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This is to certify that the
thesis entitled
ANALYSIS OF SOME PROBLEMS ENCOUNTERED
IN DEVELOPING NEW POULTRY PRODUCTS
presented by

Julius F. Bauermann

has been accepted towards fulfillment
of the requirements for

Ph.D. degree in Poultry
Science

16/ F ”NW
/

 

ajor professor

DateApril 18, 1972 <

0-7639

LIBRARY

Michigan S are
University

 

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ABSTRACT

ANALYSIS OF SOME PROBLEMS ENCOUNTERED
IN DEVELOPING NEW POULTRY PRODUCTS

by

Julius Frank Bauermann

Compelling reasons are at hand for continued new product devel—
opment. More than 200 poultry and/or egg products have appeared on
the market as fully developed, yet a large majority of them have
experienced limited sales or have been withdrawn. Extensive research
on poultry and egg product development has been conducted by several
universities, but little of it has been utilized by the industry.

The purpose of this study is to analyze poultry-product development
and the problems associated with such development, particularly in
relation to small firms as defined by the U. S. Small Business Admin—
istration.

In—depth case studies of two small USDA inspected manufacturers
of further—processed poultry products were made. Personal interviews
of key management personnel were conducted to determine attitudes and
philOSOphies towards product development. For further assessment of
management's insight into marketing procedures, selected products from
each firm were consumer tested to solve a particular problem that
management believed important. The reactions to and comprehension
by the firm of the consumer tests were analyzed and discussed.

A review of product development considerations based on a

Julius Frank Bauermann
literature review and the author's fifteen years' experience of working
in and with the industry was employed in the data analysis.

Results of the study showed that small further-processing firms
depend heavily on brokers for marketing advice, sales and distribution
of their newly-developed products. The majority of new product ideas
came to the further processor from outside sources. Brokers were most
important although buyers and ingredient/additive suppliers were also
considered helpful.

Suppliers were frequent sources of services to the firms (in the
study). Among the service areas involved were technology in relation
to food additives, engineering, flavorings, and particularly packaging
and services related to packaging.

Quality control on finished products, when practiced, was very
cursory. Raw ingredients and other materials specifications were not
used. In part this was due to management's lack of appreciation for
quality control and in part due to the failure of management to com-
prehend the quality control results if and when obtained.

Various methods were used by the firm's managements to estimate
costs of new products. Although they may not have been true costs, they
were sufficiently accurate to permit initial marketing or related
decisions.

The results indicated that the firms did not carry out formal
market testing programs. As with quality control, the inability of
management to plan, execute, or comprehend a marketing study was one
major reason. Brokers often provided management with substantial and
highly respected, by the firm, aid in this area.

The study further brought out that advertising was used sparingly

Julius Frank Bauermann

and that certain forms of advertising were of little value to the small

firm, especially television and most other forms of retail advertising.

A consumer panel showed:

1.

an overwhelming preference for an eight-ounce capacity plas-
tic cup with plastic lid as projecting a ”salad image" and
being more convenient to use than an eight—ounce capacity
aluminum cup with aluminum lid.

a strong liking for a commercially developed chicken salad
and a dislike for a chicken salad developed by a university.

among those not expressing a dislike for chicken, that the
value of a commercial frozen 2—lb. cream—style gravy and
sliced chicken to be less than 75¢; and a new competitive
frozen chicken parts and gravy to be more than 75¢ in value.

ANALYSIS OF SOME PROBLEMS ENCOUNTERED
IN DEVELOPING NEW POULTRY PRODUCTS

BY

JULIUS FRANK BAUERMANN

A THESIS
Submitted to
Michigan State University
in partial fulfillment of the requirements
for the degree of
DOCTOR OF PHILOSOPHY

Department of Poultry Science

1972

 

ACKNOWLEDGEMENTS

The author is indebted to Dr. H. C. Zindel, Dr. L. E. Dawson,
Dr. T. H. Coleman, and Dr. H. E. Larzelere for their patience and
guidance during his study program and thesis preparation. Particular
appreciation goes to Prof. J. A. Davidson for his encouragement and
direction during the early stages of the academic studies for the
degree.

It is also appropriate for the author to thank his former co-
workers at the Pennsylvania State University for their incentive and
encouragement to pursue the academic work leading to a Ph.D.

However, the deepest and most sincere gratitude goes to the
author's wife and children for their patience, inspiration, and

sacrifices to permit him to pursue the degree program to completion.

ii

TABLE OF CONTENTS

Page

LIST OF TABLES v

LIST OF FIGURES vi
Chapter

I. INTRODUCTION 1

Situational Analysis 1

Purpose of Study 4

Organization of Study 4

II. PRODUCT DEVELOPMENT CONSIDERATIONS 6

New Products 6

The Role of Quality in Product Development 8

Economic Considerations lO

Sociological and Ecological Considerations 11

Legal Considerations 12

Marketing Considerations 13

Advertising and Promotion Considerations 16

Alternative Outlet Considerations 17

III. CASE STUDIES OF TWO POULTRY PRODUCT MANUFACTURERS

AND COST ANALYSIS OF THEIR SELECTED PRODUCTS 19

Size and Description 20

Products 21

Distribution 22

Method of Product Development 23

Raw Ingredient Sources 24

Quality Control 25

Package Design 26

Market Testing 26

Advertising 28

Pricing Policy 29

Costs 31

iii

Chapter

IV. CONSUMER PREFERENCE STUDIES OF SELECTED POULTRY
PRODUCTS AND CHARACTERISTICS

Relative Utility of Frozen Chicken and Gravy
Consumer Preference for Chicken Salad

Packaging and Taste
Industry vs. University

V. FURTHER ANALYSIS AND DISCUSSION OF DATA
Marketing
Costs
New Products
Quality Control and Packaging
Television Advertising
Pricing Policy

VI. SUMMARY

BIBLIOGRAPHY
General References

APPENDIX

Product Development Checklist

iv

Page

36
36

42
45

47
47
48
51
52
53
54
56
59
62
67

67

Table

LIST OF TABLES

Preferences of Consumers for Selected Salad Packages

Consumers' Ranking of Selected Salad Packages as
to Convenience

Consumer Preference for Taste of Chicken Salads

Percentage Allocation of Total Manufactured Cost
by Plant and Product

Page

43

44
46

50

 

LIST OF FIGURES

Figure Page

1. Questionnaire Card 1 Used in Measuring Relative Utili— 38
ties of Two Concepts of Chicken and Gravy

2. Questionnaire Card 2 Used in Measuring Relative Utili— 39
ties of Two Concepts of Chicken and Gravy

vi

 

CHAPTER I

INTRODUCTION

Situational Analysis

 

Interest in new product development has increased markedly in
recent years. The number and kind of items on store shelves has
changed nearly fifty percent in the last decade. A number of reasons
for these changes can be cited, such as changing consumer behavior,
increased purchasing power, and the rapid technological advances ex-
perienced in recent years. For some processors, new products have been
added to make more efficient use of manpower and facilities, for others
to provide a hedge against seasonal fluctuations in their basic busi—
ness, and still others to complement existing products or to convert
by-products into greater economic value. Perhaps one of the most basic
reasons for adding new food products has been that each food processor
is doing his best to maintain his share, or to get a larger share, of
the consumer food dollar.

Some impressive obstacles against success of new products are
known. For example, Angelus (1970) reported that in 1968, 10,000 new
items were introduced in supermarkets and that of these 8,000 failed.
Of the latter number 7,000 were in regional distribution and 1,000 were

in national distribution. A. C. Neilsen & Co. (1969) is quoted as

 

 

2
stating that ”out of every 100 items submitted to grocery store buyers,
23 are accepted.” Angelus (1970) studied seventy-five product failures
in detail. About half of them were food products and all were national

brands. He listed six reasons for their failures:

H

Insignificant consumer difference to other products

Poor product positioning (Positioning is its market position
or place in the market, not shelf allocation.)

No point of difference (me—tooism) between products

Bad timing of introduction

Poor product performance for consumer

. Wrong market for company

N

O\Ul-L\L.Q

A generally accepted figure for successful new products on the market,
based on those introduced, is twenty percent.

In spite of the foregoing discouraging factors, compelling reasons
for continued new product development can be found. Goodman (1970)
cited an average product life cycle of only 2.9 years. Thus, a firm
must develop products just to keep itself "alive". A. C. Neilsen & Co.
(1969) reported that annual sales gains can be traced to new products.
Their statistics of established products measured show that in the
latest 12-month period these products accounted for $57 billion in
sales, about equal to the volume of the previous year. New products,
however, accounted for almost $8 billion additional sales, or 12.2
percent of the year's total business. A. C. Neilsen & Co. have also
reported (Anon., 1967) that 12.2 percent of the dollar value of food
items measured during October and November, 1966, was from products
on the market less than a year.

The USDA Poultry Slaughter Reports for the past decade show that

 

the amount of turkeys and chickens used for further processing has

increased each year. There has been a three-fold increase in pounds

3

of turkeys and a one—third increase in pounds of chickens used for fur—
ther processing. Both of these increases took place while the pounds
of turkeys slaughtered increased by sixty—five percent and chickens by
eighty—nine percent. More than 200 poultry and/or egg products have
appeared on the market as fully developed over the last decade, yet a
large majority of them have experienced limited sales or have been
withdrawn from the market. A number of poultry products have been
developed by university personnel, taste panel tested, and even test
marketed (Reid, Baker, Darrah, 1960; Reid, eti ald 1960a, 1960b;
Reid and Darrah, 1960; Marshall, 1960, 1961; Reid, Baker, Darrah,
1961; Reid and Darrah, 1961; Marshall, 1962a, 1962b, 1963a, 1963b;
Jack, 1964; Darfler and Jack, 1964; PENB, 1964; Margolf, 1964;
Marshall, 1964; Stiles and Froning, 1964a, 1964b; Jack, Darfler, and
Stratton, 1965; Baker, et. a1., 1966; Baker, et. al., 1967; Baker,
et. al., 1967a, 1967b; and MacNeil, 1967); but few, if any, have
succeeded commercially. Reasons cited by poultry processors during
personal interviews by the author, for not using these products, have
been, (1) actual sales of the products were at odds with those
reported by the limited market tests performed on the products, (2)
a fear of a firm with greater marketing/financial power usurping the
market after it has been developed by a lesser firm, (3) inability
to commercialize production and economically produce the products,
and (4) product costs exceeding competitive product costs by a wide
margin.

The National Commission on Food Marketing (1966) reported that

census concentration ratios in the poultry processing industry have

4
been low compared with other food manufacturing. These firms spent
less than one—half of one percent of their total sales on new pro—
duct development. Using data from the USDA on Federally inspected
plants, the Commission report showed concentration had increased in
chicken slaughtering and virtually no change had taken place in the
concentration ratios of turkey slaughterers over a five year period.
The studies in this instance were referring to what the trade calls
”dressing plants" (those which slaughter and cut up chickens and
turkeys to the point of being ready-to—cook) as compared to ”further
processors." The latter are highly concentrated according to the
Commission and tend to be specialized in what they produce and how
they produce. With little product differentiation, extreme cyclical
periods of depressed and high prices, overall low margins, more
mergers and increased vertical integration took place in the late
60's. As a result of all these factors, new product development has
increased noticeably. Substantial problems have arisen for both small
and large firms as they take on new products, firm expansion, and

overall growth in the industry.

Purpose of Study

 

The purpose of this study was to analyze poultry-product deve10p—

ment and some of the problems associated with such deve10pment.

Organization of Study

 

The study is organized in the following manner. A situational

analysis of poultry and egg products is provided in Chapter I.

Chapter II provides a review of product—development considerations

 

 

 

 

 

 

 

5

based on a literature review and the writer's own experience working in
and with the industry for fifteen years. Chapter III describes two
firms studied, their product—development capabilities, experience,
market—testing program, quality standards, advertising, packaging and
distribution. Cost data obtained for selected products made by each
firm are included in Chapter III. Each firm was asked to select a
problem associated with one or more of its leading products which
might lend itself to solution through market testing in the form of a
consumer panel. The products selected, questions asked, and results
are given in Chapter IV. Chapter V discusses and further analyzes
data contained in the previous two chapters. Finally, in Chapter VI the
results are summarized. In addition to specific references cited in
the literature review, a list of general references is provided
following the last chapter. A systematic checklist for product de—
velopment is made available as an appendix. The major subjects covered
in this check—list are:

1. New Product Sources

2. Evaluation of Products

3. Quality Control

4. Advertising and Promotion

5. Legal

CHAPTER II

PRODUCT DEVELOPMENT CONSIDERATIONS

New Products

 

A new product can usually be classified into one of three types.
The first type is the most glamorous and Spectacular, namely the innova—
tions. These are truly the new product, in that they did not exist
before.

A second type is one which might be labeled adaptations. These
are products which are new in one sense, but old in that they are a
different form of an already existing product. Included in this group
are the ”improved” products. The "improvement" may be only in ease of
opening the package.

A third classification is the group of products known as imita-
tions. This grouping may be further broken down into three sub—classes.
The first is that of duplicates in which the new product is really a
carbon copy of one previously marketed. The second sub-class is the
substitutes, in which the new product is a different type of food, but
which can be readily substituted for an existing food product. An
example of this category is the use of soft-drinks in place of milk and
fruit juices. The third sub-class is synthetics. Into this class
fall such new products as those which are made from an entirely dif-

ferent ingredient source, but in which the finished product is used

identically as a product currently on the market. An example of this

is the use of soybean (vegetable) protein meats for animal protein meats.
It is quite possible for a product to fall into more than one

category. For example, an adaptation of a product may well make it

substitutable for another, whereas in its original state it may not be.

Liquid milk would be unsuitable for use in hot-dog manufacture, but by

drying it into non-fat dry milk powder(an adaptation), it becomes very

useful as a substitute for other protein additives in hot—dog manufacture.
Wasson (1960) provided a list of thirteen ways a product can be

new. The positive factors are:

. New cost

New convenience

New performance
New availability

. Conspicuousness
Easy credibility

OMDWNH

Those which might slow up market development and make it more costly

and difficult are:

7. New method of use

8. Unfamiliar patterns of use

9. Unfamiliar benefit
10. Costliness (either fancied or real)

Those which have an ambivalent effect in that they seem to exert neither
a positive nor a negative effect are:

11. New appearance

12. Different accompanying or implied services

13. New market

A fourteenth item (new construction or composition) was listed but not

actually included because Wasson felt it had no consumer meaning.

The Role of Quality in Product Development

 

Both firm size and attitude seem to have a great deal of bearing
on quality in relation to product development. Competition, of course,
also directs the relationship of quality to product development. A
small firm tends to look upon quality in terms of providing a "good-
sized portion" or a "generous quantity of meat" in a TV dinner or
meat pie. The large firm looks at quality in the sense that its food
product has high microbiological and nutritional standards and that
the ingredients are all tested and are not contaminated or second-rate
in any way. Using its cost controls, market research analyses, and
microbiological tests, the large firm does not provide what it claims
to be the oversized portions and less wholesome product offered by
small firms.

Competition also plays a role in quality of product development
according to Grieg (1964). The type of competition and the intensity
of it will frequently force a firm (or it may do so voluntarily) to
differentiate the quality of its product in order to remain or even
become competitive. It is always possible to sell a product for a
lower price than an identical competing one by reducing the quality
and/or quantity of ingredients. This is fairly obvious as in decreas—
ing the meat content and increasing the gravy content of a frozen
chicken pie. Or it could be more subtle in which the basic differ—
ence between two seemingly identical cake mixes is that one already
contains powdered egg, and the other requires an egg to be added to
the mix at the time of preparation in the home. One cake mix

reflects the price of powdered eggs in its cost structure, whereas

9

the cheaper one, with fewer ingredients, provides a lower shelf price.

A standard-of—identity established for a product can severely
restrict some aspects of qualitative competition by controlling the
number, amount and kind of ingredients used in that product. In
situations such as these, other qualitative characteristics can be
used to create real or imagined differences in quality between products.
Among these are color, shape, design, packaging, grade, services, and
graphics. Generally these qualitative characteristics come into play
in mature product areas rather than in new products. Advertising and
promotion campaigns can bring about imagined quality differences, for
example, a brand name over a generic version of the same product. A
packaging concept can also be used to create imagined quality differ-
ences. It is nearly impossible for a new firm to overcome obstacles
of this type and still capture any sizable share of the market. Even
if the obstacles are overcome, returns are likely to be quite low.

Grieg (1966) stated that qualitative competition can be broken
down on the basis of vertical, horizontal, and innovational competi—
tion among the firms. Vertical competition means superior quality
between one of two products which consumers consider worth the cost.
An example might be high—meat—content chicken pie vs. the common low-
cost low-meat-content 8—oz. chicken pie. In horizontal competition
cost difference is not important and qualities are ranked in different
order by consumers. Breads serve as a good example in this instance.
Innovational quality competition signifies that changes in the product
are considered an improvement in the product by most people; and,
although usually involved, a cost increase is not mandatory. An

often—cited example of this type is that of hydrogenated vegetable

10

oils vs. lard.

Economic Considerations

 

In developing any new product, one must make a volume—cost—profit
analysis of the product early in its developmental stage. Among the
desirable estimates are the minimum volume required to avoid a loss,
the volume necessary to reach a desired profit objective, and the
probable profit or loss at various output ranges. If the firm is well
established, losses might be sustained for some period of time before
"the corner is turned" and profits begin to accrue. For a firm just
starting, profits and that ”corner" might have to be immediate.

Costs are generally classified according to one of three types
(Keller and Ferrara, 1966; Smith and Cooper, 1967). Fixed costs are
those which do not vary with volume of product. Among these would
be those concerned with rent, depreciation, insurance, and part of
the labor costs. Semi—fixed costs are those which vary with volume
but not in direct proportions with the increases or decreases. A typi-
cal example in this category is maintenance costs. The last classifi-
cation is that of variable costs. These costs will vary with the vol-
ume of the goods produced. Examples include labor cost, raw ingredi—
ents, storage, and warehousing. Obviously, the classification of the
costs given are dependent upon the time interval being considered.
Therefore, it must be realized that for some decisions 3 cost might
be fixed and classed as variable in other decisions.

Developmental costs also receive special consideration. If the
product is one which is being added to an already established line

and the plant is operating below capacity, certain fixed costs may not

11
have to be considered in determining the total cost of the new product.
If plant capacity is exceeded eventually as a result of the new product,
the product cost will have to be re—estimated on this basis.

External economic factors should also be taken into account when
developing a new product. Periods of prosperity or depression can
affect sales of a product, since the product may not be compatible
with declining incomes or expected consumer expenditures. The demo—
graphic structure of the market must be related to the product as
well. For example, it should be known that a product geared toward
consumers with a great deal of leisure time may be because of retire-

ment status and not because of high income.

Sociological and Ecological Considerations

 

Some firms believe they have consumer sociological considerations
to take into account when developing a new product. Some of these are
closely tied to economic factors, for example, shifting of expenditure
priorities by retiring consumers. Labor conditions may seriously affect
the costs if the product has substantial hand labor involved in its
manufacturing. High unemployment may provide a plentiful work force
and lower wages, whereas the opposite may be true if unemployment is
low. A product which requires sophisticated processing in manufacture
will require skilled Operators with adequate education. A history of
labor unrest in a given area may preclude the development of a product
that is perishable to a great degree or one that cannot be stored for
indefinite periods.

In the last few years, a number of manufacturers have had to

abandon a product or its continued development because the

12
manufacturing process was ecologically unacceptable. Sewage load was
too high to permit economical processing of waste from the product.
Air pollution from smoking products or possible carcinogenic activity
of natural smoke might preclude installation of a smokehouse for a
new smoked product. Hence, management has to decide whether capital

equipment, if not already on hand, is worth the risk.

Legal Considerations

 

Today legal considerations have assumed a very dominant role in
the food—processing business. Many firms now seek corporate identity
through the use of a trademark or logo, or both, to tie in all of
their products, particularly if they are diversified. When the firm
expects to grow and expand its sales territories, it is very important
that this trademark or logo be registered either in the U. 8. Patent
Office or in the appropriate state office when only intrastate pro—
tection is desired. If the firm chooses not to protect itself in this
manner, then some day it may find itself competing with a product of
the same name, design, form, etc., but of cheaper quality. Consumers
will not be able to detect the subtle difference in manufacturers,
and the firm originally making the product will suffer and have no
recourse for punitive action against its competitor.

Patents can be particularly valuable to a firm engaged in new
product deve10pment when the product contains something that is
patentable. A particular type of machinery, a particular type of a
process possibly using this special machine, a breakthrough in
chemistry related to the product's formulation, anything of this type

is desirable to have patented. On the other hand, something added to

13
the product to change its characteristic slightly (a recipe, a method
of handling it) is seldom patentable or worth patenting.

Heightened consumer activity and militancy in recent years along
with a number of new laws and regulations, as well as some strengthened
old ones, have had a profound effect on new products. Labels, package
size, graphics, ingredients, and even composition or formulation of
products are closely regulated. In the particular case of poultry and
egg products, the number of standard-of—identity products is increas—
ing through formal written regulation and in an unwritten form enforced
by disapproval of labels unless the product conforms to the ”unwritten"
standard—of—identity. This type of activity has a curtailing effect
on new product development because of restrictions limiting ingredients
or use of new, but non-standard components; or simply, as Schon (1967)
pointed out, fear of innovation often causes resistance to implementa-
tion. Depew (1969) pointed out that laws and regulations designed to
curb economic dishonesty in the 1930's, if applied now, would actually
lower quality of foods and restrict new product development.

Labor regulations which call for minimum wages, safety require-
ments, protection around certain types of machines and union contracts
can stimulate or retard new product development. Usually stimulation
is because of economic considerations, be it higher production rates,
continuous processing to reduce the number of employees required over

batch processing, or to simplify manufacturing.

Marketing Considerations

 

Before any new product is marketed, substantial market research

should be performed. The behavior of consumers and their attitudes

14

towards new products must be carefully evaluated. There are a great
many ways of doing this, and numerous studies and critiques are in the
literature. Those by Marquardt (1964), Angell (1967 and 1968), and
Ellis (1967 and 1970) are illustrative for food products, and the
reader is referred to the list of general references for additional
articles. No one method should be considered best for any given
product or situation.

One way of approaching consumer-behavior marketing research is
by checking consumers' activities, wants, customs, habits, and tastes.

Activities—— Such areas as leisure time in terms of what is
received from retirement as well as that due to vacations and
similar recreation-leisure trends must be evaluated.

Wants—— For new products it is important to determine if the
product fills a consumer need, if that need has gone unrecog—
nized in the past, or if a competing product has already ful—
filled it, and if the need must be created to sell the product
to the consumer.

Custom—- Lowenberg (1970) reviewed the socio—cultural basis of
food habits, particularly in underdeveloped countries. She
pointed out that higher cultural habits provide more daring
and a greater number of innovators. To her list of religious
patterns, meal patterns, status (occupation) patterns, should
be added economic, ecological, and "power” (drug, sexual, etc.)
patterns.

Habit—— It is important to note any market habits which have
developed. For example, it would be foolish to sell a fresh
product to a market that shops once a week. Or, to sell
family-size portions or high—unit-cost items to one which
uses individual servings or is concerned with poverty.

Tastes-— The desire for a higher quality food, more convenience,

a better grade of food, or similar indicators which show that
consumers are ready to take on new sensations and experiences

must be checked. For example, a change in income level might
prohibit or promote acceptance of a new product.
A second approach to market research for new products is to estab-

lish a product to meet the market needs. Bauermann, et. a1., (1968)

suggested that the following items be considered under this approach:

15
Product setting—- The product should be classified as to when it
is used: breakfast, dinner, snack, etc. Further classifications
can also be carried out as to whether it is a meal, a component
of a meal, a party item, etc.
Identifying characteristics-— Physical factors (color, shape,
etc.) distinguishing this product from others must be identi—

fied. A rating in terms of taste, convenience, nourishment,
and other sensory benefits should be established.

Barriers to purchase-— Areas to be investigated would include

reasons why people have not bought products in this category,

why alternative methods of distribution are not used, and how

the predicted barriers can be overcome.

Characteristics of market segments-— Consideration should be

given to socio-economic (geographic location, race, religion,

or other segmentation), psychological (emotional appeals such

as grading, inspection, dietetic, and health concerns), and

physiological (segmentation achieved by unusual texture or

spiciness for example) factors.

Influence of marketers-- The influence of a broker on a retailer,

and the consumer ultimately, needs to be verified for the product

area. If not broker handled, then introduction of the products to
the trade and consumers must be set up.

Diehl (1970) presented a possible third approach which combines the
essentials of the two approaches cited above and sets up a series of
matrices which tend to highlight and single out areas of possible
product deve10pment. He used a market framework (the way the market
looks to consumers) based on meals and then explored ”product
dynamics” (what products mean in consumer terms) before setting up the
matrices. This ”method” approach, however, is too complicated for
small firms.

Thorough market research does not guarantee success of a product,
but rather it should be looked upon as a means of reducing the risk of
failure of a product. Such research can provide information about the

size and nature of the potential market and provide guidance for

deve10pment, marketing, advertising, and promotion.

 

 

16

Advertising and Promotion Considerations

 

Advertising and promotion must be intimately involved with pro—
duct deve10pment so that the whole of the firm meshes smoothly and
completely in the introduction and sale of the new product. One can-
not just say, "Here is the product; sell it!", to the marketing team
in the firm. The same care and planning that goes into other aspects
of product development must go into advertising and promotion campaigns.

Dailey (1964) suggested that a good promotion plan should include the

following:
1. Background information
2. Market targets
3. Promotion objectives
4. Methods of promotion
5. Budget

Strategy involved in promotion and advertising must take into
account whether the new product will be primarily directed towards
consumers, the trade, or a combination of both. Consumer promotion
and advertising is particularly dependent upon the type of media
available in the market, and also on how well these media serve the
particular market. Costs, companion products of the same firm, the
firm’s recognition by consumers, and similar factors play a big part
in decision making. Among the media available in the consumer area
are newspapers, television, radio, consumer magazines, outdoor adver—
tising, car and bus cards, promotional literature, contests, coupons
and premiums, and just plain publicity (Bauermann, et. a1., 1968).

Trade advertising and promotion tends to have to be a little
more sophisticated than retail advertising, but there are several

methods of dissemination available. Among them are a promotional

 

17
field force, trade magazines and newspapers, direct mail, in-store
display material and trade conventions, fairs, or shows (Bauermann,
et. a1., 1968).

DeNisco (1970) revealed what the science department of one adver-
tising agency can do in new product development. The services consist
of liaison work between manufacturer and advertising agency representa—
tives, writing up of data and technical fact sheets on the product,
and technical advice during filming commercials. Lawless and
Katzenstein (1969) claimed that successes outnumbered failures 10:1
when prior market research was carried out and dropped to 2:1 without
prior research. They pointed out that by doing this research in the
advertising agency, they are better able to "sell" the product with

media, art and copy.

Alternative Outlet Considerations

 

Bauermann, et. a1., (1968) pointed out that there are two broad
outlets available to the food manufacturer to market a new product.
The first is to market through the retail trade to the consumer.
This involves selling through retail chain food stores and independ-
ents, particularly the affiliated ones. The second outlet is the
institutional market. Institutional outlets include restaurants,
hospitals, county homes, rest and nursing homes, industrial feeding
establishments, penal institutions, hotels, motels, resorts, and
similar dining operations. Two distinct approaches are needed for
each of these markets. In the case of retail sales, packaging must

be designed to stimulate sales, a brand name of some type must be

promoted, a careful advertising and promotion campaign laid out,

l8

profitability of the item must be pushed (particularly in relation to
other products), unique characteristics spelled out, and a complete—
ness of the overall line of a firm's products must be evaluated.
Brokers will almost certainly need to be used by a small firm in
order to sell the product.

Institutional sales must be emphasized primarily on a cost-per—
serving basis with particular emphasis on preparation costs. Strong
advertising campaigns are generally not needed since much of this
type of outlet is serviced by wholesalers and purveyors. Branding is
not a strong point, nor is package design in selling to this type of
outlet.

Some people feel that a third market-entry alternative is avail-
able to processors and developers of a new food product, and that is
contract production. Under this system the processor permits an
established food packer or distributor to market his product for him
and he would produce it under a contractual arrangement. The contract
specifies in advance the volume to be produced, quality standards, and
pricing or cost arrangements, along with other legal concerns such as
product liability, manufacture of competitive products, and terms of
remorse. In this manner the processor is relieved of marketing

responsibility, but has to settle for potentially less profits.

CHAPTER III

CASE STUDIES OF TWO POULTRY PRODUCT
MANUFACTURERS AND COST ANALYSIS
OF THEIR SELECTED PRODUCTS

Information obtained for the two case studies was through the
use of taped interviews with the management person responsible for
the further processed products and his immediate superior. Answers
to all questions and areas discussed were oral, except for product
costs and pricing, in which instance actual cost sheets for the pro-
duct selected were provided by the respective managements. Identical
questions were asked of each firm, although not necessarily in the
same order or at the same management level. The latter was impossible
because of availability of interviewees and their access to certain
types of information.

The two firms (hereafter referred to as Plants A or B) selected
were deliberately chosen because they were typical of small USDA

inspected firms in the further-processed poultry product industry.

.7

The U. S. Small Business Administration standard for "small” food pro-

\

cessors of a firm with less than 250 employees was the major sizing

a.-. .. .. .-...-o-.o—--.

criterion used. One firm represented a former slaughtering operation

/

which converted completely over to further processing, and the second
was one in which further processing was a small part of its slaughter-
ing business. Questions were collated and the answers analyzed,

condensed, and edited for presentation in this thesis. Each

19

20
sub-section which follows includes the replies to questions in that
inroad area. Names and location of the firms are left out to protect
their identity; otherwise all other information is believed true and

accurate .

Size and Description

 

Plant A:

This firm is an incorporated subsidiary of a vertically inte-
grated corporation which consisted of two feed mills, an egg—process—
ing—and-marketing firm, a l,000,000+ laying—bird operation, a started-
pullet supply operation, a few small broiler grow—out facilities and
the chicken slaughtering plant. The slaughtering plant processed
700,000 lbs. of broilers per week on-the—average, and further process—
ing accounted for about one percent or 7000 lbs. of that figure. Total
sales volume for the latest complete fiscal year (1968) was $9 million.
Only nine of the 160 total employees were employed in the further
processing operation. Further processing has been carried on for two
years of the more than twenty the firm has been in existence.

Plant B:

This firm is an independently and privately—owned corporation
that slaughtered poultry from the mid 40's until 1967. Since 1963
they have been further processing both turkeys and chicken. Average
production of further-processed products was 120,000 to 160,000 lbs.
per week depending upon time of the year. Summer was the period of
greatest volume. Sales volume for the latest complete fiscal year
(1968) was $11 million of which about 55 percent was for further

processed items. The remainder was accounted for by fresh poultry

 

21

sales and specialty cuts of raw poultry. Some 170 people were employed

in the operation.

Plant A:

Products

At the time of the interview, the firm was producing three items.

The first was "inherited” when the plant was purchased from its origi—

nal owners; the other two were newly developed. These products were:

1.

Plant B:

Frozen all white meat cooked, deboned chicken and gravy for
both retail (1 lb. 4 oz.) and institutional sale.

Pieces of cooked chicken in a barbecue sauce packed frozen
for both retail (2—1bs.) and institutional sale.

Cooked chicken parts and gravy frozen for both retail (2—lbs.)
and institutional sale.

At the time of the interview, the firm was manufacturing twenty—

four items. These products were:

1. Sliced thermoplastic chicken roll in 3—02. retail vacuum pouch.

2. Thermoplastic chicken roll in 5—1b., 6 lb. 12 oz., and 15—1b.
institutional sizes.

3. Thermoset chicken roll in 5-1b. institutional size.

4. Thermoset chicken with turkey roll in 5—lb. institutional size.

5. Chicken salad in 8—oz. retail and 5-1b. institutional size.

6. Chicken scrapple in 1-1b. retail size to a limited market.

7. Rendered chicken fat in 8-oz., 13—02., and 4-1b. retail and
25-lb. institutional sizes.

8. Barbecued chicken in a bag of random weight and for retail sale.

9. Thermoset water cooked white, combination, and dark turkey

rolls in a 7— to 9-lb. institutional size.

 

22

10. Thermoset water—cooked sliced white turkey roll in 3-oz.
retail vacuum pouch.

ll. Philadelphia-style oven—roasted white, combination, and dark
turkey rolls in 6— to 7—1b. institutional size

12. Thermoset oven—roasted white turkey rolls in 7—lb. institu—
tional size.

13. Whole smoked turkeys for both retail and institutional sale.

14. Sliced smoked pressed breast of turkey in 3—oz. retail
vacuum pouch.

15. Turkey salami in 5-lb. institutional size.

16. Chopped chicken livers in 3—1b. casing for institutional sale.

17. Chicken—a—la—king in 3—1b. casing for institutional sale.

18. Two retail packs of pre—cooked breaded fried chicken just
about to go into market. Items were packed in 1 1b. 12 oz.
aluminum tray.

19. A chicken pattie made by another firm to Plant B's specifi—

cations and from materials supplied by Plant B. Institu—
tionally sold in bulk lO-lb. box.

Distribution

 

Plant A:

Distribution was through brokers in Washington, Baltimore, Boston,

and Philadelphia.

Plant B:

Broker distribution was primarily used in California, Arizona,
Maine to Florida on the eastern seaboard, west to Wisconsin, Michigan,
and Chicago. Major strength was reported to be in Philadelphia, Balti-
more, Washington, Boston, New York, Buffalo, Pittsburgh, Albany and
Syracuse. The firm now plans to concentrate east of Green Bay, Wisconsin.

Los Angeles was proven to be a costly market because one week of the

 

23
minimum 5—week shelf life is taken up by shipping. All items shipped

to Los Angeles were fresh and not capable of being frozen.

Method of Product Development

 

Plant A:

New product ideas come from a former broker who was the firm's
sales manager. He apparently self-generates non—competitive products
which he and his wife partially develop and then turn over to a
research and development man and kitchen foreman to perfect. New pro-
ducts must be limited at present to existing facilities and equipment.
A time period of seven to eight months elapsed for the chicken and
gravy concept to be perfected. This time was longer than anticipated
because several bad leads were followed on solving a rancidity problem
which developed after 90 days' storage. They realized professional
technological aid might have helped, but it was not solicited.

Plant B:

New product ideas come from the sales department, with possibly
fifty percent of those originating with brokers and buyers via the
sales force. Management indicated preference for this source because
it felt brokers and buyers have the pulse of the public and food chains.
Duplication of competing products was done and also used for leads to
other related products. No new product ideas were solicited from
consumers because the firm already had received too many ideas from
other sources. The procedure usually followed was for the sales
department to provide a description of a new product and then for the
product development people to set up different flavor or other varia-

tions for management to test.

24

Raw Ingredient Sources

 

Plant A:

No raw ingredient standards were set up either for outside or
in-house sources. The one exception was the size of shell (ready-to—
cook chicken without giblets or neck) used in the products containing
pieces of chicken, in which a weight size was specified. Sauces,
gravies, and the like were purchased on the outside already prepared.
Plant B:

All chickens and turkeys were purchased from USDA—inspected plants.
Samples had to be submitted by prospective suppliers for visual check
of defects, olfactory examination, and if necessary, a microbiological
check. Over a period of years and from previous experience in slaughter
operations, the firm had a general knowledge of the quality of supplies
from most prospective suppliers. Shipments were rejected on occasion,
based almost exclusively on visual and olfactory determination. Since
most supplies were brought in fresh, loads had to be rejected on the
spot or else be accepted; a holdup pending microbiological test results
could cause Spoilage. Other ingredients were subjected to the same
visual and olfactory tests, plus microbiological tests whenever war-
ranted. Lots with off—flavors, off-odors, off—color, abnormally high
microbiological counts, or other defects were rejected and shipped

back to the supplier.

25

Quality Control

 

Plant A:

No formal or regular testing regime was followed with the excep—
tion of routine flavor—shelf—life tests on products by production and
management personnel. When queried on microbiological testing, the
firm admitted ”they have sent some out to be checked.” This "checking"
appeared to consist of one or two total plate counts early in the
development of the products. Since "they came back okay", the firm
did nothing more. The reason given for this lack of action was ”beacuse
the firm was too small."

Plant B:

The quality-control staff at the firm consisted of a consulting
food technologist who spent two days a week in the plant, a foreman
who also spent part of his time in product development, and three
women whose responsibilities were as follows: (1) l/2—time quality
control, l/2—time product development, (2) full—time quality control,
and (3) 1/4—time spice mixing, l/4-time clean up. The quality-control
staff took samples of product throughout the day and performed checks
for consistency and ”normal” characteristics of flavor, uniformity,
and texture. Samples of products were taken periodically throughout
the week and sent to an outside commercial laboratory for microbio—
logical examination. Tests for total plate count, coagulase positive
staphylococcus, Coliforms and salmonella were run continuously.
Streptococcus tests were run occasionally.

Testing procedures concentrated most heavily on the biggest

26
production item, but other items were "hit harder" if test results
indicated any tendency for them to deviate from accepted standards.
Proximate analysis (protein, fat, carbohydrate, ash, and moisture
content) was done by the outside commercial laboratory, but not on a

routine basis.

Package Design

 

Plant A:

Package design was done completely by the firm that printed the
cartons. The processing firm had a hand in technical advice only dur-
ing the filming of the vignette used on the package.

Plant B:

Package design was determined partly by the product—development
personnel on the basis of function and partly by the sales group on
the basis of appeal and design. All products bore the distinctive firm
logo and featured the firm name. Since most of the firm's products
were sold on an institutional basis and primarily in one form of pack—
aging, the art department of the packaging supplier provided design and
color suggestions. The firm had shown little interest in retail items
because it felt it did not have finances and distribution to sell a

retail market.

Market Testing

 

Plant A:
No formal consumer—testing program was carried out. When it was

felt that a new product was sufficiently developed, a few of the plant

27
employees and the plant management hierarchy tried it. When they
approved of it, the product was then taken out by the sales force for
comments from brokers and buyers. If that reaction was favorable, they
then got the product in a couple of stores and used that success to
persuade others to stock the item.

Portion and package size were determined by going out in the
marketplace to see what and how similar products were packed, and then
they packed accordingly. No innovations or tie—ins with other products
were attempted.

Plant B:

Much the same testing program was followed by Plant B as was out-
lined above for Plant A. No formal program was followed and when the
management group approved, the product was sent to a broker who sub-
mitted it to several of his accounts. The firm indicated that experi—
ence had shown when the product was accepted by those accounts, the
other brokers and their accounts would find it acceptable. The firm
had experimented with using commercially—run consumer test panels,
but had not found them very reliable. They also had tried using test
stores for limited sales of products just being developed, but because
most of their products had been institutional, they did not use them
routinely.

Portion and package size were determined by the sales group
analyzing what they thought the market for the product would be. Gen-
erally speaking, price was a big determining factor in regard to
their decision. When they thought that costs had soared beyond the

normal price range, they picked a smaller portion to decrease selling

 

28
prices, or packaged more of the product per unit to increase selling

prices.

Advertising

 

Plant A:

Advertising of the firm's further processed poultry products was
somewhat hindered in that they appeared as only part of a house adver-
tisement for the firm's major product, ready-to—cook poultry. This

type of advertising appeared in one trade magazine (Broiler Industry)

 

and in the Sunday supplement of a local major city newspaper.

The firm was quite excited about its latest advertising, which
consisted of 11 ”spots” per week over a 4—week period on an independ—
ent television station in the major marketing area for a retail product
they had introduced a few months before and whose sales had now
plateaued. The television advertising was to serve three purposes.
First, it was to be a test to see if TV advertising would increase
sales of the product. Success or failure was to be measured by before
and after sales volumes. Second, it was hoped that the TV effort
would influence other retail outlets in the marketing area to handle
the product and thereby increase market penetration. Third, the firm
did not use an advertising agency and wanted to see if they could
"do—it-themselves”, and what the cost would be.

The independent station was chosen because it covered only the
marketing area, whereas the three network stations spilled over into
adjoining marketing areas. The cost of the project was $2200 for the

taping of the commercial, the talent used in the spot, and the running

29
of the 11 spots over the 4-week period. Costs were virtually identical
for all four stations. The firm decided on time slotsscattered over
the day and evening, but directed towards programs with a high woman-
viewer rating and the age bracket of 18 to 49 years. The decisions
by the firm as to viewing audience were not based on market research,
but simply on the personal intuition and expectations of management.
Plant B:

The firm employed an advertising agency, but management determined
where the advertising dollar went. They told the agency what was
wanted in the way of an advertisement and then the agency laid it out
for management's approval. Advertising follows a set pattern only in

the trade papers (Producers' Price Current, Supermarket News, and six

 

food terminal papers such as Food Trade News, Griffin Report, Food

 

Distribution News, etc.) where the advertisement may introduce a new

 

product or simply keep the firm name before the public (wholesale buyers).

Some advertising was done in daily newspapers, but this was generally

a c00perative deal with a supermarket chain's weekly food advertisement.
Other media used in the past and expected to be utilized again

include billboards and radio. Television had been used in the past;

however, the firm has not been satisfied with the results. They admit

television gives the most exposure, but claim that one cannot measure

its sales value.

Pricing Poligy

 

Plant A:

The cost of manufacture was estimated, a survey was made to see

30

what like products were selling for, brokers' advice was solicited

(and followed very closely), and then they tried to set the highest
price they could get for the product. There was some evidence that

an established retail price on the market for like items was used as

a base, and then the "standard" thirty percent markup was taken off,
(which the retailer has put on) along with five percent for the broker.
This resulting figure was the ”plant selling price".

A break-even price was not determined. It was pointed out that
the retail products were not making money because of the high cost of
getting the products into the stores. The management noted that a lot
of product would be given away before it got into the stores. A volume
estimate of sales of the products was not available; they simply hoped
to tax the present facilities and then grow accordingly.

Plant B:

The cost of manufacture of the product as developed was established.
To this was added a "normal” manufacturing and distribution margin to
determine the plant selling price. A retail selling price was worked
out from the plant selling price. As an example, a chicken spread in an
eight-ounce container cost forty cents to manufacture. A margin of
thirteen cents was added to this price to obtain the plant selling
price of fifty—three cents. A distributor would then mark up the spread
to sell at sixty-one cents, and the retailer would add his markup to
sell at retail for eighty-nine cents.

Promotions for the chicken spread were handled by using promotion
and advertising allocations in the thirteen cents differential between

the manufacturing cost and plant selling price. A typical example

31
found the distributor selling at forty-five cents (based on a fifteen
percent reduction in plant selling price) and the retailer selling at
sixty—nine cents or seventy-nine cents per unit depending upon whether
he wanted a high or low promotion feature.

The firm determined the break-even point on the product immedi-
ately since the manufacturing cost was estimated as if in full pro-
duction. The firm then sold on that basis. If the volume was not
generated as predicted in the manufacturing cost, the product was
dropped. No fixed time for the drop—no drOp decision was made. Whether
or not to drop the product was based on many considerations, although
the buyers' attitudes were a prime factor, since, if they did not like
the product themselves, they would quit buying it. On the other hand,
even if buyers liked it and it still did not meet volume predictions,

management would decide to drOp the product.

Costs

Plant A:

This firm provided the cost breakdowns for two of its products.
Several of the cost factors were really unknown, but management used
figures that they felt were generally correct based on experience from
other operations. Among these cost factors were freezing, which was
fixed at l/2¢/1b., trucking (including billing tallying, labor, etc.)
at 2c/lb., and an overhead cost on the finished product of 2c/1b.
Labor costs included all labor, both direct and indirect.

No development costs as such were figured into the product cost

since the firm expected these to be covered as part of labor and over-

32
head expenses on existing products, both raw ready-to-cook and further—
processed.

Product: 11—oz. chicken w/gravy in retail aluminum foil pan with
cover and carton, packed 12 per master case

Ingredient cost:

Gravy .0138

Chicken white meat, cooked .3322
Packaging costs: .1165
Labor (adj. @ $2.00/hr.) .1891
Freezing (@ l/2c/1b.) .0050
Trucking (@ 2c/1b.) .0200
Overhead expense (@ 2c/lb.) .0200

Total plant cost (per lb.) .6966
Discount (2%, 10 days) .0155
Promotion (3% of selling price) .0233
Brokerage (5% of selling price) .0387

Plant selling price (per lb.) .7741
11-02. unit or tray selling price .5322
Master-case price as estimated above $6.39
Actual selling price per case $6.25

Product: 2—lb. cut chicken w/barbecue sauce in retail aluminum foil
pan with cover and carton, packed 6 per master case

Ingredient cost:

Barbecue sauce .0468
Seasoning .0035
Chicken (1—3/4 1b. shell @
33c/1b.) .2888
Packaging costs: .0695
Labor (adj. @ $2.00/hr.) .0500
Freezing (@ l/2c/lb.) .0050
Trucking (@ 2c/lb.) .0200
Overhead expense (@ 2c/1b.) .0200
Total plant cost (per lb.) .5036
Discount (2%, 10 days) .0113
Promotion allowance (3% of selling
price) .0170
Brokerage (6% of selling price) .0340
Plant selling price (per lb.) .5659
2-lb. unit or tray price $1.13
Master case price as estimated above $6.78

Actual selling price per case $6.90

33
Plant B:

Costs for this firm were available for several of their products,
and three were selected. The first, chicken salad, was sold to brokers
and distributors for retail sale and will provide an insight into costs
of a product with a high packaging and marketing effort. The second was
an oven-roasted turkey breast, which was sold through brokers and dis-
tributors, but only for institutional sale. It could be expected to
have a low packaging cost but high manufacturing cost. The third was
a turkey salami, which was sold through the brokers and distributors
for sale primarily to retail outlets who had to slice it to sell it.
This item had both low packaging and low manufacturing costs, but these
were coupled with somewhat higher marketing costs.

The available costs were in much greater detail than those
received from Plant A and were based on actual cost figures rather
than on estimates for some cost factors. This could be attributed to
more experience in manufacturing and marketing further-processed
poultry products.

Product: 8—ounce aluminum cup of chicken salad with sleeve over—
wrap, packed 12 per master carton

Ingredient cost:

 

 

Cooked diced chicken meat .332
Other ingredients .095
Packaging cost .193
Direct labor .093
Indirect labor (28% of direct labor) .026
Payroll taxes (5.5% of payroll) .006
Fringe benefits (16% of payroll) .019
Overhead provision .023
Operating expense provision .028
Total plant cost (per lb.) .815
Commission (3% of ave. selling price) .032
Total plant selling price (less margins) .847 (per lb.)

Ave. selling price previous 4 weeks $1.02 (per lb.)

34

Product: Random weight (approx. 7 lbs.) oven-roasted turkey
breast, packed individually and 6 to master carton

Ingredient cost:

Raw boned turkey white meat .8191

Other ingredients .0038

.8229
Ave. 89.5% yield .9187
Other ingredients added after cooking .0096
Packaging cost .0407
Direct labor .0453
Indirect labor (22.5% of direct labor) .0010
Payroll taxes (5.5% of payroll) .0025
Fringe benefits (16% of payroll) .0074
Overhead provision .0233
Operating expenses provision .0280
Total plant cost (per lb.) $1.0765
Commission (3% of ave. selling price) .0351

Total plant selling price (less margins) $1.1116 (per lb.)

Ave. selling price previous 4 weeks $1.17 (per 1b.)

Product: Random weight (approx. 5 lbs.) turkey salami, packed
2 per carton

Ingredient cost:

Raw boned turkey dark meat .1206
Other ingredients .0214
.1402
Ave. 88.5% cooked yield .1605
Packaging cost .0638
Direct labor .0725
Indirect labor (24.5% of direct labor) .0178
Payroll taxes (5.5% of payroll) .0050
Fringe benefits (16% of payroll) .0144
Overhead provision .0233
Operating expense provision .0280
Total plant cost (per 1b.) .3853
Commission (3% of ave. selling price) .0165
Total plant selling price (less margins) .4018 (per lb.)

Ave. selling price previous 4 weeks .55 (per lb.)

35
Management of the firm gave the following breakdown of items
included under the costs listed on the previous pages:

Packaging cost-— All material and supplies, packaging labor
included in direct labor.

Direct labor—- All labor directly associated with the product.

Indirect 1abor—— Selling salaries, supervision, product devel—
Opment, officers' salaries, janitorial, office salaries, ware—
house, and maintenance.

Overhead provision-- Plant rental, equipment rental, depreciation,
repairs and maintenance, interest, refrigeration, storage, taxes,

personnel expenses, USDA inspection, insurances, heat, light, and

power.

Operating expense—— Office expense, trucking and delivery expenses.

CHAPTER IV

CONSUMER PREFERENCE STUDIES
OF SELECTED POULTRY PRODUCTS
AND CHARACTERISTICS
The Michigan State University—Wayne State University Detroit

Consumer Preference Panel (hereafter called MSU-WSU Consumer Panel) as
described by Marquardt (1964) was available for preference testing a
limited number of poultry products. The panel originally met four
times a year, but in the last two years had met less often due to
several external conditions. Nearly a year had elapsed since the
previous meeting of the panel. Both processing firms in this study
were contacted and asked to submit two or three suggestions of products
and consumer—oriented questions they would like to have answered about
these products. From these suggestions three products and character—
istics about each were selected for presentation to the panel. The

product, questionnaire, and panel results are hereinafter described.

Relative Utility of Frozen Chicken and Gravy

 

Plant A:

The firm was just introducing a 2—1b. frozen cooked chicken—parts—
in—gravy product in an aluminum pan with a chipboard carton overwrap
for retail sale. The prepared products manager indicated he did not

know if their suggested retail price of $1.59 per carton was competitive

36

37
or a "value” in the consumer's mind. Since no directly comparable
product was on the market, they were being guided in their pricing by
existing products that were indirectly related via competition.

One means of measuring the relative utility of this product against
that considered competitive is the Von Neumann—Morganstern method
described and used by Marquardt (1964). Their model suggested that
the utility or subjective value of a sample may be substituted for its
objective value in the calculation of an expected value.

For the purposes of this study, a well—known 2-1b. frozen cream-
style gravy with sliced chicken (sliced from a chicken roll rather than
from pieces of deboned chicken) product, which had been on the Detroit
market for some time, was compared to the cooked chicken parts in gravy
of Plant A. This latter product had never been offered for sale on the
Detroit market. Because of the difficulty in heating the products and
maintaining an attractive and uniform appearance over an eight-hour
time period of the panel, the products were left frozen and the
vignettes of the product on the carton were used by the panelists for
comparison purposes. In each case, the photograph—vignettes were
accurate in depicting the contents of the package, and the consumers
were so informed. Seventy-five cents was placed next to the cream—style
gravy and sliced chicken and this combination was labeled "Display One".
The other carton with cooked chicken parts and gravy was labeled
”Display Two". The seventy-five cents was identified with typewriter
symbol #, the cream-style gravy with sliced chicken was symbol *, and

the chicken parts with gravy was identified by symbol %.

38

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039 upOOm

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39

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40

Each panel member was given two cards as shown in Figure 1
and 2. They were then asked to indicate which of the three items in
the displays would be their first, second, and third choice, assum—
ing they had been awarded a prize. The purpose of the first question
was to establish rationality in the consumer and to obtain an ordi-
nal measurement. This first part of the questionnaire was designed
to eliminate those consumers who would take money under any circum-
stances because "I hate chicken!”, or similar reactions. Of 109
respondents, twenty-three indicated a clear preference for the money
and thus were eliminated from any further consideration, and ten more
quite obviously did not understand the procedure and had to be
eliminated.

Overall results of this phase of the study were very disappoint-
ing from several aspects. First of all, the panelists were for the
most part experienced in that they had participated before in the
M.S.U.—W.S.U. Consumer Panel on a number of occasions. In addition
many of them had likewise participated in the Von Neumann-
Morgenstern model. They were also briefed by the panel director on
the proper procedure for this method before they participated in it.
In spite of this experience, it was obvious that most of the panel did
not comprehend how to do the test, and the attendant at the display
had to re-explain constantly how to undertake the test correctly.

All of this provides a certain lack of confidence in the validity of
the panel results.

Unexpected but very strong apparent prejudices came to light as

the panelists paused at and discussed the display. For example,

41

many of them recognized the cream—style gravy and chicken as a brand
they had tried before and did not like, because of, in their opinion,
the excessive amount of gravy present in relation to the chicken. They
therefore chose Display Two every time in order to avoid getting any
of the undesirable product. In effect this placed a rating of ”no
value” on the cream-style gravy with chicken, but did not really
establish a value on the chicken parts and gravy, except, since the
respondents did not switch over at Store Eleven when they had a chance
at 75¢ only, they presumably valued the chicken parts and gravy at
more than 75c. The strength of this prejudice was tested and confirmed
when the cream—style gravy and sliced chicken was put in Display Two
and the chicken parts and gravy was put in Display One with the money.
The panelists promptly switched over to checking Display One in every
store to avoid getting the product in Display Two. In effect then,
since they did not switch displays at Store Eleven, they rated the
”value" of the cream—style gravy and sliced chicken at least less
than 75¢. It was noted that, although some panelists did not exhibit
the prejudice cited above, they had one equally strong for chicken in
any form. They were observed checking that column which would give
them chicken every time, which of course was Display Two. It did not
seem to matter to them which chicken was there, just so long as they
got chicken. They seemed unable to or unwilling to go to Display One
in any store. Presumably they had not previously tried the cream—
style gravy and sliced chicken.

Unfortunately, of the seventy-six panelists remaining, forty-six

exhibited the prejudices cited above. Thus, only thirty of the

42
panelists could be classified as having correctly completed the
questionnaires. The results for both the afternoon and evening
sessions of the panel did not present a sufficient number of panelists
at any crossover to reach a valid conclusion as to the value consumers

would place on the product.

Consumer Preference for Chicken-Salad Packaging and Taste

 

Plant B:

This firm packaged its chicken salad in an 8-ounce container to
be sold under refrigeration at retail sale. The salad was made from
fresh ingredients and in order to provide the minimum four—week shelf
life necessary, the firm had developed a means of pasteurizing the
product after it had been packaged. The package was a 400x201 aluminum
cup to which was double—seamed an aluminum 401 lid with a full-panel
pull—out. The cup was not attractive by itself, nor could mandatory
information be printed on it because of the large quantity of cups
required to be ordered to do so. As an alternative, the cup was
placed in a chipboard sleeve, which provided printing area and a
more attractive package. Management of the firm was not satisfied
that this package conveyed a "salad image” and also wondered if the
full—panel pull-out was judged convenient by consumers as was supposed.

In order to answer these questions, a display was set up consist—
ing of three containers. Symbol # was the previously described
Plant B package. Symbol % was a yellow plastic cup with a clear

plastic set-in type cover and which contained 8 ounces of salad and

43
was of approximately the same configuration as the aluminum cup.
Symbol @ was also a yellow plastic tub but had an opaque lid and held
one pound or 16 ounces of salad. It was typical of that used for
selling cottage cheese and undoubtedly had a ”dairy—delicatessen
image". The consumers were asked the following question: "Of the
three packages displayed, which would you expect to see fresh
chicken salad packed in? (Please check one)." Their answers are
shown in Table 1. By simple inspection it can be seen that 86.4 percent
of the consumer-panelists preferred symbol %, which was the yellow
plastic cup with clear plastic lid that held 8 ounces of product and
had a configuration similar to the Plant B package. Unfortunately,
this container cannot withstand the rigors of Plant B's pasteuriza—
tion treatment, but the results did confirm management's suspicions
that their current package did not convey a strong ”salad image” to
the consumer.

Table 1. Preferences of Consumers
for Selected Salad Packages

 

 

 

Plant B 8-ounce 16 ounce
Package Plastic Cup Plastic Cup Total
2 95 13 110

 

 

The consumers were also asked to rank the packages in the order
which they felt would be most convenient to use. The results are

shown in Table 2. To determine if the differences obtained were

44

significant and to determine the overall ranking of the containers as

Table 2. Consumers' Ranking of Selected Salad Packages
as to Convenience

 

 

 

Plant B 8 ounce l6—ounce
Rank Package Plastic Cup Plastic Cup
1 3 57 34
2 26 19 50
3 66 18 ll

 

to convenience of use, a Coefficient of Concordance, as described
by Moroney (1967), was determined. This ratio is set up on the basis
of the Null Hypothesis of no agreement amongst the judges. It is
designed so that it can vary from O, signifying complete randomness in
allocation of rankings, to l, signifying complete agreement among the
judges.

The Coefficient of Concordance (W) calculated for the ranking
by convenience of the packages was 0.316, which indicated a high
amount of disagreement amongst the judges. Snedecor's (1956) distri—
bution for F was used to test for significance and W was found to be
significant at greater than the 1% level. Therefore, ranking the
containers by convenience of use resulted in the 8-ounce yellow plastic
cup with a clear plastic set-in lid being judged most convenient to
use followed by the yellow plastic tub of l6-ounce capacity and opaque

snap-on lid and, finally, Plant B's 8—ounce aluminum cup and lid.

45

Industry vs. University

 

A unique opportunity was available to test a commercially made
and sold poultry product against a university-developed poultry pro—
duct. The chicken salad manufactured by Plant B requires a pasteur-
ization treatment after packaging. This treatment was limited and
could not be done prior to packaging due to the instability of the
salad dressing at 180°F or higher temperatures. The difficulties in
packaging and marketing this product because of the pasteurization
requirement have been alluded to before. The chicken salad recipe
developed at Pennsylvania State University utilized dry ingredients
to provide uniformity in manufacture and easy inventory, but most
importantly, used a cooked salad dressing which permitted packaging
without pasteurization along with extended shelf-life.

The M.S.U.—W.S.U. Consumer Panel was asked to rate the salads
as to flavor on the 5—point Hedonic scale. Two concepts of the
Pennsylvania State University salad were tested separately against
Plant B's salad. The first P.S.U. salad concept contained dehydrated
celery made primarily from leaves, and the second concept had celery
composed mostly of diced stalks. Flavor levels of celery in each
concept were identical, but the leaf celery gave a dark green cast to
the overall salad color. The stalk celery by contrast was lighter and
more yellow in color. In neither case were the P.S.U. salads as
light or yellow—white in overall color as Plant B's. The results of
the Hedonic taste test are presented in Table 3 where a score of ”5”

was equivalent to "Like very much" and a score of ”l" was equivalent

46

to "Dislike very much”. As can be seen in the table,

Table 3. Consumer Preference for
Taste of Chicken Salads

 

 

Plant B P.S.U. Salad P.S.U. Salad

 

Salad Leaf Celery Stalk Celery
Ave. Score 4.02 2.10 2.68
Total consumers
tasting 106 56 50

 

a marked liking was shown for the taste of Plant B's salad and a
marked dislike of the P.S.U. salads. There is some evidence that
color may have influenced taste since the consumers ranked the stalk
celery salad slightly higher in taste score than the leaf celery
salad.

In each of the two sessions involving tasting, the consumers
were asked to rank the Plant B salad XE} the particular P.S.U. con-
cept after they had separately ranked them as to taste score.
Ninety—four percent of the consumers preferred the Plant B salad to
the P.S.U. leaf celery salad and eighty—six percent of them preferred
the Plant B salad as compared to the P.S.U. stalk celery salad. In
the face of these overwhelming preferences, it appeared that with

respect to taste, the university salad needs further development.

CHAPTER V

FURTHER ANALYSIS AND DISCUSSION OF DATA

Marketing

Small firms in further processing of poultry conducted no formal
market testing or consumer studies. Marketing pg£_§g_received little
attention. This could be seen from attitudes displayed by the company
managements interviewed. One reason for this may be the inability of
the managements to analyze and comprehend results, or to make use of
the data in making marketing decisions, programs, and projections.
This was often attributed to pressure of other business activities
on small executive staffs, which frequently consisted of only one or
two persons, or staffs with no training in marketing pg£_§g. A
second reason brought out was the high cost relative to other
expenses the firms encountered.

The consumer studies on poultry products with the M.S.U.-W.S.U.
Consumer Panel were designed to show these firms how consumer panels
could help them. The results tended to substantiate the beliefs of
the firms with regard to the value of consumer tests on the one
hand, but did demonstrate the tests' validity on the other. The Von
Neumann—Morgenstern method of measuring relative utility of a product
proved to be difficult for the experienced panel to do, was accepted

reluctantly by Plant A as being credible and capable of giving the

47

48
results intended, and utlimately generated meager results of bare
credibility.

The salad—packaging and taste-panel results were clear cut, sim-
ple to understand, and quickly accepted as genuine by Plant B's man—
agement. Perhaps this ready acceptance was due to the fact that the
results tended to substantiate beliefs already held by the firm's
management.

In actuality, both firms relied heavily on brokers and the retail
food store buyers' reactions, as expressed by the brokers, for con—
sumer reaction. Both managements expressed the thought that ”if the
brokers and buyers don't accept it, neither will consumers". On the
one hand, this could be considered a tribute to the brokers' and
buyers' knowledge of the market, but it also showed an almost child-
like faith in the omnipotent marketing power of brokers.

One may successfully argue that the reason for the ”expertise”
of the brokers and buyers was that most of the further processed
poultry items shown to them are ”me—too” types of existing red meat
products. They can often give ”expert guidance" to a firm based on
their previous experiences with a similar red meat item offered to

consumers .

Costs

Initially, as a firm went into further processing, true costs
were seldom known. As the commitment to further processing became
larger, the sophistication of costs, equipment, and the like became

greater. Calculation of the percentages that fixed, semi-fixed, and

49
variable costs made of the total, by products, indicated that some
products carried a disproportionate share of these costs. The data
in Table 4 illustrates this point.

No discernible pattern was evident to account for the dispropor—
tionate allocations. Neither high margin nor high volume had any
effect on allocation. Each firm assigned an identical established
amount for fixed costs to each product. This caused fixed cost alloca—
tion as a function of total costs to vary with the amount of the manu-
factured cost. High manufacturing costs resulted in low fixed cost on
the product. Low manufacturing costs produced high fixed cost alloca-
tions. Such a policy could be detrimental to new products with low
production costs, if they are required to share "full costs” during
initial stages of marketing. Overpricing may hurt its chances of suc—
cess. On the other hand, a high cost item may actually be underpriced
and in the long run could financially hurt the company involved.

Plant A's estimated costs of two cents a pound for trucking and
two cents a pound for overhead were not far off from the actual costs
of 2.8 and 2.3 cents a pound, respectively, as reported by Plant B.

Each firm reported brokerage commissions to be increasing. This
was accepted because both firms felt the services provided by brokers
were increasing. It is interesting to note the magnitude of the dif—
ference between commission rates paid by the two firms. The three—
percent rate paid by Plant B was considered a more ”usual” rate.

Plant A indicated they were forced to pay the higher six—percent rate
to get a good broker to handle the product. Reasons to justify the

higher rate were the limited product line, higher introductory efforts

50

 

 

 

 

 

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51
and costs by the broker, and the fact that the product was frozen,
which traditionally called for a higher commission rate. A difference
such as that cited would certainly work against a small firm, a firm

with a limited production line, or against new product development

per se .

New Products

 

In this study brokers were the most important, if not complete,
influence on new product deve10pment. Plant B management cautioned,
however, that brokers must be selected with care. For example, brokers
who handle ice-packed poultry may not be geared to sale of further—
processed poultry products, or they may give little attention to a
one—line company.

Further—processed poultry products on the market appear to be
innovations to many in the poultry industry. Yet, examination of the
firms' product lines indicated few, if any, true innovations. Most of
them should be classified as imitations or substitutes. Plant A's
chicken and gravy products were clearly imitations of existing pro—
ducts on the market.

Plant B innovated with some poultry products such as a fully—
cooked barbecued chicken in a bag, pre-cooked breaded fried chicken
parts, and a refrigerated canned chicken salad with several weeks'
shelf-life. Their biggest volume items, however, were chicken and
turkey luncheon rolls and the first item the plant made, which was
a chicken scrapple. All of these items were substitutes for red meat

products.

52

Grieg (1964) pointed out that a firm produces on the basis of
expected consumer wants and that they must know consumers' activities,
habits, tastes, wants, and customs. As a result there can be quality
competition in vertical, horizontal, or innovational forms. The
further processing of poultry has resulted in vertical quality compe—
tition in the industry. For example, several firms produce chicken
rolls of essentially the same thermoplastic type. The only differ-
ence between them is their quality. The same is true for poultry meat
pies and white meat turkey luncheon rolls. Horizontal quality compe-
tition has been restrained by economic factors. The relatively high
cost of poultry meats, as compared to red meats,commands that they be
used in high quality and high cost products. This limits their competi—

tive position vis—a-vis red meats.

Quality Control and Packaging

 

Sophistication of quality control, when it existed in small
further-processing plants, was very low, and so it was with both
firms interviewed. No testing program or specifications for raw
materials existed in either plant. Plant A did virtually no quality
control while Plant B did a limited amount on finished production.
As with marketing, the reason for lack of activity in this area was
due to a lack of personnel in management capable of performing the
work or interpreting the results.

Packaging suffers by much the same comparison. No packaging
research was carried out by Plants A or B. Size of container, per-

formance, graphics, packaging material, etc., were dictated by

53
competitive products either directly or indirectly, economics, or the
packaging supplier. Because packaging machinery costs were so high
and minimal quantities of custom-design materials so large, many
small plants were limited to semi—automatic machinery for filling and
packaging and stock designs and sizes of packaging, particularly with
respect to retail containers. Casing suppliers and corrugated con—
tainer suppliers offered extensive graphic services to processors at
minimal cost. Therefore, institutional packages frequently appeared

better designed than retail containers of small processors.

Television Advertising

 

The results of Plant A's television campaign were rather dis—
appointing to management. An increase in sales was only temporary and
did not sustain itself beyond the first week. Market penetration was
helped slightly when two more supermarket chains (one large, one
small) took on the firm's product line. This left only one dominant
chain in the area and two distributors who did not handle the product
in the market. The firm felt that television advertising did not pay
off. Much could be said as to whether the campaign was executed prop—
erly, whether or not using a network station rather than an independent
station would have achieved better results, whether a more active
or frequent number of television spots would have done better, etc.;
but these are questions that only more testing and research can

answer. This, the firm was not interested in doing.

54

Pricing Policy

 

A big difference existed between the two plants studied in
determining or setting prices for products. Yet, this writer's
experiences in working with other further-processing firms indicated
that both pricing policies do exist with the smaller firms in the
industry. A number of firms followed the same procedure as Plant A
in establishing price, which is to say they estimated it one of
several ways.

For example, the firm may use a competing product's price as
its own and assume that if the competitor is making money, it will,
too. Frequently, the competitor may be a large firm with high volume,
and the smaller firm rationalizes that what savings are lost with its
low volume can be made up through lower advertising, marketing and/or
packaging costs to the smaller firm. A second method used was to
show the product to several brokers and/or buyers, soliciting their
advice on price, and then juggling ingredients, amounts, quality, and
packaging to meet this price. A third method usually involved the
advice of the firm's accountant. He recommended that the firm
determine its ingredient cost and add a twenty-five to forty percent
markup ”like the rest of my clients”. Still another variation was
when the product cost the plant ”nothing”. This unique rationaliza—
tion was brought on when the product was made from what was by-product
of another operation and had been previously discarded. Thus, what-
ever was earned with this former by—product was gravy, either

figuratively or literally.

55

Plant B had a more solid framework for establishing price. But,
even so, there was dissension within management on what cost factors
should be allocated to new products. For example, some felt the pro-
duct should bear its full share of costs, particularly overhead,
start—up expenses, and the like. Others in the firm's management felt
the product should be allowed to mature to some extent before full
costs were assessed. Obviously, much depends upon the financial posi—
tion of the firm as to what share of the costs are assessed to a new
product. In some instances the firm may want to be flexible in this

regard.

CHAPTER VI

SUMMARY

Managements of small further-processing poultry firms studied
were heavily dependent upon brokers for marketing advice, sales, and
distribution of their new and developed products.

True costs were frequently not known by the small further proces-
sor, particularly with respect to new products, but the various methods
of estimating costs appeared to be sufficiently accurate to permit a
firm to go to market without fear of being too far out of line.

Quality control on finished products, when practiced, was very
cursory. No raw ingredients/materials specifications were established
and the firms studied relied on the integrity and reputation of their
suppliers. A lack of appreciation for quality control and its import-
ance was partially the reason, but more frequently no one in management
was capable of understanding any chemical and/or microbiological tests
or their results.

Outsiders were cited by small further poultry processors studied
as the source of most new product ideas; those most frequently men—
tioned were brokers, buyers, ingredient/additive suppliers, and competi-
tors.

Suppliers were frequent sources of services to the firms in the

study. Among the service areas involved were technology in relation

56

57
to food additives, engineering, spicing and flavorings, and particu—
larly packaging and services related to it, such as graphics and
materials.

No formal market—testing program was carried out by the firms
in this study. In part, this was due to managements which lacked
knowledge to plan, execute, or comprehend a marketing study, and in
part, due to the fact that their brokers often provided well-thought-
of aid in this area. The use of consultants and consumer testing had
been made by the firms, but the results were considered of little
value and certainly not worth the money spent to obtain them.

Advertising was used sparingly, and certain forms of it were con-
sidered to have little merit. Among those most prominently cited were
television and most other forms of retail advertising. The only excep—
tions to the latter were coupons in chain—store advertisements and
similar cooperative promotion efforts.

Management of the firms was found to be inexperienced and in
many respects totally lacking in knowledge in the areas of quality
control, marketing, and engineering. Strengths appeared to be in the
areas of general business knowledge, sales, and production. Both the
firms were in sound financial condition, undoubtedly a reflection on
their management.

Consumers from the Michigan State University-Wayne State Univer-
sity Detroit Consumer Preference Panel showed an overwhelming prefer—
ence for an eight—ounce capacity plastic cup with plastic lid as pro—
jecting a ”salad image" over an eight—ounce capacity aluminum cup

with aluminum double—seamed lid. They also chose the same preference

58
with respect to convenience of use of the packages.

The panelists indicated they had a strong liking for a commer-
cially—developed chicken salad and a dislike for a chicken salad
developed by Pennsylvania State University.

Consumers from the panel who did not express a dislike for
chicken demonstrated the value of a commercial frozen 2—1b. cream-
style gravy and sliced chicken to be less than 75¢. They also
determined a new competitive frozen chicken parts and gravy to be

more than 75¢ in value.

BIBLIOGRAPHY

BIBLIOGRAPHY

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Marshall, J.H., 1960. New marketable poultry and egg products, 5,
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9

 

61

19623. New marketable poultry and egg products, 9,
Chicken bologna and chickalona. Cornell Univ., A.E. Res. 83.

1962b. New marketable poultry and egg products, 10,
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1963a. New marketable poultry and egg products, 11,
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1964. Expanding the market for fowl through new pro-
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Moroney, M.J., 1967. Facts From Figures. Penguin Books, Baltimore, Md.

National Commission on Food Marketing, 1966. Organization and competi-
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PENB, 1964. Profit Making Opportunities in the 60's With Eggs$.
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Reid, R.G., R.J. Ford, R.C. Baker, and L.B. Darrah, 1960a. New Market—

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A.E. Res. 36.

1960b. New marketable poultry and egg products, 3,
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62

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General References

 

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American Management Association, 1958. Establishing a New Product Pro-
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Badenoch, B.W., et.al., 1964. New Products, New Profits; Company
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Bahm, Jr., J.F., et. a1., 1959. DeveIOping a Product Strategy: Plan-
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Baker, F.R., 1966. Market Testing Poultry and Egg Products. AEA

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63

Blood, J.W., 1967. Utilizing R&D By-products. American Management
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64

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APPENDIX

APPENDIX

Product Development Checklist

 

1. New Product Sources

H.

CD'TJFJUOGICD

Brokers, buyers, distributors and sales personnel
Ingredient and food additive suppliers
Competitors

Trade fairs, associations, and conventions

. Consumers
. Magazines, newspapers, etc.
. Analyses of trends in nutrition, living habits, food

storage methods, cooking appliances, packaging, selling,
and processing equipment
Other food product areas

II. Evaluation of Products

A. Production

1.

Compatibility of product with existing plant, equipment,
and production capacity

. New items or modifications, if any, needed for production

Space

Equipment

Power

. Labor (including skill level)
Safety requirements

(DDJOO‘CD

. Production stage of product, i.e., pilot plant, lab, etc.
. Lead time available

Investigation if co—packer could make more efficiently
or economically

Quantity to be produced in relation to time

Ingredient availability, storage, purchasing specifica—
tions, and quality control

By—products to be disposed of

B. Marketing

67

68
1. Type of market
. Retail direct

. Wholesale or retail indirect
c. Institutional

0‘03

(1). Hotel, restaurant

(2). Military

(3). Industrial, vending

(4). Government (U.S. and state)

d. Export
2. Market potential

Size (geographic and volume)
. Competitive products

. Consumer test results

. Product setting

O—OO‘QJ

C. Packaging

1. Specialized equipment needed
2. Materials

a. FDA approved
b. Product protection

(1). External contamination
(2). Oxygen and light
(3). Moisture exchange

3. Design, graphics, and color

. Meet legal requirements
Compatible with product image
. Price marking spot

Pilferage protection

. Attractiveness

(DO-DUN

4. Utility

a. Sized to proposed consumer needs
b. Convenient to open
c. Re—use feature

5. Fits into warehousing and distribution practices
(stacking, handling, shelf-space, shipping damage)

6. Production and packaging equipment speed rate syn-
chronized

7. Test extended shelf—life in package

69
Dc Pricing

. Total cost of product, break-even cost
Selling price

. Relationship to price of competitive products
. Volume-price relationships

. Market strength of selling price

Lfl-L‘LADNl-J

III. Quality Control

A. Microbiological
B. Chemical

1. Nutrition
2. Moisture
3. pH

C. Physical

. Flavor

. Viscosity
. Texture

. Color

. Appearance

U‘I-DDJNH

Shelf—life

. Adherence to formulation
. Weight

Sanitation

. Processing procedures

EQWFIU

IV. Advertising and Promotion
A. Promotion plan

1. Expected marketing outlet
2. Identity characteristics of product

B. Media choices

1. Art
2. Copy

V. Legal

A. Product liability coverage
B. FDA

1. Food laws and regulations
2. Fair packaging and labeling laws and regulations

70
C. USDA
1. Inspection

a. Wholesomeness
b. Standard-of—identity

2. Grading
D. FTC - trade practices
E. Labor
1. Occupational health and safety
2. Minimum age
3. Minimum wage
4. Employment practices

F. Patents, Trademarks
G. Weights and measures
H. Local and state laws in areas above.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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