New Product Development in Small Food Enterprises

AbstractPurpose - The purpose of this paper is to demonstrate how small businesses may deploy a formalised Stage-Gate approach to new product development (NPD). The original Stage-Gate framework was modified to better suit a small business B2B environment in the seafood industry, and was subsequently applied to a small vertically-integrated crab catching, processing and marketing business.Design/methodology/approach - This paper uses a case study methodology. The method used at each stage of the Stage-Gate framework, as well as the time and location details, the people and skills involved, and the evaluative criteria applied for NPD are outlined and discussed; and subsequently synthesized in a modified framework.Findings - The modified Stage-Gate approach was shown to be an effective NPD method, allowing for 92 initial product concepts to be narrowed down to three commercially viable and acceptable products, over a period of less than 11 months. Cost and time were minimised by the four-day ideation process. Furthermore, repeated evaluation of the sensory and market acceptability resulted in strengthened confidence in market attractiveness, while ensuring that appearance, portion size and packaging were based on expert market opinion. Moreover, this approach was successfully completed at less than 25% of the cost of the previous unsuccessful NPD undertaken by the firm.Originality/value - This study advances our understanding of how small businesses may use a formal NPD process to increase the success rate of new products, through development of a modified Stage-Gate approach.Keywords: New product development; stage-gate approach; small business; seafood business; case study..JEL Classifications: M11; M31PsycINFO Classifications: 3660FoR Codes: 1503; 1505IntroductionProduct innovation is a necessity in today's competitive global food markets (Costa & Jongen, 2006; Grunert & Valli, 2001), where consumers increasingly demand greater variety and higher quality (Jaeger et al., 2003). However, new product development (NPD) is a risky undertaking (Altintzoglou et al., 2010b; Stewart-Knox et al., 2003); a high proportion of new food products developed never make it to market, and approximately 50 to 90% of those that do are 'dead' within a year (Ernst & Young Global Client Consulting, 1999; Morrissey, 2006). When developing new products, small businesses face added disadvantages of limited resources and limited depth and expertise of personnel (Pitta, 2008).Several approaches to NPD in the food industry have been documented (Rudder, Ainsworth & Holgate, 2001). In an environment where evolving and heterogeneous consumer demands create a need for market orientation across the whole value chain (Grunert et al., 2005), consumer-driven NPD has been implemented as a strategy to address the market uncertainties within the food industry (Altintzoglou et al., 2010b; Grunert & Valli, 2001; Jaeger et al., 2003). However, this approach has been criticised because it does not take into consideration the role of other stakeholders in the food supply chain, such as producers, suppliers and retailers (Costa & Jongen, 2006). Alternatively, the Stage-Gate approach of clearly defined stages, each followed by a gate at which an objectively-based decision is made about progression to the next stage of development, has successfully been implemented in the food industry to build a road map to commercialisation (Patist & Bates, 2008).Few examples of the application of the Stage-Gate model to the seafood industry have been reported (Altintzoglou et al., 2010b; Morrissey, 2006). Altintzoglou and colleagues (2010b) used qualitative data on consumers' barriers to seafood consumption obtained through focus groups as input for a Stage-Gate approach to inspire the development of new seafood concepts (Altintzoglou et al., 2010b) which were subsequently 'virtually' tested by consumers through a web-based questionnaire (Altintzoglou et al. …