New Product Development Process Essay: Factors Affecting KFC

New Product Development Process

Discuss About The Connection Approach Corporate Responsibility.

New Product Development is the process that is used to bring a new product to the marketplace. Each and every business may need to involve in the process because of changes in the demands and preferences of customers, increased competition and advancement in technology. Innovative companies prosper by considering what the customers and market want, producing smart product enhancements and developing new products which meet and exceed the expectations of customers. There are various factors which need to be considered by an organization when it plans to develop new products for its company. The major objective of this report is to evaluate the new product development practices of the chosen company i.e. KFC (Kentucky Fried Chicken). KFC is an American fast food organization that was established in the year 1991 and it specializes in the fried chicken. It is the second largest restaurant chain in the world and headquartered in Louisville, Kentucky (KFC, 2017).  

In the first part, the report includes the new product development process that is explained on the basis of different opinions. Furthermore, there is the discussion about the factors which may affect the new product development framework of an organization. Some of the chosen factors are defined in context of KFC Organization. These factors are related prices, relative quality, concentration of target market and competitive pressure. Moreover, the paper includes the critical success factors and issues related to the organization. The success factors and issues are defined by identifying the strengths and weaknesses of the new product development process of company. At the end, some recommendations are given to enhance the new product development practices of the selected organization i.e. KFC.

New product development (NPD) process is the practice of taking a product from idea generation to market. The process of new product development includes different stages which new products generally go through, beginning with idea and idea generation and ending with the introduction of final product in the marketplace (Cedergren, Norstrom & Wall, 2017). In today’s business environment, the rivalry among companies is going intense following the market trends and customers preferences. The organizations which introduce new products to the marketplace faster are more competitive and successful in their industry. According to Griffin (1997), the organizations with the creative product development strategy and formal process for creating new products show an excellent performance in terms of attaining the profits and sales objectives, increasing the sales of new products and growth rate of new products. Moreover, it can include different activities which define the repetitive transformation of new ideas into products that can be sold to the customers. It includes various steps which can be used to develop and introduce the products into the market. There are several conceptual models which have been designed to facilitate a smooth process (Griffin, 1997). One of the most popular models of new product development process is Bah model that has been given in the year 1982 by Booz, Allen and Hamilton. Today’s companies use this model effectively as this is the best known model and it develops the NPD systems which have been put forward later. It shows the base of other models which have been introduced afterwards.

Factor That Affect New Product Development Framework

In her article, Bhuiyan (2011) stated that BAH model of NPD includes seven stages such as new product strategy, generation of ideas, screening and evaluation, business analysis, development and design, testing and commercialization. The first step of new product strategy connects the NPD procedure to the organization’s objectives and offers the emphasis for idea generation and strategies for developing screening criteria. In the second step of concept generation, it emphasizes on finding new ideas that fulfill the goals and objectives of a firm. Moreover, there is one another model of NPD that is adopted by IDEO. It is a five-step process that can be used for new product development (Bhuiyan, 2011). These steps are:

• Understanding and analysing the market, customers, technology and limitations of the issue;
• Combine the information gathered at the first stage;
• Envision new customers utilizing the product;
• Analyse and enhance the concept;
• Implementation of the changes which are related to more technologically advanced processes and thus this stage will need more time.

It is very important for a company to implement the models of new product development effectively. During past few decades, the number of new product introduction has increased intensely because the industry became more aware about the significant of new products. Respectively, managing this process has become a threat for the companies as its needs wide-spread human and financial resources (Stark, 2015).

Currently, KFC uses an effective new product development process by adopting an innovative model in its operations. Before developing new products, the company considers the needs and wants of customers. Under its product development process, the company makes efforts to catch the interest of its loyal customers with its huge collection of products. It is offering food products to its customers so KFC focuses on offering highest quality of food ingredients, competitive prices and new flavors (Mok, Sparks & Kadampully, 2013). It proposes to offer its products in domestic markets and create new customers. It sets the pricing policy of the product considering the manufacturing costs and income level of targeted customers. Before introducing the new products in the market, the company sends the products for sample testing through food truck or free sample. In this way, the company follows an effective process for new product development.

There are various factors which affect the new product development process of an organization. These factors may be related to the firm, market, product and project (Ahmadzadeh, et al, 2017). The diagram of the factors is given below:

Winning business model with the flexibility to manufacture a new product by identifying the needs of market can be an effective strategy for an organization. Introducing a successful product to the marketplace is an effort of the whole team and processes of a company. While product developers are accountable for utility, usability and user experience, there are various factors that contribute to the failure or success of new product development and many of these factors are the out of producers’ control. Under a product development process, it is predicted to create a successfully developed and saleable product in the market (Mok, Sparks & Kadampully, 2013). To develop a successful product, each and every company needs to meet the commercial and technological viability. In today’s modern environment, technological visibility is an important factor that makes the product successfully marketable. The organizations need to develop their product with increased technical capacity. In addition to this, products should also have the commercial value in the sector.

Product Related Factors

Apart from these, an organization needs to emphasize on firm related factors like research and development, strategy development, organizational structure and innovation. These factors are very important as they assist the organization to develop its products. They can be the major reason behind the growth or failure of new product. Furthermore, the company has to emphasize on the product related factors as customers are directly affected by these factors like price and quality of product, innovativeness and use of advanced technology (Gervais, 2015). These are the major factors which affect the customers purchase intention directly. Market related factors also play an important role in new product development process. The company needs to consider these factors like competition, target market and process of marketing. The organization has to develop its new strategies looking at the market competition and according to it targeted audiences. These are the major aspects which assist the organization to attain great commercial visibility.

Price is one of the most significant product related factors in the process of new product development. Relative price is the price of a product or service in terms of another. For a company, it is very challenging to determine that how price sensitive is its targeted customers are. There are various industries in which price is the number one factor and it plays an important role to influence the customers purchase decision. The companies need to set the prices of its products considering the income level of its targeted audiences. By setting the affordable prices of products, the company expects to provide the quality products on their desired value. The customers always expect that they can have higher quality at affordable prices. The people from middle and lower income level prefer to purchase the products at reasonable prices as they are price sensitive. For example, a customer purchasing a phone may be very price sensitive. If one phone is and other is $150 and other is $100. There are the chances that the customer will choose the cheaper option. In this way, the company needs to set the prices of new product considering the level of its targeted audiences (Gervais, 2015). It will assist the organization to attract them towards its products and services.

Among all the product related factors, this is one of the most important factors on which KFC has been focused. Under the new product development process, the company is trying to reduce its production cost and raw material cost so that it can offer its food products on affordable prices (KFC, 2017). The food menu at KFC is offered at reasonable prices and they have implemented innovative strategies to compete in different countries. The company is setting its prices looking at its target market group and offering the products at different rates. The products are also available in combos and bundles and prices of combo packs is less than combined price of all products. Due to this, KFC’s parent brand is on the 201^st rank of the fortune’s with the revenues of more than 15$ billion (Lusch & Nambisan, 2015). The major targeted audiences of KFC are the families in both semi-urban and urban locations in different nations belonging to the middle and upper middle income level. Under the new product development process, the company understands that it is very important to know about the price sensitivity of the company’s targeted audiences (Hollensen, 2015). The pricing policy at KF C is also equivalent to its major competitors like McDonalds and Texas Chicken.

Quality is the most significant factor under the product related factors of the process of New Product Development. Relative quality is the factor that makes sure that a product of the company is sufficiently acceptable as it was perceived by its customers. It can be defined as the comparative customer perception of quality. In today’s modern environment, people have become very conscious towards quality and they expect to purchase higher quality products on affordable prices. By ensuring the quality of products, the companies make efforts to fulfill the expectations and demands of customers related to the product quality. After conducting an analysis of preferences of customers, product development division converts them in the product characteristics while providing excellent quality (Buttle, 2012). If the company’s new product is able to satisfy the needs of customers than these products can be considered as the quality products. Offering highest quality products can assist the organization in attracting more customers towards its products. It assists the organization in gaining more competitive edge over its competing brands.

As a fast food restaurant, it is very important for KFC that it focuses on offering higher quality in its products. Looking at the customers’ concern, KFC has been emphasized on serving the customers with higher quality food. KFC is one of the largest fast food chains that serve the world with the fried chicken that includes secret blend of 11 herbs and spices. The organization is focusing on high quality and it is committed to ensure thee food safety by strict control to maintain the standards. In addition to this, it takes the post service feedback from customers so that it can get their ideas and opinions for improving the quality of its food offerings. It has developed a culture that is totally focused on the quality food (Harrington, Ottenbacher & Fauser, 2017). Under the new product development process, it cooks the products above the minimum temperature that is suggested by WHO. It uses a standard process which reduces the chances of cross contamination between raw materials and eatable food. Moreover, it provides the data on nutritional values of its products to help the people in planning a balanced meal. Thus, restaurant has made various efforts to maintain the best quality of products so that it can stay competitive in fast food industry. 

Under the process of new product development, effective target market concentration is very crucial factor. Companies conduct marketing research to assess needs and preferences of customers. Market research plays an important role in the development of new products and services. By conducting this research, the people can understand the targeted customers and current market trends in the industry (Choi, et al, 2017). Before producing new product, it is essential for the organization to analyze the whole marketplace. An organization needs to consider different segmentation characteristics before developing the products. These characteristics are demographic, geographic, psychographic and behavioral characteristics. This market information assists to convert the needs of customers into a physical product. In addition to this, it will be able to meet its product related objectives and to attain the sustainable competitive edge among its competing brands (Bowie, et al, 2016).

KFC is one of the largest and most popular fast food chains that offer its food products all over the world. The organization is famous for its non-vegetarian food and recipes that entice its targeted audiences. Targeting a large market, KFC has developed a customer-friendly environment within its each and every fast food outlet so that people can enjoy their food. The company is using multi-market strategy to describe their targeted audiences. The target market of KFC is divided into four groups like young adults, teenagers, children and budget customers. By this, the company proposes to get each and every customers involved to enhance and maintain the company’s revenues. Company is developing its new products and restaurant environment considering the needs and tastes of its targeted customers. The company is very much concentrated to its target market. In order to attract a large customer base, the company is able to develop better relationships with the customers (Buttle, 2012). By adopting effective strategies for its target market, KFC aims to offer the best eating and dining experience to its customers. It has introduced a breakfast menu recently that is prepared on the basis of demands of customers.

Competitive pressure is also an important marketing factor in the process of new product development. For an organization, competitive pressure can be described in terms of its impact on the incentives of firm to introduce the products and practice the innovations. The outcome of this product innovation is a new product to launch in the marketplace. In this way, the incentive for innovation is determined by the profits generated from new product (Beneito, et al, 2015). Considering the competition in the market, companies develop and innovation their product development process regularly. Before developing new products, firms identify their competing brands and analyze their strategies to assess their weaknesses and strengths related to the products and services. Analysis of competitive pressure is an important part of the marketing plan of company (Genoveva & Siam, 2017).

The demand for fast food products is continuously increasing across the globe. It can be notes that various fast food restaurants are starting their operations in different urban areas all over the world. KFC is among the most popular fast food outlets which have in the industry for a large duration. The company has a significant competitive pressure from different leading fast food players like McDonalds, Burger King, Subway, Wendy’s etc. To grow among these competitors, KFC is making efforts to deal with this competitive pressure (Harrington, Ottenbacher & Fauser, 2017). It has to enhance its acceptability by customizing its food menu to align with the taste of domestic people. To overcome the competitive pressure, the company is focusing on the quality of new products rather than prices. In this process, price is less significant because most of the players in fast food industry are offering their products on similar prices. By looking at the competitive pressure, the company has introduced new products and innovative thinking (Hu & Xie, 2013).

There are some success factors and issues which are related to the company and its new product development process factors (Florén, et al, 2017). The strengths and weaknesses of new product development process of KFC are stated below:

There are some points under the new product development process of KFC which are good and company is using them to attain sustainable competitive advantage. These are the strengths of company as they support the organization to develop the products smoother. The strengths are given below:

• One of the major strengths of the company is that it is focusing on offering new products on affordable prices by decreasing the cost of production and raw materials. By offering the food menu on reasonable prices, the company will be able to increase its customer base.
• Previously, the company was offering non-veg products only, now company has expanded its business in vegetarian products also looking at the competitive pressure in the fast food industry (Fuller,2016). It is strength because the company will be able to stay competitive in the industry.
• In addition to above, multi-market strategy is also a significant strength of the company through which it concentrates on its targeted customers. It enables the KFC to cover a large market so that it can gain more competitive edge over its competitors.
• Looking at the competitors’ products, KFC as introduced various new and innovative products like chocolates, brownies, veg burgers and other veg products. It has enabled the organization to enhance its brand image among a large population (Drucker, 2014).

Thus, the above strengths are good in relation to the new product development (NPD) process at KFC. These points will assist the organization to attain sustainable competitive advantage.

Apart from the above strengths, there are some weaknesses of new product development process which are not working in the favor of KFC. These weaknesses are given below:

• One of the major weaknesses of KFC is that the company is facing intense competition from its leading competitor i.e. McDonalds. Till now, the company is failed to meet the new product development strategy and process of McDonalds.
• Moreover, the company is not able to develop more technology advances in its product development process than McDonalds. Like McDonalds has used Lonworks technology for its kitchen operations and to decrease the energy consumption (KFC Restaurant, 2018).
• In today’s modern environment, people are becoming very much conscious towards their health. Thus, the utilization of unhygienic calories and unhealthy fats in new product development is creating problem for KFC brand. It is affecting the business operations of the company (Schrempf, 2017).

Thus, the above-mentioned are the points which need to be focused by the organization and they should make improvement in these aspects of business. The weaknesses of the company may affect the sales and revenues of this leading fast food restaurant.

From the above report, it can be analyzed that KFC has various weaknesses which need different improvements. It is hereby recommended that company should develop new product development strategy to enhance its process. By conducting the market research, KFC should analyze the market trends, its major competitors and their strategies. Market research can assist the organization to collect the information about different factors like consumer spending habits, needs of target market, existing competition, location, industrial factors etc. This process can help KFC to understand the market through which it can focus on its new product development process accordingly. It should emphasize on the above weaknesses and it should use its strengths to overcome these weaknesses.

The organization should adopt some effective and innovative strategies to match its product development process with its competitors. KFC is operating its business operations in the global fast food industry but it is not able to meet the level of its competitors. It should hire a team of technical experts so that it can develop technological innovation in its product development process. When a company introduces a new product, it should give a test-run with the loyal customers and then it should introduce the product in marketplace accordingly. In this way, it should involve the customers in the process that will enhance the customer loyalty towards KFC’s food products. The company should allocate all the responsibilities in different department like production division will create the plan to produce the products. Marketing division will develop plan to advertise and distribute the product in market. Moreover, finance department will give the funds for launching the new product in the market. Thus, the company should manage it’s all the activities and processes in an effective manner. It will enable the organization to make the product development easier and smoother. Furthermore, the company should a systematic process to develop its new product like analysis of market trends and customer needs, generation of ideas, screening of the ideas, testing of new concept and finally introduction of product in market. After new product introduction, KFC should conduct the post launch review so that it can take the feedback of customers.

Conclusion 

In the limelight of above report, it can be concluded that new product development is an important process for each and every organization. The process of new product development refers to the original products, improvement in products, changes in products and new brands which are developed from the development efforts and research of firm. From the above report, it can be founded that KFC is effectively managing its product and market related factors operating its business in fast food industry. Some of these factors are working as strengths of organization and some factors have adverse impact on its brand image and revenues. The company should consider the above recommendations to improve its new product development process. From the above report, it can be learned that KFC is focusing on different factors of New Product Development process.

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