The Research and Development Department of a Business
The work of research and development involves developing new products
and improving current ones through various forms of research. New
products and improvements to current products are needed to meet the
requirements of customers, taking into consideration changes in
consumer demand, seasonal sales changes, and the availability of new
materials and technology. The marketing department
information about changes in consumer demand and the requirements of
customers. The research and development
department must also be aware
of new materials, technology and products that affect the customer's
requirements and possibly the future of their customers needs. For
example development within the music industry has moved it forwards
with the development from audiocassettes audio CD-ROMs.
New technology can also allow a company to manufacture a product more
efficiently to meet consumer needs and demand. Research is also vital
as it provides information for the development of products
Also research and development can be split into sub functions, 2 of
which are product research and product development
, which are linked.
Text Box: Over 90% of previous ideas are abandonedHere is a rough
drawing to show how the product research and product development work
together on improving products.
Text Box: Can help companyâ€™s plan
Text Box: Market research, to discover consumer needs and thoughts
Text Box: Product research, trying to develop new ideas for goods and services
Text Box: May lead to
Text Box: Product development, new goods and services to meet consumersâ€™ needs
Research and development is very expensive and can be very time
consuming for many businesses to be see positive results from it, even
though this can be the case most of the time most businesses invest
greatly in research and development, some companies put millions into
their research and development departments. Some of the main reasons
* They gain an advantage over rivals
* Developing new and better products for customers
* Allows them to assess how they're products are doing
* Businesses may find that there are cheaper ways in producing
* Research and development also allows better products to be
produced but at the same price for making them, so meaning the
company can raise prices for that product
Research development also has its risk. Even though research and
development has been carried out to its fullest there is no guarantee
that the strategy they have produced will work, meaning money can go
to waste from providing money for that research and development
project and wasted end products. This maybe due to consumer needs
changing all the time or just the industry is adapting to quickly for
that business. Some problems with research and development are that:
* Over 90% of new ideas fail during the development stage.
Businesses may invest heavily into their research and development
and yet receive no positive results from that
* Other businesses may copy ideas and receive more success from
doing that than the other business is
* Some ideas are not used to there full potential and incorporated
into the product
For every business research and development is a vital factor to its
success or failure and also successfully implementing research, which
they have gathered into their products to ensure that they have
produced the best products available.
Research and Development,
McDonalds recently has come upon some hard times, coping with changing
trends within their industry and newer and fresher ideas coming from
rivals. McDonalds in recent since the enlargement of such rivals like
Subway McDonalds has invested heavily in its research and development
department to find out what exactly what was going wrong with their
customer sales figures between the years 2000-2002.
Their most recent research plan was to understand why their profits
dropped from 1'977 million dollars in 2000 to 893 million dollars in
2002, this they found was due to the consumers worries had greatly
increased with health fears of increasing obesity becoming more common
for those eating more and more fast-food, so customers now opted for
more healthier options like subway which offered more of a variety for
health conscious customers.
Through this research into what was currently going on McDonalds
changed its image vastly by evaluating the current menu and making
changes to it from using organic products to revising the whole menu
entirely by offering salads and vegetarian burgers.
Evidence of their new strategy to tackle with new consumers and rivals
and the adjustments they made to the way McDonalds is run and its menu
was shown in the annual reports.
McDonald's has thanked the continuing success of its recently
introduced salad range for its best quarterly sales growth figures in
The fast-food giant saw its global sales increase by 10% to $4.7bn
(Â£2.5bn) in the second quarter of 2004, compared to the same period of
Profits were up even higher, jumping by 25% to $590.7m, above
The figures indicate that McDonald's turnaround from its recent
downturn is staying on track.
(Taken from the BBC website, www.bbc.co.uk)
Also McDonalds has vastly changed its image through research of what
they're current customer range is. By finding this out they worked out
how to advertise McDonalds to that certain audience and draw them in.
one of the ways they done this was by playing on modern days society
of looking up to celebrities, they done this by incorporating Justin
Timberlake into their advertising scheme and by sponsoring his
worldwide tour, this allowed them to increase there customer range by
endorsing a worldwide star. Also they've introduced a scheme where
customers can download songs after purchasing a meal from McDonalds in
In addition to the introduction of new, healthier products, McDonald's
has also worked hard to improve its level of service, and introduced
new initiatives in the US, such as customers being able to download
songs after they purchase a Big Mac.
(Taken from the BBC website, www.bbc.co.uk)
As shown by McDonalds, through effective research and implementation
of that research McDonalds has once again started to see profit
increases since the beginning of 2000 when they started to show steady
decreases in profits.
2000 2001 2002 2003
Research and Development,
The Fuse bar
Cadbury Schweppes has always had the problem of finding new ways to
develop its products and produce new ones into a developed market.
Cadbury Schweppes found that in order to release a new product within
an already intense developing market they had to invent new and
innovative strategies to tackle the problem of releasing a new
One of Cadburys latest business adventures was the new release of
their new chocolate bar called "Fuse".
The things that Cadbury Schweppes realised it had to in order to
ensure that this new product the fuse bar was released successfully
were, extensive research of the background into the confectionery
market, an evaluation into the Cadbury Schweppes company itself,
researching the snack market, market research, product development,
extensive consumer testing to ensure customers get what they want,
designing process, more consumer testing, product launch strategy,
launching of the product, analysing post launch results and the
overall conclusion of successfulness of the product. All of this is
put into great detail to ensure that the results required are produced
from all this, at the same time a lot of investment is put into all
this so the company as big as Cadbury Schweppes is definitely
expecting some positive results from all this.
Research of the background into the confectionery market
This is important as it helps the company with understanding what has
been going on within the market as lets them spot any trends within in
it thus helping them predict how that market is going to move on
within the next few years. Although this can be the case markets can
develop more quickly than expected where companies may come up with
new innovative ideas, which can change the market drastically. To
tackle these problems Cadbury Schweppes has constantly been doing
research into the market to ensure that they're competitiveness within
the market stays strong against competitors
Evaluation of the Cadbury Schweppes Company
To ensure that the Cadbury Schweppes Company is working to its highest
quality, regular evaluations to the company are made, from studying
the company's growth to its overall placing within its industry e.g.
confectionary market. At the moment they found that the company is no.
3 in the global drinks market with over 92 countries in which its
brands span across, and also they are the worlds fourth largest
chocolate supplier with over 25 large plants across countries all over
the world and making sales of their products in over 165 countries.
Research into the snack market
As Cadbury Schweppes found through this research they found out that
the snack market was a huge business finding figures like:
The confectionery business was worth 4.9 billion pounds
The biscuit business 1.7 billion pounds
Snacks 1.2 billion pounds
Crisps 1.1 billion pounds
Ice cream 0.8 billion pounds
Snacking they found was key to ages between 16-34 years, this key age
group they found represented 37% of the snack industry.
Through market research they tried to establish a link between
consumers to their products. Through this research this allows the
company to make more informed decisions on what they're going to do.
Also through market research its shows how previous brands have been
successful in their product launch strategy.
Cadbury Schweppes set out 2 objectives for the development and the
launch of the new Fuse:
1. To grow the market for confectionery
2. To increase Cadbury Schweppes' share of the snacking sector
The Fuse bar concept was developed after market research by Cadbury
Schweppes identified that the growth of snacking and a definite gap in
the market for a more chocolaty snack for consumers. After this was
identified a development team was brought in to identify the recipe
which consumers wanted most. Not all products during the development
stage from Cadbury Schweppes were used for the later stages of further
Early consumer testing
Early consumer testing was important in the case of Cadbury Schweppes
as they found out that about 85% of most products with early testing
help with the launch of the final product. Forms of early consumer
testing which Cadbury Schweppes used for the Fuse bar were, giving out
free samples to the public, taste tests and personal preference tests.
Pack design and brand name
As Cadbury Schweppes found a key element of any new product launch is
the development of a strong packaging design and brand name.
The design brief for the Fuse bar had two clear requirements:
1. To communicate the dynamic and slightly wacky "personality" of
the new product and create a point-of-purchase i.e. in store
2. to bring the brand name to life by communicating the fusion of
Cadbury Schweppes' chocolate with snacking ingredients
Packing allowed Cadbury Schweppes to convey the positive attributes of
the product they are trying to sell. Cadbury Schweppes sought to
position their new Fuse bar as unique, exciting and as a delicious
chocolate snack, which would stand out from its competitor's products.
To achieve this Cadbury Schweppes used bright and fiery colours for
the product name and contrasting them against the easily recognisable
Like packaging brand names play a critical role in the success of a
product, by helping create the products own "personality". The new
product (the Fuse bar) was aimed to appeal to 16-34 year olds. The
name Fuse Cadbury Schweppes felt gave the chosen affect to communicate
the fusion of snacking ingredients.
Further consumer testing
Testing is important throughout the entire product development
process. It helps provide valuable information that can be use to
fine-tune the product and minimise many risks included in a new
In this further testing the company found out that the Fuse scored
higher for texture, "interesting eat" and combination of ingredients,
than its competitors and achieved the highest rating ever for a new
Cadbury product- 82% of consumers which they tested rate the Fuse bar
as excellent or very good and 83% said they would regularly buy it.
The launch strategy
The launch strategy Cadbury Schweppes found thee most important aspect
of the launch of their new product. To ensure the launch was
successful Cadbury Schweppes had to go through a number of processes
from ensuring that retailers will stock and sell their product to
ensuring that they had a key customer range. If the product failed at
this stage it would cost the company millions from investing into
Usually the way Cadbury Schweppes launched it products in the UK was
by launching the product in one region of the country to raise
awareness and give them a general idea of how the product would sell
elsewhere in the UK.
There were also key requirements to the co-ordination of the launch:
* Secrecy had to be paramount
* Marketers who had identified the gap in the market had to work
closely with individuals from research and development as well as
other external agencies
* Manufacturing operations, in conjunction with marketing and
finance, had to evaluate a new factory investment for brand
Cadbury Schweppes officially launched the Fuse bar on the 24th of
September 1996, aptly christened "Fuseday" by Cadbury Schweppes. This
launch involved a tight management of the stock distributed, with over
40 million bars being moved from Cadbury deports straight into shops
ready for sale within only a matter of days.
After a new product is launched it is important to analyse whether the
product has met its launch objectives. During 1996 the chocolate
market grew by 9% and 19% of this growth was contributed to the launch
of Cadbury Schweppes' Fuse bar. One way of analysing the effectiveness
of the whole product launch is to ask market researchers to identify
advertisements using prompts in a recall test. Cadbury Schweppes found
out that during just one week of the Fuse bar being released it sold a
record 40 million bars and within 8 weeks the Fuse bar became the UK's
most favourite snack bar. The release of the Fuse bar also contributed
greatly to the growth of the company in 1996.
Overall through thorough uses of these processes Cadbury Schweppes has
created and developed a successful and popular brand through its new
product the Fuse bar. The main three reasons why Cadbury Schweppes'
product launch was so successful because;
Â· They used accurate sources of consumer research to identify a big
Â· Product research and development combined extensive consumer testing
lead to the successfulness of the overall product
Â· Massive trade and consumer hype generated by a national launch of
the Fuse bar