Development of innovative functional pet food products - a compilation of relevant knowledge for industry actors

Abstract (Swedish)

Problemställning: Ändringar i EU:s lagstiftning har på senare tid förändrat mervärdesmatsbranschen genom att skärpa kraven för påståenden till konsumenter. Samtidigt har mervärdesprodukter växer för husdjur ökat. Att på ett korrekt sätt följa den nya lagstiftningen kräver en ny typ av kunskap inom mervärdesbranscherna, vilket blir ännu tydligare för produkter med innovative påståenden som inte är väletablerade. För att navigera i detta krävs forskning för att säkerställa rätt leverans av värde till konsumenterna, och på rätt sätt.

Syfte: Att kartlägga och sammankoppla befintlig kunskap inom mervärdesmat, husdjursmatsbranschen och upprättandet av innovativa nischmarknader. Slutsatserna är avsedda för praktisk vägledning för utveckling av innovativ mervärdesmat för husdjur.

Forskningsfråga: Vilken kunskap, relevant för utveckling av innovativ mervärdesmat för husdjur, framträder vid sammankoppling av följande ämnen: mervärdesmat, husdjursmatsbranschen, etablering av innovativ nischmarknad?

Metod: Relevant kunskap har samlats in med hjälp av ett ramverk, vilket resulterat i en kvalitativ analys med affärsmodellen Business Modell Canvas som analysverktyg. Kunskapen har också testats på en fallstudie (en specifik produkt från ett fallföretag).


Slutsatser:
1. Värdeerbjudandet för innovativ mervärdesmat för husdjur ska vara centrerad kring dess funktionalitet.
2. Vid tidpunkt för lansering bör produkten riktas mot opinionsbildare inom djurmatsbranschen.
3. Kundrelationen bör byggas på förtroende.
4. Fackhandeln är den lämpligaste kanalen
5. Indirekta kostnader kan uppstå genom otillräcklig hållbarhetsanpassning eller en felaktigt vald nivå av påstående om mervärdet.
6. Värdebaserad prissättning är den rekommenderade prissättningsstrategin.

Abstract

Background: Recent changes in EU legislation have changed the industry of functional foods by tightening substantiation requirements for claims made to consumers. Parallelly, functional products are growing within the pet food segment. To follow the new legislation requires a new kind of knowledge within both industries, which becomes even more apparent when developing innovative products with less established claims. Research is required to navigate this jungle, and at the same time deliver value to consumers.

Problem description: Upon doing research, it appears that the topics of functional foods, the pet food industry, and strategies for establishing an innovative market niche, have not been researched and documented together. This results in a knowledge gap concerning strategies for developing an innovative functional pet food product.

Purpose: To survey the interconnected area of the existing knowledge within functional foods, the pet food industry and establishing of an innovative niche market. The conclusions are intended for practical guidance regarding development of innovative functional pet food products.

Research question: What knowledge, relevant for development of innovative functional pet food products, emerges at the interconnection of the following subjects: Functional foods, The pet food industry, Establishing an innovative niche market?

Research method: Relevant knowledge has been collected with the help of a framework, resulting in a qualitative analysis with the Business Model Canvas as analytical tool. The knowledge has also been tested on a product development case from a case company.

Conclusion:
1. The value proposition of an innovative functional pet food product should be centred around its functionality.
2. At the time of launch, the targeted initial customer segment should be opinion leaders within the pet food industry.
3. The customer relationship should be built on trust.
4. Specialty retail stores is the most suitable channel.
5. Indirect costs can come from deficient sustainable product development or wrong level of claim.
6. Value-based pricing is the recommended pricing strategy.

Popular Abstract

The functional foods and pet food industries are experiencing a shift, due to emerging trends and regulations. As a result, industry actors aiming at being innovative are faced with new challenges that need to be addressed. This thesis aims at providing useful guidelines for Swedish pet food industry actors to unravel and navigate these new conditions, allowing the innovative culture to thrive within the industry.

Functional foods, a relatively new genre of foods, are products that add an extra benefit to existing food products, for example by helping to prevent diseases or supplying extra nutrients. This is a big market worldwide, and still growing. Lately, the EU has passed new regulations regarding what can legally be claimed about a product in marketing and communication to consumers. Parallelly, the pet food industry have experienced a shift in how pet owners view and treat their animals. The trends indicate an increased emotional bond to their pets, meaning they are willing to spend more money on them, and increasingly treat them as any other member of their family.

Together, this adds up a situation where functional pet food development have almost entirely new conditions to navigate. Swedish industry actors faced with the challenge, in this thesis embodied by a case study at Lantmännen, need new guidelines to produce successful products in the new market. This becomes even more evident when developing innovative products, which means products with new and relatively innovative claims. Such products create niche markets within the already existing area of functional pet food.

There are six main takeaways validated from the research:
• The marketing of a functional pet food product should be centred around the functionality (“claim”) of the product to appeal to consumers.
• The initial customer segment should be opinion leaders.
• The relationship to the consumers should be built on trust to a large extent.
• Specialty retail stores are the most suitable channel.
• Indirect costs can come from deficient sustainable product development or wrong level of claim.
• It is beneficial to use value-based pricing as pricing strategy.

The case study describes the challenge for Lantmännen R&D as they are investigating opportunities for development of an innovative functional pet food product for subsidiary Lantmännen Doggy. Their potential product, with the essential amino acid L-lysine as the active ingredient, enhances cognitive function in mammals for a period of four to six hours.

The conclusions have been generated by combining three different knowledge areas - ‘functional foods’, ‘the pet food industry’, and ‘establishing of an innovative niche market’ - to an interconnected knowledge area aimed at such product development. The results have then been tested on the case to test their practical applicability, and then evaluated by their bearing on the general case (i.e. whether the same result would be obtained if the case company and/or product was another). The theoretical and empirical knowledge have been gathered and evaluated with the help of a framework, and the analysis has been conducted with building blocks from the Business Model Canvas (BMC) as starting point and structure.

• author: Bengtsson, Lovisa ; Bildt, Gunnel and Skäremo, Julia
• supervisor: Stein Kleppestø; Malin Sjöö; Emma Nordell
• organization: Department of Business Administration
• course: TMA820 20151
• year: 2015
• type: H2 - Master's Degree (Two Years)
• subject: Technology and Engineering
• keywords: functional foods, innovation, pet food, product development
• report number: 284
• ISSN: 1651-0100
• other publication id: LUTVDG/TVTM--15/5284--/SE
• language: English
• additional info: All authors contributed equally to the report.
• id: 5463978
• date added to LUP: 2015-08-12 10:49:53
• date last changed: 2015-08-12 10:49:53