New Product Development

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To answer the question “What are the factors that made Schwan focus extensively on innovative product development initiatives“there are to state two main points. The first arises from the changing dynamics of the frozen pizza business in the country. For the last decade, the frozen pizza market was growing the fastest within the entire US frozen food industry, reporting at a rate of 29,2% between 1995 and 2000. This was caused by the introduction of the ‘rising crust’ technology, through which frozen pizza got almost the quality of the pizza offered in restaurants. This had a declining effect on the other three segments of the pizza branch (dine-in, take away and home delivery), because now having almost the same quality, frozen pizzas where cheaper, more convenient, and most of all product innovations of the frozen pizza segments rivalled the offerings of the dine- in pizza companies. However, this includes that the companies of the other segments will lay more effort in stopping this process (and as a result competition will increase). Therefore frozen pizza producing companies are forced to keep up to or have almost to quicken establishing innovations as a result of the rising pace and competition in the fast growing market. Thus the pressure in the market is increasing, which lays even more weight on the frozen pizza producing companies to keep the pace and so not to fail. Another reason for the rapid growth towards the early 21st century was the advent of ‘single- serve’ pizzas. Because these ‘single servers’ became very popular by customers, most of the frozen pizza producing companies began to draw their focus on this segment. Because of this competition became even more intense in this sector, especially between Schwan and Kraft Foods. Thus, the companies decided on factors to distinguish from competitors. Since pricing, promotion and distribution were replicated very quickly in the industry, product innovation emerged as the single- largest factor that...
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