Application of Hurdle Point (HP) in New Product Development
Using Hurdle Point Evaluation (HPE) as benchmark for New Product Development in Korean Food & Beverage Market to maximize profit
In this age when food & beverage market is saturated with products, accurate evaluation of a new product’s potential competitiveness in the market before launch becomes crucial. Adding new products in the product line helps businesses remain compettitive and permanent. As a result, a great deal of cost and effort go into developing a new product so failure after its launch is an enormous loss.
Since 2005, R&R has collected product and concept acceptability scores and developed all-inclusive food & beverage HP of not only our client’s products, but competitors’ as well. Many research and consulting firms compute Hurdle Point using their own methods, but R&R’s HPE is the only research firm in Korea to use actual data accumulated for over 10 years.
Over 190 surveys are conducted with more than 25,000 consumers on more than 340 food & beverage products since 2005. R&R analyzed accumulated scores on ‘satisfaction’ and ‘intention to purchase’ of new products in 20 general product categories. Products in each category, such as noodles, tofu, and Kimchi, have different HP, which allows for comparisons among same types of products as well as general categories.
These data allowed R&R to analyze average score (Top2(%), 5 point score) and standard deviation of each product and category; the average satisfaction scores of all food and beverage products studied so far are Top2 49.5% and 3.3 points, with standard deviation of 17.4% and 0.4 point respectively. The average scores are then divided into four rating system of HP standards:
[Top 20%] : Very positive
[Top 20-39%] : Modification required, but positive
[Top 40-59%] : Many modifications required, and need to be reevaluate d
[Top 60-100%] : Stop development
Although the standard of HP differs for each client, with R&R’s HP, any food and beverage products can be tested for competitiveness in the market. Clients with leading brands have higher standard of HP than less competitive brands when testing for new products. On the other hand, less competitive products within the same category can be compared with the leading brands in Korean food & beverage market.
The strength of HPE is that with each survey on food & beverage products and with accumulating data, the HP is updated annually, which enables more accurate analysis and adds more products. In addition, HP can be applied to other families of products such as cosmetics, electronics, etc, so the implication of HPE is endless.
About the Author:
Dr. Kyu Hyung, No, is the CEO of R&R Marketing in South Korea, a fieldwork oriented market research institute specialized in Food & Beverage.