Road Blocks to Success Road Blocks to Success

The U & I Group

What are the Issues?

Over

half of all new products fail

Food: IRI Study of 608 introductions
52% fail 48% success

All Industries:
New products 46% fail 54% success
Source: IRI New product trends 2000. Robert Cooper 2003
Both major and minor intros launched between 10/96 and 10/98 (looking at 2 years post introduction) in 20 categories. Major: New brand or extension into new segment. Minor: form/ flavor extension (not size change).

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General Reasons for New Product Failure

% Citing Reasons for Failure

45% 30% 25% 18% 17% 15% 11% 22%

Marketing Analysis Product Problems or Defects Marketing Efforts not Enough Higher Costs than Expected Competitive Strength or Reaction Poor Timing of Introduction Technical or Production Problems All Other

Indequate Communications!!!
Source: Robert Cooper 2003

The U & I Group

Why?
People

Teaming

The Knowledge and Information they have at the time. A lack of understanding of all aspects of the product, process and package requirements. The Mindsets People Have Towards Professional Work.
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The Key During all Phases

Communicate! Communicate! Communicate! KEEP

ALL PARITIES INVOLVED AND INFORMED AT EVERY POINT IN THE PROCESS

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What do YOU Communicate About?

Link what you are doing to Achieving:

#1 How you are delivering

Unique and Superior Product Differentiated Product Delivers unique Benefits Delivers Superior value to the Consumer

# 2 Clearify a Strong Market Orientation. Market driven and consumer focused. --- Good Market research # 3 Understand International Orientation # 4 Communicate Pre Development Homework # 5 Communicate Sharp and Early Product/ Project Definition # 6 Develop a Well Conceived Market Launch # 7 Get The Right Organizational Structure and the Right Project Structure # 8 Keep Top Management Support # 9 Leverage Core Competencies # 10 Keep the Project Aimed at Attractive Markets
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Source: Robert Cooper 2003

Idea

Concept

Business Case

Develop

Scale Up Test/ Validation

Launch

Post Launch Audit

Keep these Questions in Front of you all the time

Can We sell it?
High Risk

Does Someone want it?

Communicate what contributes to Answering these questions & Getting the work done
Low Risk

Can We make it?

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Can We make money?

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Idea

Concept

Business Case

Develop

Scale Up Test/ Validation

Launch

Post Launch Audit

Stage 0 Idea/ Planning and Situation Assessment Does Someone want it? Can We sell it?

Is there a market opportunity on which to focus? Is this opportunity within our core technical competencies? Can We make it?
The U & I Group

Can We make money?

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SnackWells

1995 Nabisco hit a gold mine when it began the fat-free SnackWells line of cookies and crackers which grossed $476 MM that year. Green packaging meant Healthiness. But by 1997, SnackWells sales had plummeted to $274 MM. In 1998 Nabisco added fat back in (to 150%) to improve taste. No long term technology platform strategy to keep the SnackWell Brand fresh. No long term Management Commitment!!! SnackWells became a cash cow.

The U & I Group

Idea

Concept

Business Case

Develop

Scale Up Test/ Validation

Launch

Post Launch Audit

Stage 1: Concept Does Someone want it? Can We sell it?

Focus on Understanding Unmet Needs for Consumers or Customers Develop Potential Solutions for key unmet needs

Can We make it?

The U & I Group

Can We make money?

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Maalox Whip
Maalox

Whip: A dessert topping that controls diarrhoa. Novartis had both pharma and consumer business units. Created a new Maalox Moment for Novartis.

Thirsty

Cat: Bottled Water for your cat @$1.49 Use some common sense!
The U & I Group 11

Idea

Concept

Business Case

Develop

Scale Up Test/ Validation

Launch

Post Launch Audit

Stage 2: Building

the Business Case Can We sell it?

Does Someone want it?

Define Consumer Segments Identify key consumer language and behaviors Identify technical solutions to consumer problems Test Concepts with consumers For top rated conceptswhat are potential technical solutions/ protocepts? For key Consumer Segmentswhat are potential technical solutions/ protocepts? Test Concepts and Prototypes with consumers

Can We make it?

The U & I Group

Can We make money?

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WOW! Chips
Frito-Lay's Wow Chips Hit Hoosiers Hard -- "Hundreds Suffer Diarrhea, Cramps, Incontinence" --- CSPI Announces TV Spot to Publicize Wow Problems -One little quarter-page ad in the Indianapolis Star had the telephone ringing off the hook in Washington, as hundreds of Hoosiers reported stomach cramps and other symptoms after eating FritoLay's new Wow chips. The snack product is made with the controversial fat substitute olestra, sold under the name Olean by Procter & Gamble, its manufacturer. At a press conference today in Indianapolis, the nonprofit Center for Science in the Public Interest (CSPI) said it was inundated with reports of abdominal cramping, diarrhea, fecal incontinence, and other gastrointestinal symptoms. On the day the ad ran, CSPI's tollfree Olestra Hot Line, 1-888-OLESTRA, received almost 200 calls. Cecilia Bowman, president of Hoosier Organic Marketing Education, based in Clayton, Indiana, said, "Shame on Frito-Lay and Procter & Gamble for using Hoosiers as guinea pigs for their products. The FDA should yank olestra from the market. If Wow chips and other foods made with it were ever marketed nationally, millions of consumers could get sick. Frito-Lay's reputation might literally be going down the toilet in Indiana. I hope the company exercises some responsibility and voluntarily ends its test market before more people get sick."

1998, Frito-Lay introduced WOW! Chips made with Olean. The fat-free cooking oil called olestra was approved by the FDA on January 24, 1996 as an ingredient safe for use in salty and savory snacks.
Olestra is made from vegetable oil and sugar put together in such a way that it is bigger than a normal fat molecule. While it is made starting from natural ingredients, our bodies can't digest this bigger olestra molecule because of its size. Olestra passes through our bodies without being digested or absorbed by the body in any way (similar to how fiber interacts with the body, for example). Therefore, olestra adds no fat or calories to foods cooked in it. Because olestra is derived in part from vegetable oil, it cooks like regular vegetable oil and the products made with it taste exactly like the delicious full-fat versions that are cooked in regular vegetable oil.

1998 sales were $347MM. Sales in 2001 were $150MM.

2002 With close to 20,000 reports forwarded to the agency from both CSPI and olestra developer Procter & Gamble, the FDA has logged more complaints about olestra than it has about all other food additives historically. P&G sold the factory that manufactures olestra. Frito- Lay begam reverse market testing Wow!-brand chips. Frito-Lays Wow! Chips reportedly have eaten into sales The U of low-fat Baked Lays chips, which are olestra-free. & I Group 13

What are you responsible for?

Make

sure that you do a thorough job of market research Make sure that your product attritubes really meet the consumer need
That the factors controlling them at lab, pilot plant and products are fully understood That the product can be made at full production scale through the complete distribution schedule without loss of attributes

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Idea

Concept

Business Case

Develop

Scale Up Test/ Validation

Launch

Post Launch Audit

Stage 3: Development/ Feasibility review Does Someone want it? Can We sell it?

Develop best consumer/ technical solutions Develop best product/ package Define potential Manufacturing Issues Begin to Define all product / package specs

Can We make it?

The U & I Group

Can We make money?

15

New Coke

1985, after 99 years with essentially the same taste, Coca-Cola decided to switch to a new, high-fructose corn syrmp, to make Coke taste sweeter and smoother--more like its arch rival, Pepsi. This historic decision was preceded by a top-secret $4 million survey of 190,000 people, in which the new formula beat the old by 55 percent to 45 percent. What Coca-cola apparently neglected to take into account was that many of the 45% who preferred old Coke did so passionately. The 55% who voted for new Coke might have been able to live with the old formula, but many on the other side swore that they could not stomach new Coke. 1985, new Coke captured 15% of the entire soft drink market and Coke Classic 5.9% with Pepsi at 18.6%. In 1986, new Coke collapsed to 2.3%, Coke Classic surged to 18.9%, and Pepsi helf firm at 18.5%. A large public outcry ensued during the 79 days when old Coke was no longer on the shelves. Coca-Cola quickly reintroduced the "old" Coke when they realized market share was falling and christened it Classic Coke. Volume for the classic brand has risen 24 % since 1984, making it the No. 1 soft drink in the land since 1987. Consumers became even more loyal to the brand after it was temporarily taken away from them.

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During R&D Including Pilot Plant Work

Consider physical, chemical, microbiological, nutritional, sensory, packaging, shipping and consumer use factors. Involve pilot plant, manufacturing and packaging engineers at early stages of development; processproduct-package interactions Carefully train all pilot plant operators, develop QA and HACCP plans with QA staff. Develop manufacturing operating instructions based on pilot plant results, develop consumer use instructions.

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Idea

Concept

Business Case

Develop

Scale Up Test/ Validation

Launch

Post Launch Audit

Stage 4: Testing and validation/ Scale Up Does Someone want it? Can We sell it?

Run product at plant location Test plant product/ package with consumers Define Advertising/ Marketing plans Define Sales Roll out Define Distribution Roll out

Can We make it?

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Can We make money?

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Wine & Dine Dinners

Heublein, a wine and liquor importer and distributor, introduced this product in the mid-1970's. "Wine & Dine Dinners" came with pasta and sauce mix and a mini bottle of salted wine that was intended for creating the sauce. However, this rather important instruction wasn't properly explained, and consumers assumed the wine was for drinking. The misunderstanding left a bitter taste in the mouths of unforgiving consumers.

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During Manufacturing

Involve QA staff in all phases of implementing QA and HACCP plans Finalize Detailed operation instructions - in a form understandable to all operators Train all operating personnel op operating instructions and the need (reasons) for compliance Finalize detailed sanitation instructions Train all sanitation personnel on sanitation operating instructions -- instructions and training may need to be in languages other than English Finalize detailed instructions for storage, warehousing and shipping

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During Manufacturing

Check on date of production, shipping and holding history, production records on ingredients used and amounts used. Microbiological examination - bacteria, yeast and mold counts; pathogens as appropriate Production of pilot plant test lots -- follow-up thermal shock; mechanical vibration shock testing Storage stability tests - 30 days at 0, 5, 25 and 37 oC Sensory evaluation - flavor and aroma, color and texture All ingredients checked for compliance with specifications

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Idea

Concept

Business Case

Develop

Scale Up Test/ Validation

Launch

Post Launch Audit

Stage 5: Ready

to Launch Product in Market place Can We sell it?

Does Someone want it?

Can We make it?

The U & I Group

Can We make money?

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Gerber Singles
This

product for adults was launched in 1974 in a variety of fruits, vegetables, and entrees. However, consumers simply could not relate to adult food products sold in baby food jars.

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During Distribution
Maintain retention samples for reference Establish and maintain shelf-life testing procedures Maintain a check of customer complains Review records of your total distribution system for possible technological problems Continually review repeat sales records Keep tract of competitors

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Idea

Concept

Business Case

Develop

Scale Up Test/ Validation

Launch

Post Launch Audit

Stage 6: Post Launch Audit

Key Deliverables include:

1. Actual versus plan on key dimensions of project and business objectives - Projected financial returns - Project cycle time - Market performance - Early customer satisfaction and quality statistics 2. Lessons Learned documented for input to subsequent projects. 3. Product improvement suggestions added to the Idea Bank 4. Project open issues reviewed, with plans to address.

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Its All Up to You!

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