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New Product Development: Stew Leonard’s Essay



Since its inception in 1969, Stew Leonard’s has positioned itself optimally in the United States’ grocery store industry by offering diverse food products. The firm has established four supermarkets, which are located in New York and Connecticut.

The firm’s product portfolio is comprised of dairy products, meat, wine, and juice. In addition, the firm sells its products to over 300,000 customers every week.

A workforce of over 2,000 employees necessitates the company’s operations. Stew Leonard’s has had exemplary performance over the past decades, as evidenced by its listing in the Guinness Book of World Records. This recognition was due to its sales per unit area in the category of all single food companies in the US.

Despite its superior performance over the past four decades, Stew Leonard’s is experiencing pressure from the external market environment such as change in consumer behavior and intense competition. Thus, the firm’s top management team has an obligation to respond to the prevailing market trends.

One of the most effective approaches that the firm should consider is new product development. This paper illustrates the critical aspects that Stew Leonard’s should consider in developing and introducing the new product.

New product

In line with its quest to offer diverse nutritional food products, it is essential for the firm to consider the introduction of a new snack product. The product should be produced from high-energy natural ingredients such as different whole grains, milk, and vegetables in order to meet the customers’ tastes and preferences.

In order to improve the ability of the new product to provide customers with the needed energy within a short duration after consumption, it is imperative for the firm to ensure that the snack product is easily digestible and absorbed by the body.

In a bid to improve the snack’s capacity to provide the needed energy, the firm should incorporate some of the ingredients used in the production of energy drinks such as ephedrine, ginseng, ginkgo biloba, taurine, carnitine, inositol, and creatin. These ingredients will meet the customers’ energy requirements and enhance their well-being.

Feasibility and profitability

By introducing this product, Stew Leonard’s will greatly improve its performance. The feasibility and profitability potential of the new product is fostered by a number of factors.

Food consumption

Food consumption habits in the US were affected by the 2008 economic recession. Some market segments such as the private labels were least affected by the recession. During the recession, private labels’ prices varied between 20% and 40% as opposed to the branded equivalent.

However, the trend has been reversed by the improvement in consumer confidence in the country’s economic performance over the past few years.

A study conducted by the Business Monitor International (2014) records that per capita “food consumption is expected to rise by a compound annual growth rate of 2.6% between 2013 and 2018” (par. 5).

Sustained economic performance will spur private consumption expenditure, which is critical in promoting profitability within the retail sector. Business Monitor International (2014) argues that private consumption expenditure is expected to grow by 2.2% between 2014 and 2018.

By introducing the new product, Stew Leonard will be in a position to benefit from the improvement in the consumers’ purchasing power.

Change in consumer lifestyle

Consumers in the US appreciate the consumption of healthy food products. This trend has arisen from an increase in incidents of diseases associated with poor eating habits such as obesity. Currently, consumers are shifting to the consumption of healthy traditional snack foods.

However, their preference mainly lies in the snack foods perceived to have high health benefits. The feasibility of the new snack product will be improved by the view that snacking has become a common trend amongst Americans. The NPD Group forecasts that snacking between main meals will increase by 5% to over 86.4 billion eating over the next five years (Prepared Foods, 2014).

Product diversity

By introducing the new snack product, the firm will enhance the attainment of the diversification strategy. Thus, Stew Leonard’s will be in a position to enter a new market segment, viz. the athletic market segment, which will be promoted by the unique product features.

Competitive advantage

Introducing the new product will improve Stew Leonard’s competitive advantage significantly. The competitive advantage will arise from the view that the firm expects the product to attract new customers due to the associated health, energy, and nutritional benefits.

The health, energy, and nutritional benefits of the new snack will attract diverse customer categories. This aspect will lead to an increment in the firm’s sales revenue, hence its financial sustainability.

Due to the attained level of financial sustainability, Stew Leonard’s will be in a position to finance diverse strategic aspects such as continuous product improvement, hence sustaining its competitive edge in the US food industry.

Recommended mass media and social media channels

After successful development of the product, it is imperative for Stew Leonard’s to create sufficient awareness on the existence of the new product in the market. Creating awareness is fundamental in an organization’s quest to improve the consumers’ purchase decision.

In a bid to create optimal market awareness, Stew Leonard’s should use the advertising technique, which entails mass media and social media channels.

Mass media

In its effort to create adequate market awareness through advertising, the firm should consider two main mass mediums, which include print media and broadcast media. The core broadcast mediums that the firm should integrate include radio and television.

The firm should develop attractive advertising message in order to improve the likelihood of influencing the target customers. Moreover, the firm should create awareness using different print mediums such local newspapers, magazines, and brochures.

In selecting the mass mediums, it is imperative for Stew Leonard’s to identify the most well established media houses in order to increase the likelihood of creating successful market awareness.

Social media

Market awareness should also incorporate social mediums. The core mediums that the firm should take into consideration include Facebook, Google+, and YouTube.


The choice of the print and broadcast mediums will enable the firm to create optimal market awareness due to their capacity to reach a large number of potential customers in the US given their market penetration. Using television and radio will ensure that consumers in different regions receive the intended message simultaneously.

Through these mediums, the firm will create awareness to the older customer group. Conversely, the choice of the three social mediums will enable the firm to reach the younger generation, which is increasingly becoming techno savvy. Furthermore, the two mediums have become critical sources of product information.

Consequently, consumers are increasingly using the two mediums in searching information on different products. Moreover, social mediums are characterized by a multiplier effect due to the ‘word of mouth’ effect.

Pricing structure

In order to enhance its competitive advantage through new product development, it is imperative for Stew Leonard’s to ensure that the product penetrates the market successfully. Price is one of the key determinants that the firm’s management team should consider in order to stimulate the rate of market penetration.

The price structure adopted should influence the consumers’ purchase intention. The consumers’ purchasing decision is subject to the set price point.

The firm should adopt the introduction pricing structure such as the penetration pricing strategy. This strategy will allow the new product to penetrate the market aggressively. The decision to adopt this pricing structure arises from the view that most customers already understand the benefits associated with healthy eating habits.

Stew Leonard’s has developed sufficient economies of scale, hence its ability to set the price of the new product at a relatively lower point as compared to competitors. By adopting this strategy, the firm will sacrifice short-run profits.

However, Stew Leonard’s will develop an efficient market position, which will be a critical source of the firm’s competitive advantage. The strong market position will originate from the capacity to maximize the sales revenue due to the widespread market acceptance.

Additionally, the penetration-pricing strategy will act as deterrence to potential competitors.

Customer relationship management

The high profitability potential in the US food industry has increased its attractiveness to investors. Furthermore, the existing firms are increasingly diversifying their product portfolio in an effort to exploit the market opportunities.

Despite this trend, Stew Leonard’s can enhance the dominance of the new product by developing an effective customer-relationship management system. The CRM system should be aimed at entrenching product loyalty.

One of the way through which the firm can achieve this goal entails integrating point of sale systems, which involves high-tech software that has the capacity to capture the customers’ details. Through this technology, the firm will be in a position to offer unique customer experience, for example, by designing loyalty programs.

Symons (2014) affirms that on average, “13% of disgruntled consumers will tell at least 20 people about it” (par. 2). The automated POS will enable the firm to customize its service delivery by generating automated messages such as emails informing customers on different product aspects such as product improvement.

Additionally, the POS will enable the firm to track the customers’ purchase history such as product inquiries. This aspect will improve the likelihood of influencing the consumers’ intention to purchase the product, for example, by designing attractive loyalty programs.

Inherent risk

Despite the fact that the introduction of the new product will present an opportunity for the firm to maximize its sales revenue and profitability, it is imperative for the firm’s management team to appreciate the existence of inherent risk.

One of the inherent risks that might affect the development of the new snack product entails change in consumer preferences. According to Ogawa and Piller (2006), consumers are characterized by heterogeneous product demands, which lead to micro-segmentation of product categories.

Due to change in consumer tastes and preferences, it is difficult for the firm to undertake precise forecast on the sales revenue expected to be generated from the sale of the new product. The ultimate effect is that the commercialization of the new product will be affected adversely.

This risk might arise if the firm does not have adequate understanding of the customers’ needs. Therefore, in a bid to minimize such risk, it is imperative for the firm to undertake continuous market research. The firm should use the findings of the market research to adjust its product development plan.

Risks of not launching

The food industry is undergoing a remarkable transformation, which is arising from macro-environmental factors such as change in consumer behavior. In order to align with the changing market trends, it is imperative for firms to invest in extensive product innovation programs.

The programs should focus on improving the firms’ market dominance through new product development. Failure to invest in new product development is a major risk that might affect the firms’ long run existence.

The risk arises from the view that the ability of a firm to generate and sustain growth in sales revenue, hence its financial sustainability is hindered.

The problem is further exacerbated by the view that the firm’s market dominance might be crowded-out by the competing entities. Therefore, the firm’s financial strength is diminished, which affects its prospected future growth.


The introduction of a new snack product will substantially improve Stew Leonard’s market dominance by attracting new customers. This goal will be attainable due to the unique product features. Product uniqueness will be enhanced through continuous market research, hence entrenching the customers’ tastes and preferences.

This approach will remarkably minimize the inherent risk associated with its new product development. Furthermore, successful new product development will foster the firm’s longevity and market dominance in the US food industry.


Business Monitor International: United States food and drink report. (2014). Web.

Ogawa, S., & Piller, F. (2006). Reducing the risks of new product development. MIT Sloan Management Review, 47(2), 65-70.

Prepared Foods: . (2014). Web.

Symons, G. (2014). Its all about customer experience: CRM systems and loyalty programs. Web.

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IvyPanda. (2019) 'New Product Development: Stew Leonard’s'. 12 July.

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