Notes On Unit 3 – Food Product Development

Resource Description

Unit 3 – Food Product Development

A.    Factors impacting food product development

Food manufacturers must address a number of factors that influence developments of products. The factors are divided into two distinct areas:

• External factors (macro-environment) 

External = factors company has no control over, they include: – economic environment –political environment –ecological environment –technological environment.  PETE

Economic Environment

State of economy can determine success or failure of a new product. When consumers have a high income, products may work well compared to tougher economic times. 

• Recession – downturn in the economy; less disposable income, lower capacity to pay for goods, decreased employment and increase in reliance on social services. People are spending less money, consumers purchase less food and go to fast-food outlets and cheaper restaurants. New product development generally declines and range of products decrease. 

• Expansion – when the economy grows with production, employment opportunities and introduction of new products. More high- value foods available for consumers. Economy improves while unemployment, interest rates and inflation decrease. Consumers spend more. 

• Boom – consumers are spending more money, eat at better restaurants and try new products. More luxury products are bought. New businesses appear and unemployment rates are low. Economy may grow too fast, interest rates rise by the government to control economic growth. Decrease in new product development. 

• Contraction – has similar effects as recession, but not as severe. Disposable income, consumer spending, business activity and new product development are in decline. 

• There are some factors that affect food product development;