creating and ruling block-buster categories fdin, june 2010 presented by david jago

Creating and ruling block-buster categories

FDIN, June 2010

Presented by David Jago

2© 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Today’s presentation

Being in the right place at the right time with the right product and the right price

It’s obvious, but…

What should have stood the test of time, but didn’t?

Why, and could it have been saved?

What tracking hundreds and thousands of product launches worldwide has taught us

Good innovation and ongoing product development

You need both, but real innovation is rare…

The winning habits of category creators and rulers

When to innovate, when to develop or change, and when to stick to your guns


Looking back, what should have stood the test of time, but didn’t?

Nabisco’s SnackWell’s brand in the USA started life as a range of low fat alternatives

It moved to sugar-free as the market shifted beyond fat-free (and taste-free)

It picked up on the low carb fad with CarbWell extensions

It went back to sugar-free, but too late…


Some innovations were just “too clever”

Douwe Egberts launched Café Switch in the UK in autumn 2006

A liquid blend of coffee, milk and sweeteners in a dual-compartment “pod” to be squeezed repeatedly to produce a smooth froth, before mixing with water in the cup

Achieved reasonable distribution and sold when promoted…


Others got the timing wrong…

Nescafe Hot When You Want, self-heating canned coffee, launched in the UK in 2001

Problems with package functionality and safety issue…

But also launched into the period of the coffee shop explosion…


What should have done better?

What went wrong?

Right place, right time, right product, right price…

Could it have been “saved”?


New Covent Garden, juice

Range of apple based juices launched January 2009

Pressed and squeezed from 100% fresh apples with no concentrate or added water

Bottle format offers differentiation

Sales of best-selling varieties peaked after 3 months, since withdrawn

Brand equity didn’t transfer well to juices category?

Entry into a category that was increasingly commoditised, especially with effects of economic downturn


Kellogg FrutaBü

Launched April 2008 as the latest attempt to break into the BFY fruit snacks segment

100% fruit and fruit juice in a 29g pouch pack, “helping you get more fruit”

Failed to reach more than 40% distribution at peak in first 6 months

Kellogg’s brand “down-played”

Convenience attributes were clear versus fresh fruit, but the package format was likely to confuse (snack or beverage?)

Targeting not clear?


Oxo ready-to-use stock

Launched 2007 as a logical, added value extension to the Oxo brand

Affordable price point: 450ml at 99p

Failed to reach more than 20% distribution, sales fell significantly after about 20 weeks

Oxo brand association with granules and cubes didn’t transfer well to ready to use stock?

A little early to capitalise on ongoing trends towards home cooking?

Competition followed with Knorr Stock Pots, shelf-stable, concentrated premium stock at £1.98 for an 8-pack to make 4 litres

Achieved 80% distribution within 8 weeks, single varieties have average weekly sales of £50,000 each


Schwan’s Ugly frozen pizza

Launched June 2008 under the strapline “Looks aren’t everything, taste is”

Focus entirely on quality of ingredients (specific cheeses, mushrooms, olive oil dough, etc.) and bake at home message

Sales fell after initial burst, distribution not much over 20%

Brave proposition… perhaps a little too brave?

Compare and contrast to premium chilled pizza that typically communicates same values, with visibility


Tropicana smoothies

Launched February 2008 in 1 litre at £2.99, and 250ml

June 2009, new 750ml carton at £1.99, “smaller pack, better value”


Slim-Fast Hunger Shot (Unilever)

Launched February 2008 as a radical development of the Slim-Fast brand

Took the brand from the negatives of slimming into a more positive and inclusive approach, hunger management

Small bottle format was already well established in dairy-based health drinks, and Unilever had experience via Flora products

Sales peaked after about 4 months, at 40% distribution

Price competition in the chill cabinet created an unfavourable environment

Private label (Tesco) present

Market opportunity simply “too small”?


The winning habits of category creators and rulers

Category creation is rare… in recent years

Many category rulers are “unique”, long-established, and have stayed largely through factors other than (product) innovation:

Marmite, Ribena, Coca-Cola, Hovis, Heinz soup, Nescafé…

But Red Bull, New Covent Garden Soup, Innocent smoothies, Bottle Green elderflower pressé, Snack-a-Jacks… all could be said to be category creators and maintain a strong position despite imitators and lower-priced alternatives


What do they have in common?

Winning factors include, but are not restricted to:

Specialism – brands that are indelibly tied to a category

A focus on categories that are not commoditised, where private label is (relatively) weak

Heavyweight support

Significant differentiation in key brand/product attributes

Development of package/flavour formats in tune with trends, while remaining very loyal to core attributes (not stretching too far)

Cautious innovation

Knowing when to innovate, when to develop or change, and when to stick to your guns


Wrigley = chewing gum

Heritage

Authenticity

Specialism

Small number of strong brands that appeal to distinct segments

Strong, steady rather than spectacular NPD that can draw on development in other markets esp USA

Strong flavour and packaging development

A category that has virtually no private label and just one other strong player


Wrigley product development 2005-2007

2005 2006 2007


Wrigley product development 2008-2010

2008 2009 2010

Flavour extensions

?


Hellmann’s = mayonnaise

Focus on “real food” values

Authenticity

Specialism

Brand development has focused on increased consumption occasions, rather than short-term flavour appeal

Small number of SKUs, each with appeal to a distinct segment, but all in line with core brand attributes


Hellmann’s product development 2007-2009

2007 2008 2009


Heinz = tomato ketchup

Enjoys very strong position of trust

Authenticity and real food values

Consistency, tradition

Brand development has focused primarily on convenience (pro and con), as well as appeal to distinct segments in line with ongoing trends

Flavour developments have been cautious…


Heinz ketchup product development, 2005-2009

2005 2007 20092006 2008


Ruling brands are “loved”


And are entrenched in everyday consumer behaviour


Ruling brands are reliable, traditional, authentic…

The antithesis of new and innovative?

Brands remain loyal to core attributes, and rely on existing mechanisms of trust…

0

10

20

30

40

50

60

Reliable Traditional Authentic Comforting Healthy Fun

Hellmanns Heinz Average


Conclusions

Fundamental consumer attitudes are consistent:

Health, convenience, authenticity and provenance remain key drivers

Balance and compromise are important key words, especially now

Brands' mechanisms of trust are in still in place

Transparency, authenticity, authority…

Emotional attachment is critical

Real engagement can draw the consumer to premium segments, to trade up as an affordable treat

Provided it offers value for money (important at the top and the bottom end of the market)

Right now, it’s about value with values…

Attitudes towards changing own-label grocery

purchases in the last 12 months, December 2009 Base: 1,000 internet users aged 16+

27

3

4

5

18

37

39

41

0 5 10 15 20 25 30 35 40 45

None of these

When the economy recovers I w ill buy moreow n-label products

When the economy recovers I w ill buy lessow n-label products

I’ve sw itched from branded to ow n-label but w illsw itch back w hen I have more money

I’ve sw itched from branded to ow n label but w illkeep buying ow n label w hen I have more money

When the economy recovers I w ill keep buyingthe same amount of ow n-label

The recession has encouraged me to try moreow n-label products

The recession has made me think hard aboutw hether brands are w orth paying more for

%

Source: Toluna/ Mintel

Brands struggle to maintain relevance

Consumer attitudes towards branded and own-label products, December 2009

Source: Toluna/ Mintel

Base: 1,000 internet users aged 16+

6

15

22

26

28

29

34

44

46

0 10 20 30 40 50

None of these

I am suspicious of ow n-label products dueto the low price

Branded products are better but not w orthpaying more for

I think branded food products are betterquality

There is no difference in quality betw eenbranded and ow n-label products

When it comes to some foods I w ill alw aysbuy branded

It's w orth paying more for branded goodsin some areas

Buying ow n-label instead of branded is aneasy w ay to save money

There are some food products w here it'snot w orth paying more for brands

%

But higher cost perceptions still a challenge


And bear in mind:

Great concepts can fail for a variety of reasons

What didn’t work then might work now

Don’t overdo flavour/line extensions

New flavours should maintain consumer interest in the category, not create additional sales via a separate brand equity!

Steal with pride

Copy and improve

Consumers seem to have a narrow tolerance for new things—you can’t make it too much of a disconnect

The end result has to have real, tangible benefits

Thank you

tel: 020 7606 4533

email: [email protected]

Director of Insight & Innovation

David Jago

creating and ruling block-buster categories fdin, june 2010 presented by david jago

Documents

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