Page 1: Introduction
In the modern world, many consumers have opportunities to buy and use an ever-increasing range of goods and services. Firms continually develop new products which, more often than not, improve on those already available. The most innovative businesses will continually seek out new opportunities for product development with a view to satisfying consumer needs, improving human welfare and keeping the company strong. This is very true of the nutrition industry, where innovative solutions are required to meet nutritional needs and offer health benefits. Often these problems and needs involve the most vulnerable sections of the community eg the very young and people with long term health problems.
In developing new products, it is important to identify ways of meeting real consumer needs. Firms that supply the needs of the nutrition market know that, in order to succeed, they must offer products that are demonstrably beneficial at prices that consumers (which includes hospitals etc) can afford. This case study focuses on the way in which one of the world’s leading nutrition companies used a science-based research approach to develop a healthy milk product for babies and toddlers aged between 6 and 24 months that rapidly created a new market segment.
The product, Next Steps, is made by Cow & Gate. It is a milk for babies over 6 months for use as part of a mixed diet. It is not a substitute for breastfeeding, which Cow & Gate believes is best for babies. Next Steps contains valuable energy, plus the minerals and vitamins such as iron and vitamin D that cows’ milk cannot provide in the right balance to meet the growing needs of the child.
Numico and Cow & Gate
In many industrial sectors, there has been a tendency in recent years for companies to merge to form a bigger grouping. In the nutrition industry, large companies often control a number of related businesses with linked sets of products. In many instances, a large company has purchased another company and, in doing so, has become the owner of famous brand names that it can develop. Numico is a very large company whose shares are traded on the Amsterdam Stock Exchange. This case study focuses on Cow & Gate, which is a well-known brand of one of Numico’s subsidiary companies.
Numico provides nutritional products to meet a variety of needs. They are used by different groups of consumers, including:
- infants and toddlers
- people with specialised nutrition needs
- health-conscious adults looking to maintain a healthy lifestyle through using nutritional supplements.
In Europe, Numico is the market leader in infant nutrition with a very extensive product range. Cow & Gate is a familiar brand name to many mothers, because of the leading role that the company and its products have played in infant feeding over many years.
Page 2: Ethical business
Ethics are concerned with the dividing line between what is right and what is wrong in relation to behaviour. Business ethics are concerned with making sure that the actions of an organisation are based on morally acceptable behaviour. Within nutrition, ethical considerations include how companies use their patents and the quality of advice that they give to potential customers. Numico is driven by a sense of ethics because:
- it operates in a sector concerned with meeting health needs
- it has always placed business ethics as a leading priority.
Numico believes that access to proper nutrition at every stage of life is vital to good health. Numico also believes that it is vital for consumers and health professionals to know as much as possible about nutrition and the nutritional benefit of its products, in order that they can make informed decisions. Many of Numico’s customers are children and adults with special needs in relation to their health and welfare. All parts of Numico therefore give the highest priority to meeting customer needs, to health and safety, and to providing optimum quality standards. For example, Numico requires its suppliers to conform to strict environmental and quality guidelines.
Page 3: New product development
Product development is the process of moving on products from the ideas and research stage to a final product ready to be launched on the market. Many companies develop products on the basis of customer market research. They discover:
- what customers are currently buying and why
- what products customers would like to see available that are not currently available
- how existing products might be improved.
For the nutrition industry, this type of approach to developing new products does not go far enough. This is because development to improve human welfare needs to be based on scientific research and on clinical testing as well as on consultation with consumers and health professionals.
Nutritional science at Numico
Numico’s relationships with the scientific and health communities are essential to its business. The company’s main nutritional research centre is in Wageningen, the ‘cradle of food technology’ in the Netherlands. The centre is one of the most important in Europe in the area of nutrition and nutritional components. Research focuses chiefly on two key questions:
- How does a particular nutritional process actually work?
- What effect do products that use this process have on human organs?
Through research, companies aim tofurther promote health through the development of high-quality products. Numico uses science and research to develop new products to help those most in need as well as to produce health supplements that help people to enjoy a healthier life.
Page 4: Responding to the needs of the customer
The success of any new product depends very much on just how well its producer has understood and responded to the needs of the final customer. Cow & Gate is particularly well placed to be successful because the depth of the scientific research carried out at Numico laboratories supports the usual market research so effectively.
Developing any new product involves a number of steps. The first is to identify a need for a new product. It is common in most countries for mothers to start feeding cows’ milk to their infants too early. Growing medical research indicates that a fortified formula or breastfeeding plus vitamin/iron drops are more appropriate to meet the nutritional needs of infants towards the end of their first year and beyond. This has led to the Department of Health recommending that babies under one year of age should not be given cows’ milk because it is too low in iron and other important nutrients.
Through its ongoing dialogue with mothers, Cow & Gate knew that mothers who bottlefeed were keen to change feeding products as their infant’s needs changed and baby developed physically and mentally. In many instances cows’ milk was being introduced into babies’ diets before they reached one year of age. There was a clear need for an alternative to cows’ milk to deliver energy and nutrition in the latter stages of an infant’s first year and beyond.
Having identified a need, Numico commissioned scientific research to try to identify a solution to this nutritional problem. At the same time, Numico held detailed discussions with mothers to understand usage and attitudes towards formula and cows’ milk late in their infants first year. Having come up with a product formulation it was tested for nutritional quality and safety. Practicality of use of the product was also assessed and results of these tests were used to develop product usage instructions. Preparing the product for launching to the market also involved carrying out market research to find out:
- the ideal form of the product – this includes packaging design
- how best to position and promote it
- the most appropriate price
- where best to place the product eg supermarkets, chemists.
The end result of all this activity was Cow & Gate Next Steps.
Page 5: The product
Cow & Gate Next Steps is a thicker, richer, satisfying milk drink for when bottlefed babies begin to outgrow follow-on milks and need to progress. It can be used from six months as part of a weaning diet. It is specially formulated to be nutritionally suitable for growing babies and is better for them than cows’ milk because it is:
- higher in zinc, iron and vitamins A and D
- lower in protein to be more suited to a baby’s kidneys
- higher in essential fatty acids for growth and development
- has added selenium and beta-carotene (important anti-oxidants) to help protect body tissues.
A successful launch of any new product is only the starting point for a product’s continuing success. The product has to go on from there. Next Steps quickly established a new market segment known as toddler milks. This was highly encouraging to Cow & Gate because it demonstrated the worth of meticulous scientific research designed to meet an identified market need. However, 18 months of strong sales is not enough. It is also important to ensure the product’s long term success. This is best achieved by listening to customer requirements and then making ongoing improvements to the product or packaging in the light of these evaluations.
Once the product was up and running, Cow & Gate set up a series of focus groups as a form of qualitative market research to find out about customers’ perceptions of the product. These focus groups consisted of mothers who were using or who had used Cow & Gate Next Steps. They were encouraged to talk about how they used it and what they saw as its strengths and weaknesses. Their comments have enabled Cow & Gate to identify ways to improve the product still further.
Cow & Gate has also monitored the product’s success through the traditional method of analysing its market share, which is often the best indicator of consumer satisfaction. Results to date have been excellent! Next Steps has been well received by parents and is proving to be an invaluable addition to the options on offer to parents who choose to bottlefeed.
Page 6: Conclusion
Within the nutrition industry, businesses have a duty to develop products that match consumer needs as fully aspossible. This case study provides a good example of new product development that combines the strength of scientific research with an ongoing understanding of consumers’ requirements.
Numico believes that breastfeeding is best for babies and knows many mothers continue to breast feed their infant beyond six months of age. However, some mothers are unable to breast feed or choose not to do so and elect to bottle feed instead. Research shows that some mothers introduce cows’ milk into their infant’s diet too early, against the guidelines of the Department of Health. Cow & Gate has been able to draw on extensive scientific research to provide a viable alternative to cows’ milk in the latter half of a baby’s first year and beyond. Having developed an innovative product, Cow & Gate is looking to improve it continually with the help and advice of consumers and to the benefit of everyone concerned.
Cow & Gate | Innovation in infant nutrition