Commercial concepts explained: new product development in foodservice

New product development in foodservice is critical in keeping pace with rapidly changing trends, preferences and socio-economic factors. However, in recent times, innovation has become a critical form of risk mitigation as businesses are forced to re-think their product offerings in response to market volatility, supply chain challenges and soaring cost increases.

Here are seven common terms used in the innovation of new products:

  1. Insights

A new product or service usually starts from an insight which is an opportunity or an observed change in human behaviour that forms the basis of a new concept. For example, the popularity of plant-based and sustainable products is due the rising prevalence of environmentally conscious customers.

  1. Innovation vs renovation

‘Innovation’ generally refers to the creation of a new product whilst ‘renovation’ refers to an upgrade or enhancement of an existing product. An example of product renovation is changed formulation that results in a new product claim such as improved texture, lower sugar, or fat free.

  1. Stage-gate framework

This is a science-based management framework frequently adopted in manufacturing businesses that coordinates commercialisation of new products across different stages or gates. This framework is highly cross functional as it collaborates different areas such as marketing, sales and research and development.

  1. Rotational products

A rotational product is one that is swapped into a customer’s product range in place of an existing product.  Rotational products are popular in pantry, confectionary and beverage categories which tend to have different flavour offerings. 

  1. Value engineering

This refers to the improvement of internal production processes resulting in reduced product costs. Examples include optimising packaging to reduce waste, improving pallet utilisation or extending shelf life to reduce stock write off.

  1. Product cannibalisation

This occurs when a new product sources its sales from an existing, older product. This is common across many categories where new products are launched to an existing customer base.

  1. Range rationalisation

This refers to the discontinuance of certain products based on their relative profitability.

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