Product development pays off during recession
February 19, 2010
by Bryan Salvage
KANSAS CITY, MO. – While the recession continues, many meat and poultry processors are agonizing over whether or not to invest resources in new product development efforts. One expert insists they should and that the benefits will be realized immediately, but more importantly in the future.
“Studies show companies that continue to invest strategically in both new product development and advertising during a downturn tend to increase their overall ability to recover, survive and profit in the future,” said Alan Turover of The Turover Strauss Group Inc., Springfield, Mo. As an expert on business strategies, trend identification and new product developments, Mr. Turover told MeatPoultry.com the question of whether or not to invest in R&D is common during economic downturns. Fortunately, history provides some pretty solid evidence for providing an answer – although that answer isn’t always comfortable for struggling companies to hear, he said.
New product development activities must be on target to succeed. History provides examples of this theory. “At the beginning of the depression, Post and Kellogg’s were roughly equally dominant in the breakfast cereal market,” Mr. Turover said. “Post answered your question [should meat and poultry companies remain active in new product development in this down economy] by cutting back on advertising and new business investment. Kellogg’s took the opposite approach, investing significantly in both advertising and new product development.
“The result was that Kellogg’s business soared and they have dominated the cereal category ever since,” he continued. “During that same general time period, Chrysler targeted Plymouth as a low-end car and was able to surpass Ford’s second-place automaker spot.”
Kraft also created an all-time best-seller by investing in Miracle Whip in 1933 and other major companies, including Apple, Proctor and Gamble, and Texas Instruments have created market changing successes by investing in new products during down periods, Mr. Turover said.
“Our own experience as an innovation, concept and development company in the food and beverage Industry is showing us that the industry leaders are not just blindly sticking with their old new product strategic plans,” he added. “They are requesting us to do ‘innovation tune-ups’ so they will be in synch with the current economic situation. Then, they are moving full-speed ahead to implement those revised plans.
“So, there is every reason to believe that strategically targeted new product efforts will pay dividends to meat and poultry processors,” Mr. Turover concluded.