Food product development Flashcards
external factors (macro-environment) that impact
on food product development
PETE
- political
- economic
- technological
- ecological
political factors
Australian Food Manufacturers are subject to regulations made by federal, state and local governments
may be influenced by:
- organisational operations
- tax policies
- national and international laws that affcet demand and supply chain
federal, state and local govs all have laws that affect the business operations of food companies
these reglations cover areas such as
- product safety
- product claims
- tradmarks, copyrights
- employee health and safety
- environment etc
political factors that may affect FPD:
- type of government regime (in aus - democratic gov)
- war/conflict
- legislation e.g mimimun wage or anti-discirmination laws
- market regulations e.g. certification, labelling for organic foods
- trade agreements, tariffs, restrictions e.g. GMF
- tax breaks and levies
- fundings and initiative e.g ‘Waste less, Recycle More”
- advisory and research assistance e.g. CSIRO
political changes closley tied with economic changes e.g. in Aus a change from a Labour to a Coalition government may affect taxation policies - could impact overall cost of food production.
economic factors
factors that help determine the competitiveness of the environment in which a business operates and consumers willingness to purchace goods
factors in economic environment and meaning
- changes in inflation rates -> changes in costs of ingredients, equipment, wages and processes + may need to raise prices
- changes in invert rates -> companies may need to borrow money so they can buy new equipment and technology + producer may raise prices to meet using interest rates
- exchange rates -> importing food may mean rising cost of food (if AUD is low)
- tax rates -> taxes can be charged if new government is elected (raising price of food)
- import and export tariffs -> a tax imposed on imported goods can raise price of food
- wage agreements and salary leads -> higher wages = higher cost of food
- level of unemployment -> low levels of unemployment can affect income + the likeness for people to buy these products
How do companies respond?
- need to be aware of economic conditions and have strategies to adjust both positive and negative changes
- it could change the number of employees and scope of operations
- need to be aware of loan finance and low interest rates (important to borrow money at the lowest rates)
key words of economic factors
Recession
- downturn in economy
- consumers spend less money, less on fast food, new food products
- profits of businesses decline and businesses risk bankruptcy
Expansion
- economy grows in terms of production, employment opportunities
- high value foods become available
- consumers more financially secure and have more money to spend
Boom
- consumers spend more money (eat at better restaurants, try new food products, travel more, luxury items)
- unemployment rates are low
Contraction
- less severe than a recession
- consumers have less disposable income
technological factors
inventions and innovations result in new products, innovative ingredients, new industries, new market opporutunites
examples of technological developments in FPD:
- natural sweetners
- high-pressure pasteurisation
- resistant starch
**New technology offers food manufacturers the benefits of: **
- improved production efficiency
- expanded product range
- low cost
- labour requirements
- increased market share
How do companies respond?
-technological environment generally changes -> developments by researchers in non-industry organisations (CSIRO and universities)
- non-industry groups have a broader based and proactive approach -> rather than directly related to specific company interests, they do so in response to immediate problems affecting the company
ecological factors
whole food system uses enviornmental imputs e.g. land, air, water, energy
outputs returned to natural environment e.g. greenhouse gases, pesticides, wasterwater, packaging & food waste.
current trends in global macro-environment
- sustainability: sustaianbly produced products e.g. coffee
- organic food
- water security: e.g. improved plant breeds with reduced water needs
- biodiversity: e.g. minimising uneccessary packaging, environmentally friendly packaging
What commercial practices have companies done to address these issues?
- use of biodegradable and recyclable packaging
- better air pollution control
- environmentally friendly processing and transport for products
- efficient energy use
internal factors (micro-environment) that impact
on food product development
PPFC
- Personnel Expertise
- Production Facilities
- Financial Position
- Company Image
Personnel Expertise
The expertise of staff is crucial to the operation and development of a business. The team may include:
* marketting personnel
* food scientists
- technical managers
- nutritional experts
* Product testing and quality assurance staff
* Product distribution staff
* Financial staff / purchasing staff / company directors / warehouse staff
- packaging desingers
Many workers are required to be multi-skilled
* Allows greater mobility within and between staff categories and greater flexibility within company operations
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 expense
* Large companies often use a mixture of production technologies -> smaller ones depend on one simple process
* Consideration into whether the company’s current facilities are adequate for production -> level and volume of production influences what facilities they will require
* New products will have higher chance of being produced if the facilities it required matches the facilities the company possesses
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 portion of the company includes the value of its assets, cash flow, profit-and-loss balance, value of shares, amount of borrowings or loans to others, interest rates, equity and property, value of stock on hand, market share, product range
* Company must invest ample finances to produce a new product
* Financial position is determined by income, production costs, profit, wages, facility costs
Company Image
Public perception of a food company is a result of the company’s image, which generally evolves over years of operation.
* AIM for companies -> to make themselves and their products memorable to consumers
* Companies develop a reputation through their mission statement, values, logo, advertising, campaigns and media presence
* Public perception of a food company is a result of the company’s image
* It is the result of strategies, products and market that were chosen deliberately by the company
* Company image is reflected mainly in its market segment and consumer attitudes towards the company
Example -> Kit Kat’s slogan: “Have a break, have a Kit Kat”
-> Coca Cola’s ‘Share a Coke’ campaign (adds personal level to drink)
drivers of the development of food products
Mum Carries Tammy So Crammed
- Market concerns
- Consumer demands
- Technological developments
- Societal changes
- Company profitability
Market concerns
- health: many food products are marketed on the basis of health related claims + consumers have an increased awareness of healthy eating and concerns such as weight, lifestyle diseases, GM foods (willing to pay more for healthy products)
- special products are called functional foods -> designed to promote various aspects of consumer health
- dietary considerations: increased incidence of allergies/intolerances = consumers require designated allergen-free foods -> legally required to declare allergens on product packaging
- the environment: more ethically-minded consumers selecting products based on sustainability, waste management and cruelty-free agriculture + companies feel pressure of having a public influence on environmental action to gain popularity
Examples:
* Gluten-free (coeliac)
* Sugar free
* Weight loss
* Allergies (i.e. nuts, eggs)
* Functional foods (i.e. probiotics)
Environmental concerns:
*Biodegradable packaging
* Less packaging (i.e. easy-crush mount franklin bottle)
* Recyclable products
Consumer demands
Most people want convenient foods at a low price: price and convenience are useful new product characteristics that assist food manufactures with competitiveness and marketing
- manufacturers needs to assess carefully its target market before designing convenience features into a new food product
- consumer demands include dietary references, preparation methods, different packaging sizes, the use of organically grown ingredients, local as opposed to overseas products and ingredients, and cultural preferences
Examples:
Busy lifestyles: convenience foods (i.e. frozen meals, microwavable meals, meal kits)
High living expenses: low cost foods (i.e. bulk packs, special deals, generic brands)
Community spirit: locally sourced ingredients (i.e. Australian tuna, farmer’s market veggies)
Societal changes
- ageing population: easy-opening packaging, foods requiring minimal preparation
- single-person household: single-serve meals, increased convenience / these people are often willing to experiment with new food products
- changing work hours: moving away from 9-5 work model / more casual and shift workers / nutritious snack foods and convenience foods are key
- multiculturalism: Australia is a diverse country / increases in ethnic products, those catering for cultural/religious preferences (i.e. halal, kosher, and food fusion such as falafel chips)
