Arnott’s Biscuits Limited's New Product Development

Arnott’s Biscuits Limited New Product Development
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1.0 Executive Summary
Arnott’s Biscuit Limited is a biscuit company belonging to Campbell Soup Company located in Australia that began in 1865. The company has carried out its operations for about 150 years and it is partly recognized as part of the Australian culture since most people have grown up eating the biscuit products made by the company.
The target market of the company is the middle class and the upper class with a prime target on the chidden who are under the age of 12. The packaging of the products made by the company are made in such a way that they can attract their target audience.
The target population of the company has remained for a long time and it also targets lovers of cookies apart from targeting the kids.
As indicated previously, the parent company of Arnott’s is Campbell Soup Group and therefore the company is headed by the CEO who reports to the president of Campbell Soup Group.
The company also has a non-domestic market which is outside Australia. It exports its products to about 40 countries. There are also different product lines which are manufactured by the company. The main product lines are;
* The Chocolate Biscuits- With the brand names such as Tim Tams, Wagon Wheels among others.
* Sweet Biscuits- Tiny Teddy, Fancy Favorites
* Crackers- Savoy, Flavored Crackers
* Savoury Biscuits- Shapes
* Crispbread- Salada
Table of Contents1.0 TOC \o "1-3" \h \z \u Introduction PAGEREF _Toc9459548 \h 32.0 History of Arnott’s Biscuit Limited PAGEREF _Toc9459549 \h 53.0 Key Issues Affecting Australia Biscuit Industry PAGEREF _Toc9459550 \h 64.0 New Product Development Model PAGEREF _Toc9459551 \h 74.1.1 The New Idea PAGEREF _Toc9459552 \h 74.1.2 Screening of the Idea PAGEREF _Toc9459553 \h 74.1.3 Concept Definition PAGEREF _Toc9459554 \h 84.1. 4 Strategic Analysis PAGEREF _Toc9459555 \h 84.1. 5 Testing PAGEREF _Toc9459556 \h 94.1. 6 Market Strategy PAGEREF _Toc9459557 \h 94.1.7 Actual Development of the Product PAGEREF _Toc9459558 \h 105.0 Recommendations and Conclusion PAGEREF _Toc9459559 \h 11References PAGEREF _Toc9459560 \h 11References PAGEREF _Toc9459561 \h 12Appendix PAGEREF _Toc9459562 \h 14
Introduction
The purpose of this business report is to present the development process of a new product by the company. The new product intends to get rid of the common health problems associated with the high intake of biscuits. The product will be having a lower concentration of calories and rich in high ingredients.
This report is also aimed at broadening the knowledge of new product development and marketing. In addition, the knowledge gained for the report can be used by other up and coming manufacturing companies in its preparation and evaluation of ideas and marketing strategies. The principles or theories used in this report include the new product development process and how the company followed all the steps up to the final production of the physical product (Pride et al., 2015, pp. 27).
The report was written in adherence to the concept of marketing environment of the company where the micro environment has a branch called marketing intermediaries which deals with how a company promotes, sells and distributes its products through different channels to the final buyer using supply chain management. Moreover, the theory of product promotion was used where the group decided to use social media and television commercials to promote its biscuits.
It begins by first exploring the key issues in the biscuit industry in Australia. After identification of the key issues affecting the industry, the report provides a solution to these key issues through the development of a new product. The new product development stages have been identified and extensively discussed in this business report. Recommendation and conclusion about the new product is the last part of the report.
History of Arnott’s Biscuit Limited
Arnott’s Biscuit Limited began in 1865 by William Arnott who was an immigrant to Australia. He began it as a small bakery that supplied biscuits pies to the local people and the crews of the ships that docked at the port nearby CITATION Cit16 \l 1033 (Citect, 2016).
In 1997, Arnott’s was acquired by Campbell Soup Company which was a shareholder of the company since the 1980s. Campbell Soups Company is located in the US but the manufacture of the biscuits was carried out in Australia CITATION Cam10 \l 1033 (Campbell , 2010).
Arnott’s is regarded as the biggest food companies in Asia Pacific Region, Currently, the company has over 4,300 Australian employees. It is also estimated that over the past century, more than 50,000 Australians have been provided employment opportunities by the company. Moreover, being the leading manufacturer of biscuits and snacks in Australia, a research done in 2008 shows that the company’s average revenue is $5.2 billion (Company Website).
The company sources the ingredients used to manufacture the biscuits from the Australian farmers. The biscuit products manufactured by the company are regarded as part of the Australian culture. In fact, when Arnott’s was acquired in 1980 by Campbell Soup Company, there was controversy as most if the Australians did not like the idea. They thought that the products of the company would lose their Australian identity as they would be ‘Americanise’ the products.
The company continues to expand its business operations in a bid to get market outside Australia. According to the company’s fiscal 2018 annual report, the company reflected significant actions taken by the company over a period of two years in to achieving a 10% increment in its net income of $8.685 billion, a $0.86 increase in earnings per share and an increased cash flow of $1.305 billion from $1.291 billion in 2017.
Figure 1: Key financial performance of Arnott’s Company
Figure 2: Financial performance of Campbell Soup Company, a company that owns and subsidizes Arnott’s Company.
Key Issues Affecting Australia Biscuit Industry
Over a period of five years, the Australian Biscuit Manufacturing Industry had been facing numerous challenges in its overall production. Firstly, the industry was facing the problem of high imports of products and raw materials especially biscuits, a product that they can make locally (Richardson, 2018, pp. 4). Australia was becoming a net importer of biscuits with its import count growing to 2.4% in 2011, a figure that satisfied a total of 30.8% of the country’s domestic demand, hence calling for more imports. In the following year, the annualized import count rose to 5.8% and a total of $295.5 million, rendering the country’s biscuit industry, relatively small. In this context, New Zealand was the main exporter of biscuits and snack food to Australia delivering a total of 95.5 million tons making this one of the largest imports of Australia since alone covered 14% of total exports. Other major exporters are China, the United States of America then Hong Kong.
Figure 3: this figure represents major exporters of biscuits and snack food in to Australia and the total amount of money spent on the imports.
Secondly, there was a massive decline in the per capita biscuit consumption that forced the government to alter its budget due to less revenues from biscuit manufacturing industries. The reduction in consumption was because people started using other snacks due to health problems related with the amount of sugar present in biscuits, hence opting to fresh fruits and nutrition bars. This was a general shrink of the biscuit manufacturing industry of 1.95% and an annual revenue reduction of $768 million.
Figure 4: A physical representation of the general overview of the biscuit manufacturing industry in Australia.
Figure 5: A figure representing the rate at which people in Australia are conscious about their health, hence opting to other snack options.
Figure 6: Figure showing how competitive the confectionery industry is and why people are opting to other snack options.
Thirdly, due to declining demand, the companies were experiencing huge loses and falling profit margins, a notion t...