Trends in Food Science & Technology 13 (2002) 372–379

Viewpoint

Identification of key
success factors of Introduction
The development of functional foods is currently one

functional dairy of the most intensive areas of food product development

worldwide. The global functional food markets are
roughly estimated to be between $10 billion and $40
foods product billion with an annual increase of about 8% (Anony-
mous, 1998; Challener, 2000). Interest in functional
foods has been prompted by a rapid expansion of sci-
development entific knowledge of the importance of a healthy diet,
technical advances in the food industry, increased con-
sumer demands for health promoting food products as
well as predictions for an aging population and increas-
ing health care costs (Challener, 2000; Hasler, 1996;
Mikaela Biström and Mirasol, 1999). Functional foods have been defined as
foods that provide an additional physiological benefit
Katrina Nordström* that may prevent disease or promote health and well-
Laboratory of Biochemistry and Microbiology, being (Hasler, 1996; Stauffer, 1999). Functionality may
Department of Chemical Technology, Helsinki be an inherent quality of the food raw material or a
University of Technology, PO Box 6100, FIN-02015 feature introduced by innovative new processing tech-
HUT, Finland (tel.: +358-9-451-2549; fax: +358-9- nologies or by the addition of health promoting food
462-373.; e-mails: mikaela.bistrom@hut.fi; ingredients or probiotic micro-organisms to the food
katrina.nordstrom@hut.fi) matrix. The food industry is currently striving to offer
such functional new products to the rapidly growing
markets. This poses major challenges for product
The present study elucidates key success factors influencing development where the ability to recognize key factors
the product development of functional dairy foods and of a breakthrough product becomes essential.
examines if the studied products can be categorized as Breakthroughs have been defined in many industries
potential breakthrough products primarily in a domestic as products, which provide a company with greater
market. General conclusions are also made with reference profits and a longer-lasting competitive advantage in
to functional foods development in the international set- the marketplace in comparison to minor product
ting. Three functional dairy foods were studied with specific developments or line extensions (Samli & Weber, 2000;
emphasis on the key success factors influencing length and Utterback, 1994). A fundamental characteristic of break-
timing of individual product development phases on the through products is their ability to meet consumer
total length of product development. Key factors which needs, providing added value and benefit for the con-
were identified as being the most critical were (1) the spe- sumer. In addition, breakthroughs have been defined as
cificity and action mechanism of the added health benefit products, which may expand or redefine a product
of the final product, (2) the range of new product or process category being distinct from existing portfolios. Inter-
alternatives, (3) the selection of the consumer target group estingly, although such products may offer specific
and, (4) legal and marketing issues. advantages over existing products both for the con-
# 2002 Elsevier Science Ltd. All rights reserved. sumer as well as for the developer, consumer acceptance
Keywords: Functional foods; Food product development; Development of such products is often slower than would be expected
process; Breakthrough product; Key factors; Dairy industry (Samli & Weber, 2000; Utterback, 1994). Thus life-
cycles of breakthrough products are typically longer
than those of line extensions. Consequently, the devel-
opment of a breakthrough requires an intricate combi-
* Corresponding author. nation of technological expertise and an awareness of
0924-2244/02/$ - see front matter # 2002 Elsevier Science Ltd. All rights reserved.
PII: S 0 92 4 - 2 24 4 (0 2 ) 0 0 18 7 - 5
 M. Biström and K. Nordström / Trends in Food Science & Technology 13 (2002) 372–379 373

the not so obvious market needs. It may thus be sug- hand, contain bioactive peptides, which are reported to
gested that also the current technology push for func- reduce high blood pressure (Korpela & Seppo, 2000;
tional food development must optimally target the Nurminen & Sipola, 2000). A strain of Lactobacillus
market pull for such breakthrough products. helveticus produces these functional short peptides by
The present study elucidates key success factors influ- enzymatic cleavage of milk protein. The third example,
encing the completion and time frames of selected the LFM, is based on a new chromatographic method
examples of functional food product development in the for removal of lactose, which does not affect the natural
Finnish dairy industry primarily during 1990–2000. taste of milk. This pleasant, unaltered taste of the milk
Arguments are presented as to certain key success fac- undoubtedly adds a very important organoleptic quality
tors related to the functionality of the product concept. to the milk. However, as this study will focus specifically
These factors are interpreted as influencing the speed on product functionality, i.e. the health benefit, the
and success of product development of functional dairy added value of the taste of the product will not be dis-
foods. Results are presented primarily from a domestic cussed further. LFM is targeted for individuals suffering
point of view. from lactose intolerance who are unable to consume
traditional or even low lactose milk products. Thus the
Study design and methodology health promoting functional benefit is linked to the
The product development processes of the three prevention of symptoms or a disorder.
functional dairy food products, Gefilus, Evolus and the The study consists of three sections. In the first sec-
lactose-free milk (LFM) of Valio Ltd., Finland, were tion, the product development processes of Gefilus,
studied. The aim was to conduct a comparative content Evolus and LFM are described and divided into specific
analysis, i.e. a cross case analysis, of key success factors phases. The structures of the separate phases and the
of the innovation activities and the development pro- duration of each phase are analysed, and based on these
cesses of functional dairy foods. analyses a set of key success factors for product devel-
The theme interview methodology of Hirsjärvi (1988) opment of these functional dairy foods are formulated.
was used with minor modifications. This is a semi- In the second section, the impact of the most important
structured interview method, consisting of selected, and critical key success factors on the timeframes and
well-defined themes. Questions are not detailed nor are outcomes of the three development processes are exam-
the questions ranked, i.e. the interviewee is not directed ined with reference to the functional product concept as
by specific questions but will be allowed to express opi- whole. Finally, in the third section, the definition and
nions and viewpoints with reference to the themes. The identification of a breakthrough product concept among
answers will therefore be more personal, objective and functional dairy foods is discussed. In the present com-
intuitive. Three themes were used: (1) the product idea munication, the main focus will be on the functional
and product concept, (2) product research and develop- feature of the product concept and less attention will be
ment, and (3) marketing and regulatory affairs. paid to critical success factors as defined in the business
The study was conducted and research data collected and management literature (Cooper, 1994; Cooper &
by interviewing company experts at Valio Ltd. These Kleinschmidt, 1996; Gupta & Souder, 1998; Lester,
were individuals from the research and development 1998; Meyer & Purser, 1993; Slade, 1992). Without
division of the organization closely involved with pro- underrating the importance of issues such as develop-
duct development of these three products during 1985– ment tools, organizational and complementary assets, it
2001. All interviewees had a comprehensive knowledge was imperative that the scope of the study would remain
of the product concept itself, the progression of the well focused.
development process, and other organizational issues
inherent to the development of the products. As only Some limitations
few individuals had such knowledge spanning over at There are certain built-in limitations to the present
least 10 years, only two company experts were inter- study, which should be noted. First, the scope of the
viewed for each case by using the theme interview. On study is somewhat narrow, and more detailed figures on
the other hand, by asking exactly the same questions, sales, market volumes, etc. may have brought further
the reliability of the data could be tested. Additional insight into the results of the study. However, as Evolus
data was gathered from company publications and and LFM were just about launched at the time of the
other relevant literature. study, no such figures were available for publication.
Gefilus, Evolus and LFM represent recent trends in Second, the Finnish dairy foods industry enjoyed a
the functional dairy foods market in Finland. The relatively protected market situation up to 1995, when
functionality is incorporated into Gefilus products by Finland became a member of the EU. This undoubtedly
using a Lactobacillus GG strain and the functionality of led to changes in the industry infrastructure and also
the strain refers to the probiotic effects of the organism reflected on organizational changes within the company
(Saxelin, 1999). The Evolus products, on the other itself. Such changes have undoubtedly influenced the
374 M. Biström and K. Nordström / Trends in Food Science & Technology 13 (2002) 372–379

development of the three products studied. Third, con- the other two products. The marketing phase of Gefilus
sumer awareness of the health benefits offered by func- and LFM were relatively short run events in the total
tional food products has certainly increased from the share of the development cycles, whereas the duration
early 1990s, which has created an increasingly favour- of the basic research phases were substantially pro-
able market for these products. In view of these limita- longed when compared to that of Evolus. The Gefilus
tions, and perhaps some not identified above, all project did show some overlapping of individual phases
conclusions will be made within the scope, aims and (Fig. 1), but there were problems with reference to
methodology of the present study. prompt implementation of the phases and to the dura-
tion of individual phases. Consequently, the Gefilus
Structure of product development processes project suffered from a late participation by marketing.
The literature on new product development is vast Although, not evident from Fig. 1, it was difficult for
and many approaches have been made to divide product the company to allocate sufficient attention to the mar-
development into specific phases (Cooper, 1990; Cohen, keting of Gefilus. In 1990, there was no previous
Kamienski, & Espino 1998). In the present study a five experience on marketing strategies of functional dairy
phase system was chosen to facilitate the analyses of the foods in Finland, or even abroad. In addition, as can be
different activities within the functional dairy food seen in Fig. 1, the research and development phases
development processes. Accordingly, we defined the were rather lengthy and reflects the hurdles faced by
product development processes of Gefilus, Evolus and R&D with novel product concepts. The ladder-like pat-
LFM as consisting of following separate phases: (1) idea tern of Gefilus (Fig. 1) also indicates that each step was
generation, (2) basic research, (3) development of the initiated and taken in turn. Thus each phase became an
final product concept, (4) clinical testing of the final isolated procedure or an individual project not con-
product and (5) marketing activities and product launch nected to the process development as a whole. Similarly
(Fig. 1). It is to be noted that the basic research phase of in the case of LFM, there was only modest overlap
Gefilus and Evolus refers to the research on the phy- between the five product development phases. It is evi-
siology of lactic acid bacteria and the selection of sui- dent that each individual phase of the LFM- project
table raw materials, i.e. milk, fruitjuice, etc. However, resembled that of Gefilus in representing in fact a sepa-
for the LFM this phase refers to development of the rate research project. These separate projects spanned
methodology used for lactose removal. Furthermore, also vertically across product development rather than
development of the final product concept phase refers to becoming integrated into eachother and progressing as
formulating the final product concept in research a continuous process.
laboratories and/or finalizing the large-scale processing
of the product. Functionality and production technologies influence
An examination of the structures of the product product development
development processes shows that the Evolus-project As shown earlier, the structure of the three product
was executed within the shortest time frame and the development processes as well as in the timing of the
Evolus product development process was distinct from separate phases differs. This raises the possibility that
those of the Gefilus- and LFM-projects (Fig. 1). The product development may depend on inherent features
cross-functional activities in the Evolus-project is seen of the functionality incorporated into the dairy product
as an overlapping of each phase which evidently spee- as well as on the production technologies. Thus the
ded time to market. The duration of the research and effect of these features on the time frame of product
development phases in the Evolus-project was clearly development can be considered in more detail.
shorter than in the two other projects. On the other The definite action mechanism of blood pressure
hand, although the testing phase of Evolus was equiva- lowering functionality of Evolus is attained by blending
lent to that of Gefilus, the early timing of the testing the active bacterial strain to chosen dairy raw materials.
phase in the Evolus-project is distinct. Most notably, The functionality of Gefilus, on the other hand, is due
the efforts put into marketing and testing from the very to the probiotic effects of the added Lactobacillus GG,
start of the Evolus-project resulted in a shortening of which is documented to have a positive effect on the
the total amount of time spent on this project. Thus gastrointestinal tract (Saxelin, 1999). Thus, the action
Evolus exemplifies a product concept in which the idea mechanism and functionality of Gefilus is more diffusely
has met marketing at an early stage. Hence, it can be defined than that of Evolus. Consequently, we suggest
concluded that the structure of the Evolus development that this less defined health effect may have influenced
process as a whole is in accordance with Takeuchi and the development process of Gefilus by delaying the
Nonaka’s (1986) rugby type approach to R&D. onset and prolonging the execution of the clinical test-
The compact and overlapping pattern of product ing phase considerably. Furthermore, the product
development phases discussed earlier for Evolus was, development of Gefilus was based on finding new and
however, not as evident in the development processes of innovative production technologies, which may also
 M. Biström and K. Nordström / Trends in Food Science & Technology 13 (2002) 372–379 375

Fig. 1. The timeframes of the three functional dairy product development processes and of the separate stages within the
development processes.

have contributed to the lengthy development process. designated to finding innovative solutions at the basic
This was most probably due to the fact that Gefilus was research and development phases before moving onto
a pioneering product in the functional foods sector in the next phase of the development cycle. Second, the
1990 in Finland and was based on a new technology of earlier arguments suggest that a less well defined func-
combining a probiotic organism with an organolepti- tional action mechanism as seen with Gefilus, or func-
cally acceptable dairy food matrix. LFM on the other tionality based mainly on perfection of a new
hand, may be argued to represent a health maintaining production technology, exemplified by LFM, may
product for a selected market segment. This product partly contribute to an extended step-by-step develop-
contains no added health promoting substance or ment process.
quantifiable entity as such. The functionality of LFM is
based on a new production technology, where the aim is Technology push functionality may evolve into a
to optimize different process variables to accomplish a market accepted food concept
functional and pleasant tasting end product. At the beginning of the product development of
Some conclusions may be drawn on the earlier dis- Gefilus and LFM, the functional foods era was still in
cussion on the effects of functionality on product devel- its infancy in Finland. When Gefilus was launched in
opment. First, much of the focus during product 1990 it was the first product in Finland bringing a
development of both Gefilus and LFM needed to be health promoting feature to foods. Thus Gefilus as a
376 M. Biström and K. Nordström / Trends in Food Science & Technology 13 (2002) 372–379

concept initiated the functionality and health foods era Key success factors of functional foods product
in the Finnish food industry. Furthermore, both Gefilus development
and LFM, of which the latter was launched several In order to develop a deeper insight into the product
years after Gefilus in year 2001, represented new and development processes presented earlier, factors specifi-
unique product concepts and manufacturing technolo- cally affecting the timeframe and labor intensiveness of
gies respectively at the time of initial product launch. each project were further evaluated. The main focus was
However, not one of these features or technologies were on the key features of functionality. The data gathered
expected by or familiar to dairy markets or could con- by the interviews allowed for the identification of cer-
sumers have requested such features or technologies in tain key success factors with reference to the functional
advance. Therefore, it may be argued that both Gefilus feature of the dairy product. These were: (1) the added
and LFM represent technology push products as has value to the consumer or the developer, (2) the possibi-
been defined by Samli and Weber (2000) for other lity for further product applications, (3) the selection of
industries. consumer target group and (4) the legal issues (Table 1).
Evolus, on the other hand, exemplifies a somewhat The influence of these key factors was evaluated with a
different product. At the time Evolus was developed and ranking scale of positive impact, no impact, and nega-
when it appeared on the Finnish dairy food market in tive impact. By using this method of ranking, Gefilus
2000, Gefilus and other functional food products had and Evolus both gained five positive impact points
already introduced domestic markets and the consumers respectively. These two products differed in two differ-
to the idea of the health promoting benefits of func- ent aspects, which can be further examined.
tional foods. Therefore, a certain market acceptance of The added value brought by Gefilus was primarily in
the functional food concept in general existed amongst the knowhow it contributed to the company, paving the
the consumers. On the other hand, there was no prior way for other national functional dairy foods, such as
demand, i.e. no definite market pull, for a functional Evolus among others (Table 1). In addition to the
dairy product such as Evolus with blood pressure low- organizational advantages, i.e. the knowhow and com-
ering specific activity. Consumers could not have been petitive advantage, the added value of Evolus was
aware of such a technological possibility. Thus Evolus strongly connected to the specific health promoting
may be argued to represent a product that combines benefit for the consumers. Communicating the func-
technology push functional activity with a market tional benefit to the consumers as well as to all the team
accepted final product concept. A combination of such members of the project was consequently easier com-
features made a speedy development process possible, pared to that of Gefilus. Furthermore, although both
where the aim was to get the product out on the products offered many possibilities for alternative pro-
domestic market while no competing dairy products duct applications, Evolus targeted a well defined con-
with similar functionality existed. sumer group whereas Gefilus offered benefits to all
The earlier arguments lead us to draw some general consumers.
conclusions on the structure and time frame of product Turning the attention to the negative impact scores of
development of functional dairy foods such as those the development process of Gefilus and Evolus shows
used as examples presently. We suggest that, (1) devel- that both scored one negative impact point. In both
opment of functional dairy foods, which are distinctly product development processes these were due to food
technology-push products such as Gefilus and LFM, legislation, which posed restrictions on the domestic
must be combined with marketing at very early phases marketing actions with reference to health claims. In the
of development. This could reduce the risk of step-by- case of Evolus, these issues were solved whilst the pro-
step product development, which otherwise could result ject was ongoing and regulatory aspects had therefore
in significant time delays and possibly even in loss of no major impact on the total timeframe of the develop-
focus. On the other hand, (2) a defined functional action ment process. However, as Gefilus was a forerunner in
mechanism is a distinct advantage in speeding-up the the field, it confronted many unexpected restrictions.
total development process. Focusing on the function- Conforming to these regulatory requirements influenced
ality of the desired dairy product will carry the initial the time frame of the development process by prolong-
idea across all phases of development. Furthermore, if a ing the marketing phase distinctively (Fig. 1).
product with such definite functionality is built on a Impact scores of LFM resembled those of Evolus in
previously established concept, even new technologies many aspects (Table 1). Specifically, the added value for
will be met by a certain market acceptance. Finally, the company with the LFM development process was
(3) for functional dairy foods to become truly mar- the increase in knowhow of a new production technol-
ket-pull type of products, it is necessary to increase ogy, i.e. the production of pleasant tasting lactose-free
consumer awareness of the many technological oppor- milk. The convenience for the consumers brought by
tunities available in future functional foods product LFM was due to the prevention of the symptoms of
development. lactose intolerance, without changing the taste of milk.
 M. Biström and K. Nordström / Trends in Food Science & Technology 13 (2002) 372–379 377

Table 1. Impact of key factors on the success of the three product development processesa
Key factor Gefilus LFM Evolus
Added value To the organization Knowhow + + +
Competitive advantage + + +
To the consumers Defined action mechanism 0 + +
General health promoting + 0 0

Applications Many alternatives + + +

Few alternatives 0 0

Target group Everybody + 0 0

Defined group of consumer 0 + +
Not specified 0 0 0

Legal issues Influencing product concept 0 0 0

Influencing production process 0 0 0
Influencing marketing actions
a
+=Positive impact on the development process. 0=No impact on the development process. =Negative impact on the
development process.

On the other hand, with reference to regulatory issues extensions. For Evolus the speedy development was
and marketing, also LFM and the new production very evident. However, with LFM the speed to market
technology confronted problems. Consequently, pro- was not in reality very fast but the product concept and
duct launch was delayed by approximately two years. the underlying rather straightforward technology did
However, the new and innovative production technol- offer possibilities for speedy development. Moreover, as
ogy of LFM does offer numerous possibilities for use in Evolus and LFM were launched several years after
many different product applications. An extension Gefilus, they satisfied an already existing or emerging
beyond the niche-market of lactose intolerants is cer- consumer trend. Gefilus had also already confronted
tainly possible. On the other hand, as the processing and resolved the challenges brought on by regulatory
technology of LFM is rather expensive this might not be issues concerning health claims of functional dairy
profitable. More specifically, if the lactose free end pro- foods in marketing. Thus this was not or should not
duct is to be modified further by, for example, adding have been an issue at the time of development and
flavors or to produce yoghurts, the added value of the launch of Evolus and LFM.
pleasant taste of LFM may be masked by other fla- In a previous communication on the emergence of
vours. Such further developments thus remain to be new probiotic functional foods, we have shown that the
seen. Gefilus product concept may also be regarded to repre-
sent a dominant design in the functional foods market
Breakthrough products in functional foods in Finland (Nordstrom & Bistrom, 2002). Such a pro-
In order to examine if Gefilus, Evolus and LFM can duct may be defined within a product class as the one
be considered to be breakthrough products in the Fin- which wins the allegiance of the marketplace and the
nish functional dairy foods sector, the definitions of one that competitors and innovators must adhere to if
breakthrough and line extension products of Samli and they hope to command significant market following
Weber (2000), were used as references (Table 2). By (Abernathy & Utterback, 1978; Anderson & Tushman,
using this method of evaluation, Gefilus may be inevi- 1990). Furthermore, according to Utterback (1994)
tably argued to represent a breakthrough product con- dominant designs usually have the power to create new
cept. Gefilus fulfills all the features typical for industry standards. Gefilus emerged as a new product
breakthrough products at the time of development and concept innovation during the years 1987–1990. After
product launch (Table 2). However, with reference to launch, this product concept gradually established a
Evolus and LFM, the definition of a breakthrough is new standard of health promoting products in the Fin-
not as clear (Table 2). Evidently, many of the definitions nish food sector, which may be called a platform of
for a breakthrough apply both to Evolus and LFM but functionality in Finnish dairy products. Furthermore,
these products also possessed faster speed to market Gefilus as a dominant design, created a platform for a
combined with an impression of lesser risk to the man- product concept from which several processing alter-
agement during the development processes. With refer- natives or precursors of functional product designs
ence to new product development in general (Samli & appeared. Consequently, based on the present data, we
Weber, 2000), the latter criteria are more typical of line suggest that Evolus and LFM have evolved from this
378 M. Biström and K. Nordström / Trends in Food Science & Technology 13 (2002) 372–379

Table 2. Identification of Gefilus, Evolus and LFM as breakthroughs or line extensionsa

Identification claims concerning the product Gefilus Evolus LFM
Breakthrough
Offer a unique consumer benefit + + +
Can expand or redefine the product category + + +
Are distinct from existing portfolio + + +
Require different marketing practices +
Entail high financial risk + + +
Is closely related to emerging consumer trends +

Line extension
Is routinely developed
Minor product variation to existing ones
Do not require new production facilities or capabilities
Can be introduced to the market with greater speed + +
Give the impression of lesser risk to the management + +
Require limited resources and know-how
Are simple and may generate temporary volume in sales
a
+=The stated claim was considered as true. =The stated claim was considered as false. Definitions for breakthroughs and line
extension defined by Samli and Weber (2000)

functionality platform. There is no doubt that the tech- possible second generation products to emerge. Pressure
nologies used to attain functionality for Evolus and for second generation products may result in an
LFM are different from that of Gefilus, but as health increased demand for products with increased perfor-
promoting dairy products they may be argued to have mance, which entails more specific, more noticeable,
evolved from the Gefilus platform. The most valuable and perhaps even more fast-acting features of function-
contribution of this platform was in providing the ality. Furthermore, as switching costs of consumers may
underlying knowledge on production, marketing and decrease as market pressure increases, it may be postu-
legal issues of functional dairy foods. Hence the few lated that consumers may also become more willing to
similarities to line extension products, found in both switch to completely new and different product alter-
Evolus and LFM, are due to the benefits gained by natives. Such products may be, for example, novel
exploiting the platform established by the Gefilus pro- foods, nutraceuticals or other products which currently
duct development process. As Evolus and LFM both are categorized as medicines, but which may enter the
contained new and unique functional characteristics it markets of health promoting foods in the future. New
may further be argued that these products can also be product alternatives and technologies can be developed
considered as breakthrough dairy product concepts in and introduced from any industry, the pharmaceutical
their own category. industry being the most probable one.
Consequently, the functional foods sector may
Discussion on future developments become crowded with new players, encouraged by a
We have previously proposed that the market pres- lowering of the barriers to entry, which in the case of
sure for functional foods is established by the perceived functional foods, correlates with the eagerness of con-
value of health promoting products to the consumers sumers to accept new products and processing technol-
(Nordstrom & Bistrom, 2002). As consumer awareness ogies. Therefore, the possibility and risk that second
of functional foods increases there will be more pressure generation products evolve mere as line extensions of
for developers to bring new products with new func- the first generation product concepts should be carefully
tional features onto the markets. According to the data evaluated with reference to possible competition from
of the present study, we further suggest that Evolus, outside the food industry itself. For the functional foods
LFM and Gefilus can all be defined as representatives of sector to remain within the food industry, developers
first generation functional dairy food products within should focus on initiating a new era of second genera-
the Finnish dairy industry. All three products add new tion products within the food industry itself.
attributes of value to functional dairy food products.
The diversification of the first generation product con- Conclusion
cepts and in time, the possible conversion of these fea- Key success factors of new functional dairy foods
tures into ‘must be’ everyday products may also give development in the Finnish dairy industry have been
rise to a second generation of dairy products. Therefore, identified in the present study. Speedy development of
the domestic market acceptance of first generation functional dairy foods requires focus on the added
functional food products will lay a foundation for health benefit to the consumer, the range of new appli-
 M. Biström and K. Nordström / Trends in Food Science & Technology 13 (2002) 372–379 379

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