Think break

A large oils and fats ingredient company plans to develop a new pastry margarine product and is trying to identify a target market and new products. Possible target markets are pie manufacturers, frozen pastry manufacturers, croissant manufacturers, biscuit manufacturers, cake shops, small retail bakers, supermarket bakeries and hotel patisseries.

1. Choose some suitable segmentation factors from Table 3.8 and assign the target markets into the segments. Select what you think are the two most suitable segments for a new pastry margarine product.

2. Identify possible new products, both incremental and innovations, for each segment.

3. Evaluate these new products and select the two most promising ideas.

4. Identify the most important 'customers' to include in the design process for these two new product ideas.

5. What tangible product qualities would they need?

6. What services would they need?

7. Sketch the complete product concepts for the two products.

The product development process 137 Table 3.8 Methods for segmenting industrial buyers

Stage in the food chain: primary processor, secondary processor, caterer, retailer. Type of processing: for example baking, freezing, dry mixing, sterilisation. End consumer products: for example snack foods, takeaways, breakfast foods. Size: number of employees, amount of capital, turnover per year, production volume. Technical knowledge and skills: high technology, average technology, craft. Usage rate: large, medium, low; regular, variable. Type of purchaser: new, old, repeat, contract, casual.

Organisational structure: private or multinational company, farmers' cooperative.

The needs and wants of the buyers

All buyers are interested in firstly the ease of using the ingredient in the process and secondly the cost and quality of the final products. Although the buying action is logically based on these needs, there are still some psychological reasons for buying. Basic needs and wants of the industrial buyer are shown in Table 3.9. Actual needs and wants do vary with the different people in the buyer's company. For example:

• Production personnel - delivery time, reliability in supply, constant quality, ease in processing.

• Product development personnel - ease and shorter time for development, final product qualities.

• Quality assurance personnel - raw material specifications, ISO standards, narrow range of quality variation.

• Purchasing personnel - reliability of supply, price, size of delivery, regular deliveries.

In looking at these needs, one can see that there is an emphasis on service as well as the product, and this reinforces the need to develop the service with the

Table 3.9 Needs and wants of the industrial buyer



Ease of delivery

Convenience in processing

Ease of storage

Uniform, stable, processing

Ease of ordering

Technical simplicity in processing

Reduced risks



Costs, discounts

Financial losses


Product failure

Payment method

Staff failure

Payment time

Equipment failure



Technical information

Production of uniform, acceptable products


Satisfactory sales and profits

New and improved consumer products

Competitive advantage

Help in processing

Few equipment problems

Information on derived products

Efficient staff use

Marketing help with derived product

product. In developing industrial products, there is a need to identify the important people in the buying company as regards this type of ingredient and to find from them their needs and wants in the new ingredient, and decide how their needs and wants relate to the buying company's critical needs. In other words, the product development team in the supplier's company needs to understand the buying company's overall needs in product and services, and also the needs and wants of some individuals.

The PD Process

The PD Process is therefore a combination of product and service development. In the past, these have been done in sequence, completing the product development process, and then starting the service development. This leads to an increased time for development and also sometimes to a lack of harmony between the product and the service. In Fig. 3.19, there is an attempt to combine the product and service development processes to give an integrated product and service. The integrated product/service development process is particularly useful when new products are being introduced with a new service process and a new service system. The service system may already be in place and a new product and a new service process will be developed. This still means integration of the two development systems.

De Brentani (1995) has suggested three successful scenarios for industrial service development:

• Customised expert service: expert capabilities and resources providing customers with customised and high-quality service.

• Planned pioneering venture: pioneering new service ventures aimed at attractive, high-volume markets.

• Improved service experience: enhanced speed, good service quality and reliability.

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