Business 2000 - 6th Edition: Developing products is certainly not easy as consumers view anything new with suspicion and will approach only with caution, writes Colm Ward

Consumers can be a fickle bunch. On one hand, they are always on the lookout for innovative products while, on the other, they tend to view anything new with suspicion and will only approach with caution.

It is the job of product developers to anticipate consumers' whims, to somehow tap into needs that people often don't know they have and create a product that meets those needs. It can be a difficult task - and expensive if it is not done right.

Product development is not simply a matter of creating an item and putting it on the shelves in the hope that it will find a market. It is a combination of market research, testing, manufacturing, branding and promotion.

Depending on the nature of the product and its target market, one or more of these activities will take precedence.

In many cases, product development involves creating new varieties of existing products. As well as boosting sales, this can also regenerate consumer interest in the brand.

At Cadbury Ireland, new product innovation is referred to as "big-I" innovation, while the development of new varieties of existing products is referred to as "little-i" innovation, according to Ms Lee Ireland, marketing manager. For example, the introduction of new varieties of the well-known Dairy Milk brand would be a form of "little-i" innovation while the introduction of a completely new brand would represent "big-I" innovation.

In the fast-changing confectionary market, companies have to be on the alert constantly for opportunities to develop market share.

"We would always be looking at our category groups versus our competitors," says Ms Ireland.

New product ideas come from a number of sources but generally have their roots in consumer trends. For example, Cadbury recently introduced Boost Guarana in an attempt to tap into the market for energy-giving snacks.

It is a responsibility of all the marketing staff at Cadbury to look at ways to develop new products, says Ms Ireland.

When someone comes up with an idea, a business case is developed to examine if the new product will be viable. Then a project team is created, with responsibility for bringing the concept through to development. This team would typically have representatives from a number of different sections of the business. "We would be big believers in getting the key stakeholders involved up front," she says.

It is an accepted fact among marketing professionals that it is much harder to change people's buying habits once they have passed the age of 35. For that reason, a great deal of effort is made in attracting consumers in the 18-30 age group. They tend to have more disposable income and are less set in their buying ways.

This is the audience that Coca Cola Ireland set out to capture with its new energy drink, BPM Energy. Designed to tap into the growing market for energy drinks, BPM is the result of 18 months of development involving extensive market research and consumer testing.

"The start of the 18-month process was when we spoke to consumers to get an understanding from them of what energy meant to them, particularly in relation to energy beverages, and also to get an understanding of how to fit it into their lifestyles," says Ms Aedamar Howlett, brand manager for Fanta, Sprite and Lilt, and one of the team that designed BPM.

The research indicated that there was a potential market for a new energy drink for people aged between 16 and 24, particularly for males in the 18-21 age group.

A "cross-functional" project team was formed, composed of people from a number of different sections of the company, including marketing, technical, finance and operations. They met on a regular basis to examine the progress being made.

Following the initial research in which a brand concept was identified, Coca Cola's research and development facility in Brussels was given a brief that broadly described the requirements for the new drink. They developed different varieties according to these instructions, which were tested with consumers.

"Each formulation that we tested had been designed specifically for the brand and designed specifically for the particular variant of the brand," explains Ms Howlett.

Finally, the developers settled on two varieties that would be introduced onto the market - BPM Energy Hydrate and BPM Energy Focus.

"The brand concept was the first thing that was developed and tested," she says. Once the developers had settled on this, they began to look at other areas, such as packaging and the identity or "look" of the product. These were fine-tuned as the development process went on.

To coincide with the introduction of the new product in January of this year, Coca Cola Ireland undertook the biggest marketing campaign in its history, involving advertising on television, cinema, radio and the internet, public relations, free samples and in-store promotions.

The BPM product is unusual within the Coca Cola organisation in that it was developed exclusively for the Irish market. In general, however, the development of new products or the modification of existing ones is an ongoing challenge for producers.

Coca Cola has a policy of "continuous innovation" with its core products, which involves modifying the packaging and developing new variants on the brands. There is also a separate new brands department that is concerned with the development of new products.

While the development of a new product can take up to 18 months, the work does not stop there. Once a product has been launched on the market, it undergoes constant monitoring to determine what impact it is having.

For Coca Cola, product tracking is carried out on all products. "We have continuous tracking of all of our brands and BPM Energy is no different. It will be included in the continuous tracking we would be doing on all brands, interpreting imagery and awareness as well as tracking performance," says Ms Howlett.

The Business 2000 column provides information for business studies teachers and students on the current business climate.

It is intended to complement The Irish Times Business 2000 multimedia resource package developed by Woodgrange Technologies, which is sent to all second-level schools and selected third-level institutions.

Business 2000 is published every Friday in the Business This Week supplement. The teachers' support desk at Woodgrange Technologies can be reached at 01-4352514 or by e-mail at: business2000@woodgrange.com.

Companies participating in Business 2000 are: the Irish League of Credit Unions, Bord Fáilte, Enterprise Ireland, Coca-Cola Ireland Ltd, Dell Ireland, Musgraves, the Pensions Board, NTR, AIB, Guinness UDV, Masterfoods Ireland Ltd, Health & Safety Authority, the Office of the Revenue Commissioners, Bus Éireann, Danone, the National Centre for Partnership and Performance, CRH, Department of Health, InterTradeIreland, Beiersdorf, the Department of Finance, the National Development Plan, Cadbury Ireland, the Irish Sports Council, GlaxoSmithKline, USIT and the Food Safety Promotion Board.