New product development is fraught with difficulty, cost, and high rates of failure. Why do companies pursue it? Would it not be simpler to do the minimal amount of development necessary to stay in business? Or simpler still, wouldn’t it be easier to coast along with existing products? Both options would certainly be simpler, but the company would not be profitable for long. Food companies must grow to make money and survive. As John Maynard Keynes put it so succinctly in A Treatise on Money, “The engine which drives Enterprise is not Thrift, but Profit.” 1 Developing new food products is one of the major ways a food company can build profits. It is estimated that only one new product idea in 58 actually makes it through the development process and yields a successful new product. 2 Yet some companies realize a whopping 50 percent of their sales and 40 percent of their profits from products on the market five years or less, according to Robert Cooper, professor of marketing and technology management at McMaster University in Ontario. 3 Five dominant forces drive the need for new food product development:
1. Life Cycle • Nearly all products have life cycles. They enter the marketplace, flourish for a time, then die and must be replaced. A very few defy the odds and seem to stay in the market indefinitely: Kellogg ’ s Corn Flakes®, Spam®, Kool‐Aid®. But they are the exceptions.
2. Stakeholders’ Expectation of Growth and Profit • A company’ s management may adopt a policy of aggressive growth to satisfy long‐range business goals and repay investors or stakeholders. New products are seen as a way to achieve these growth goals.
3. Changing Consumers • Consumer populations may change due to immigration, demographic shifts, and a host of other means of social evolution. These changes may require the development of new products more suited to the makeup of the new marketplace.
4. Technology Advancement • New technology may enable development of new food products more suited to the lifestyles of current consumers. It may also offer increased assurances of food safety, higher food quality, or greater efficiency in production.
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