CHAPTER: 1

INTRODUCTION

1.1. Introduction of Report

This report provides an overview of new product development and feasibility of that low calories chips and wafer in market, its impacts on the market environment and its vulnerability problems like huge loss in profit, high risk involvement, over utilization of resource, large investment. The aim of the report is to identify significant challenges to the new product development of low calories wafer in India that arise from consumption pattern ,changing lifestyle, risks, resource constraints and social or political responses for the organization to be competitive in market. The report also considers a range of response strategies being developed and explored at various product development stages. Upon completion, this work will be circulated as a discussion paper to researchers, organization, and other stakeholders.

New product development(NPD) is the term used to describe the completeprocessof bringing a newproductor service to market. There are two parallel paths involved in the NPD process: one involves the idea generation,product design, and detail engineering; the other involves market research andmarketing analysis. Companies typically see new product development as the first stage in generating and commercializing new products within the overall strategic process ofproduct life cycle managementused to maintain or grow their market share Feasibility study is an integral part of a New product development. Whether its for the creation of a new product or the expansion of an existing one, the product cycle is similar, for purposes of new product development the components in this cycle can be divided into four basic stages.

Differing amounts of time may be required for each stage in the product cycle, depending on the particulars of the product and the consumption trend. Typically, it takes 3 month or even more for a product to move from preliminary planning to product launch execution. Key aspects of the product cycle seem to recur during the development process. The information obtained in the evaluation stage provides the impetus for the idea pursued in the next round of planning in new product development. This new product stages are a series of ever-improving estimates as to how the product will grab the market share. Each stage provides more information. When evaluated and applied to the succeeding stage, ways to accomplish, the product development come into sharper focusThe structure of this chapter is as follows. We begin with underlining the importance of NPD for the continued growth and health of new product developed by the firm. Next, literature concerning success and failure in new product development is reviewed. After that, we discuss the role and importance of consumer research in the NPD process, both at the early stages (consumer research) and at the later stages (consumer research for verification) with different type of analysis. Specifically, we consider the need for consumer research in the early stages and then explore in detail the criteria for effective strategic consumer research for low calories wafer. Finally, this chapter ends with finding of the report and suggestion for batter implementation of new product development and conclusion.1.1.1. Scope of the Report The report covers an overview of the consumption trend of the low calories packed foods along with the position of the snak foods like wafer and chips in India. The report will focus on the new product in packed food categories i.e. low calories wafer and chips, its market potential, the growth of the market in Ahmedabad and what are the challenges and opportunities that the new product will face. On the competitive landscape, the report lays out the major steps for the new product lunching by the companies that functions within the Ahmedabad territory and the strategies that company will follow to capture the major chunk of the market share and the feasibility of that product in market. The concluding part of the report covers the drivers affecting the new product attractiveness and the future prospects of the new product in Ahmedabad1.1.2. Research Objective of Report

To study the future growth and sustainability of new product in Ahmedabad.

To make the potential market analysis of new product in Ahmedabad To study the market attractiveness of the new product in Ahmedabad.

To study the impact of consumer consumption trend on new product

To study the marketing tactics and technological skills required for the new product launch 1.2. Introduction New product development for low calories packed wafer and chips1.2.1 New product developmentNew product development and introduction (NPDI) is probably the most important process for many companies, but also one of the least understood (and, perhaps, executed). Important because, as we will see, NPDI is responsible for the revenues and margins that a company can achieve and its ultimate value. It is the least well understood process because few companies assign a single individual to be responsible for the whole process. Instead, it is usually driven through a series of functional silos, causing delays to build up and, often, the original market requirements to get lost. But lets start with a definition. Our definition of NPDI starts with the identification of an opportunity in the market (somebody needs a product to do this) and ends with the successful launch of the product. In between are many activities to define the requirements, develop and test a product concept, fully define and develop the product, source for suppliers involved, plan the manufacturing and supply chain, and prepare marketing programs. On top of that, its about defining the product strategy, managing the overall product program, and monitoring all the projects and activities needed to drive the NPDI process.

Most functional areas of the company get involved at some time or another, including marketing, engineering, supply management, manufacturing, finance, and so on. As the people in these functions use enterprise systems to help them do their jobs, all of these systems are involved in NPDI: for example customer relationship management (CRM), enterprise resource planning (ERP), product life-cycle management (PLM), supply chain management (SCM), supplier relationship management (SRM), and many others.

Our definition is important because it includes all of the processes that change the company. Think of the company as a giant machine: raw materials and parts go in one end, are turned into products by machines and labor inside, and are shipped out to customers at the other end. Many of the people inside of the company are solely dedicated to nurturing and managing this machine. All well and good until we want to change what the company is making. This is what NPDI does: it changes what we buy (and who we buy it from), changes what we make (and how we make it), changes how it gets to the customer, and changes how we market it to the customer. Typically, a different group of people are responsible for making the changes. Once the changes are complete, stability is restored. NPDI can create change on a number of levels, including:

Incremental product changes, which may have minimal impact on sourcing and manufacturing, but may entail a new marketing program

New product introductions, which may require significant market research and engineering and entail more significant changes in sourcing and manufacturing, as well as a major marketing program

New category introductions, which entail all of the above plus dealing with the risk of introducing a product that the market is completely unfamiliar with

Is NPDI the same as innovation? Innovation is clearly part of the NPDI process, without it there would be no new products or no new ways to make, market, and sell them. But innovation would be useless without the ability to change how the company operates, to successfully introduce the new product. The job of NPDI is not done until the product is in the market, shipped at the right time, delivered to the right customers, and in the right volumes.

Companies must develop new products to grow and stay competitive, but innovation is risky and costly. A great majority of new products never makes it to the market and those new products that enter the market place face very high failure rates. Exact figures are hard to find and vary depending on the type of market (industrial versus consumer) and product (high tech versus fast moving consumer goods). Moreover, different criteria for the definition of success and failure make it complicated to compare. However, failure rates have remained high over the previous decades, averaging 40% Griffin, (1997). According to Crawford (1987), the average failure rate is about 35%. Later, Cooper (1993), a leading researcher in the field of new product development (NPD), estimates a failure rate in the order of 25-45%. A more recent study of ACNielsen (2000) showed that only one-third of all fast moving consumer goods (FMCG) introduced in 1998 in Dutch supermarkets can be considered successful. In this study success was defined as having a level of weighted distribution in supermarkets of at least 50% after one year.Since the 1960s it became apparent that the high failure rates of new products justified research to examine the reasons for success and failure. Prior to the 1960s the development of new products was considered a technological linear process; new technologies and a proactive research and development (R&D) effort were believed to drive the success of products that were created (Poolton and Barclay, 1998). Later on it became clear that more factors played a role. The first studies on NPD performance showed that the market place played a major role in stimulating the need for new and improved products. Since the pioneering studies of Booz, Allen and Hamilton (1968), the success and failure of new products has been studied intensively. Much has been written about the most appropriate NPD practices, which can lead to product marketplace success. Success depends among other factors on the degree to which the new product successfully addresses identified consumer needs and at the same time exceeds competitive products. Unfortunately, although past research on NPD performance has shown that even the slightest improvements in an organizations NPD process could yield significant savings (Montoya-Weiss and ODriscoll, 2000), bringing successful new products to the market is still a major problem for many companies. Despite increasing attention to NPD, the new product success rate has improved minimally (Wind and Mahajan, 1997). Cooper (1999) states: Recent studies reveal that the art of product development has not improved all that much- that the voice of the customer is still missing, that solid up-front homework is not done, that many products enter the development phase lacking clear definition, and so on.Consequently, companies still have problems with effectively and efficiently implementing the factors of success into NPD practice. Consumer research at the earliest stages of NPD that helps bridge marketing and R&D functions is crucial in this process. Miller and Swaddling (2002) argue that the shortcomings in the current state of NPD practice can be directly or indirectly tied with consumer research (or the lack thereof) done in conjunction with NPD. As this appears a major bottle neck, this thesis aims at developing and illustrating consumer research methods at the marketing-R&D interface.1.2.2 Importances of New Product DevelopmentNew products that deliver added consumer value contribute significantly to the success of companies. NPD is generally recognized as the basis for profitability and growth of most companies. Additionally, innovativeness of companies has a positive impact on economic growth (Porter, 1990). Eliashberg, Lilien and Rao (1997) report a survey among 154 senior marketing officers of Indian corporations. 61% of the respondents expect that 30% or more of their sales will come from new products within the next 3-5 years. This finding is consistent with the survey of 700 firms (60% industrial, 20% consumer durables, and 20% consumer nondurables)

Booz, Allen and Hamilton (1982) who found that over five-year period new products accounted for 28% of these companies growth. Hultink and Robben (1995) reported that new products introduced in the last five years generated 41% of companys sales and 39% of companys profits. Besides these benefits, NPD offers other benefits like the positive impact on company image, the opening up of new markets and the provision of a platform for further new products

The need to develop new products is increasingly felt in light of turbulence in the environment. The causes of such turbulence are numerous and interdependent and include:

Expanding competition (more companies competing for the same market)

Increasingly demanding and knowledgeable consumers whose needs, expectations and taste

rapidly change over time

Rapidly changing developments in science and technology, for example biotechnology, information and communication technology and knowledge about the food-health relation Globalization of businesses, including increased international competition All these discontinuities result in shorter and less predictable product life cycles and create new markets to deal with, which in turn lead to an increasing pressure to develop and launch new products.1.2.3 Four Separate Drivers of NPDI for Processed Packed Food Trends in New Product IntroductionsIn most markets and especially those relating to consumer products, the number of new product introductions per annum has increased dramatically. For example, a study into the consumer packaged goods market showed that new product introductions had increased around tenfold over an 18-year period (see Table 1).Table 1.1: An 18-Year Comparison of Consumer Packaged Goods Product Launches

Sources: Department of Marketing & Inspection, GOI, 199907 trienniumDriven by consumer demand and fueled by advances in technology, companies have to bring more and more products to market in order to remain competitive. The companies best able to execute NPDI will clearly have an advantage. This is partly about reducing time to market but also about making effective use of scarce internal resources.

R evenue Expectations

Partly as a consequence of the increasing rate of new product introductions but also because of the drive of technology advances, product life cycles are shortening. As a result, companies are increasingly dependent on revenues from new products to drive their top lines each year. A recent study by Deloitte showed that, for the companies most dependent upon new products, the proportion of their revenue derived from these products will increase from around one third to nearly a half over the next three years (see Figure 1).Graph 1.1: New Product Revenue Contribution

Source: Rabobank Analysis; Web http://www.bisnetindia.com/bishtml/060012502441.htmThe implication is that companies good at NPDI will see the benefits sooner, those who are less effective will feel the pain sooner. In the future companies will have fewer opportunities to live on past successes.Growth and Balance

NPDI allows companies to grow revenues and retain high margins by launching new products and creating new customers in new markets. Even when a companys top line isnt increasing, it needs NPDI to replace existing products that are reaching the end of their life. Newer products typically command higher margins in the market while older products are impacted by competitive challenges and waning customer interest. Well executed, NPDI keeps a pipeline of new, high-margin products flowing to the market.Value

Successful companies have higher stock market valuations than their less successful counterparts. This is because the market factors in the value of future growth and margins. And, as we have seen, this is largely a function of the NPDI process. Put directly: NPDI drives growth, which drives value. By investing in the NPDI process, companies are directly investing in themselves and the returns are high. High valuations allow companies to raise money in the markets at the best rates, acquire competitors, and attract the best people. All of these companies have one thing in common: a track record of growth and margins fueled by new products.

1.3 Low Calories Snacks Consumption Overview1.3.1 Worlds Low Calories Food Market

Here has been an interesting shift from "low-calorie" labels on foods since the late 1980s toward "low-fat" instead. This reflects all the media hype created in recent years by best-selling diet plans and books and infomercials from authors/celebrities such as Dean Ornish, Susan Powter, Rosie Daley (Oprah Winfreys personal chef), and others. In 1991, the numbers were almost equal, butlow-fat food products now outnumber low-calorie products by almost three to one. In 1994 alone, fat-reduced foods rose 70% in number. The reason behind in this swing is Low-fat doesnt meanzerocalories.The world low calories snack foods market stands enthused by the growing emphasis on convenience laid by time-constrained consumers according to new report by Global Industry Analysts, Inc. Changes in lifestyles, and paucity of time are bringing to fore the time-elevating advantages of snack foods.Easy on-the-go portable packages, such as stand-up pouches, single-serve/ bite-sized packs, reseal able bags, and finger-hugging canisters, which add a new dimension to the concept of added convenience, is expected to emerge into a major product variable for commercial success.Health-driven snackers are setting into motion strong demand for healthy, low fat, low-calorie, organic, fiber-rich, vitamin, mineral fortified snacks, while carefree snackers are igniting demand for diverse taste and flavor profiles to quench their indulgent carvings.The rise in popularity of protein-rich diets is expected to take demand for meat-based snacks to a new high. Meat snacks are expected to continue to play on the meal replacement trend, by lending itself as a healthful, convenient snack.Stringent regulations over labeling of trans-fat content in packaged foods in the developed markets are additionally expected to drive the popularity of TFA (trans-fatty acids) free snack products.Continuous innovations in flavors, and tastes, especially exotic, and sophisticated flavors, are expected to help the market score huge gains in the upcoming years.As stated by the recent report published by Global Industry Analysts, Inc., volume sales of snack foods, in the global market, are expected to rise by 9.8 million tons between the periods 2007 to 2010.Strong dollar growth is expected to stem from the world meat snacks market, with the United States leading growth with a projected CAGR of 7.6% over the 2001-2010 periods.Consumers are increasingly looking to eat healthily, and this is reflected in growing demand for snack products perceived as nutritious. A new generation of snack products are emerging that contains new functional ingredients, use fat and sugar replacers and are developed with new cooking processes to make them healthier. Recent innovations include drinks to replace snacking occasions, satiety promoting products and vitality boosting snacks. It is these latest developments that will lead the way in the future. Innovation in healthy Snacks is a new management report published by Business Insights that tracks the development of healthier snacking options within the wider market.

It looks at how different companies are gaining competitive advantage through healthier snack formulation and positioning. The current status and potential of key areas such as low no, functional, natural organic and sports fitness snacks is assessed, together with emergent areas and marketing trends. Develop more effective strategies for healthy snacks using this report's analysis of the development of the healthy snacks market by country and product category.1.3.2. Indian Snacks IndustrySnacks are a part of Consumer Convenience/ Packaged Foods segment. Snack is described as a Small quantity of food eaten between meals or in place of a meal. Snack food generally comprises bakery products, ready-to-eat mixes, chips, namkeen and other light processed foods According to the ministry of food processing, the snack food industry is worth Rs 100 billion in value and over 4,00,000 tonnes in terms of volume.Though very large and diverse, the snacks industry is dominated by the unorganized sector According to an Apeda survey almost 1,000 snack items and 300 types of savories are sold across India. The branded snacks are sold at least 25% higher than the unbranded products Savory snacks have been a part of Indian food habit, since almost ages. Though there is no particular time for snacks, normally they are consumed at teatime. The variety is almost mind-boggling with specialties from all regions, which have gained national acceptance industry. he been growing around 10% for the last three years, while the branded segment is growing around 25% per annum to stand at Rs 5,000-Rs 5,500 crore, due to various reasons like Multiplex culture, snacking at home while watching TV, pubs and bars (where they are served free). AC Nielsen's retail audit shows that the large sales volumes are due to a marked preference for ethnic foods, regional bias towards indigenous snacks and good value-for-money perception. Of course the branded segment is muchnot established but it have Rs 2,200 crore share in market, which is what makes it so attractive to food Companies that are looking at bigger shares and in the branded snacks market,Frito Lay commands a share of 45%, followed by Haldirams at 27% and ITC at 16%

Graph:1.2 Market share of company in snack food industry

The rest is divided between a handful of new entrants, wannabes and many regional players of the wide range of snacks available, potato chips constitute a sizeable segment of the Indian snack food industry, according to India Info line. The potato chip market is generally an unorganized industry. Nearly all potato chip snack products are manufactured and sold locally. There is also no uniform standard for packaging, as there is in Europe, the United States and other more developed regions. Many snack foods are sold loose or packaged in poly-pouches, which may only be folded, or in some cases, stapled closed. As the Indian economy continues to grow, and production standards improve, many snack food companies are making significant investments into plant equipment and packaging machinery.

Pepsi Foods Ltd., now known as Frito-Lay India Ltd., produces India's largest snack food Manufacturers brands, including Ruffles, Hostess, Cheetos and Uncle Chips. Frito Lay's story is an example of how American recipes were adjusted to satisfy local tastes. Procter & Gamble's Pringles brand of potato crisp was launched in Delhi in 1999. Pringles is also a baked potato crisp, unlike many other potato based Indian snack foods that are fried. P&G currently imports the Pringles product and therefore the product has been priced at a premium and is marketed to a micro-niche

1.3.3 Indias Low Calories Food MarketExceptional growth in the Indian economy and an increasing awareness of healthy functional ingredients is driving the Indianfunctional foodsand beverages market. A strong desire among Indian consumers to maintain a healthy lifestyle isan additionalfactordriving this market, according to the analysts, who found that the market earned revenues of over US$185m in 2007 and estimates this to reach US$1,161m in 2012.While the market is still in its infancy, along with sports and energy drinks, the demand for functional foods ispredicted to witness an expanding consumer base due to their specific health benefits."It is difficult to convince Indian fast moving consumer goods (FMCG) companies to fortify their products with innovative ingredients," said Frost & Sullivan research analyst Aditi Paul. "The vague regulatory and industry approval protocols for functional foods further dampen the speed of market growth."Survival in the functional foods business requires cutting-edge R&D and high technical expertise, and it seems most Indian companies do not invest enough in research, yet this may change in the near future."Partnerships amongst functional beverage manufacturers, pharmaceutical companies, nutrition companies, and food additives companies is the right strategy for the formulation of a product that is healthy, offers great flavours, and is palatable along with being affordable,"Presently valued at just over US$2bn, the Indian low calories snacks market experienced a healthy 9% growth in 2007. India accounts for almost half the low calories snacks consumed throughout the Asia-Pacific region in volume terms. The industry is highly fragmented, and is largely dominated by small players, which account for nearly 70% of the total market, and a few prominent participants such as Frito Lay (a division of PepsiCo), Haldiram Foods Ltd, ITC Foods, Nestl, Indo Nissin, and Unilever. PepsiCo leads the Indian market for snacks with brands such as Lays and Kurkure, while SM Dyechem is another prominent player with its brands such as Peppy, Piknik and Senor Pepito.Snacks segment includes noodles, pasta, soups, chips (crisps) and nuts; and many of the new product launches in the country have already positioned themselves to meet a growing health trend. The latest innovations from PepsiCo have included potato chips (crisps), such as Frito Lay Kurkure Snacks, launched in October 2006, which are Monosodium glutamate (MSG)- and cholesterol-free. Many product launches claim to be low in fat and calories.The snack food market in India is valued at Rs. 1530 crore and is one of the largest markets in the world, out of which potato chips holds the major market share of around 85%.CHAPTER: 2Consumer trend analysis

2.1. Consumer Consumption trendsWhile people want to eat better, their busy lives sometimes make it difficult to get some of the foods and nutrients they need to maintain energy and caloric balance. A snack that could deliver taste and satiety would be a product many might seek out.

People who began following higher protein diets rediscovered nuts as a great snack and began to drive up demand. Additionally, companies and nutrition science researchers had begun to look more closely at the unique properties of nuts.

Research now indicates nuts are a nutrient-dense food, full of fiber and antioxidants. With the outer skin of some nuts on, they can actually have a thermogenic effect on some individuals (i.e., you use more calories to eat the food than you take in, thereby burning calories).

With respect to edible pale green nut, there is a wealth of great nutritional news from a number of sources. Some call them one of the next super foods, due to the presence (along with sunflower seeds) of more phytosterols, a plant chemical known to help lower cholesterol levels. In addition edible pale green nut, have one of the highest levels of fiber, lutein, and B6 compared to other nuts. It gives a very unique and important nut to use as one of the building blocks of this new crisp.

The key attributes for craveable nuts are: taste, aroma, mood and brand. Consumers are looking for premiumness via size or quality of the nuts to ensure their craveablity

While taste, thirst, aroma and mood are drivers of the craving space for potato chips, taste, price, brand, healthy, fat, appearance, quality, texture and portion size are the key factors in the healthy space for chips.

The key attributes for healthy nuts are taste, price, brand and healthfulness. Consumers are looking for structure function claims like: a good source of fiber, important in reducing your risk of chronic diseases like heart disease and diabetes; providing essential minerals your body needs, including potassium, magnesium, and zinc; as part of a low-fat, low-cholesterol diet, may reduce the risk of some forms of cancer; may reduce your risk of high blood pressure and stroke. When consumers think about nuts and health trade-offs, they do not worry about flavor, and they are interested in the health benefits nuts can naturally bring to them

Key trends that can impact this idea are taste, convenience and healthfulness.

Taste: food product need to have their own unique flavor and texture, which is driven by the form and the method of eating. While not used in processed foods much, it can be seen that this nut could have very broad appeal. The edible pale green nut has a way of appealing to the classic mindset (due to its long history), or the variety-seeker (which is not an common ingredient in foods) or the imaginer.

Convenience: product with a bag that has a zipper closure and a product design that leaves few crumbs or residue on the fingers, these crisps are easy to eat in public. Its near-impossible to drive kids around and try to crack open pistachio seeds with your mouth.

Healthfulness: Nuts have both the halo of health and reality of health. With all the good news about nut these create good image in mid of consumer. Other factors we look for in healthy foods today can be food shop, natural and a few simple ingredients. The low fats and the protein story in food are excellent consumer will opt for that type of food product now this day.

2.2. Low calories Product Benefit Deliver to Consumer and Manufacturers Crisps deliver on the promise of bringing a difference to natural snacking. We like the package graphics, they do inspire us. Grain chips are unique and present the tongue with an interesting taste. Tasters really felt these were much better to snack on than chips or crackers. They really seemed to hit the spot.

Bigger idea: The wafer alone might need to work very hard to deliver everything. But when you take the whole lineup together -- nut clusters, crunches (these are little works of art which rolled the shell around those peanuts?) and wafer -- we are seeing that True creation what they call a movement.

Opportunities in the future can build upon this platform and help people understand that combining this good source of protein with other foods could make for good meals that are exciting without going overboard. Given the base ingredients, we can see natural extensions that create more fiber opportunities and also bases that can be believable for functional benefit products. This is just the beginning for the evolution of the low calories food snacksRating: Tasty and great. The entire product design hangs together well. This is an example of a manufacturer listening to the consumer, letting the scientists and engineers design a good product and bringing it together in a complete package.

Market potential: Excellent for low calories food product. For the megabrand creator, we might be seeing the birth of another billion-dollar baby in this type of food product. It is going to be fun to see how this brand and this product inspire the competition. Looks like the consumer can win with this one.2.3. Consumer Consumption Trend in Different ConditionsFood habits are generally culturally driven, deeply ingrained in the psyche of people, and, therefore, quite difficult to change or influence in the short term. A visible change in food habits usually indicates much deeper changes at work in the societys lifestyles, attitudes and aspirations. Over the past few years, a number of exciting trends have been noted in Indias food habits. Even though many of them are niche, they have the necessary force to expand to more consumers in the future. Capturing the explosive power of these food trends at the right time offers a tremendous opportunity for growth for a vast number of FMCG and lifestyle brands.

We are focusing this issue of consumption pattern of foods on a number of trends and developments occurs in two broad areas health foods and indulgence foods. These seem to be the two dichotomous and yet somehow synchronous directions in which consumer needs as well as product development seem to be moving. In fact, food is taking on many different roles for consumers, and these are the trends we have foundTrend: 1 Food as HealthIndias health issues have come to the fore in recent years. Epidemics of lifestyle diseases like coronary disease, diabetes and obesity are now part of our daily conversation, and chronic diseases like arthritis are also on the rise. India has always believed in a deep link between diet and wellness, as per its ayurvedic and yogic traditions, and enhanced the scope for growth and availability of health food products.Graph:2.1 food habits of Indian

This shift in consumer needs has led to the emergence of two broad trends in product development. One type of products would be have the presence of good food even today the Indian consumer believes that a proper diet could help mitigate or cure many health problems.

No wonder healthy food is becoming a fast-growth category. Theres growing awareness among consumers that packaged foods (chips, fried foods, biscuits, snacks, ready-to-eat, ready-to-cook, instant foods, juices, drinks) are likely to contain unhealthy levels of salt, sugar, oil, hydrogenated fats, chemical additives, preservatives, food coloring and so on. And with so much information available on health and nutrition today, the buzz words from informed consumers seem to be less salt, no sugar, no preservatives and no transfats. Rising awareness and affluence have made health food products accessible to a larger segment of the population. In recognition of these trends, food marketers in the country have introduced a number of new products, spurring the growth of the health food market. The entry of large supermarkets and easy import of foreign products has made from wholesome ingredients such as milk, fruit and grains. The second type of products would be free from perceived negative ingredients, such as the sugar-free, transfat-free foods. Several savvy marketers are already riding this trend. Trend: 2 Foods as Convenience-Cum-NoveltyChanging lifestyles and the modified eating habits of Indias growing urban population have propelled its processed food industry. 30 million upper and middle class Indians consume packaged food and 200 million more are projected to do so in the next three years. Frozen and canned foods that can be heated and served instantly have found a place on the shelf in a regular middle class kitchen. This has led to a growth in the availability of processed foods as manufacturers rush to cater to a growing demand. Various social changes are driving this trend, from the growing number of nuclear families to increased urbanization and a significant rise in the number of working women as well as a growing practice of singles living away from home for education or work.According to a study, the Indian Ready to Eat market is estimated to grow to US$ 727.09 million by 2015 from the current $ 209.09 million.What is interesting is that the variety of ready to cook and ready to eat food is growing, thus helping the housewife in her quest for novelty, From a mindset where home- cooked and fresh food was preferred and housewives insisted on making everything from snacks to multi-course meals in-house, today it has become commonplace to seek convenience and variety using the vast menu of ready to cook and eat foods 35 - 40% of housewives in SEC A, B and C households regularly shop for packaged and convenience foods items like noodles, pasta and soup powders, and ready to cook offerings from companies like MTR and Ashirvaad, regardless of whether they are shopping from traditional format or modern format grocery storesTrend: 3 Foods as ControlToday consumers forget that food was meant for nourishment not for controlling weight. The situation is quite awkward for a multitude of consumers across the world, and India is no stranger to it. Driven by the size zero and thin-is-in revolution, men and women, boys and girls are increasingly embarking on various ill-advised diets to cultivate that Size Zero figure. Many companies in the food sector have jumped on the bandwagon to provide healthier alternatives to what is clearly a crying consumer need of the hour. Everything from chocolate to butter, vodka to whisky comes with a diet variant that promises enjoyment without the guilty side effects. While the market for low-calorie foods is small in developing countries, India already ranks among the top 10 consumers of diet foods, from liquor companies to dairy processors, all major players have launched products that promise to liberate consumers from the ill-effects of fattening productsTrend: 4 Food On-The-GoIndia has had a long tradition of salty snacking, with a host of regional ingredients and flavors creating a smorgasbord of snacks, ranging from fried snacks like chips, chaklis and samosas to steamed fare like dhoklas. The snack food industry in India is highly fragmented, with the market dominated by savories sold by local vendors. Traditionally, all these snacks used to be made at home by the housewife, and traditional flavors of her region of origin would dominate her repertoire. Today, with an increasing amount of time being spent by people in office or outside the home, combined with the convenience of readily available packaged snacks, the snack food market is booming with innovation.

The market is estimated at US$ 3 billion, with 50percent comprising the organized snacks category. This category, growing at a healthy 30 percent annually, is sub-divided into the traditional segment (bhujia, chanachur), western segment (potato chips, cheese balls) and the newly established finger snacks segment, an adaptation of traditional offerings to the western format.The market in India is diverse and large with over 1,000 different snack products and some 300 types of savories. Potato-based snacks, and in particular potato chips, are the largest product segment, holding an 85 percent share of the salty snack market, followed by snack nuts, chickpeas and other pulse-based savory snacksIndias annual average per capita snack food consumption is 500 gm with urban consumption outstripping rural by 10:1. Western India is the top snack consuming region followed by the North. Urban lifestyle lends itself to the snacking and grazing consumption behavior, which one observes in more developed countries. As Indian consumers increasingly move to a more cosmopolitan lifestyle, snack foods that are easily portable and hygienic have become a ready substitute for hot-snacks. As long as the consumer keeps munching, every marketer is scrambling to get to the top of the snack pile, more than 4 in 5 SEC A,B and C consumers have consumed a snack out of home in the last one month. Chips and Ice Creams are the top favorites for out of home consumption, with each of the snacks being consumed at least once a week, on an averageTrend: 5 Foods as Instant Pick-Me-UpThe increasing demands made on the body nowadays, with long commutes and the need for work combined with play on a daily basis have led to consumers needing a greater infusion of energy than ever before. Whereas in earlier generations a cup of tea or coffee would be the magic cure, todays consumers look for new-age solutions. Though the market is flooded with energy supplements and energy bars, its energy drinks that are creating a buzz with the young crowd Energy drinks appeal to the consumers at a logical level, by energizing, and at an emotional level, by representing an active lifestyle that people relate to. Sports drinks too perform dual functions to succeed as a brand. They have to position themselves as social consumption products. These drinks have started positioning themselves as performance boosters instead of a sports drink since India doesnt have a big sports market but it does have a huge performance market. The sports and energy drinks are at their infancy stage, but they are expected to post strong growth in the niche segment. The consumption of energy bars is also becoming a trend among the youngsters.Trend: 6 Food as Natures KitchenWith growing awareness of the nature and number of dangerous chemicals being used in modern agriculture, more consumers are turning towards food grown organically. This has been a global trend among more affluent consumers, and has now percolated to affluent Indian consumers as well. In India, in any case, there was always widespread awareness and concern among educated consumers about the pesticide residues in food. Moreover, India has always had a penchant for natural products both in food as well as in cosmetics and healthcare. Organic foods are now available, making it easy for those with the awareness and the pockets to turn au natural.

Organic produce costs about 35 to 40 percent more due to scarcity of organic products. However, many organized retail chains have started marketing organic products, either under their own labels or imported or other brands. Private label organic foods make even more sense for them due to the higher margins they can charge. The further development of organized retail supply chains from farm to fork should only make it easier in future to get more organic food delivered to each dining table.

Functional food, also termed as the nutraceutical products (a hybrid of nutrition and pharmaceutical), is any fresh or processed food claimed to have health-promoting ingredients apart from its basic nutritional function. A general increase in awareness has been fuelled by the favorable scientific reports about the health benefits of nutraceutical ingredients. In developed countries, the ageing populations who are more health conscious look towards consumption of such supplements and foods that provide an optimum balance of nutrition. The typical functional foods could be anything like the prebiotic, probiotic foods, omega fatty acids or even crops that naturally contain components that aid the body functions like soy, gluten or whey proteins. Thus, these would include fruits, vegetables, energy drinks, juices with or without preservatives, breakfast cereals and fresh dairy products-all imparting the desired health benefits and physiological changes. The Indian functional food market, apart from the dietary supplements, is estimated to be about Rs 125 crore, and will grow with the introduction of relevant products in this spaceTrend: 7 Foods as LuxuryFood as plain nutrition has passed its sell-by date. Today, food is about many different things, including lifestyle choices or values, and affluent consumers are using food elitism to signal their affluence or arrived status. Up-market variants of the plain vanilla products are being preferred from plain chocolate to dark chocolate to chocolate by country of originthe same movement in coffee and tea, buying a richer version of the same old thing seems to be the new flaunt mantra. Many brands are riding this trend by introducing up-market versions of mass-market brandsTrend: 8 Foods as DiscoveryThere is a noticeable difference in the Indian consumers willingness to experiment with food since the past few years. The Indian consumers culinary experimentation is not only restricted to different cuisines within India but outside India as well. With the Indian palate getting more and more experimental, out-of-the-box thinking and quality of food and service is getting more crucial. This new trend of experimentation can be seen across all segments of food, from the restaurants to the ready-to-eat, from the sauces to the ice-cream.Indian consumer have become classier, the foods more complex and experimental. The people who consume them have become braver in their choices and this change is largely due to the increase in the amount of foreign travel which has added an international touch to their palates. Urban Indians are opening up to experimenting with non-local food and have gone beyond the Continental, Chinese and Thai Apart from the usual Continental and Chinese food, the other cuisines that the Indian consumers are experimenting with are Italian, Mexican, Lebanese, Pacific Rim and Korean food. Indians are now more aware that the South East Asian Cuisine includes Thai, Malaysian, Singaporean, Indonesian, Vietnamese and Filipino cuisine, to name a few, as well as the more popular Chinese food. Even within Indian foods, there is a trend of experimentation. In the ready-to-eat segment, there are now more off-the-shelf choices available for the consumer also.Trend: 9 Foods as Guilt Free SinAs health products are gaining popularity with the consumers, a majority of these consumers feel the gap between tasty food and healthy food. This gap has led to the emergence of a new trend: the Guilt Free Sin trend. Consumers are now looking out for a tasty way to good health which allows them to indulge in food that they crave for along with keeping a check on their calorie intake and other dietary restrictions. Spotting this trend, marketers have launched several products in the market that allow consumers to enjoy health and indulgence at the same time India is witnessing the launch of a number of probiotic indulgence products - dietary supplements containing potentially beneficial bacteria which are good for the digestive system, helping in better absorption. Awareness of the new age health foods is high, more than 4 in 5 consumers are aware of the health foods that are available in the market today (Refer Exhibit below); close to 50 percent have also purchased at least one of these products in the last 3 months Table:2.1 Indian consumer preferred foods

Source: Food Habits of India 2009 a forthcoming report by The Knowledge Company, the Publications and Market Intelligence Division of Mindscape2.4. Survey Finding According to the last 2000 survey by the Atlanta-based trade group named theCalorie Control Council, 180 million Indian currently consume low or reduced-fat foods and beverages. By comparison, in 1998 there were only 42 million adult consumers of low-cal, sugar-free products in the India

The vast majority of 70% of India adults use either reduced-fat or low-calorie products regularly(at least once every 2 weeks). This high level of usage has probably reached a peak level. Fully 69% of adults responding to the survey usebothreduced-fatandlow-calorie products.

Over one-quarter of all Indian female heads of household (16.5%) buy frozen entrees--purchasing between four and six packages in a given 30-day period, according to Simmons data, cited by market researcher FIND/SVP.Q1: What low-fat products are people eating in their quest for weight loss? According to the Council, the most popular are...

Low-fat or skim milk (12% of all consumers)

Low-fat salad dressings, sauces and mayonnaise (26%)

Low-fat cheese, yogurt, sour cream and other dairy products (30%)

Margarine (44%)

Chips, snack foods (62%)

Meat products (39%)

Ice cream and frozen desserts (36%)

Cakes and baked goods (32%)

Dinner entrees (30%)

Sources: www.tigsurvey.comQ2.The Top Reasons Why Consumers Choose Low-Cal, Sugar-Free Foods & BeveragesTable: 2.2 Use of low calories food for Indian peopleReason20052007

To stay in better overall health65%67%

To eat/drink healthier foods & beverages58%58%

To maintain current weight52%51%

To maintain an attractive physical appearance45%46%

To reduce weight41%45%

For refreshment or taste45%41%

To prevent/control dental cavities32%31%

To help with a medical condition25%26%

Sources: www.tigsurvey.comQ3.How Much Do We Spend Per Week & Per Year on Food?The answer to this question should be of intense interest to providers of weight loss programs, especially those that require their customers to purchase their company-brand Analyzing these expenditures can help objectively demonstrate to customers that they really are not spending more under their plans than if they purchased regular food at the supermarket and away from home.

The TGI (Target Group Index) & KMR Group has some interesting figures from its latest "Consumer Expenditure Survey". Basically, the TIG says thatthe average person spends $62.50 per week on food, with $39.04 spent on foodaway from homeand $23.46 on foodat home.Figures do not include alcoholic beverages.Sources: www.tigsurvey.com2.5. The Demand System and Expenditure Elasticitys ModelTo get some insight into the changes in Food consumption pattern, discussed above, let us present the expenditure elasticity estimates. These will give us a likely explanation for the observed switches from calories contain food to low calories food items during the 2000. To do so, we employ the Quadratic Almost Ideal (QAI) Demand System proposed by Blundell, Pashardes and Weber (1993). The QAI extends the well known Almost Ideal (AI) demand model by allowing a non monotonic relationship between marginal budget share and income. Although the AI model has been widely used in analyzing consumption in developing there is now considerable evidence to suggest that the assumed linearity of budget shares in the log of household expenditure is empirically false, and it makes the AI a very restrictive model. The QAI model is given, in budget share terms, Wi, as: i=1n Pi s are the household specific unit values of the various items, obtained by dividing the expenditure values by the physical quantities are the demand system parameters x R is the per capita real Food expenditure of the household, defined as

x is per capita money expenditure

- is the Stone Price IndexThe expenditure elasticity, i , of item i is given by:

Sources: Chatterjee, S., A. Rae, and R. Ray, (2006), Food Consumption, Trade Reforms and Trade Patterns in Contemporary IndiaCHAPTER: 3

NEW PRODUCT DEVLEPOMENT3.1. New Product Development Stages for Low Calories Wafer/Chips

Inbusinessandengineering,new product development(NPD) is the term used to describe the completeprocessof bringing a newproductor service to market. There are two parallel paths involved in the NPD process: one involves the idea generation,product design, and detail engineering; the other involves market research andmarketing analysis. Companies typically see new product development as the first stage in generating and commercializing new products within the overall strategic process ofproduct life cycle managementused to maintain or grow their market share. The new-product planning process involves a series of steps from idea generation to commercialization. Use of a parallel development processUntil recently, most companies used a sequential process for new product development, whereby development proceeds sequentially from one functional group to the next (see figure, panel A). Embedded in the process are several gates, where decisions are made as to whether to proceed to the next stage, send the project back for further work, or terminate the project. Typically, R&D and marketing departments provide input into the opportunity identification and concept development stages, R&D takes the lead in production design, and manufacturing takes the lead in process design. According to critics, one problem with such system emerges at the product design stage, when R&D engineers fail to communicate directly with manufacturing engineers. As a result, product design proceeds without manufacturing requirements in mind. A sequential process has no early warning system to indicate that planned features are not manufacturableTo rectify this problem and compress NPD time, a company should use a partly parallel process. As shown in Panel B of Figure 3, sequential execution of the NPD stages is replaced by partly parallel execution. The process design, for example, should start long before product design is finalized, thereby establishing closer coordination between these different stages and minimizing the chances that R&D will design products difficult or costly to manufacture. This should shorten the NPD cycle time.Figure: Sequential versus Partly Parallel Process of new products development

1. Idea Generation Idea generation is a continuous, systematic search for new product opportunities. It involves delineating sources of new ideas and methods for generating them. Methods for generating ideas include brainstorming (small-group sessions which stimulate a wide range of ideas), analysis of existing products, and surveys. Idea to have Low calories chips/wafer product in market generated from the following sources and data which are as below: The market is estimated at US$ 3 billion, with 50percent comprising the organized snacks category. This category, growing at a healthy 30 percent annually, is sub-divided into the traditional segment Potato-based snacks, and in particular potato chips, are the largest product segment, holding an 85 percent share of the snack market.

India is one of the biggest emerging markets, with over 900 million population and a 250 million strong middle class India is given by a strong income growth, change in lifestyle nuclear family and both parent working culture and favorable demographic pattern for snack products. Rapid urbanization, increased literacy and rising per capita income , have all caused rapid growth and changes in demand patterns, leading to tremendous new opportunities for exploring the large latent market which demands for the low calories and healthy foods A diet and health awareness trend is highest in India. In terms of diet, certain factors undoubtedly have greater confidence for consumers in some markets than others, for almost 50% of people in India think in this fashion.Graph 3.1: percentage of people who think about calories while taking foods

Source: India sample taken from ABC socio-economic groups, 40 selected urban centers2. Product Screening

After the firm identifies potential products, it must screen them. In product screening, poor, unsuitable, or otherwise unattractive ideas are weeded out from further actions. On the following basiss we will do screen of the product which are as follows:

Description of the product so to know whether it is technically feasible to manufacture the product? What are the industry sales and market trends the product idea is based on and its Market size? Effect on existing products (brands) on this product? Existence of differential advantage is there or not? Product description

Low calories wafer/chips are made up of different grains and edible pale green nut, this wafers are not fried but instated of that they are roasted but in such a way that they not loss there quality and taste and this attribute can be achieve by setting up standards for the product with respect to potato chips attribute.

Percentage of people who consume Snacks food, by country is shown in figure and India came 15th but when we calculate the number of consumer then it become 3rd because of the population size we came 3rd in consumption

Graph 3.2: Percentage of people who consume Snacks food, by country

Sources: Global TGI based on Percentage of people who consume Snacks food, by country;

Website www.tigsurvey.comThe market is estimated at US$ 3 billion, with 50percent comprising the organized snacks category. This category, growing at a healthy 30 percent annually. Wafer snacks, and in particular potato chips, are the largest product segment, holding an 85 percent share of the snack market so we can estimate how much large market is present if we forecast for next 5 year it will be as followForecast Summary SectionVariablemarket potentialMean1.725Pseudo R-Squared0.000000Mean Square Error9.578585E-02Mean |Error|0.3069563Mean |Percent Error|18.40673Forecast MethodHolt's Linear TrendAlpha0.3Beta0.5Intercept (A)1.169363Slope (B)0.2967244 Graph 3.3: Forecast and Residuals Plots

Year Forecasted Value

Current year $1.5Billion1st year $ 1.95 Billion E2nd year $ 2.05 Billion F3rd year $ 2.35 Billion F4th year $ 2.65 Billion F

5th year $ 2.94 Billion FCalculation of Potential customer for low calories wafers or chipsTable 3.1: Potential markets of low calories foods

Total population of India March 2007100%1,1,29,88,156

Population consume snacks food78%8,81,30,762

Health conscious customers in India49%4,31,84,074

Potential customer40%4,40,00,000

Sources:-Population: web http://www.censusindia.gov.in/Census_Data2007/Census_data_finder/A-Z_index/A Z_Index.htmlConsumption: Source: India Healthcare Trends 2008 a report by The Knowledge Company, the Market Intelligence & Publications Division of MindscapeHealth consciousness: India sample taken from ABC socio-economic groups, 40selected urban centers;

Website www.tgisurvey.com3. Concept Testing Consumer feedback about the product ideas. Concept testing presents the consumer with a proposed product and measures attitudes and intentions at this early stage of development. Concept testing is a quick and inexpensive way of measuring consumer enthusiasm. It asks potential consumers to react to a picture, written statement, or oral description of a product. This enables a firm to determine initial attitudes prior to expensive, time-consuming prototype development. In general, concept testing should ask these types of questions of consumers: - Is the idea easy to understand? - Do you perceive distinct benefits for this product over those products currently on the market?- Do you find the claims about this product believable? n Would you buy the product?- Would you replace your current brand with this new product? Would this product meet a real need?Gap AnalysisTable 3.2: Gap Analysis questioner

Low Calories Chips price should be higher than other chips 1 2 3 4 5

You should be able to trust the Low Calories products of the firms which are already existing or any new firm 1 2 3 4 5

Low calories product Satisfy your specific needs toward Snack foods 1 2 3 4 5

The physical form, shape & size of low calories chips should be change from the normal available potato chips 1 2 3 4 5

Low Calories product gives you value of your money 1 2 3 4 5

If new branded wafer comes in market with high nutrition value and healthier feature then will you shift from your preferred brand 1 2 3 4 5

Sources: primary survey done refer primary analysis on page numberCalculationTable 3.3 Gap calculationSECTION SECTION POINTS NUMBER OF RESPONDERSECTION AVG SECTION % STRATEGIC IMPACT FACTORSECTION TARGET

Price6001354.59020100

trust5401354801575

Satisfy5801354.3861260

physical5601354.2841260

Form5201353.8761050

Value for money6201354.6921680

Brand Switching5101353.8761575

SUM100

MAX FACTOR20

TOTAL ACTUAL(A)582.222222

TOTAL TARGET (T)500

A/T RATIO1.16444444

Calculate actual position and target position depends on selected stage

Draw gap chart as shown in Figure 2 then measure the gap between the actual and the target, to fulfill this goal we use A/T ratio to find how far we are from the target and compare the result to below table.

The A/T ratio is more the 0.9 which is 1.65 thats mean this type of product can create benchmark for the company who will introduce low calories wafer in its product line4. Business Analysis

Business analysis for the remaining product concepts is much more detailed than product screening. These are some of the factors considered in this stage of planning:

Cost projections: Today, most companies are under extreme pressure to develop products within time period are rapidly shrinking. As markets change, so do the requirements. This is more pronounced if the products are consumer based. For instance, the product that a consumer wants today may not be liked when delivered three years from now. Associated with this are the urgencies and pressures on the manufacturers to modify their product characteristics based on the up-to-date requirements, while the product is still being developed. This has chilling effects in managing the complexity of such continuously varying product specifications and handling the ongoing changes. This is because it takes extensive time and efforts to propagate a set of specifications throughout a product design, development and delivery (PD3) process cycle. It takes additional time to turn them into opportunities for growth and profits.

Many companies are stepping up the pace of new product introduction, and are constantly learning and embracing new ways of engineering products more correctly the first time, and more often thereafter. In a separateGraph 3.4: Percentage of actual operating costs incurred by various departments

Today, most companies are under extreme pressure to develop products within time periods that are rapidly shrinking

Competition: Concurrent engineering provides a way to bring the product into the marketplace early. Those companies that bring their product into the marketplace before their competitors wrestle away a larger share of the marketplace. This is shown in Figure 4. Slow-to-market or slow responsiveness is due to inability to react quickly to changing market conditions. Such conditions force manufacturers inadvertently to lose market share to their competitorsLet us denote the sales volume of two very similar companies as:

Se (t) = sales volume of company E, which introduced its products early to the marketplace.

Si (t) = sales volume of company L, which introduced its products late to the marketplace.

e and i are prefixes in the above nomenclatures come from early and late.

t = 0; when company E introduced its product.

t= T; when company L introduced its product. Graph 3.5: Sales and market share advantages of early product introduction

KeyS: SalesE;e: Early introduction

L;l: Late introduction

t = Time elapsed after initial introduction

T = Time when company L introduced its productMarket share is the ratio of the sales volume of a particular company to the total sales of all the companies, which are producing competitive products for that market. The total sales are equivalent to the total consumption of a section of consumers or buyers.

Market share or sales advantage of company E over L

= Se (t) / Se (t); for t< T ..(1)

= [ Se (t) Si (t) ] / [ Se (t) + Si (t) ] ;for t > T... (2)

The company E had a 100 percent market share up to time T. After time T, company L introduced its product and the market was shared between the two companies. If the company E were managed correctly, it could still enjoy higher market shares. The earlier a product is introduced by a company, the better are its prospects for achieving and retaining a larger market share. If the customers have realized significant productivity improvements with this early introduction of the products into their organization, they tend to continue using it and invest more into it. This tends to have a very positive effect on the resulting sales-volume of the company E. By the time a new competitive product was introduced by a competitor, company E had already captured and locked in a share of the market. This is shown in Equations (1) and (2). The locked in sales volume at time T is as follows:

Locked-in sales volume at time T= Se(T) (3)

Longer sales life = T (4)

The sales life of the product is also increased by a period of time T due to early introduction. On the other hand, one month slip in product introduction (or development delay) is one less

month of sales.Price/sales relationship projections: early introduction is the price and cost advantages. Most of the profits from successful products are realized early after their introduction (see Figure ) There are many views to what a price is. In this paper, a linear view of price is employed for simplicity. Price, from the perspective of the seller, is viewed in this paper as the sum of the costs incurred in design and production plus a reasonable mark-up margin or profit. In general, the selling price of the product is several times its manufacturing cost:

Price = Company Cost + Mark-up (5)

Where company cost is the result of life-cycle costs:

Company Cost = Marketing Planning Cost + Design Development + Cost of Component Sub assemblies

+ Assembly Cost + QC/Inspection Cost + Investment Tooling Cost + Production Cost +

Distribution Cost + Warranty Service cost (6)Graph 3.6: Cost and price advantages of early product introduction

Conceptually the plots of the unit costs and market price of a product introduced by companies E and L and drawn against time. For the purpose of discussion, let us denote:

P(t) = Market Price of a product

Ce (t) = Cost of developing a unit product by company E

Ci (t) = Cost of developing a unit product by company L.

Thus:

Unit Profit Margin for company E

= P(t) Ce (t) for t > 0 (7)

Unit Profit Margin for company L

= P(t) Ci (t) for t> T. (8)

In the above equations, it is assumed that the development costs are unitized. In the absence of actual costs, a company can estimate these unitized costs based on either some projected sales volume, market research, or from historical data for a product being replaced. When a product is introduced late in the market, most such companies keep its (product) price lower than what their early competitors are asking for an equivalent product that is of a similar kind. In Figure, it is also assumed that due to competition, prices of the products cannot be set very far apart. The competition has forced the two companies to set a very competitive price of their products. This is taken to mean that prices of the products are very close to each other to a point when the products are considered to follow a single price curve line called market price P(t). Cost advantage of early introduction with unit sale of the product is thus given by the following expression:

= [ Ci (t) Ce (t) ] (9)

Total cost of the products can be obtained by multiplying the sales volume and the unit product cost. When a new product is introduced (that is during an initial period 0 < t< T), there is usually no or very little competition. The company has more pricing freedom and consequently can muster better profits margins.The total profit margins (TPM) of the two companies can thus be expressed as follows:At time t< T;

Total profit margins (TPM) for company E: TPMe (t) = [Se (t)] [P(t) Ce (t)]; t< T (10)TPMi (t) = 0; t< TTPM for company L = 0; for t< T, since the product does not exist. During T< t< Tlife, total profit margins for company E are: TPMe (t) = { Se (t) [P (t) Ce (t)] }; t> T (11)

and total profit margins for company L at any time after t> T are:

TPMi (t) = { Si (t) [P(t) Ci (t)] }; t> T(12)

Thus, as shown in Figure 5, total profit advantage (TPA) of company E over company L can be computed by subtracting the above two TPMs as follows:

TPA (t) = TPMe (t) TPMi (t) (13)

TPA (t) = { Se (t) [P(t) Ce (t)] }; for t< T .(14)

and: TPA (t) = [ [Se (t) {P(t) Ce (t)}] [Si (t) {P(t) Ci (t)}]]; for t> T. (15)

If the sales volumes are the same for both E and L companies (say S), then:

TPA (t) S (Ci Ce); for t> T ..(16)

Where the figure in the bracket represents the cost advantage of early introduction for a single unit of the product. Figure shows that market price of the product, P (t), decreases with time, which is normal to expect in a competitive environment.

The result is that after time T, the cost advantage gap between the early and late introductions narrows down steadily. There is still a cost advantage between the two; however; the TPA gap is smaller. Furthermore, there could be secondary benefits of being first, such as early acquisition of the manufacturing competence or being ahead in the learning curve. Other benefits include having time to react for market change, or react to change in product focus, etc.For some products that have high switching costs, the benefits of early introduction are even larger. Besides the obvious cost advantage, which comes from early introductions, it has the potential of gaining more customers who maintain their loyalty due to the inherent cost burden of switching to other competitive products.

Their loyalty often creates a residual sale trail, which can remain fairly uniform. Residual sales trail is the minimum sales volumes, if no new sales were made after time t > T. If a company new sales projection is superimposed over its residual sales trait, it gives what maximum sales volume company E can expect. Consequently an early introduction builds sales momentum, which is carried through the later part of its lifecycle.Required investment: The NPD process must be managed as a balanced portfolio of projects at different stages of development. Companies may use a project map (similar to that depicted in Figure ) to aid this process. Four types of development projects commonly appear on this map pure R&D, breakthrough, platform and derivative projects. Over time, a particular technology may migrate through these different types of projects. R&D projects are the precursor to commercial development projects and are necessary to develop cutting edge strategic technologies. Breakthrough projects involve development of products that incorporate revolutionary new product and process technologies. Platform projects typically offer fundamental improvements in the cost, quality and performance of a technology over preceding generations. Derivative projects involve incremental changes in products and/or processes. A platform project is designed to serve a core group of consumers, whereas derivative projects represent modifications of the basic platform design to appeal to different niches within that core group. Companies need to identify their desired mix of products on a project map and then allocate resources accordingly. It is important that the mix of current and new products be consistent with the companys resources and with its strategic intentGraph 3.7: Map of Projects for NPD Development

Source: Wheelwright, S.C. and Clark, K.B., Revolutionizing Product DevelopmentProfitability: there are many situations that might affect the sales volume life-cycle curve. Economic factors, market trends and product quality are some of the major examples. Economic factors such as recession, high inflation, or high interest rates can change (increase or decrease) the products life cycle in terms of sales volume. Market trends such as annual seasonal trends or fads could also lengthen or shorten the sales volumes.Calculation of revenue loss:This is shown in Figure for both market growth and a market decline. Each follows an S-curve trend. Together they form a bell shape. In Figure 6(bottom graph) two bell curves are shown; one bell curve is for the revenue when an early (or on-time) market entry; and the other bell curve is for a delayed market entry. In the growth S-curve case, the rate of growth is slow in the beginning, increases quite rapidly in the middle zone and then again slows down as it reaches the peak revenue. In the case of market decline S-curve, the decline is slow at the peak, sharply declines in the middle region and again flattens up in the lowest region. Tw is the market window (time) when the growth revenue S-curve reaches its peak. If it is assumed that the time of decline is the same as the market window (time of growth), the two Scurves are symmetrical about the vertical axis. The assumptions are very reasonable, since the straight lines are approximately a median line of the S-curves. The total product life-cycle time can thus be computed as: life=2Tw The S-curves (or bell curves) are often very symmetrical about a straight line connecting a peak revenue point to a start-point. The bell curves of Figure 6 are approximated by a series of straight lines. Two straight lines are drawn one for the market growth S-curve and another for the market decline S-curve. Another set of two lines is shown for delayed market entry and the market decline. Carter and Baker (1992) also used a straight line to measure the impact of delays in launching a product. As shown in Figure, both these bell curves are symmetrical about lines that form sides of a triangle. On the basis of this symmetry, the area under the bell curve can easily be approximated by the area under this triangle. Graph 3.8: Computation of revenue loss due to delayed market entry

If q is the slope of the revenue S-curve and a is the rate of revenue-growth or revenue decline, the peak revenue can be expressed as: Peak-revenue = Tw..... (20)

Where a = tan () (21)

Revenue generated in the case of on-time market entry and delayed market entry can be computed by computing the area under the respective bell curves: Total revenue for early (or on-time market introduction) = Area under the dotted curve:

Rarely = (2Tw) (a Tw )/2 ..(22)Rarely= a (Tw)2. ....(23)Total revenue generated when product introduction is delayed by Td units:

Rdelayed = Area under the dotted hatched curve

Rdelayed = (2Tw Td) (a Tw a Td)/2... (24)It is assumed that the growth rate for the delayed market entry is the same as the early or on-time market entry, meaning L remains constant. In actual practice, this seems to occur. If Rloss denotes a revenue loss term due to delay in introducing the new product, then:

...(25)

..(26)

.,,,,,,,,(27)

It is interesting to note that revenue loss is independent of the growth rate a. The above equation (27) represents an approximation of the actual revenue loss, which must be computed using true S-curves or bell curves. This approximation can be used as a measure in calculating the impact of delays in launching a product. For example, considering a 12-month market window; i.e. T w = 12. A Td month delay in a launching a product can be computed using the information given in Table1Table 3.4: Revenue loss computation

Sources: Andreason, M., Myrup and Hein, L. (1987), Integrated Product Development, IFS Publications Ltd, Springer,

Berlin.5. Product Development Product development converts a product idea into a physical form and identifies a basic marketing strategy. It involves branding, product positioning, and attitude and usage testing. Companies which are already manufacturing snacks; they will enjoy their core competency with respect to manufacturing low calories wafer and chips, also companies already have their brand name existing in market but for a new firm it is very difficult task to do so, therefore we start with basic marketing strategy. Segmenting the Market

Segmentation based on food and health-related behavior and attitudes markets is divided them into seven discrete segments: Compensators Sports, Beer & Barbeques

Traditionalists

Indulgers

Go-for-it-Guys

Disengaged

CarefreeBut in India Compensators, Indulgers, Go-for-it and Traditionalist are present in majority. So the key target segments for low calories wafer and chips are:Compensators

Compensators have a balanced approach when it comes to health and diet. They do eat unhealthy foods in moderation, but are aware of this and take steps to balance it with healthier alternatives. They understand the calories in, calories out message and apply it.

Go-for-it Guys

Go-for-it Guys are very active and can be found worldwide. They stay healthy through sport and exercise, and dont worry too much about what they eat. It is also important for them to look attractive to the opposite sex. They are heavy consumers of food, they quickly adopt any food product in market just to show style and presence.Indulgers

Indulgers do little sport and spend lots of time at home, including in front of the television. Many have children, the effect of which is reflected in their diets. They are heavy users of chocolate, sweets and potato crisps they just need something to consume. Many put their families first, but they also think it is important to be attractive and young looking Positioning

It is the most important thing to create an image f your product in the mind of the consumer, so it should give the proper idea of the product and its feature like:

Eat whenever you feel, where ever you feel because its a low calories snack with no compromise in taste and quality, which is healthier to eat with high nutritive value.

Somewhat in this fashion positioning of this product has to be done

Branding

The American Marketing Association (AMA) defines a brand as a "name, term, sign, symbol or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of other sellers.

Therefore it makes sense to understand that branding is not about getting your target market to choose you over the competition, but it is about getting your prospects to see you as the only one that provides a solution to their problem.

The objectives that a good brand will achieve include:

Delivers the message clearly

Confirms your credibility

Connects your target prospects emotionally

Motivates the buyer

Concretes User LoyaltyWhile increasing revenue is top of the wish list, it comes at the bottom of the performance list, with 33% of new products that had this as a primary objective failing to achieve it and brand building is most important objective to achieve successGraph 3.9: strategic objective required for success of product

Sources: Winning New Product Development Strategies in Financial Services: Building a profitable culture for NPD success; website www.globalbusinessinsights.com6. Commercialization After all stages are completed, the firm is ready to introduce the product to its full target market. This is commercialization and corresponds to the introductory stage of the product life cycle. Commercialization involves implementing a total marketing plan and full production.

Among the factors to be considered in the commercialization stage are the speed of acceptance by consumers and channel members, the intensity of distribution (how many outlets), production capabilities, the promotional mix, prices, competition, the time period until profitability occurs, and commercialization costs.Three major elements that emerge in terms of consumer behavior and healthy lifestyle are healthy eating, exercise and dieting; and the balance of these elements differs considerably between segments. Based on the prevalence of these three features, it is possible to identify the most promising groups for targeting by brands offering a health and wellness proposition. These are the Compensators, the Go-for-it Guys and the Indulgers as explain above. Product launch

Successful product launches dont happen by accident. Theyre built on processes and methods proven to communicate your value proposition. Theyre designed to grow your business and, most significantly, they intentionally exceed the expectations of customers product launch shapes those expectations. You only get one chance to make that first impression. Successful product launches create the internal and external excitement that drives the market adoptionHere are some ground rules that will help you assure successful and repeatable product launch projects.

FOUR PILLARS FOR A SUCCESSFUL PRODUCT LAUNCH

Sources: www.crimson-consulting.comI. Assign Dedicated Resources Companies dedicate teams exclusively to the challenges of building market momentum for a new product launch. They use the same team from launch to launch, leveraging their experience and knowledge of shared processes and organizational decision-making.

Dedicated launch teams can include members for project management office (PMO), public relations, marketing, product management, and events management. You can create such teams with company resources or use a combination of on-site consultants to staff up and down as needed. Recognize that launch roles cant be defined on a one-off basis. Your launch plan will help you identify the right resources and when those resources are needed. This plan will drive your search for partners and team members with a proven experience and demonstrated skill sets. Include in this plan the time for up-front preparation. This will assure that all team members are on the same page as you progress through the plan and will ease adjustments as the unexpected occurs.

Graph3.10: Most significant management challenges for new product development efforts

Sources: IBM Institute for Business Value 2006 Value Chain Study.So up-front preparation steps should include the necessary lead time for outside resources and establishing master services agreements, or in-house resource allocation agreements, so your team can start work immediately.II. Dont Over Commit Your Product The old rule bears repeating: under-commit and over-deliver. The biggest mistake companies make on product launches is over committing the product to customers, analysts, and employees.

To avoid disappointment or distrust, resist the temptation to over-sell your products:

Capabilities and benefits to customers (Value for money should be perceive by consumer)

Differentiation or fixes to prior product gaps or deficiencies to industry analysts (High nutritive value and low in calories at affordable price) Capabilities with your own employees (skill required for the production is there or not).

Three planning steps will help you identify realistic deliverables for your launch.

First, identify the long pole in the tent the task with longest duration and highest importance. Examples are advertising buys, marketing-communications production, enabling customer service to support the new product, or field service training programs.

Second, create a work-back plan from your anticipated launch date. Once you define what the plan needs and its completion date, dedicate the resources necessary to deliver on it.

Third, communicate, communicate, and communicate. Keeping your management team and employees up to date on the details will allow you to successfully navigate the ebbs and flows of natural changes. Maintaining a trusted relationship with analysts will encourage their conviction on your behalf. Communicating and working with your customers will appropriately build expectation and reassure you are meeting your customer needs. Graph3.11: primary strategy for your sites new product development efforts

Sources: IBM Institute for Business Value 2006 Value Chain StudyIII. Implement a Scientific Launch Process Take the same approach to product launches as you do to product development. Use proven, scientific processes. Product development begins with planning, managing, tracking, and measuring from the conception of your product. You need:

Established end-to-end product development launch processes

Time-phased tracking

Product cost capture and measurement Workflow management to share information across the product development stages

Process control component management

Marketing product launch uses the same foundation as product development. Best-practice companies start with a marketing product launch P&L. Then they measure marketing ROI with tracking that starts with the marketing bill of materials and follows through to customer use of the product. IV. Leverage Collaboration Tools Globalization and telecommuting have changed the way enterprises large and small operate. Whether across town or across the ocean, organizations are spread out. You simply cant do things the way you did when everybody was in the same building.

Technologies like Web conferencing and collaboration environments let widely dispersed teams bridge the geographic gap and work together easily. And, todays technology can offer these services at prices that are affordable for organizations of any size.

Collaboration technology unites dispersed team members by letting them:

Conduct remote meetings

Share calendars, files, and documents

Train new employees at will

More importantly, by expanding communication, this technology:

Facilitates cross-functional integration

Automates activity management and work flow

Tracks tasks and milestone dates You can also use the same model to virtually organize the channel partners you need for closely integrated marketing programs. With controlled access logins, you can link VARs, distributors, systems integrators, industry analysts and publications, and even beta customers into your network by using the same toolset. Product life cycleDifferent type of product cycle will there for different type of companies such as

Company size affects the speed at which new products are developed. Most medium sized companies take 4 to 6 months to develop new products, for large companies this lengthens to between 7 and 12 months as shown in figure and this survey has been done by Global business insight Graph3.12: product life cycle for different company sizes

Sources: Winning New Product Development Strategies in Financial Services: website www.globalbusinessinsights.com For existing companies its product life cycle will follow this type of trend Strategies for Extending the PLC

The nature and type of applicable strategies to extend the PLC will vary with each stage, and the level of variation depends on the product type, market conditions, consumer audience and projected PLC timeline. It is hard to predict a transition from one PLC stage to another (because of measurement lags) and proactively react to the change with targeted action. However, through proper marketing mix design and contingency planning, it is possible to apply various product planning and product marketing strategies at the beginning of a particular stage when it arrives. For new firm the product life cycle

A PLC is traditionally viewed, from a marketing perspective, as being comprised of four distinct stages: Introduction, Growth, Maturity and Decline.

In the Introduction stage, the product is introduced to the market through a focused and intense marketing effort designed to establish a clear identity and promote maximum awareness. Many trial or impulse purchases will occur at this stage. Next, consumer interest will bring about the Growth stage, distinguished by increasing sales and the emergence of competitors. The Growth stage is also characterized by sustaining marketing activities on the vendor's side, with consumers engaged in repeat purchase behavior patterns. Arrival of the product's Maturity stage is evident when competitors begin to leave the market, sales velocity is dramatically reduced, and sales volume reaches a steady state. At this point in time, mostly loyal consumers purchase the product. Continuous decline in sales signals entry into the Decline stage. The lingering effects of competition, unfavorable economic conditions, new fashion trends, etc. often explain the decline in sales, and its cash flow and profit is also reducingGraph3.13: Relation of profit sales and Cash flow it respect to PLC

Source: HaxA.-MajlufN,Strategic Management,Perntice Hall Engiewood Cliffs 1984,page250 The value of time-to-marketThe importance of being first to market is discussed extensively in various sources. Besides the instinctive idea that it is best to be first, other measurable benefits are possible for those that get to the market sooner with innovative products and services:

leaders in Increased sales through longer sales life The earlier the product reaches the market, relative to the competition, the longer its life can be.

Increased margins The more innovative the product (that is, the longer it remains on the market with little or no competition), the longer consumers will pay a premium purchase price.

Increased product loyalty Getting the first opportunity to attract customers, especially early adopters, offers an advantage in terms of customer loyalty; customers will most likely upgrade, customize or purc