Food is essential for maintaining life; thus, the business will focus on selling red meat. The purpose of developing new red meat products is to address market gaps, such as new consumer pressures and demand. The consumer market can be segmented into groups with similar purchasing characteristics such as income, age, lifestyle taste, beliefs, and health (Du & Chen, 2017). The food market currently follows three initial growth inclinations, including indulgence, health, and convenience, and therefore, consumers will often buy products that meet all their needs during a shopping occasion.
New product development (NPD) is a vital process for food companies to undertake to meet consumer needs and remain completive in the food market. Many product ideas fail at different stages of the process, and most companies will continuously have a variety of foodstuffs at different stages of development (Ireneusz, 2018). The development of a new product follows a sequence involving various events, as depicted in Figure 1.
Figure 1: New Product Development Cycle
Businesses develop marketing strategies alongside the product development process, and product promotion begins after the launch, followed by a performance review of the product to measure its performance. Pricing decisions must consider various costs such as handling, packaging, transport, processing, and storage involved in manufacturing the product for it to be profitable. Sometimes products are launched in different parts of the country to measure their performance and decide whether to invest in them or not. Many products may fail at varying stages of the NPD process, and some of those that succeed do not last in the market for long. Some reasons for failure include stiff competition, low profits, food scares, ineffective advertising, a high cost of the ingredients, inappropriate production and packaging, and reduced product display on a shelf (Ireneusz, 2018). Although numerous products may fail, the NPD process remains critical to any successful food business to safeguard its competitive ability against other companies.
A recent trend where consumers are developing a more significant interest in how products and packaging are done made many manufacturers respond by creating organic or farm-assured ranges of food products. Luxury or “premium priced” products is an examples whose production targets a specific group of consumers wishful for status or higher disposable income. Such a categorical output is called tiering system in which manufacturing is meant to meet different consumer needs (Ireneusz, 2018). Furthermore, food companies compete with one another to sell their products, influencing consumer purchasing decisions and increasing their market share. Therefore, firms need to keep current information about the factors affecting the patterns in consumer purchasing, such as price, consumer preference, regional availability, and level of demand.
Market research is conducted to determine why consumers buy some products in preference and discover their attitudes and purchasing habits. Food companies often review their sales figures, and product ranges to keep and increase their market share, thus promoting decision-making concerning product type, price, channel of distribution, and sale promotions. The investigative market research provides data about what customers buy, whether they like it, and if they are likely to rebuy the same in the future. It may include online or telephone surveys, home product trials, focus groups, frequent domestic purchase monitoring, and buyer loyalty cards. Historically, premium and value ranges have provided consumers with choices between food products. In contrast, mid-range tiering has provided food manufacturers with the ability to supply a broader range of products, thus reaching many consumers.
Also, a marketing mix often referred to as the ‘4 P’ ’s explains a combination of marketing activities or tools to guarantee customer satisfaction and accrue benefits for the food company. Firstly, the product is specified via packaging and branding, then the target market is identified, followed by pricing, which reflects the cost of production, marketing, and profit margins. Place includes where the product is sold and promoted through advertising, both in and out of the store. Also, a product’s lifecycle comprises its time in development and when it is available for sale in the consumer market (Ingenbleek, 2015).
The approach to pricing a new product identifies the factors that may lead to adopting promising valuing strategies. The first type explains the essential product attributes, such as its uniqueness. In contrast, the second denotes the direction and the events leading to the implementation by the business’s administration and selling department, such as attracting new clients and attaining new market stakes. The third and fourth classes designate the consumer and the competitive nature of the market in which a company functions, such as intensive competition and high latent demand.
Skimming pricing recounts a high preliminary value to attain maximum interim financial results (Du & Chen, 2017). It aims to advance the total conceivable price from individual market segments, from the uppermost value sectors to the lower ones. This approach is ideal for pioneering high-value products with an impressive image and enables the company to cover the expenses of developing the new item and decrease future costs. On the other hand, penetration pricing indicates a reduced initial price and is useful when a company offers similar products, pointing to price-sensitive consumers, particularly on a mass scale. Furthermore, this plan intends to entice new customers to attempt the latest product, thus achieving a better market share and curbing the entry of competitors into the business. Moreover, the strategy is vital when the firm can reduce the unit cost as the supply increases or when the customers are familiar with a specific product or the regular market prices (Du & Chen, 2017). Finally, dynamic pricing involves setting flexible rates based on processes involving current market demands, competition, and supply to make a timely product price regulation for a correct service to the consumer in time. In contrast, product price lining entails categorizing items based on quality, such as red meat from different animals (Ingenbleek, 2015). Market pricing implies what the customers want to pay depending on supply and competition due to demand.
Ireneusz, R. (2018). The maturity progression of the new product development process in the context of security and recent product success. Handel Wewnetrzny, (375), 307-318. Retrieved from
Ingenbleek, P. T. M. (2015). Price strategies for sustainable food products. British Food Journal, 117(2), 915-928. Retrieved from https://search.proquest.com/docview/1648571586?accountid=45049
Du, P., & Chen, Q. (2017). Skimming or penetration: Optimal pricing of new fashion products in the presence of strategic consumers. Annals of Operations Research, 257(1-2), 275-295. DOI:10.1007/s10479-014-1717-0
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Published On: 10-06-2021
