5.5.1 Interconnected knowledge area
When developing an innovative functional pet food it is crucial to make sure the correct degree of claim is made for the function in order to avoid indirect costs. In order to be able to claim a function when marketing a functional food within the pet food industry, safety and efficacy studies need to be conducted. Depending on the tests and legislation, different degrees of claims can be made. The Nutrition and Health Claims regulation aims at protecting consumers from misleading communication by companies, by stating that all claims must be supported by valid scientific evidence. Also, consumer acceptance is an important factor to take into consideration when developing functional foods, and getting consumers to accept the function and trust the brand are success factors according to Wennström (2009). Additionally, trends within the pet food industry indicate that pet owners are becoming increasingly aware of what is added into the pet food. It is therefore of importance to make sure the correct claim is made for a functional pet food in order to communicate the function and reassure the consumers of the tests conducted. Legislation, or the lack of tests conducted, prohibits certain claims to be made. The authors assume that this can affect the consumer decision process as they may not trust the function if claims are weak. Additionally, information about the function will be incomplete if claims are not substantiated, which will prohibit the product from differentiation from the rest of the products. Additionally, according to the definition applied throughout this thesis, the product is not a functional food without its claim. Vague or complex claims that are difficult for the consumer to understand can disrupt the knowledge and persuasion steps in their decision process, meaning a decision is harder to reach. As a result of this, the adoption speed is affected. If consumers have trouble reaching the adoption decision, less recommendations, or even bad recommendations, can be expected. These are costly consequences, since it might affect consumer acceptance, and thereby lead to failure.
Working with sustainable product development when developing an innovative functional pet food can also reduce indirect costs. As for food for human consumption, the sustainability trend is increasing rapidly. Additionally, according to the Market
and Innovation Manager at Doggy, pet owners tend to increasingly have the same purchase behaviour for their pets as for themselves. Therefore, it can be assumed that the pet food industry will probably also experience an increase of the sustainable trend. Sustainable aspects should be considered early on in the development process when working with sustainable product development (Byggeth, et al., 2007). Therefore, if not applying sustainable product development throughout the whole process when developing a functional pet food, it can be assumed to have a negative effect on the product, or company.
Such negative effects can be consumers refusing to try the product, or bad reputation for the product or company.
Other, more direct, costs that can be expected when developing an innovative functional pet food product are costs involved in product development, such as working with sustainability, patenting, conducting scientific trials, and marketing in order to inform the consumer of the product and build trust.
Large and established companies, with a financially stable R&D unit, have an advantage when developing a functional food (Siró, et al., 2008). Additional costs that can be expected are ones involving targeting the right consumer group and researching their behaviour, which both Wennström (2009) and Parrish et al. (2006) stress the importance of.
Summary – Cost structure
The analysis of the cost structure discusses the potential indirect cost of not claiming a function at the right degree, where there is risk for failure of the functional pet food. Another indirect cost involves working with sustainable product development, which, if not applied, could harm sales and reputation as consumers increasingly demand sustainable products. Direct costs are to be expected when working with sustainability, patenting of an effect, conducting scientific trials, and marketing.
5.5.2 Application of knowledge
The direct costs connected to the case product are costs for product development, marketing, and production. It can be beneficial for Doggy to also invest in sustainable product development. Since the claim is categorised
as innovative, more extensive evidence of the effect needs to be produced. As discussed in earlier sections, marketing will be of high importance in order to spread the message and inform the consumers of the case product. Since Lantmännen have a well-established R&D department, from which Doggy can utilise synergies, costs concerning the product development will be lower.
Another synergy for Doggy that reduces the cost for building trust is the brand identity, already established from both Lantmännen (for humans) and Doggy (for pets).
Indirect costs are potential setbacks due to insufficient substantiation of claim or sustainability work. Regarding the claim being categorised as innovative, spending money on providing the requested evidence reduces indirect costs in the long run, since the message to consumers will be clearer, and therefore the benefit is more likely to be understood and accepted. Additionally, claiming without enough evidence can be damaging and costly, which is also explained by Doggy’s claims ladder. Lastly, to proceed not to take on an active strategy for sustainable product development, might be costly in the bigger picture.
However, Lantmännen have a sustainable image, which might be beneficial for Doggy, depending on how well-read the consumer is about the companies’
connection. As consumers are becoming more well-educated within sustainability, Doggy should consider working more extensively with sustainable product development as a pre-active stance can prevent higher costs due to potential legislation on sustainability in the future.
Overall, the costs are applicable to and correspond to Doggy’s ways of working today. However, Lantmännen, and by extension Doggy, already owns the licensing rights for the patent. Also, marketing should be made less expensive by support from already trustworthy brands. These are special conditions in this case, but are not proven to be untrue in other cases. The case study rather proves that the costs involved are all applicable to a real case. Concerning sustainable and legislative aspects, it is concluded that a pre-active stance is recommended.