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New insights into consumer-led food product development

New insights into consumer-led food product development

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Published by: John Henry Wells on Jan 12, 2010
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06/18/2012

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New insights intoconsumer-led foodproductdevelopment
A.I.A. Costa
*
,1
andW.M.F. Jongen
&
Product Design and Quality Management–Agrotechnology and Food Sciences, Wageningen UR,P.O. Box 8129, 6700 EV Wageningen,The Netherlands(e-mail: ana.costa@wur.nl)
This paper builds upon a review of relevant marketing,consumer science and innovation management literature tointroduce the concept of 
consumer-led new product development 
and describe its main implementation stages.The potential shortcomings of this concept’s application inEuropean food industry are described. Contrary to previousoptimistic views, it is put forward that without significantchanges taking place in the mindset of the organizationsinvolved in Europes food R&D, the way forward forconsumer-led innovation strategies in the agri-businesssector will be long and hard.
Introduction
New product development (NPD) is often recommendedas a suitable strategy to build competitive advantage andlong-term financial success in today’s global food markets.Product innovation is said to help maintain growth (therebyprotecting the interests of investors, employees and foodchain actors), spread the market risk, enhance thecompany’s stock market value and increase competitiveness(Buisson, 1995; Lord, 2000; Meulenberg & Viaene, 1998;Trail & Grunert, 1997; van Trijp & Steenkamp, 1998).Surprisingly, however, the European food and beverageindustry displays much lower research and development(R&D) investments than industries in other sectors and isquite conservative in the type of innovations it introduces tothe market. Radically new products are rare (only 2.2% of total product launches), especially when compared to thehigh number of products (an estimated 77% of total productlaunches) representing nil or an incremental level of noveltyonly that is introduced to the market every year (Avermaete
., 2004; Ernst & Young Global Client Consulting,1999). This approach to innovation, which keeps R&D costslow and implies a minute technological risk only, does allowthe introduction of a relatively high amount of differentproducts in a short time span. The large majority of foodproducts developed in this way cannot, however, beconsidered truly new. Moreover, with mere technology-based reductions of processes’ and ingredients’ costs beingfrequently marketed as new, enticing benefits to theconsumer, it becomes increasingly harder for buyers toperceive the added-value of ‘slightly new’ food productsand thus reward incremental innovation (Galizzi &Venturini, 1996; Grunert, Baadsgaard, Larsen, & Madsen,1996; Trail & Grunert, 1997).It is a generally accepted fact that far too many foodproduct introductions fail. Figures vary widely, but even themore conservative estimates, encompassing only truly newproducts and excluding those that failed before reaching themarketplace, indicate that 40–50% of new productintroductions are out of retailers’ shelves within a year(Ernst & Young Global Client Consulting, 1999). Thisapparently supports those advocating that few resourcesshould be committed to discontinuous innovation in food. Itis often said that eating preferences and habits’ slow rate of change, together with the consequent consumer aversion totoo much novelty in food, constitutes a barrier to genuineinnovation too high to overcome. Nevertheless, consumers’food consumption behaviour does change, perhaps fastertoday than ever. It is also not wise to assume that consumersall share the same preferences or degree of risk-aversionconcerning innovative products. Given the global characterof food markets today, innovation may, therefore, becomemore of a necessity than an option (Galizzi & Venturini,1996; Grunert
., 1996; Trail & Grunert, 1997).Moreover, being conservative does not seem to be payingoff much anymore: me-too products launched in Europe fail
0924-2244/$ - see front matter
q
2006 Elsevier Ltd. All rights reserved.doi:10.1016/j.tifs.2006.02.003
Trends in Food Science & Technology 17 (2006) 457–465
Viewpoint
* Corresponding author.
1
Address: Aarhus Business School, MAPP, Center for Research onCustomer Relations in the Food Sector, Haaslegaardsvej 10, DK-8210 Aarhus, Denmark. Tel.:
C
45 89486498; Fax:
C
45 86150177.
 
(on country average) 18% more often than line extensionsand about 24% more than truly new products (Ernst &Young Global Client Consulting, 1999).
Consumer-led product developmen
was introduced inthe early 1990s as a market-oriented innovation conceptconcerning the use of consumers’ current and future needsand its determinants in the development of new productswith true added value (Urban & Hauser, 1993). It has beensince repeatedly advocated by several marketing and foodtechnology experts (Lord, 2000; van Trijp & Steenkamp,1998), but little has been done to consolidate its theoreticalfoundations and establish concrete methodological guide-lines for its practical implementation. To our knowledge,only two applications of consumer-led NPD within the foodindustry have been described so far (Grunert & Valli, 2002;Jaeger, Rossiter, Wismer, & Harker, 2003), each followingits own methodological approach. Additionally, empiricalor case-based studies analysing the advantages anddisadvantages of this innovation strategy
vis-a`-vis
theconventional NPD practices within the food industry havenot yet been reported.This article builds upon a review of the relevantmarketing, consumer science and innovation managementliterature to describe the economic background and thetheoretical foundations that brought about the concept of 
consumer-led new product development 
. Next, the keystages of the concept’s practical implementation and thepotential shortcomings of its application within the foodsector are described. Additionally, an attempt is made toforecast the future of consumer-led food product develop-ment in Europe in the current circumstances and to highlightsome of the areas in which more research is necessary toensure its prosperity.
The challenges of today’s global food markets
Socio-economic and technological developmentsoccurring during the last decades in Western societyhave triggered the need for a shift of the agricultural andfood industry sectors’ orientation from production tomarket. The fact that food markets have become buyermarkets rather than seller markets has several expla-nations (Grunert
., 1996; Meulenberg & Viaene,1998). From the economic perspective, the increase of disposable income and the decrease in population growthresulted in the deceleration of the demand for food.Meanwhile, the scientific and technological developmentsof the last half-century gave rise to global-scale foodproduction and distribution, making an ever-diverse andever-increasing food supply almost permanently availableeverywhere. This imbalance between supply and demanddecreased the importance of availability and price asdeterminants of food purchase and increased the relativeimportance of consumers’ choice criteria (Meulenberg &Viaene, 1998; van Trijp & Steenkamp, 1998). Nowadays,most Western consumers can buy exactly what they wantto eat, instead of only what is readily available oraffordable, and have, therefore, become the drivingelement of the food chain.Due to the significant changes in life-styles and valuestaken place in the last 50 years, the nature of food choiceitself has been transformed. Smaller, higher-educatedfamilies, in which both adults work full-time, andsingle-person or single-parent households have triggereda quiet revolution that is gradually doing away withconventional eating patterns. The growing importance of values such as
quality of life
,
well-being
or
protect the planet’s environment 
is also exerting influence on the wayconsumers perceive and evaluate foods and productionsystems, thereby increasingly determining choice (Meu-lenberg & Viaene, 1998). Western consumers are likewisedemanding more and better information about the foodthey eat and how it is produced. They are increasinglyaware of the interdependence between food production,food consumption, their own health and that of theenvironment. This awareness, together with an abundantand diversified supply, has made consumers highly criticalof, and demanding about, food products’ quality andsafety (Earle, 1997; van Trijp & Steenkamp, 1998).Finally, consumers are more heterogeneous and whimsicalthan ever, which makes their food choice harder tounderstand and predict (Grunert
., 1996; Linnemann,Meerdink, Meulenberg, & Jongen, 1999). To gain a betterknowledge of what consumers want, how their needschange and how such changes can be promptly addressedis consequently becoming not only a factor of success forthe agri-food businesses, but ultimately also one of meresurvival. Companies who are able to uncover (or, betteryet, anticipate) demand, deliver against it and commu-nicate this effectively to consumers increase highly theirchances of survival and success in the marketplace (Kohli& Jaworski, 1990; Urban & Hauser, 1993). This isparticularly true in the context of today’s global foodmarkets, in which manufacturers and distributors seek toproduce and sell foods to both familiar and unfamiliarcustomers in the midst of world-wide competition.Public health, environmental and sustainability policiesmay also bring about the need to influence consumer’sfood choice. This influence can be exerted either byregulating processes and products (i.e. affecting avail-ability) or by educating consumers about the relationbetween food consumption, health and the environment(i.e. changing the relative importance of choice criteria).In any case, the food chain will be affected, either directlyor indirectly, and the development of an effective meansof communication between people and organisationsbecomes crucial in being able to cope with policy change(Best, 1991; Meulenberg & Viaene, 1998). If consumerscannot grasp the need to adjust their behaviour, as well asthe benefits to be gained by such an adjustment, they willnot accept change, let alone behave according to thepolicy-makers’ expectations. Similarly, for innovative
A.I.A. Costa, W.M.F. Jongen / Trends in Food Science & Technology 17 (2006) 457–46
458
 
technologies to be successfully applied in food productionthey must be, rst and most, analysed in terms of perceived consumer value. Carelessly pushing themforward simply because they might be highly advan-tageous for the food chain’s actors can, in spite of allefforts, do more harm than good (Best, 1991; Fuller, 1994;Meulenberg & Viaene, 1998).
Market-orientation and consumer-led new productdevelopment
Agriculture and food enterprises clearly need todevelop further their understanding of the markets inwhich they operate and skilfully apply this knowledge inthe creation of competitive advantage. The most adequateway to achieve this is probably through the implemen-tation of the
market-orientation
concept (Grunert
.,1996). Market-oriented companies are those which havecommitted themselves to the continuous generation andinternal dissemination of market intelligence relevant tothe current and future needs of their customers, as well asto the continuous improvement of their responsiveness tosuch needs (Kohli & Jaworski, 1990). Although a positiverelationship between market-orientation and businessperformance has been established for several types of industries (Avlonitis & Gounaris, 1997; Han, Kim, &Srivastava, 1998; Slater & Narver, 2000), not much isknown about the level of market-orientation of Europeanfood companies and how it influences their performance.One could expect the current scenario of high marketinstability, increasing competitiveness, slowing economyand modest technological development to be ratherfavourable to a market-oriented approach (Kohli &Jaworski, 1990). Nevertheless, few studies addressingthis topic indicate that the generation of consumerintelligence by the food industry, a necessary but notsufficient condition for market-orientation, remains veryscarce and mostly accidental. In practice, most foodcompanies, with the probable exception of some largemultinationals, rely on retailers to obtain informationabout their end-users. This leads to the assumption thattruly market-oriented food companies are still rare inEurope (Avermaete
., 2004; Harmsen, 1994;Meulenber & Viaene, 1998; Trail & Grunert, 1997).Studies in innovation management have looked closelyat the relationship between market-orientation and newproduct development (NPD), suggesting that theseorganisational processes could greatly benefit from eachother (Grunert
., 1996; Kok, Hillebrand, & Biemans,2001). On one hand, it has been sufficiently demonstratedthat market-orientation is a critical factor in successfulproduct development and innovation processes (Atuahene-Gima, 1995; Cooper & Kleinschimdt, 1994; Lukas &Ferrel, 2000; Wind & Mahajan, 1997). On the other hand,it is rather straightforward to conclude that the continuousadaptation of a company’s products and services to themarket (i.e. NPD) is a pertinent way of formulating themarket-orientation concept. NPD can be seen as anorganisational process in which information about themarket and its actors is gathered, diffused, assimilated andreturned in the shape of a new product or service.Consequently, a market-oriented approach to productdevelopment implies a sound understanding of:1. The fact that both technical knowledge and marketinformation are necessary to run effective productdevelopment processes;2. The way market information can be gathered,disseminated and combined with technical knowledgeto develop successful products (Grunet
., 1996).It is also thought that the implementation of market-orientation in innovation and NPD processes can be acrucial step in leading the remainder of the organisation to amore market-oriented conduct (Kok 
., 2001).The concept of 
consumer-led new product development 
can be viewed as a market-oriented innovation strategydeveloped specifically for the manufacturers of consumergoods, as it focuses on the share of market intelligencepertaining to the end-users. It is an integrated conceptconcerning the application of consumers’ current and futureneeds, and its determinants, in the development of innovative products with true added value (Grunert
.,1996; Lord, 2000; Urban & Hauser, 1993; van Trijp &Steenkamp, 1998). Its main pillars are:Consumer needs should be the starting point of NPDprocesses;NPD should aim at the fulfilment of consumer needs andthe realisation of consumer value rather than at thedevelopment of products or enabling technologies
per se
;Given that increased sales and satisfactory returns oninvestment can only be achieved if consumer needs areeffectively identified and satisfied, the measure of success of a NPD process should be the degree of fitbetween the new product and the needs of the targetedconsumers.The key stages in the formulation of the consumer-ledNPD concept follow closely a market-oriented approach:
need identification
,
idea development 
to address the need,
 product developmen
to substantiate the idea and theproduct’s
market introduction
to communicate thefulfilment of a need (Urban & Hauser, 1993)(Fig. 1). An effective ability to translate subjective needs (e.g.
healthy
or
convenient 
) into objective product specifica-tions is essential for the realisation of the satisfaction of consumer needs through the development of a newproduct. Concurrently, marketing strategies communicat-ing the existence of a new or improved product whichsatisfies consumer needs in a distinctive and superior waymust be conceived. It is thought that such a consumer-ledapproach to product development can greatly increase thelikelihood of success of innovation processes (Dahan &
A.I.A. Costa, W.M.F. Jongen / Trends in Food Science & Technology 17 (2006) 457–465 
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