Stage Model Research in the UK Fast Moving … · Stage Model Research in the UK Fast Moving Consumer Goods Industry Dr. Mark Francis ... FMCG, Product Development, Process, ... launch

1 M. Francis/ Stage Model Research in the UK FMCG Industry

Stage Model Research in the UK Fast Moving

Consumer Goods Industry

Dr. Mark FrancisCo-Director

Food Process Innovation Unit

Cardiff Business School, Cardiff University

Aberconway Building, Colum Drive

Cardiff, UK, CF10 3EU

Tel: +44 (0)29 2087 4420

Fax: +44 (0)29 2087 4556

Email: [email protected]


AbstractThere is a large body of literature on the subject of organizational innovation, but little ofthis specifically addresses the fast moving consumer goods (FMCG) industry. Inparticular, none of the stage models presented in this literature adequately described theUK FMCG development processes witnessed by the researcher during his case-basedPh.D. study. This paper consequently addresses the question what is the sequence ofmain stages for lower innovation product development processes in the UK FMCGindustry? A new stage model is offered that recognizes the dual product and packagingdevelopment imperatives of this industry. The paper also contributes to the developmentof theory by characterizing a dominant paradigm that has emerged within the innovationliterature and presenting a detailed explanation of the development process that is basedupon the empirical evidence collected from five case studies. Finally, the paper suggeststhe use of multiple forms of representation to supplement the stage model to betterunderstand and improve the dynamics of product development processes.

Key Words: FMCG, Product Development, Process, Stage Model

1. Introduction

A time analysis of three product development process cases conducted during the pilotphase of the researcher’s Ph.D. study within the UK fast moving consumer goods(FMCG) industry revealed that over 98% of the total cycle time (total elapsed timebetween the start and end stages of the product development process) of each casecomprised complete inactivity. This was surprising because a fast time to marketcapability was expected to be highly valued, especially within the low and mediuminnovation level cases where the resultant products were not competing on theirinnovative merits.

A review of the literature to explore this problem further revealed that little had beenwritten about the design and organization of development processes in the UK FMCGindustry. It also revealed that the great majority of the new products developed by thisindustry were of these lower innovation types (Ernst & Young/ ACNielsen, 1999), andthat no study had been conducted that attempted to explain the causes of the cycle timeperformance of these processes. In addition to its obvious academic merits, such a studywould yield benefits to the community of FMCG product development practitioners. Itwould explain the root causes of delay and hence facilitate meaningful interventions tothese processes to enable sustained improvements to their cycle time performance.

However, a pre-requisite to being able to explain these causal relationships it is necessaryto first be able to adequately describe the development processes themselves. This isconventionally achieved via a stage model, which is a diagrammatic representationdescribing the discrete stages that an organization typically conducts when conceiving,developing and introducing a new product or other innovation.


The literature review had revealed no such stage model that had been presentedspecifically for the UK FMCG industry, and those stage models that were presented didnot accord with the product development processes witnessed during the pilot cases. Thefirst major research question of the study was consequently established to be what is thesequence of main stages for lower innovation product development processes in the UKFMCG industry? It is this question that forms the subject of this paper. Table I containsthe key definitions that pertain to it.

Table I Key Definitions from the Statement of Research PurposeTerm DefinitionProcess “A sequence of observable and unobservable individual and collective events, actions and

activities, unfolding over time in context.”- Adapted from Pettigrew (1997, p.338) and Tuttle (1997, p. 350)

ProductDevelopmentProcess

“A disciplined and defined set of tasks and steps which describe the normal means bywhich a company repetitively converts embryonic ideas into saleable products or services.”- (Rosenau et al., 1996, p.528)

Fast MovingConsumer Goods(FMCG)

“A low-priced item which is used rapidly with a single or limited number of consumptions (asopposed to consumer durable or consumer service).”- (Baron et al., 1991, p.83)

Lower Innovation Those types of product development projects that are equivalent to the medium and lowinnovation product clusters on the Innovation Based Clustering model (Ernst & Young/ACNielsen, 1999). This means projects categorized in the Line Extension, Me-too,Seasonal/ Temporary and Conversion/ Substitute clusters.

This paper attempts to make four contributions to the theory on organizationalinnovation. It characterizes a dominant paradigm that has emerged within this body ofliterature; presents a detailed explanation of a UK FMCG product development processthat has previously been lacking; develops a new stage model that better describesdevelopment processes in this industry and suggests four additional forms ofrepresentation to supplement this stage model in order to facilitate the improvedcommunication, control and performance of such development processes.

The paper is presented in five parts. The first part establishes the theoretical frameworkon stage model research. The second part explains the research methodology designed toachieve the research objectives. The case study evidence is considered in part three, withthe Tesco food product development process being advanced as a representative processthen explained in some detail. Part four compares the descriptive power of the literatureagainst the case evidence collected. The final part develops an alternative stage modelfor the UK FMCG industry and recommends multiple forms of representation tosupplement the stage model.

2. Stage model literatureA review of the academic and technical literature on the subject of organizationalinnovation reveals that an orthodoxy has emerged amongst scholars and practitioners.Their convergent views form a dominant paradigm that emphasizes the high innovation,


low volume development environments of durable goods manufacturers from theAutomotive and Electronics/ IT industries (Francis, 2004).

Numerous research reviews, critiques and evaluations have been written to characterizeand categorize this extensive literature. Amongst these, Wolf (1994) identifies StageModel research as a distinct genre, which he characterizes as conceptualizing innovationas a series of discrete stages that unfold over time. Its purpose is to determine whetherthe innovation process involves identifiable stages, and if so, what they are and what theirorder is.

The stage models illustrated in Table II are the yield of a sample of representative andinfluential publications from within the generic product development literature, and arepresented as being representative of this background literature. These models confirmthat at a level of abstraction it is possible to identify common process stages betweenthese models even though they individually display a different scope, emphasis and levelof detail. Three broad process phases are also identifiable. These are referred to withinthis paper as the Product Independent, Product Development and Post Development-Evaluation phases respectively.

The Product Independent phase refers to those process stages that are not directly andwholly attributable to a single development project. These include strategic planning,capability development, process improvement and general technological research anddevelopment activities. The Product Development phase includes all those productspecific process stages required to design and introduce a new product. This typicallyencompasses the idea generation through to commercialisation or launch stages of thatdevelopment process. Finally, the Post Development-Evaluation phase encompasses allthe process stages that might occur after the formal launch of a product. This includes anevaluation of the performance of the development process itself, which is sometimesreferred to as a postmortem review. It also includes the evaluation of the new product’sperformance in the marketplace.


Table II Representative Product Development Stage Models from the Background Literature

PHASE

Wolf (1994) Booz, Allen andHamilton (1982)

Cooper(1988)

Griffin (1997) Wheelwright andClark (1992)

Dimancescuand Dwenger(1996)

PRODUCTINDEPENDENT

Build Knowledgeand Capability

Identify NewProduct Strategy

Idea Conception Exploration IdeaGeneration

Idea/ ConceptGeneration

Idea Generation Idea

Awareness

Matching

Appraisal Screening PreliminaryAssessment

Idea Screening Product Definitionand Selection

Design

Concept Plan

Business Analysis

Persuasion

AdoptionDecisionImplementation Development Development Development Design & Build

PrototypesEngineer

TestingConfirmation TestingTrial

Test and Validation

Pilot Production Produce

PRODUCTDEVELOPMENT

Routinisation Commercialisation Launch Commercialisation ManufacturingRamp Up

Distribute

InfusionPOSTDEVELOPMENT-EVALUATION

Dispose

Source: Developed by the researcher from an analysis of the publications identified.

A review of the focal literature that addresses the FMCG development process in the UKidentifies only a single stage model that is presented specifically for this industry. This isthe EPI Wheel (Figure 1).


Figure 1 The EPI Wheel

Source: Ernst & Young / ACNielsen, 1999, p.40

Efficient Product Introduction (EPI) was a consultancy-led project that was conductedbetween 1997 and 1999 as part of the European Efficient Consumer Response (ECR)movement. The EPI Wheel was a key deliverable from this project. It was designed tofacilitate the collaborative development, launch and evaluation of new FMCG productsby manufacturers and retailers in all the retailing environments in Europe, and was notdeveloped specifically for the UK.

The EPI Wheel describes a standard eight-stage process. Each of these stages involvecollaboration between the manufacturer’s account management team and the retailer’scommercial buying team. It also integrates the standalone category management processthat was developed within the ECR movement as the mechanism to implement andmanage distinct groups of products that consumers perceive to be interrelated (AndersenConsulting, 2000). The outer ring of the EPI Wheel reflects the three distinct phasesidentified in Table II. Whilst using an innovative circular form of representation andemphasising the need for collaborative customer-supplier relationships, it conceptualisesa development process that involves a sequence of discrete stages that unfold over time,in common with all the other stage models that are described in Table II.


3. Research methodology

After applying Yin’s mechanism for establishing relevant situations for the application ofdifferent research strategies (1994, p.6), the case study was identified as the mostappropriate strategy. Figure 2 illustrates the research design framework that wassubsequently developed for achieving the research objectives. Its constituent case studiesare each represented as a box on the figure with the unit of analysis for each being thewhole product development process. Each case study box is labeled according to themain product category that was the focus for data collection. Each box also illustrates theparticipant organizations that were the subject of the fieldwork. These independentorganizations are represented as a number of inner boxes. The figure therefore illustratesthat the study was of multiple-case design, each of which involved multipleorganizational participants.

The horizontal axis of the figure indicates three development process innovation levelcategories that are labeled high, medium and low respectively. These were derived fromthe Innovation Based Clustering model proposed by Ernst & Young/ ACNielsen (1999),which provided the basis for the case selection criteria. A purposive case selectionstrategy (Silverman, 2000) was applied to fill these three categories. Polar extreme(Eisenhardt, 1989; Pettigrew, 1990) sampling was encompassed by selecting both highand low innovation category case processes. Typical (Stake, 1994) sampling was alsoencompassed. This was achieved by including the medium innovation categoryprocesses. The claim to typicality can be made because these latter case processesconcentrated on the development of Me-too (derivative) products that have been found torepresent over 80% of all new products developed in the UK FMCG sector (Ernst &Young/ ACNielsen, 1999).


Figure 2 The Research Design Framework

Each case process is positioned on Figure 2 in relation to the main level of innovationthat was believed to apply to the products produced by it. The vertical axis on the figureindicates that the research design involved two distinct phases. The first of these wasexploratory (Yin, 1994, pp.3-4) in nature. Its purpose was to both broaden and deepenthe researcher’s knowledge of the practices and issues associated with productdevelopment processes within the UK FMCG industry. This was in order to achievewhat Glaser and Strauss (1967) term contextual sensitization. This insight was then usedto select the research problem and inform the lines of questioning for the main fieldworkphase. This second phase of the study was explanatory (ibidem) in nature and was toestablish the cause-effect relationships that subsequently became the focus of thisproblem.


3.1 Phase 1 (exploratory): pilot case studies

The Beer Promotion case was a six-month study of a low innovation developmentprocess in the Beer product category that was conducted at Bass Brewers PLC. Basswere a large UK national brand manufacturer of lager and beer products. They suppliedoff-license products to a wide range of retail outlets. These outlets included Tesco and allthe other UK major FMCG retailing groups. The scope of the case involved the completeproduct promotion process, from concept to delivery at the customer RegionalDistribution Center (RDC). It also encompassed multiple Bass head office departments,the Bass Hilton National Distribution Center and a contract packaging supplier calledKammac.

The Convenience Foods process was a medium innovation development process atTesco. Convenience Foods was a high growth category that was dominated by private-label products. The case was conducted over a ten-month period and concentrated on theproduct introduction part of the Tesco product development process. The scope of thecase encompassed the decision to commercialize a designed product up to the delivery ofthat product to the firm’s RDC network. Data collection was confined to theorganizational boundary of this single company. Whilst the bulk of the data collectionwas conducted at Tesco’s commercial headquarters at Cheshunt, fieldwork was alsoconducted at their Magor RDC and Ebbw Vale retail store.

The final pilot case study was of a high innovation Confectionery process. The caseinformant was Chocolate Corporation, who were a multinational brand manufacturingenterprise. The firm was provided anonymity for reasons of commercial confidentiality.The fieldwork involved semi-structured interviews with staff from ChocolateCorporation’s Commercial, Operations and Marketing departments. It also involvedinterviews with senior personnel from three tiers of their packaging supply chainnetwork. These companies included both of the design studios that were used in the UKby Chocolate Corporation. They also included a printer of packaging material and acardboard outer and substrate (bar wrapper) supplier.

3.2 Phase 2 (explanatory): main fieldwork case studies

The Biscuit and Confectionery process represented the low innovation case of the mainfieldwork phase, and was a study of the product development process at Biscuit Co. Ltd.Like Chocolate Corporation, this firm has been provided anonymity for reasons ofcommercial confidentiality. The company was a small to medium sized contractmanufacturer of private-label confectionery and biscuit products for all the main UKFMCG retailing groups. It also manufactured a small volume of products under its ownbrand names. The case involved the interviewing of the complete management andproduct development teams. The scope of the case encompassed concept developmentthrough to delivery at the customer RDC and therefore again incorporated the completeproduct development process.

The medium innovation case of this second phase was a twelve-month extension of thepilot Convenience Foods process. This again concentrated on the Chilled Ready Meals


product sub-category. However, the scope of this case was enlarged to encompass thewhole food product development process, from concept development through to thedelivery of the developed product at the point of sale. The case also involved datacollection at a number of participant organizations that were drawn from the first twotiers of the firm’s network of packaging supply firms. This network represented thecomplex set of inter-firm relationships that were required to design and produce theproduct packaging, which occurred immediately prior to the commercialization of adeveloped product. These participant organizations included design studios, reprographicagencies and a printer.

An opportunity also emerged to conduct additional fieldwork at Ready Foods Ltd, whowere a multinational manufacturer of branded products. This firm has again beenprovided anonymity. The Ready Foods site was a dedicated Tesco Chilled Ready Mealssupplier that acted as a contract manufacturer of Tesco private-label products. Thisprovided further insight into the early stages of the Convenience Foods productdevelopment process. It also provided further information about the interface betweenTesco and its contracted product suppliers. Ready Foods single-sourced its packagingmaterial from the same printer that acted as a participant for the main Tesco fieldworkabove. The Convenience Foods case therefore involved participant organisations thatwere drawn from a coherent network of related product development service suppliersthat composed two tiers of its product development supply chain.

The data collection activity that resulted from the execution of this research methodologyproduced hundreds of hours of interview and observational evidence, and hundreds oforganizational documents. It also produced eight hours of video footage, twenty hours ofaudio footage and numerous value stream maps of the case product developmentprocesses.

4. Case study evidenceFigure 3 illustrates the Tesco product development process that was the focal process inCases 2 and 4. This process describes the development of all Tesco private-label foodproducts. The fieldwork evidence established that the existence, sequence and purpose ofthe main process stages in all five cases illustrated in Figure 2 were consistent, althoughthey differed in terminology. The major process transactions were likewise found to beconsistent. The Tesco process is therefore advanced as a representative example of thecases studied and is provided as a vehicle for discussion and evaluation. The twodimensional boxes on the figure indicate the stages carried out by Tesco. The threedimensional boxes indicate the stages carried out at the firm’s product and packagingdevelopment suppliers.


Figure 3 The Standard Tesco Food Product Development Process


4.1 Planning

The Planning phase comprised two product-independent process stages. The first ofthese involved constructing the Food Trading Plan document. This was an output fromthe retailer’s annual strategic planning exercise and it defined the performance objectivesfor all of the firm’s food product categories.

In accord with the ECR category management process the second planning stage entaileddeveloping a separate Category Plan document for each of the food product categories.This defined the category performance objectives that were designed to contribute to thehigher level performance objectives in the Food Trading Plan. The production of theCategory Plan required the firm’s trading teams to agree development prioritiesconcerning which new product ranges to develop and which existing product ranges toextend. This exercise culminated in the production of the Product Development List,which was the document that listed each planned product development project in launchdate sequence.

4.2 Technical (product) development sub-process

The Technical (Product) Development sub-process encompassed all the process stagesrequired for developing the product recipe. Taking in sequence each of the productsitemized in the Product Development List, the first stage of this sub-process was theDevelopment Briefing, which required the trading team to produce a document called theProduct Development Brief. This was a description of the product concept that includeddetails such as the legal title, target price, weight, shelf life and launch date of the newproduct. It also included a technical description of its desired flavor, appearance, textureand aroma. The trading team then arranged a meeting with the selected contractmanufacturer to discuss the concept and to agree a timescale for the completion of eachof the stages in this sub-process.

The contract manufacturer subsequently conducted any market research, comparativeshopping (to assess competitive products), food shows and restaurant visits that wererequired to elaborate upon the concept that had been briefed. They then developed anInitial Product Concept based upon this. The product was reviewed at a formal stage gateby the Tesco Food Technologist who made a decision to either drop (kill) the project orgo (proceed) to the next stage in the process.

If a decision was made to go, the Initial Product Concept entered the Kitchen Trial stage.This involved the contract manufacturer’s product development team working ondomestic-scale kitchen equipment to develop a Kitchen Concept that had acceptableeating and visual quality. If a decision was again made to go at this next stage gate theprocess entered the Factory Scale-Up stage. This was again conducted at the productmanufacturer’s factory. The purpose of this stage was to scale-up the Kitchen Conceptonto their industrial-scale production equipment whilst matching the visual and tastestandards established during the previous stage. Three tests could be conducted at thispoint. The first was a microbiological test to confirm the product’s shelf life. The secondwas a home freezing test to establish whether it was suitable for freezing. The third was a


travel test to ensure the product did not degrade microbiologically when transportedbetween the factory and the consumer’s home. The production costs were then finalised.

The product now entered the Final Product Review stage. The trading team formed a tastepanel and assessed the product’s appearance, aroma, flavor and texture that again resultedin either a drop or go decision. If the decision was made to proceed, the process enteredthe Pack Copy and Specification Preparation stage. The manufacturer’s productdevelopment team were required to use a Tesco supplied document template that residedon the hard disk of their computer to detail the full technical specification of the newproduct. This document was called the Supplier Technical Product Specification, and itincluded the list of ingredients and nutritional content to be printed on the packagingmaterial. It also included recipe, food additive and food intolerance information. Thelatter information was provided for the benefit of consumers with food allergies. Itindicated whether the production process and ingredients could be guaranteed free oftraces of potentially harmful substances such as gluten and nuts.

At this point, a copy of the Supplier Technical Product Specification document wasprinted off and posted to the trading team for review. If it did not contain any errors itwas placed into an envelope along with the three other documents that were required bythe Tesco Trading Law department during the Text Copy and Approval stage. The first ofthese detailed the marketing text copy that was to appear on the packaging. This includedthe contact information, product title and claims such as healthy eating and suitable forvegetarians. The second document described the cooking instructions and servingsuggestions that were to be included in a panel on the back of the packaging.

The final document contained in the envelope was a copy of the Keyline Drawing, whichprovided technical information on the product manufacturer’s production machinery.The design studio that had been commissioned to produce the packaging design used thisinformation to establish the dimensions within which they could locate the artwork andtext copy. The printer also used it. This was to ensure that the packaging material thatthey produced could be used on the manufacturer’s packing equipment.

The receipt of the envelope by the Trading Law department marked the start of the LabelCopy Specification (Text) Approval stage of the process. First, the Trading LawManager who was the legal expert in this area transcribed the information contained inthe envelope to the Tesco computer system. Some of this information was used to updatethe computerised databases that the department was responsible for maintaining. Theseincluded the food intolerance, additives and ingredients databases. Next he assessed thelabelling legality of the information derived from the Supplier Technical ProductSpecification and amended this accordingly. Finally, he produced a document thatdetailed the legally approved packaging text. This was called the Legal Label CopySpecification (LCS).

The Pre-Launch Trials were conducted in parallel with the development of the packaging.These were a rehearsal by the manufacturer for a full-scale production run of thedeveloped product, which enabled the launch date for the new product to be finalised.


Blank packaging was used because the final packaging material was still being developedat this point in time.

4.3 Packaging development sub-process

The Packaging Development sub-process encompassed all the process stages required fordeveloping the packaging material into which the new product was to be packed.The first stage in this sub-process was the Design Briefing. This involved a meetingbetween the trading team and Design Executive from the Tesco Design department whowas responsible for the packaging artwork for that product sub-category. The DesignExecutive was briefed about the nature of the new product and the product manufacturerinvolved. Deadline dates for the delivery of the packaging components of the newproduct were then agreed.

Using the information obtained during this briefing, the Design Executive created adocument called the Packaging Design Brief. This formed the requirement specificationfor the packaging design. It had two parts. The first was the marketing element thatincluded items such as the character of the product and brand, marketing objectives andthe target completion dates for the design stages. The second part of the documentincluded items such as the key visual signals, photography and illustration requirementsand an indication of the structural components of the pack. The Design Executive thenorganised a meeting with the design studio and reprographic agency, who were briefedabout Tesco’s packaging requirements for the project.

Using this briefing information, the design studio developed a number of Design ConceptBoards. Each of these was a full-scale colour mock up of the final packaging design thatwas presented on an A3 board. These were intended to convey the ‘mood’ of thepackaging design. The sub-process now entered the Design Concept Approval stage.The design studio organised a short meeting with the Tesco Design Executive and Buyer.This was to present each of the Design Concept Boards so that one of them might beselected for development.

When a Design Concept Board was approved and the Legal LCS was available, theArtwork Production stage started. A copy of the Legal LCS was then sent to the designstudio. The product manufacturer simultaneously sent pre-production samples of theproduct to be photographed. This was to ensure that an accurate representation of theproduct was reproduced in the illustration to be placed on the front of the packaging.

The design studio drew upon a number of inputs to produce the packaging artwork.These included the transparency positive of the photograph supplied by the photographer.They also drew upon the Legal LCS, Keyline Drawing, packaging barcodes and colourreference documents that were supplied by Tesco.

The output from the design studio was called the Artwork Proof, which was a two-dimensional representation of the product packaging. It included the exact location, size,orientation and colour of all the pictures, illustrations, graphics and text copy that were to


appear on that packaging material. It also included information on the position of thefold lines and certain printing machine calibration marks.

A copy of the Artwork Proof was sent to the Tesco Design department, which on receiptstarted the Artwork Approval stage of the process. A copy of the Artwork Proof was sentto the Trading Law department and was reviewed in conjunction with the earlier LegalLCS document. This was to ensure that the text copy and artwork for the projectcomplied with labelling legislation when they were considered in conjunction. Onapproval, the design studio was contacted to authorise the transmission of the digitalartwork files to the reprographic agency.

The delivery of the digital artwork started the Packaging Reprographics stage at thereprographic agency. This involved the conversion of the digital artwork into a formatsuitable for physical printing. The product of this process resembled an exact, colourcopy of the final packaging material that was laid out flat on an A3 board. This was sentto the retailer to be checked for accuracy and the reprographic agency was informedwhen this was approved. This acted as a signal for them to produce a high qualityreprographic film of the packaging design to be sent to the printer to start the Print andProduce Packaging stage of the process. At this point the printer contacted the productmanufacturer to confirm the scheduled product launch date, then produced an initialproduction batch of packaging material.

4.4 Product launch and distribution

Finally, during the Product Launch and Distribution stage, the batch of packagingmaterial was delivered to the product manufacturer in advance of the scheduled launchdate. It was then used to pack the newly manufactured product, which was delivered tothe Tesco Regional Distribution Centre network on the day of the product launch.

Whilst the printer was planning the production of the packaging material, a member ofthe trading team updated the central Tesco stock control computer system with details ofthe packaging barcodes for the new product. This was to enable the new product to bereceived at the firm’s Regional Distribution Centres and retail stores. The computerupdate also acted as a signal to the trading team to inform the store managers of theimpending product launch by transmitting its details via an internal bulletin document.

5. Evaluation of the evidence

The stage models summarized in Table II differ in two important respects to the casestudy evidence exemplified by the process described in the previous section. The firstand most important difference is that none of the models place any emphasis on thedevelopment of product packaging, which was a key innovative dimension and prominentfeature of all the case processes studied. This might be explained by the influence of theAutomotive and Electronics/ IT industries within the dominant paradigm characterized


earlier in the background literature review. Unlike the FMCG industry productpackaging does not feature as an important aspect of end product differentiation andhence innovation in these industries.

The second difference is that the stage models in the background literature emphasize aprocess stage for conducting a pre-launch consumer trial or market test of the prototypeproduct. This is to assess the product’s likely level of market acceptance. Such a stage iscommon in a development process of consumer durable products such as cars (Clark andFujimoto, 1991), or for expensive industrial goods and products incorporating newtechnologies (Kotler, 1994, p.343). However, this market testing stage was not a featureof any of the lower innovation cases studied. The great majority of such UK FMCGproducts (nearly 82%) are Me-too in nature (Ernst & Young/ ACNielsen, 1999). Theyare relatively cheap to develop because their research and development and advertisingcosts have already been borne by the products upon which they are based. Taken inconjunction with the number of stage gate reviews undertaken by technical staff, suchnew products therefore carry a low risk of failing to recoup their development costs.Market testing for such a product is not therefore perceived to be a cost-effective activity.

5.1 Critique of the EPI Wheel

In contrast to the generic stage models drawn from the background literature, the EPIWheel was developed specifically for the FMCG industry. Whilst there was no evidenceof the actual implementation of this model, a comparison of its main phases with Figure 3does reveal similarities. Both recognise a category-level planning phase followed by adesign phase. They both also recognise an introduction phase (termed Launch in the EPIWheel) and a post-launch evaluation phase.

The most obvious difference is the lack of recognition of the packaging developmentimperative noted above. The EPI Wheel is consequently a linear-sequential model thatdoes not reflect the concurrent Technical (Product) and Packaging Development sub-processes noted on Figure 3. Interestingly, closer inspection of the EPI Wheel revealsthat it does not contain a discrete stage for the physical design or production of theproduct. All of its stages are instead concerned with marketing, or the management ofinformation.

Evaluation of the individual process stages on the EPI Wheel reveals furtherdiscrepencies with the evidence encountered during the fieldwork. With the exception ofthe high innovation Confectionery process in the pilot study there was no evidence of thecollation and screening of potential product concept ideas proposed in its first stage. Inpractice a single idea was generated and pushed into the process without recourse toconsumer feedback.

Another major difference between the EPI Wheel and the fieldwork evidence was thelack of any joint retailer-manufacturer collaboration during the activity encompasssed bythe four product launch and evaluation stages on the EPI Wheel (stages four to seveninclusive). On the contrary, informants at both Tesco and Biscuit Co. Ltd stressed the


importance of internal control over these stages in order to minimise retailer-manufacturer conflict. This finding implied that the collaborative product developmentpromoted by the EPI project was not occuring . The eighth stage proposed on the EPIWheel was also contradicted by the evidence collected at Tesco. There was noassessment of the impact of a product launch on its product category nor any systematicfeedback of product or process performance to the planning phase.

As a final note, the conceptualisation of product development processes seems to havebeen over-simplified by writers in this field of study as neither the EPI Wheel nor otherstage models drawn from the background literature convey the true dynamics of the UKFMCG industry. They depict only the homogenised static sequence of activity stepsinvolved in developing a single product and do not convey the simultaneous developmentand introduction of batches of related new product that is the norm in this industry.Neither do they convey the flow of work through product and packaging firms that werelocated at the confluence of multiple retailer product development service supplynetworks.

6. Conclusions and recommendationsGiven the consistency of existence and sequence of the main stages and transactionsfound in the case development processes studied it is possible to represent a genericversion of them. Hence the new stage model illustrated in Figure 4 answers the researchquestion posed in the introduction to this paper and overcomes the omissions andcontradictions identified in the EPI Wheel.


Figure 4 Stage Model of the Product Development Process in the UK FMCG Industry

Source: Developed by the researcher from cross-case comparative data.

Three salient points should be noted on the above figure. The first is the inclusion of theProduct Independent (Planning) Phase as the first stage on the model. This reflects theinfluence of the ECR category management process on the case processes. The secondsalient point is the inclusion of packaging as well as technical (product) development astwo concurrent sub-processes. The third point is the inclusion of the Post DevelopmentEvaluation stage at the bottom of the figure. This reflects the evaluation of the financialsuccess of the new product that was conducted in all but one of the processes.


The above model is redrawn in Figure 5 into a format pioneered by the EPI Wheel. Thisformat more effectively represents the feedback loop between the post developmentevaluation and product independent phases of the process.

Figure 5 Schematic Representation of the UK FMCG Industry Stage Model

Source: Developed by the researcher; format based upon the EPI Wheel (Ernst & Young/ ACNielsen,1999, p.40)

Whilst this new model is advanced as a better explanation of the development processwithin the industry, the study also identified work prioritisation problems at the productand packaging firms that were located at the confluence of multiple retailer developmentservice supply networks. These problems were attributable to the stucture, powerrelationships, volume and timing of the development project workflows within thesenetworks. It is therefore concluded that no single form of representation can adequatelyconvey the structure and dynamics of development processes, particularly for lowerinnovation processes of the type encountered during the fieldwork.


To truly represent and understand the dynamics of product development, four forms ofrepresentation are required for each process to supplement the stage model. The first issome means to indicate inter-firm relationships and boundaries, such as a networkdiagram. The second is a method to indicate the different routes and their probabilitiesthrough the possible activity steps in the process, such as a decision tree. The third issome means to indicate the capacity, demand and volume of work that flows througheach of the stages of the process. Finally, the fourth is an indication of the standard cycletime per process stage, and for the development process as a whole. This could be a ganttchart. Alternatively, it could be the inclusion of a timeline or timescale per process stageon the stage model .

The use of these multiple forms of representation as a suite for mapping productdevelopment processes should enable more information to be conveyed about the designand performance of such a process without overburdening a singular form ofrepresentation with too much complexity. This in turn should facilitate the analysis andverification of the performance of these process and consequently lead to their improvedcontrol and performance.

ReferencesAndersen Consulting. 2000. The Essential Guide to Day-to-Day Category Management. An ECR Europe

Publication.Baron, S., Davies, B. and Swindley, D. 1991. Macmillan Dictionary of Retailing. Oxford: Macmillan.Booz, Allen and Hamilton. 1982. New Product Development for the 1980s. New York: Booz, Allen &

Hamilton Inc.Clark, K.B., and Fujimoto, T. 1991. Product Development Performance: Strategy, Organization and

Management in the World Auto Industry. Boston, MA: Harvard Business School Press, Boston.Cooper, R.G. 1988. Winning at New Products. London: Kogan Page.Cooper, R.G. 1994. “Perspective: Third-Generation New Product Processes.” Journal of Product

Innovation Management, 11: 3-14.Dimancescu, D. and Dwenger, K. 1996. World Class New Product Development: Benchmarking Best

Practices of Agile Manufacturers. New York: AMACOM.Eisenhardt, K.M. 1989. “Building Theories from Case Study Research.” Academy of Management Review,

14 (4): 532-550.Ernst & Young/ ACNielsen. 1999. Efficient Product Introductions: The Development of Value Creating

Relationships. ECR Europe Publication.Francis, M. 2004. “Two Genres of Product Development Literature.” Food Process Innovation Unit

Working Paper Series.Glaser, B. and Strauss, A. 1967. The Discovery of Grounded Theory: Strategies for Qualitative Research.

Chicago: Aldine.Griffin, A. 1997. “PDMA Research on New Product Development Practices: Updating Trends and

Benchmarking Best Practices.” Journal of Product Innovation Management, 14: 429-458.Kotler, P. 1994. Marketing Management: Analysis, Planning, Implementation, and Control. 8th edition.

London: Prentice-Hall International (UK) Ltd.Pettigrew, A.M. 1990. “Longitudinal Field Research on Change: Theory and Practice.” Organization

Science, 1 (3): 267-292.Pettigrew, A.M. 1997. “What is Processual Analysis?” Scandinavian Journal of Management, 13 (4):

337-348.Rosenau, M.D. Jr., Griffin, A., Castellion, G.A. and Anschuetz, N.F. 1996. The PDMA Handbook of New

Product Development. New York: John Wiley & Sons.Rothwell, R. 1992. “Successful Industrial Innovation: Critical Factors for the 1990s.” R&D Management,

22: 221-239.


Silverman, D. 2000. Doing Qualitative Research. London: Sage.Stake, R.E. 1994. “Case studies” Pp. 236-247 in N.K. Denzin and Y.S. Lincoln, eds., Handbook of

Qualitative Research. London: Sage.Tuttle, D.B. 1997. “A Classification System for Understanding Individual Differences in Temporal

Orientation Among Processual Researchers and Organizational Informants.’ Scandinavian Journal ofManagement, 13 (4): 349-366.

Wheelwright, S.C. and Clark, K.B. 1992. Revolutionizing Product Development: Quantum Leaps in Speed,Efficiency, and Quality. New York: The Free Press.

Wolf, R.A. 1994. “Organizational Innovation: Review, Critique and Suggested Research Directions.”Journal of Management Studies, 31 (3): 405-431.

Yin, R.K. 1994. Case Study Research: Design and Methods. 2nd edition. London: Sage.

Documents

Stage Model Research in the UK Fast Moving … · Stage Model Research in the UK Fast Moving Consumer Goods Industry Dr. Mark Francis ... FMCG, Product Development, Process, ... launch