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Risk and Failure of the NPD

Each NPD process is accompanied be a huge risk, and if a certain company is unable to manage it, the new product will fail. There are many different factors that could cause this failure (Table 4.2.1.1). The difficulties are prevalent along the new product development process. Even more, failure rates for new food products are consistently higher than those for new industrial products (Redmond 1995). Despite the risks, if the companies succeed in establishing and implementing a systematic framework for managing new product activities, they can minimize the associated risk and increase the chance to develop the new product (Jain 2001).

Research also can give a significant input into the new product development, especially into the dairy products. The Agri-Food and Biosciences Institute (AFBI), the United Kingdom contributed to the product development via outspreading the value-added potential—for example, nutraceuticals and functional foods. It finds opportunities to add value in three main directions—enhancing lipid composition, optimizing vitamins, and applying advanced processing—and thus to optimize the nutritional value of dairy products. Everyone contributes to and enhances the new product development process. Moreover, these achievements can give an adequate respond to the consumer lifestyles and demands (e.g., consumers who are more health conscious and aware, searching for dairy products with longer shelf life, natural, at high quality with flavor, texture, and with a wide variety).1

Table 4.2.1.1 Causes of New Product Failure.

1.

Market/marketing failure

  • • Lack of market analysis
  • • Small size of the potential market
  • • No clear product differentiation
  • • Poor positioning
  • • Misunderstanding the customer needs
  • • Lack of channel support
  • • Inability to support fast sales growth
  • • Lack of clear competitive advantage

2.

Financial failure

  • • Insufficient funding
  • • Low return on investment

3.

Timing failure

  • • Late in the market
  • • Too early—market not yet developed

4.

Technical failure

  • • Product defects
  • • Bad design

5.

Organizational failure

  • • Poor fit with the organizational culture
  • • Lack of organizational support

6.

Environmental failure

  • • Government regulations
  • • Macroeconomic factors

Adapted from Jain 2001; Redmond 1995; Markovitch et al., 2014

The US dairy industry has different achievements in new dairy products development complying with the clients' requirements (e.g., in addition to traditional cheese products, the companies has responded to the requests of health professionals by developing lower-fat products that retain their traditional body and flavor). In response to concerns about sodium, the industry is conducting research to develop lower-sodium cheeses that retain functional and safety characteristics of traditional products.2

 
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