Product development the Coca-Cola way

phapev, 10 Jaanuar 2010 Piret Potisepp / General Manager of the InnoEurope innovation centre, Kadri Tiitso/ consultant/project manager at the Association of Estonian Food Industry ShareThis The process of innovation at the Coca-Cola Company (CCC) was introduced by Victor Behrmann, head of the groups competence centre for Europe, Eurasia and Africa, who spoke at the product development day in December. The CCCs innovation centre in Brussels belongs to the global network of innovation centres, which covers 108 countries and constitutes 40% of the CCCs business operations. The Brussels centre produces 500 innovations a year. The centres activities include product innovation; development of packaging and sales & marketing tools; and quality control. The groups product portfolio includes coffee, water, flavoured water, sports drinks, energy drinks as well as juice and juice drinks, carbonated soft drinks, teas, syrups and milk-based products. In packaging innovation, for example, the key word is on the go consumption (re-sealable canned drinks). In retail, the POP-cooler solutions are a recent innovation. In its product development process, the CCC utilises the so-called stagegate model. A stage is a period of work and a gate is the decision-making point. Each stage is followed by a gate. The gate closes or opens, allowing the project to move into the next stage. The gates are also quality control points in the process. The options available at a gate are as follows: returning to the same stage (improvement); termination (if the gate keepers fail to make a decision); suspension; proceeding (positive decision). The key elements of the stage-gate model are: The idea, scoping (consideration of technology and market trends, assessment of competition and consumer needs, consumer recommendations, brainstorming); Building a business case (technical feasibility, risk analysis, investment plan, brand alternatives, communication alternatives); Development (technical solutions, supply chain plan, investment prospects, surveying consumer use and perception of the product, quantitative testing of consumers; brand name); Preparations for launch (commercial solutions, supply chain capacity, pricing, product design, communication plan for consumers, sales plan); Marketing activities (market supply, quality assurance, preparation of sales and distribution plans, sales promotion, samples, advertising, monitoring awareness; testing, use). Behrmann emphasised that efficiency and speed are important in the stage-gate process. Also, key roles are essential throughout the process the right person must be at the right place. The key roles in this process are outlined below.

The task of the project manager is to manage the team in working towards the project goals, plan the activities within a stage together with the team, and monitor its implementation; hold meetings before the gate discussions; ensure that all work is completed before the gate. The final part of the project managers important job is to present the project to the gate keepers and jointly analyse the results and assess risks and problems. The job of the gate keeper is to assess the projects against established criteria and ensure that the right projects are let through the gate at the right time; the gate keepers responsibility is to decide whether a projec t should be allowed through to the next stage; review the work done before gate discussions; prepare the action and resource plan for the following stage together with the project team; and make decisions relying on criteria established in advance. The job of the gate assistant is to administer the gate meetings, present the agenda, communicate the gate decisions, maintain the stage-gate process, and ensure that it is observed and preserved; provide the project managers with the required training during the preparation phase; review the preparations before the gate. The gate assistant is also responsible for deciding upon the annual gate meetings schedule and booking the venues for the meetings. In his presentation, Victor also provided a real-life example of the product development process. Namely, he talked about his experience in the ILKO International project a partnership between Illycaffe and the CCC. Stage 1: Idea The consumption of coffee is increasing around the world on all levels (at home as well as outside the home). Due to the constant increase in the consumption of coffee drinks, the CCC decided to enter this market as well. Stage 2: Building the business case The company identified the competing products in the past and at present. It also researched the potential positioning of its product, by mapping all the similar products on local and regional markets as well as throughout the world. It was discovered that there is a niche on the global level in the premium product segment. Next, the company went into partnership with the Italian coffee producer Illy. Stage 3: Development Key product Illy ready-to-drink coffee (contains 4.5% coffee extract); at first, black ready-to-drink coffee is launched on each market without preservatives and without milk; target: 26% of the total volume. Other product variants 2% coffee extract; 35% fresh milk. At least one variant promoted upon launch in each market; target: 74% of the total volume. Stage 4: Preparations for launch Creating a legal entity for the partnership (joint venture); Illycaffe sets up the production of coffee extract; Development of supply (finding ingredient suppliers, finding a fresh milk provider; quality audits; preparation of quality documentation; contract negotiations; product testing) Development of packaging (a separate project following the stage-gate model; creation of the design); Sourcing of ingredients (pre-supply quality control); First commercial production under supervision. Stage 5: Marketing activities Ensuring the best exposure (focus on the most important exposure; the target channels of key opinion leaders and

early adopters); Greater focus on availability at the right (retail) outlets; Parallel home use promotion in supermarkets; Penetration of high quality stores (establishing an image of success not sold at the cheap chains, but sold everywhere else); A fair margin for trade partners to promote the product; At the moment, the product is sold in 18 countries.