2007 R&D Survey - Marketing Plays a Bigger Role than Before

Our annual survey finds marketing playing a much bigger role in every step of the product development process.

By David Feder, Managing Editor

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Last year, research and development teams at most food and beverage processors were wrestling with reformulations for the healthier and organic trends. Foremost was the technical difficulty for many food manufacturers -- especially bakers -- to get trans fats out of their products. Labeling requirements for the presumed unhealthy fat kicked in at the beginning of 2006, and the drive was on to acquire the coveted "no trans fats" label.

Breathe a sigh of relief: Efforts for most were successful, and today little starbursts announcing "0 trans fats!" decorate the labels of most cookies and savory snacks. But the healthier-for-you impetus is here to stay, and R&D teams will remain busy reformulating or designing from scratch foods and drinks that promise more in the way of physical, mental and social health.

Who will make up those R&D teams designing healthier fare? Our annual R&D Survey indicates the push for more cross-functional teamwork continues. But whereas last year's survey spotlighted how nutritionists, agronomists and some purchasing agents were working with the lab-coated bench workers, this year some white-collar denizens come to the fore. Marketing and sales people are playing a bigger role in the development of new products than many of us might believe.

This year's survey results are based on 324 responses. While the marketing folks score high but two points behind R&D in product conception, they actually rank higher (by eight percentage points) than R&D as well as management in decisions on whether to take a product idea forward (see Figure 1).

Product development goals for our respondents typically are set by the triumvirate of R&D (75 percent), marketing & sales (73 percent) and corporate management (65 percent). More than half (55 percent) also noted their CEO/CFO/president is "very involved" as well.

But the folks in the plant have their say, too. More than one-third (34 percent) of respondents say those in manufacturing also are "very involved" in setting product development goals (and a higher 47 percent say the plant is "somewhat involved"). That's virtually the same number as noted manufacturing also is "very important" in determining the products the company is to explore further (Figure 2).

Three-quarters of the respondents say marketing & sales is "very important in determining the products [their] company wants to explore further." Management is more involved, too: 60 percent say the CEO/CFO/president pitches in and 67 percent say more general segments of corporate management are in.

R&D was ranked comfortably in the middle of these titles at 64 percent. And an interesting statistic arose from this breakdown indicating nearly one in five respondents claims suppliers are "very" involved in the determining products the company should further explore. That's a good amount of clout coming from outside.

If the shoe fits

Decision making is crucial not only to determine what the new formula goals should be but how to make them happen. A lot goes into a final "thumbs up/thumbs down" for a new or revamped product. Any stage of the decision-making process can trigger the spending or saving of thousands of dollars.

Different people get to make the call at those different stages. "Does it fit our brand?" is answered equally by marketing & sales and by top management. Not surprisingly, marketing takes over when the question is "Does it fit our marketing strategy?" I guess you gotta suspend trust in the marketing & sales folks when you decide "Can we make money on it?" – only R&D scored lower among the nine job titles (see Figure 3).

Interestingly, suppliers figured a close second to manufacturing (only half a percentage point behind) when the question was "Can we make it?" It's our assumption those are suppliers of equipment as well as ingredients.

One question we expanded this year was where each title fits along the product development process (see Figure 4); that is, who is on the product development chain?

Click to enlarge image.

Click image to enlarge.

Of interest, in our chain the marketing and sales team does the majority of the brainstorming – slightly more than R&D. And of course, that group handles the lion's share of market investigation as well. R&D gets into the driver's seat for formulation as well as product testing and development. Then, as would be expected, the bench squad hands the reins over to plant operations for manufacturing, production and packaging.

This does not mean there's no team effort. In fact, the differences in the breakdown are not that big – everybody in-house pitches in across the board with more or less equal voice, and a little more emphasis when the development process hits their department.

One set of survey results that came as unexpected was the degree to which the marketing & sales team is involved in product testing (more even than the manufacturing operations team) and the packaging phases (surpassed only by manufacturing operations).

This ties in to our question on whether a company makes decisions regarding new product development in a centralized or decentralized manner. When asked if decisions are made at the corporate level (centralized), almost two-thirds said yes, versus 36 percent claiming decisions at their company are decentralized – that is, made by a particular business unit.

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