Creating a market
A Bernard Matthews case study

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Page 2: Product development

Firms may try to reduce their dependency on one product because of variations in demand which can be both seasonal and cyclical. The market may have become too competitive or merely saturated. The demand for some products, those with higher income elasticity, is likely to be more adversely affected by a downturn in the trade cycle than others.

Product development can be seen as a method of generating internal growth, often undertaken when the opportunities for organic growth of the core business appear exhausted. Developing new product lines enables a firm to find new applications for its expertise and resources. If successful, this allows the firm to spread the risk and grow, but it must also be aware of harming its core business through a misunderstanding of the new market, redirecting too many resources and the possibility of diseconomies of scale.

Resources audit

Having undertaken a full resources audit which examined the physical, human and financial resources as well as those intangible assets such as customer goodwill, Bernard Matthews decided to implement the product development strategy. The Company already had a number of strengths on which to build i.e. a strong brand identity and an easily recognisable brand name and it was hoped that consumer loyalty would remain strong. Bernard Matthews Plc is unusual, it is one of the few firms in the UK that can claim to be a fully vertically integrated company, controlling all the production processes from the breeding and rearing right through to the end product. This means that Bernard Matthews products bought in a supermarket could be traced right back to the factory packing line and from the factory, it is possible to trace the farm, egg or parents of the egg. This gives the company complete control over the quantity and cost of all its raw materials, but most importantly, it allows a complete guarantee of quality.

The firm already had a well developed distribution network and all the necessary contacts within the food retailing industry. This core of competences and skills within the company, both managerial and technological could be employed and further developed. The firm possessed good internal communications which would allow for the smooth introduction of new products. However, possibly the most important advantage that Bernard Matthews possessed, was a company philosophy that was very much market orientated, tailoring products to the needs of the customers. The management kept a close eye on market developments for any opportunities.

Bernard Matthews | Creating a market