VISHWA VISHWANI SCHOOL OF BUSINESS

Product & Brand Development

A Mini Project Report on New Product Development

Submitted to

Dr. Bharat Bhushan Singh

Submitted By

V. Rojashree
T. Harish
J. Venkatesh

Report on NPD - Spoonees

SPOONEES

CONTENTS
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Indian Snack Industry____________________________________________01

New Product Development________________________________________08
New Product Idea_______________________________________________11
Product Concept________________________________________________12
New Product Strategy - User-Centered Design (Ucd)___________________13
Marketing Mix__________________________________________________13
The Organization Hrv Industires Pvt Ltd.____________________________14
Finances______________________________________________________15
Marketing Plan With Clarity On Marketing Mix_________________________15
Commercialization Plans__________________________________________16
Long Term & Short Term Goals For The Product_______________________16
References____________________________________________________17

Report on NPD - Spoonees

INDAN SNACK INDUSTRY

An Overview Snacks 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 savouries are sold across India. The branded snacks are sold at least
25% higher than the unbranded products. Savoury 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.

The industry has 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 much smaller at Rs 2,200 crore, which is what
makes it so attractive to food Companies that are looking at bigger shares. In the
branded snacks market, to get down to basics, Frito Lay commands a share of 45%,
followed by Haldirams at 27% and ITC at 16%. 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%. Big players like McChain
Smiles and NP Foods have also entered into Indian potato snack industry in 2005.

Report on NPD - Spoonees

Products covered

Potato chips

Savory snacks

Snack nuts

Popcorn

French fries
New Delhi: According to a study by McKinsey&Co, the Indian food market will grow two
fold by 2025 with the rapidly growing Indian economy and improving lifestyles of Indians
contributing in a big way to this growth. Quoting the study by McKinsey&Co, a report by
the US Department of Agriculture stated "The market size for the food consumption
category in India is expected to grow from US$ 155 billion in 2005 to US$ 344 billion in
2025 at a compound annual growth rate of 4.1 per cent."
The Indian snacks market is worth around US$ 3 billion, with the organised segment
taking half the market share, and has an annual growth rate of 15-20 per cent. The
unorganised snacks market is worth US$ 1.56 billion, with a growth rate of 7-8 per cent
per year. There are approximately 1,000 types of snacks and another 300 types of
savouries being sold in the Indian market today. Potato chips and potato-based items
are the most popular products with more than 85 per cent share of the salty snack
market, the report said. In the organised potato chips market, Pepsi and Haldiram's are
some of the leading players.
There is a big market for snacks in India as urban Indian consumers eat ready-made
snacks 10 times more than their rural counterparts. Indians in the western regions eat
the maximum amount of snacks, followed by the people in northern region.
The Indian snacks market is experiencing rising demand due to various driving factors
which in turn is providing immense opportunities to manufacturers to grow and operate
in the market lucratively.
The Indian food and beverage sector is huge and highly competitive in nature. The
industry comprises of several sub-sectors such as fruits & vegetables, meat & poultry,
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dairy, marine products, grains and consumer foods. Snack is one of the major segments
of the packaged food division, which comes under the broad category consumer foods.
Though the snacks market in India is dominated by the unorganized sector, the
organized sector has shown remarkable growth in terms of market share in the last few
years.
The report provides a snapshot of the Indian snack industry which has witnessed
several changes since 1995. In the initial years, the market was dominated by two
players - traditional snacks player Haldiram and Uncle Chips manufacturer Amrit Agro.
Later on, with the entry of global beverage and snacks player PepsiCo, the market
dynamics changed completely. Now, the market is dominated by PepsiCo with its wide
range of product portfolio. The other major players include Parle Agro, ITC, Parle
Products, Balaji Wafers and Parle Wafers among others. A number of regional players
have also entered the market in the last few years and are giving tough competition to
the big players.
The snacks market is classified into two broad segments - Western and traditional
snack segments, wherein western snacks enjoy more popularity in comparison to the
traditional snacks. Moreover, the western snack segment is dominated by large number
of MNCs and organized snack manufacturers.
There are certain factors that predominantly work towards enabling the sector to grow in
the likes of higher disposable income that aids in greater spending power by
consumers, rapid urbanization which leads to busy lifestyle and subsequent inclination
of consumers toward packaged food products and aggressive marketing campaigns by
all the players to break the product clutter and attract consumers toward their brand. In
addition to these, the other factors which are contributing towards rapid growth of the
industry include growing working women population, fast expanding retail network and
the convenience factor associated with snack consumption.
Though there is no specific regulation pertaining to snacks, quality standards laid by
FSSAI has to be followed by the industry players. Various government policies that
have been formulated for the food processing sector such as FDI, tax benefits and
export promotions are applicable for the snack category as well.

Report on NPD - Spoonees

To sum up, the Indian snacks industry is a stable market at present and has strong
growth potential in the future years.

We talk about the evening in India, various yummy and regional snack foods do pop into
the mind of Indian people. Because they have fervent love for food, especially local &
home made snacks which are eaten at any hour of the day. Advent of snack industry
has widened the choices which enable people to snack discreetly with absolutely no
compromise on palatable taste. Though snacking is rather a new segment of the food
industry and still at an embryonic stage.
Globalization has brought about radical changes in the snacking pattern, liberalization,
mall culture and urbanization have laid profound impact on dietary pattern of the people
across the nation, resulting into the escalating intake of processed and fast food. Wide
expansion of nuclear families has also brought forth a quantum leap in demand of snack
foods which are hygienic, nutritious, portable and substitute for hot [Link] is
leading the snack industry to a great height. It is a vehement temptation for healthy
ready to eat snacks that urge the people to gobble up occidental snacks like Pizza,
Burger, Chips, and French Fries which have conquered the palate of people. Thus, the
snack industry has opened the floodgates of opportunities in the food processing
market.
If we look at growth rate of the snack industry is really stupefying, and is also
prognosticated that production of branded snack food grows at annually 20% in
upcoming 2 years. The Indian snack market has got at worth of $ 459 million in 2006, is
one of the largest snack markets in the Asia-Pacific region, and accounts for three per
cent of the total Asia-Pacific snack market revenue. Australia, China, Japan and South
Korea are the only countries which have won greater revenue from the sale of snacks
than India.
Potato chips are by far the largest product category within snacks and holding the
largest share about 85% of the total market revenue. The branded chips market has

Report on NPD - Spoonees

been prospering at a fast pace of about 20 to 25 per cent annually and its production is
forecast to be 6500 tons alone in India. Snack nuts and savory snacks are following the
suit, but at present popcorn and other flavored corns have yet to make headway in the
Indian market.
The Indian snack industry is awfully fragmented and extensively unorganized, is a
matter of deep concern. Home made snacks and grubs sold by local vendors are still
reining supreme in the market that is replete with cheaper products such as Potato and
Banana Chips, Pizza, and Fun Food for attracting the consumers and suiting the pocket
of lower income groups. So in order to unify the Food Processing Industry, corporate
growth strategy and implementation of food safety and standards act are needed so that
it can expand the production & export base.
The prospect of the industry is pretty promising, because big names of the snacks
business have stepped into the Indian market. Expanding and flourishing snacks market
are attracting new players as well to venture into this industry. And well established
companies are offering several different variety of healthful and nutritious snack options,
and snack parlors & fast food restaurants are springing up all across the country. All
these augur great for the snack industry in India.

Source: [Link]

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NEW PRODUCT DEVELOPMENT

New product development (NPD) is the complete process of bringing a
new product to market. A product is a set of benefits offered for exchange and can be
tangible (that is, something physical you can touch) or intangible (like a service,
experience, or belief). 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 and marketing analysis. Companies typically see new product
development as the first stage in generating and commercializing new product within
the overall strategic process of product life cycle management used to maintain or grow
their market share. Improving and updating products is an ongoing task as consumer
needs and wants continuously change. A failure to develop products could result in a
reduction in sales if consumers decide to buy competitor products. The eight stages of
new product development are described below.

Report on NPD - Spoonees

Stage 1: Idea Generation
New product ideas have to come from somewhere. Organizations get their ideas for
NPD from the Sources include:
Market Research
Employees
Consultants
Competitors
Customers
Distributors and Suppliers
Stage 2: Idea Screening
This process involves shifting through the ideas generated above and selecting ones
which are feasible and practical to develop. Pursing impractical ideas is expensive and
a waste of resources.
Stage 3: Concept Development and Testing
The organization may have come across what they believe to be a feasible idea,
however, the idea needs to be taken to the target audience. What do they think about
the idea? Will it offer the benefit that the organisation hopes it will? or have they
overlooked certain issues? Will there be a demand for the product? Note the idea taken
to the target audience is not a working prototype at this stage, it is just a concept.
Stage 4: Marketing Strategy and Development
How will the product/service idea be launched within the market? A proposed marketing
strategy will be written laying out the marketing mix strategy of the product, the
segmentation, targeting and positioning strategy and expected sales and profits.

Report on NPD - Spoonees

Stage 5: Business Analysis
The company has a great idea, the marketing strategy seems feasible, but will the
product be financially worth while in the long run? The business analysis stage looks
more deeply into the Cash flow the product could generate, what the cost will be, how
much market shares the product may achieve and the expected life of the product.
Stage 6: Product Development
At this stage the prototype is produced. The prototype will undergo a serious tests, and
will be presented to a selection of people made up of the the target market segment to
see if changes need to be made.
Stage 7: Test Marketing
Test marketing means testing the product within a specific geographic area. The
product will be launched within a particular region so the marketing mix strategy can be
monitored and if needed modified before national launch.
Stage 8: Commercialization
If test marketing is successful the product is ready for national launch. The following
decisions regarding the national launch need to be made

timing of the launch

how the product will be launched

where the product will be launched

will there be a national roll out or will it be region by region?

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SPOONEES - THE NEW PRODUCT IDEA

Name of the Product: Spoonees
Product Category: Snacks/RTE
New Product Idea:
The idea is to have a time pass snack product to eat shaped as a spoon, by which a
person can add healthy nuts or fruit pieces or any other eatable so that he can spoon it
out and eat as healthy snack item.

Fig. 1. Snoopee Packet

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Fig.2.1 & 2.2. Spoonee shells

PRODUCT CONCEPT
The New Product Concept materializes the Idea of the New product. This is helpful to
develop the marketing and engineering details of the New Product.

Investigate intellectual property issues and search patent databases

Who is the target market and who is the decision maker in the purchasing process?

What product features must the product incorporate?

What benefits will the product provide?

How will consumers react to the product?

How will the product be produced most cost effectively?

Prove feasibility through virtual computer aided rendering and rapid prototyping

Definition: A Product that satisfies the hunger and health needs of a customer as a
time pass snack.
The Spoonees is a snack item which can be eaten in several ways. You can eat it just
like that, or you can take a spoonee of fruit slices along with it or you can have dry fruits
or nuts or anything that you like to have with the spoonees. It allows wet items as well
as dry items. You can use spoonees as an ingredient in your daily salads or chats. You
can experiment new tastes by using spoonees.

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NEW PRODUCT STRATEGY - User-centered design (UCD)

User-centered design (UCD) is a process (not restricted to interfaces or technologies)
in which the needs, wants, and limitations of end users of a product, service or process
are given extensive attention at each stage of the design process. User-centered design
can be characterized as a multi-stage problem solving process that not only requires
designers to analyse and foresee how users are likely to use a product, but also to test
the validity of their assumptions with regard to user behaviour in real world tests with
actual users. Such testing is necessary as it is often very difficult for the designers of a
product to understand intuitively what a first-time user of their design experiences, and
what each user's learning curve may look like.
The chief difference from other product design philosophies is that user-centered design
tries to optimize the product around how users can, want, or need to use the product,
rather than forcing the users to change their behavior to accommodate the product

MARKETING MIX
Product:
The product is featured as spoonees, which is a Snack item, that can be eaten along
with additional ingredients to add taste and health.
The product as a snack item gives a new experience of snak or timepass eateries.
It is in golden yellow colour, with a single flavor so far.
The company is thinking to launch a new series of different flavours in the next quarter.

Price:
The price for a 100 gm packet is Rs.20
The price will be same for all the available flavors of spoonees.

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Place:
It will be available in every common store, shopping malls, cinema theatres.

Promotion:
A World wide promotional campaign is already started.
Other elements like sponsoring, TV commercials, internet are also in our list of priorities.

THE ORGANIZATION HRV Industires Pvt Ltd.

The roots of the organization are from Rural India, where the Organizations head office
is at Hyderabad, Telangana State, India. The Chairman of the Organization is Mr. J.
Venkatesh, and the key people are Mr. Harish Chandra, MD and Ms. Rojashri,
President.

The company owns automated kitchens in Hyderabad, Warangal and

Visakhapatnam. The source materials are gathered from Farmers at a decent pay.
There around 200 employees working full time in the company.
We would like to expand the company to other states in North & South India.

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FINANCES
The Companys majority stake is owned by the three directors equally. Financial
operations are undertaken by Ms. Rojashree, The group President. We practice a very
efficient and effective way of financial dealings. The accounts are maintained and
audited. A major proportion of Stake is held by Mr. J. Venkatesh, Chairman of the group.
Financial operations are undertaken by Ms. Rojashree, The group President. We practice a very
efficient and effective way of financial dealings. The accounts are maintained and audited.

Initial Investment:

2 Crores ([Link])

Manufacturing Unit Costs: 38 %(along with Machinery)

Budget for purchasing Raw Material : 12 % for Production
Salaries and Operational Expenses : 20%
Marketing: 20%
Working Capital : 10%

MARKETING PLAN WITH CLARITY ON MARKETING MIX

Target Market: The Target Market is all snack eaters segment. Profoundly, the Middle,
Upper Middle and Lower Classes of People. Children and Youth are our main primary
Target.
Competition: The Competitors are all the Snack and RTE product producers. Namely,
Pepsico, Parle Agro, local Industries and all other snack selling companies.
Promotional Strategy: Extensive and Intensive Advertising through all the available
media. Personnel and Non Personnel promotions throughout the country positioning
the Product Time Pass Snack.

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UVP:
The Unique Value Proposition of our product is its Taste & usefulness as a time pass
snacks. The Taste of the Snack is distinctive and Indian. The spices from different
regions of India are brought and blended nicely to give an exotic and hot taste.
Positioning:
We positioned our Product as Snack Eatery with health quotient. We also try to
penetrate the market with our product stating as Snoopees are can be a dietary snack
meal in the mornings. Could be a replacement for the breakfast.

COMMERCIALIZATION PLANS
We commercialize our product in all the cities, secondary cities, towns and villages. We
want that, a common man from rural India should know about our product.
Our product will be available in all super markets, convenience stores and kirana and
General Stores.

LONG TERM & SHORT TERM GOALS FOR THE PRODUCT:

Long Term Goal: To be the Market Leader in Snack items segment. And to expand to
a large institution with a product portfolio of more than 250.

Short Term Goal:

To bring a new breakfast revolution in the dietary life of people, where health is
given the high importance, where people look for Spoonees as an alternative for a
breakfast.

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References:
[Link]
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[Link]
[Link]
[Link]

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