New product development (NPD) is the lifeblood of future business. While most agree on the importance of NPD, the challenge for many companies in the natural products industry is where to start.
 
For this column we interviewed Joel Ombry, the innovations and operations lead with the Consumer Insights Marketing Group at Alticor Inc. (Ada, MI), an $8.4 billion global consumer products company. We asked Mr. Ombry to describe the process of new product development and where small and medium-sized companies might start the process of “ideation” (idea generation) that ultimately leads to future new products.

The NPD Process

NPD usually involves five phases: Opportunity Identification and Selection; Concept Generation; Concept/Project Evaluation; Development (including Technical Development and Marketing Development); and Launch. For many companies, the first phase of this process is rather sporadic and largely intuitive. And it is often left to people within the organization who have shown a flair for the creative or fill a position such as head of the organization’s R&D.

The function of ideation is in fact a discipline of its own. Mr. Ombry says it begins with a mindset or culture of innovation within the company. This does not necessarily mean that any one individual or department need be responsible for the generation of ideas; though it is very important that someone or some department takes responsibility for the ideas once they are generated and submitted.
 
Understanding Markets

Mr. Ombry says the importance of having a “Deep Understanding of Markets” is crucial. He believes it is the responsibility of managers to understand their consumers and competitors. If a company is involved on the ingredient supply side of the industry, managers should understand their customers as well as the consumers that ultimately use the ingredients. Equally, the company must understand the competitors that operate in the market; not just the direct competitors that supply the same type of ingredient, but also the competitors who are offering an alternative (or substitute) ingredient that potentially addresses the same consumer need but in a different way.
 
For example, a company might offer a novel fiber product that addresses a consumer need in the digestive health segment, but there is a growing awareness that inflammation plays a key role in gut health conditions. The company would do well to watch for potential competitors looking to migrate or extend their claims from inflammatory joint health into other segments such as gut health. The question for the company offering the novel fiber product would be whether the introduction of a competitor with a new mode of action into the gut market actually increases consumer awareness and expands the market or simply creates competition for a share of the consumer wallet and cannibalizes the existing market.
 
What About the Budget?

Mr. Ombry claims there is a lot a small or medium-sized company can do at relatively low cost. First, whether you are a brand manufacturer or ingredient supplier, try to attend both the industry’s retail and ingredient supply shows. Don’t spend the entire show in meetings. Make sure you set aside time for walking the show floor. It is often the Marketing, Sales and/or R&D staff that are sent to these tradeshows. But from time to time it is worth taking other managers, such as the Operations Manager or the Chief Financial Officer, to engage them in the process. Ideation is not department-specific and a fresh perspective often drives innovation.
 
Other methods of creating a deep understanding of markets include taking the time to read literature. Trade publications, for example, offer an excellent source of insight into industry-specific markets. Some published sources offer a commercial focus, while others focus on technical issues, and yet others focus on company announcements and press releases. Regardless of their focus, it is wise to keep abreast with as much current information as possible.
 
The Power of Observation

According to Mr. Ombry, acquiring a deep understanding of markets requires “strong observational skills.” Those with these skills have the ability to see and understand potential trends in the market before others can see them. The ability to cultivate this skill requires discipline, persistence and experience. Developing strong observational skills means listening and observing all points of view no matter how ridiculous they might seem. It may also involve “reading between the lines,” or looking beyond what is currently in front of you.
 
The power of observation also includes studying consumer behavior within the retail environment. For instance, when visiting a new town or country make sure some time is allotted for walking the streets or malls. Watch consumers as they buy your products or products with your ingredients. Do they impulse purchase or do they comparison shop? Do they spend time reading the facing label or turn the product around to read the nutrition panel? Ask the shop assistant for help when buying your product and ask them to explain what it does. You should be as familiar with the consumer experience as you are with your product/ingredient.

Adjacencies

Finally, Mr. Ombry explains that once you have acquired a deep understanding of the market and developed keen observational skills, it is important to look at “adjacencies”—a keen observation skill that requires looking into industries that are adjacent to your own. For a company interested in the delivery of ingredients, this might involve examining a controlled-release drug technology from the pharmaceutical industry or a vending technology from the snack industry, with a view to how these adjacent industries have successfully addressed a similar issue.

Mr. Ombry goes on to suggest that one needs highly refined observational skills to pick up on what he calls the “weak signals” of early trends within an industry. As an example, let’s look at the recovery from the economic recession for the natural products industry and how this will relate to consumers and competitors. Will this recovery result in changing consumer behavior, and if so, what forms will this take? All of this information feeds into the ideation process, which in turn results in successful new product development.

Paul Altaffer is on the product and business development team at RFI Ingredients, Blauvelt, NY, a manufacturer of innovative natural ingredients and custom formulations for the functional food and dietary supplement industries. He was previously the founder and president of Nat-Trop, an ingredient company now operated by RFI that develops and trades primarily in South American products. He can be reached at 510-337-0300; E-mail: [email protected].

Grant Washington-Smith has over 17 years of experience across a variety of businesses in the natural products industry. He previously worked in business development and brand management for Alticor Inc. Prior to arriving in the U.S., Grant was involved in marketing and business development throughout New Zealand, Australia and the Asia/Pacific region. His focus has been on the commercial development of the novel and the innovative. He can be reached at [email protected].