that only four basic varieties ever sell, namely apple, blackcurrant, fruits
of the forest and rhubarb. However, the company has decided that it will
incorporate custard fillings inside the rhubarb pie in order to enhance its
market share.
(3) New markets. Sales and marketing personnel are very proactive in
trying to identify new markets. Staff from the technical department have
a responsibility to keep up to date on the changes in the marketplace and
are proactive in visiting a range of retailers on a weekly basis. The
development personnel identify opportunities within the marketplace
and then approach retailers with their ideas.
(4) New products. The company is fairly aggressive in its approach to
product development and it is proactive in identifying opportunities.
Most of its ideas come from an assessment of what the market is
actually doing and projections from market researchers who predict
trends in the marketplace. It estimates that it has introduced
approximately 40 new products over the last 12 months. While the new
products it introduces are new to the company, it does not follow that
they are new to the world products, as they have often appeared before
in its competitors' product ranges.
 (5) ``Me-too'' products. Own label products are sometimes introduced as An evaluation of
``me-too'' products, for example the range of own label chicken-Kievs, in NPD activities
a range of varieties such as coriander and lime was a direct copy of the
range sold by Iceland.
(6) Innovations policies. This company is heavily involved in supplying
retailers with own brand products. It is proactive in trying to develop 473
different products, which it presents to retailers approximately every
two weeks. It also actively seeks the opinions of retailers as to what they
require and then responds by undertaking development work.
(7) Successful products. The company is set targets by its parent company
therefore it is important that it takes into account the performance of all
its products so that it only manufactures those that give a satisfactory
return on investment. Each case study company was asked to identify
how it determined whether a product was successful.
. How is success measured? The success of a product can be measured
taking account of its profitability and its contribution to cost.
. What constitutes success? Success is determined by a product's
profitability and its turnover value. Both need to be sufficient to
make the product worthwhile to the company.
± Percentage profit.
± Turnover.
± Contribution to costs.
± Why would you withdraw a product? The costs/price of any
product must be realistic.
A balance of all the first three is important.
(8) Own brand. The return on a product is important and if it is not high
enough then the product may be withdrawn.
(9) Retailers' brand. The reasons may be variable, however, they usually
revolve around return on shelf-space per linear foot. Once a product is
reaching the minimum acceptable return the manufacturer is advised to
watch its stock. Typically, the manufacturer expects a product to last
between 18 and 36 months. On some occasions a product will become a
staple and will appear to be successful for a long period, even years.
(10) Relationship with customers/market. This manufacturer always works
with a number of retailers, who expect regular presentations of new
products ideas. The product development manager will see some
retailer's brand manager on a weekly basis. It tries to identify at least
two new products a month. Sometimes retailers identify an idea that
they would like developing, for example, they may request a coated
BFJ chicken product and give the company two to four weeks to come up
105,7 with a product idea and a presentation.
(11) Marketing strategy of the company. The company produces a number of
core products which have very steady sales throughout the year. These
include a sweet apple pie and a number of savoury pies such as minced
beef, steak and chicken pies.
474 It is competitive in that it has a ``me-too'' strategy in which it will
reproduce a product that has already been launched by a competitor.
It tries to develop its own ranges and not develop identical products to
those already on the market. However, it always pays attention to any new
developments within the market. When it has identified successful products
it tries to follow the same theme.
Product quality is very important to the company, regardless of whether
it is manufacturing its premium product or its economy range. It only offers
promotions when encouraged to do so by retailers, indeed it feels obliged to
offer them, and these can range from:
* money off;

* buy one get one free (BOGOF); and

* when it's gone it's gone (one off promotions: WIGIG).

Case study conclusions

It is difficult to find food manufacturers that are identical in order to undertake
comparative studies. The decision to evaluate SMEs was taken in order that
similar sized manufacturers could be compared.
From the case study profiles it is possible to draw together information from
which to undertake comparisons. Table II collates data from across the four
manufacturers.
Table II highlights the fact that all four manufacturers are involved with
product development, and they all undertake some form of product extensions.
In addition, they all, to some extent, admit to taking on board other
manufacturers' products when producing ``me-too'' products.
Lack of sales and profit are generally considered reasons for withdrawing a
product from the marketplace and one manufacturer cites retailers as being in
the position to request a product to be withdrawn.
Two manufacturers have limited relationships with their customers, while
two have strong relationships with their retailers and all four have strong
relationships with their ingredient suppliers.
The overview of the types of products developed and the policies pursued
gives an insight into how those four food companies approach the task of
trying to meet the demands of both the retailers and, ultimately, the
consumer. Food manufacturers are proactively undertaking new
developments, be it extensions or product enhancements to their existing
products.
 Case study companies An evaluation of
A B C D NPD activities
Brand reformulation Routinely Occasionally Occasionally Routinely
Line extensions
Own decisions Yes Yes Yes Yes 475
Requests Yes No No Sometimes
New market developments Yes Yes Yes Yes
New product developments Yes Yes Yes Yes
``Me-too'' products Yes Yes Occasionally Yes
How is success measured?
Customer satisfaction Yes Yes
Profit Yes
Combination of profit and sales Yes
What constitutes success?

{ } { }
Percentage profit Yes Linked Yes Linked
Turnover Yes Linked Linked
Contribution to costs Yes Useful Not Linked
generally
considered
Why would you withdraw a
product?
Lack of sales Yes Yes Yes
Lack of profit Yes Yes Yes
Retailers request Yes
Relationship with customers? Limited Limited
Relationship with retailers? Strong Strong
Relationship with ingredient Strong Strong Strong Strong Table II.
suppliers? Case-study overview

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