Rising consumer expectations and pressure on shelf space left their mark on the high-risk and costly business of new product development last year. But for those with their eye on the big bucks, Sarah Dowding takes a look at what makes a long-term winner NPD must yield staying power New product development is a notoriously perilous and costly business because 90% of new products disappear within five years. Chris Morley, account director at Information Resources, says: "New product launches are expensive, risky and time consuming. However, the rewards for a successful launch can be huge, both financially and in terms of kudos." Product development needs clear strategies to create new and improved products to meet the needs of increasingly discerning customers. The escalating trend towards global markets and international competition means many companies have to review their product programmes. "The number of new launches was slightly down in 2000, reflecting a degree of rationalisation in the light of increasing pressure on shelf space," says David Jago of Mintel. More integrated communication and co-operation throughout the company is also needed in many cases, because nearly every department will take a role in NPD. Those who are involved in the NPD process need to think like consumers. If consumers fail to understand a new product or brand proposition immediately and instinctively, they don't buy it. Manufacturers must also wholly believe in what they do, because consumers are quick to realise when they don't and will lose faith in the brand or decide not to buy it. The product needs to deliver on the concept promise to be accepted by consumers. In the grocery sector, successful new brands usually peak in the 13-24 week period as opposed to 25-52 weeks for unsuccessful brands. Brand extensions or brands using existing names, such as Kit Kat Chunky, generally have twice the success of new names, and any product has double the chance of success when it is promoted in the first four to 12 weeks. Advertising quality and quantity matter. Advertising drives awareness, which drives trial, which, in turn, drives sales. New brands also need long-term support if they are to succeed in the long term. Criteria often used to judge success for a new product is either that it has a 2% category share or more than £1m in annualised sales. Growth categories tend to attract more new products and therefore more own label products. This is a Catch-22 situation because there is more reason to spend money in a growth category than an ailing one, and the growth becomes self-perpetuating. Health and convenience foods are at the forefront of new product development, because meeting the needs of time hungry consumers is at the top of the agenda. This impacts on all aspects of NPD, from packaging and ease of carrying to resealability and pack size. NPD in food is seeing smaller pack sizes or single serve items. Traditional meal times and occasions are disappearing. More "snacks" are coming onto the market ­ although the definition of a snack is changing. More foods are being developed as suitable for snacking and eating on the go ­ such as cereals and rice desserts. Hazlewood Foods has developed the Conewich, a cone shaped sandwich, which can be eaten with one hand ­ to satisfy the grazing and dashboard dining trends. NPD needs to be a faster process. Gone are the days when it could take six to nine months from idea to launch ­ or longer. Consumers' lives are changing more quickly and they expect to see these changes in their brands. Organisation and management skills become more important as development timescales become tighter. Good NPD is about understanding the subconscious drivers as well as the conscious motivators. Successful products communicate emotionally, not rationally. Many products are bought because the consumer wants to portray a certain image. Many car manufacturers, Apple computers and Toblerone chocolate have all succeeded on this rationale. Toblerone is an illogical brand - hard to break, difficult to eat and complicated to make but it is hugely successful, to the extent where the name on the packaging is irrelevant for people to understand the brand. Being first to market is no guarantee of success in the long term either. Some brands reap the benefits of being cautious and building on any weaknesses of the leader and are priced competitively. But many first movers do hold their lead, such as Pot Noodles and Mars Celebrations. For many companies, NPD remains a risk, but it takes a new product to establish the market in the first place. {{LEADING EDGE }}