Download Factors that influence food product development

Factors which
impact on food
product development
EXTERNAL FACTORS
External factors such as the economic, political,
ecological and technological environment often
affect food product development.
 Consider a company that produces luxury food
items in tough economic times or a manufacturer
that suddenly finds its fish supply is no longer
available due to environmental concerns.
 These factors that relate to the macro-environment
are generally outside the manufacturer's control
and must be considered in proper decision-making
processes.
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ECONOMIC ENVIRONMENT
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The state of the economy can affect food product
development. A great new food product idea may
work well when consumers have a high income
level and the economic outlook is prosperous, but
the idea may fail in tougher economic times. All
economies experience changes in the level of
activity.
ECONOMIC ENVIRONMENT
Sometimes a downturn in the
economy can affect food
producers. It might not be the
right time to launch a new
product, particularly if there is
already competition in the
marketplace and consumers are
struggling with lower disposable
incomes.
ECONOMIC ENVIRONMENT
Economic factors may affect food product development
include:
 changes in inflation rates – costs increase
 changes in interest rates – money becomes more
expensive
 exchange rates – affect the cost of imports and returns
on exports
 tax rates - affect profit margins and disposable income
 import and export tariffs – can affect the retail prices
of food products.
 wage agreements and salary levels – affect costs and
disposable income
 level of unemployment – affects disposable income
 natural disasters – affect availability and prices of
commodities
POLITICAL ENVIRONMENT
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Australian manufacturers, producers and distributors of food
are all subject to regulations made by federal, state and local
governments.
At the federal level, the most prominent regulatory body is
Food Standards Australia New Zealand (FSANZ), which, in
principle, coordinates and oversees food regulation
throughout Australia and New Zealand.
In addition, there is also some overlap between FSANZ and
the Therapeutic Goods Authority (TGA), which oversees
foods or other products that are promoted and advertised on
the basis of claimed health-related benefits.
In NSW, regulation is more direct at the state government
level via the NSW Food Authority.
Local government deals specifically with local issues relating
to foods, such as zoning laws, planning permits and health
inspection matters.
POLITICAL ENVIRONMENT
Other political influences:
 lobby groups:
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the Australian Consumers Association
the National Farmers’ Federation (NFF)
Some lobby and special-interest groups run candidates for
political office to promote their views and interests, e.g.
Australian Greens has parliamentary members at all levels
of government in Australia.
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overseas countries:
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tariff barriers
trade restrictions
factors relating to food inspection, quality and safety can
restrict the ability of local manufacturers to trade in some
export markets.
ECOLOGICAL ENVIRONMENT

The ecological environment includes the
air we breathe, the food we eat, our
waterways, biodiversity in both plant and
animal species, and the land itself.

Today there is concern about
endangerment of species and
environmental damage because of
issues such as pollution, land
degradation, inadequate waste disposal
and conservation of natural resources.

These issues affect consumer attitudes
to such things as recycling,
biodegradability of packaging, pollution
of the atmosphere and waterways, use
of pesticides and waste disposal.

A selection of organic dairy foods
developed in response to consumer
demand for pesticide- and fertiliser-free
foods
Companies have developed a range of strategies to address consumer concerns and
enhance the marketability of their products. These strategies include the use of
biodegradable and recyclable packaging, better air pollution control, environmentally
friendly processing and transport for their products, and more efficient energy use and
waste disposal in their processing operations. This needs to be supported by the
development of new products, packaging and processing technology.
TECHNOLOGICAL ENVIRONMENT
‘It's not what you do, it's the way that you do it’ are words from an old song.
These words are especially relevant to food product development.
Changes in science and technology affect the development of new food
products.
 extrusion techniques
 ultra-high temperature (UHT) processes
 new packaging technology such as modified atmosphere
 computer control in food processing
 automated equipment
 improved distribution systems
 genetic engineering (genetically modified materials are probably the most
controversial of new food ingredients).
 food additives
Developments in processing technology often arise from research and
development (R&D) activities by private or government-sponsored organisations,
such as universities and research organisations other than those within
companies.
New technology offers food manufacturers the benefits of improved production
efficiency, expanded product range and increased market share, as well as lower
costs and labour requirements. The bottom line is greater profits!
INTERNAL FACTORS
Internal factors relate to the micro-environments
and are mostly within the manufacturer's control and
include:
 the expertise of personnel
 production facilities
 the company's financial position and
 company image.
Such factors can have a major impact on the success
or failure of a company's new products.
PERSONNEL EXPERTISE
The expertise of staff is crucial to the operation and development
of a business. The personnel (staff or human resources)
employed by a food company include some or all of the
following:

production staff on the factory floor

financial staff

marketing and sales staff

purchasing staff

product development staff (sometimes called R&D staff)

product testing and quality assurance staff
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maintenance and engineering staff

management staff

company directors
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product distribution staff
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warehouse staff
PRODUCTION FACILITIES
Production is the mechanism
whereby raw materials are
converted into final products
for the market.
 Production facilities vary in
complexity, level of
technology, output capacity
and also expense. In general,
the complexity of equipment
is related to specific products
and processes, output
volume and the financial
status of the company.

The production
facilities needed to
present food for
airline passengers are
different from those
needed for serving
meals at a local
cafeteria.
PRODUCTION FACILITIES
Food production methods:
 Continuous production
 Mass production
 Batch production
 One-off production
FINANCIAL POSITION
A company's financial position is a major factor in the type of
equipment it can afford and hence its product range and new
product development activities.
The financial position of any company includes:
 the value of its assets (cash, property, equipment)
 its cash flow
 profit-and-loss balance
 value of its shares (for public companies)
 amount of borrowings or loans to others
 interest rates
 equity in other companies and property
 value of stock on hand
 market share
 product range and other aspects that vary between
companies.
COMPANY IMAGE
Company image is reflected mainly in its market
segment and consumer attitudes towards the
company. It may develop through some of the
following factors:
 consumer perceptions of product quality
 prices
 form and convenience of products and packaging
 market availability
 labelling.