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NEW PRODUCT DEVELOPMENT

NEW PRODUCT DEVELOPMENT. A SMALL BUSINESS PERSPECTIVE. 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. WHAT IS MARKETING?.

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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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