When it's done right -- with innovation, speed and market insights -- product development can be a key growth driver for consumer packaged goods firms.
Today, a key element of the process is speed. Because of the highly competitive nature of today's marketplace, new items need to reach the shelf timely and efficiently.
All marketers are challenged by the need to deliver products to the market quickly. Faster cycle times can help companies stand out from the competition. And competition is heavy. Last year, 32,025 new food, beverage, health and beauty care, household and pet products were introduced, according to Productscan Online, a database of new products from Marketing Intelligence Service, Naples, N.Y., a new-product reporting firm. This was a 1.9% increase over 2000.
"Speed to market is important to gain market share quickly and get a foothold of market segmentation quickly," said Gary Chiappetta, president, Brandscope, Chicago, a marketing and design company.
The first company that markets a truly unique product is going to make a name for itself. This is especially true when, say, a new ingredient becomes available. The first marketer that gets a product with that ingredient to the shelf will become the market leader.
There's also the cost issue. Shorter cycle times also reduce cost involved in the process. This is true of all types of product development, including a new product in an existing category, a product that creates a new category and an existing product that has been re-staged.
How fast is fast? Cycle times range from four to six months on the short side and nine to 18 months on the longer side, said Chiappetta.
To develop a product the right way -- and on time -- marketers should consider the following, according to Chiappetta.
Good communication. All parties involved in the process -- including designers, engineers, marketers and retailers -- should be on the same track.
Clear goals. Marketers sometimes make the mistake of designing a product without having the end product in mind, said Chiappetta.
Retail partnerships. Retailers today have a lot of clout in the product-development process, dictating to manufacturers in areas like pricing and shipping. "Retailers have a lot of strength in the decision-making process," Chiappetta said.
Consequently, manufacturers need to understand what the retailers' merchandising strategies are. It must then develop product and packaging that will work within those systems so that it's easier for retailers to integrate the product.
Consumer understanding. Manufacturers need not only to understand what consumers "say" they need, but also what they don't say they need. Through qualitative and quantitative research and surveys, manufacturers have tried for years to understand what consumers want.
Now, they need to get underneath what consumers "say." Although most companies know the value of listening to customers, few have developed a real system for turning customer input into top- and bottom-line results, said Wayne Mackey, principal, Product Development Consulting, Boston.
"Companies need to understand the environment in which consumers are using the product," said Mackey.
This could mean attending a picnic to see how a product is being used. The marketer could then take that information to see what new product would make a difference in consumers' lives.
Companies define this approach in different ways. Product Development Consulting calls it "Customer-Centric Product Definition." The model is said to help companies create measurable, repeatable development processes that can substantially reduce wasted time, effort and product development budgets. It focuses on how customer requirements at the very earliest stage of product development, during product definition, help companies create products in a faster cycle that meet market needs.
Various divisions and "pockets" within companies are doing this well, including Kimberly-Clark, Chinet, Johnson & Johnson and Procter & Gamble, said Mackey.
Prevent delays. Many companies make last-minute changes in the product development process. At the 11th hour, for instance, someone may want a packaging change. Such changes put huge delays on the manufacturing schedule.
"There shouldn't be changes in the product requirements once the product is launched internally," said Mackey. "You need to prevent schedule breaks and stick to deadlines."
Establish sales channels. Examine the ways in which you will get products to consumers, including whether it will get to shelf directly or through distributors.
"Companies need to understand the entire value chain -- from how to get your raw materials to how you get the products into consumers' hands," Mackey said.