Heinz conducts focus group analysis before product development begins

While almost all consumer product companies conduct market research before conceiving, developing, or launching a product, not every company approaches this process the same way.

H.J. Heinz, a $2.5 billion international food conglomerate, believes that primary market research is one of the most significant elements in the product development process. “Our fundamental approach is to get close to consumers and understand what they want,” says Casey Keller, Managing Director for Ketchup, Condiments and Sauces at Heinz North America. “Get marketing and R&D—and even sometimes some of the other functions—involved in understanding, so that when we design and develop a new product proposition, it is designed with the consumer in mind for optimum success and based directly on contact and feedback from them.”

The concept behind EZ-Squirt, one of the company’s most successful product launches, was created precisely this way. Heinz knew that kids use more ketchup per capita than any other age group, and that the 125 year old brand needed some updating to attract this user group. So they went directly to the source to find out how to make ketchup a fun, creative food experience for kids. While brainstorming with a group of kids aged 6-12, the idea of what would make ketchup easier and more fun was born – turn it into a way for kids to create art while enjoying their food. These efforts led to several innovations that propelled EZ-Squirt to success. The consumer groups suggested changing the color of ketchup to make the experience more fun. “They thought that would really identify it as a product for them and not necessarily for their parents,” says Keller. Another key observation that originated from this focus group was the overall packaging. In order to allow kids the ability to hold and control the bottle, it needed to be shaped different to fit smaller hands and to be much softer.

More than 10 million bottles of EZ Squirt Blastin Green were sold in the first seven months, with Heinz factories working 24 hours a day, seven days a week to keep up with demand.

Although, primary market research is the most costly form of research a company can conduct, the benefits can be reaped two fold. However, when you are in a mature market like Heinz is, spending the money to understand first hand what problems your customers face, better positions you to be able to provide a viable solution. This research should not be the only data collection you perform as your company works to develop new products.

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When is Good Taste Not in Style?

If you are American Apparel(AA) the answer is NOW!

AA, the latest apparel company to hit the fashion scene, is capitalizing on it vertically integrated, “sweat-shop free” operations and its sexually charged advertising to sell T-shirts and other basic, no frills type clothing.

Being one of the only remaining textile manufacturers in the US has enabled AA apparel to shorten its supply chain and respond quicker to changing trends, a strategy that its competition with top heavy management and factories half a world away isn’t able to duplicate. The inspiration for the designs, the design themselves and the production all occurs in house.

However, its founder, Dov Charney, doesn’t believe this operationally efficient strategy is enough. As Charney explains, “the whole sweatshop-free, made in American thing is no longer a selling point – “It’s like a sexy girl who keeps telling you she’s sexy; it’s nauseating” – but will always form the core of American Apparel’s success.

So, Charney has adopted a different strategy, a strategy that has been around forever, use sex to sell products. He has taken his in-house approach to design and production and applied it to their advertising, which is where the controversy begins.

Charney takes many of the ad photos himself, often using female employees as models. What started a couple of years ago as mildly boundary pushing crotch shots of models has now escalated to gritty amateur porn. “Meet Lauren,” exclaims one print ad, in which a young comely blond is photographed only wearing socks while performing a self-satisfying act. The ad reads “Safe to say she really loves her socks.”

Ann Simonton, the founder of Media Watch, says “this is beyond ‘sex sells.’ It goes to a level of humiliation.” There is something about the low resolution snap shots of these young barely legal girls that makes you feel like you are watching the founder play out his nymphomaniac fantasies on a powerless audience.

When did showcasing young, barely legal girls in sexually racy positions become an acceptable from of advertisement?

I guess when young women began buying the product. Jane Buckingham, president of the Intelligence Group, whose Cassandra Report is the arbiter of what’s cool with American’s youth, says that American Apparel is one of the most influential brands going. Today, the brand is prominent among both trendsetters and followers. It appears high in every category of cool- sitting alongside brands such as Marc Jacobs and Diesel, both of which are far more expensive and spend exponentially more money on marketing.

Detlev Zwick, an assistant professor at York University’s Schulich School of Business in Toronto, believes “He [Charney] has a good sense of what he can adopt and where he has to push the envelope in order to grab attention of the youth market – which is completely overwhelmed by marketing messages.”

Americans boycotted Nike when they learned of the horrendous working conditions in some of its South Asian factories (ie. Laborers working for $0.2/hour, female employees sexual molested by supervisors, workers not allowed to use the bathroom facilities but once a day.)

How is making your female employees pose in semi-nude photoshots for company ads not exploiting the young female labor force at AA? If Nike decided to use the pictures of its Asian child labor factories in its advertising (because kids are cute), do you think it would sell more shoes. I seriously doubt it. As a matter of fact I would argue that the backlash would be so severe that the company might never recover.

If Nike, a company touted for its innovative marketing, would never resort to this type of promotion, why do other companies?

I think this is partly because these companies are desperate, cheap, and honestly, uncreative. They want instant publicity and notoriety, but they don’t have the money to hire savvy marketers or time to generate buzz from grassroots efforts, so they take a page from Hollywood that says any publicity is good publicity and they look to push the envelope on what society will accept. Today, that is kiddy porn.

“The best way to show T-shirts these days from an advertising perspective is to put them on good-looking people, and if everyone’s putting them on good-looking people, then you have to put them in strange situations. They‘re just following that formula to a certain extent, says Max Lenderman, a youth marketer.

If by strange you mean inappropriate, then I agree.

But to say that this advertising is formulaic is to imply that it is predictable and necessary for promotion, and that because other companies have succumbed to this form of shock-value advertising to schlep their products that it is acceptable. For every company that has used this form of advertising there are hundreds that haven’t. It would be interested to learn the survival rate of companies that adopt this form of advertising and if they can maintain it over time. Abercrombie & Fitch learned the hard way about the repercussions of using overtly sexual selling tactics, when it was forced to pull the racy holiday edition of its quarterly catalog, which featured naked models and tips for oral sex, when sales dipped 13% over the previous year’s comparable sales.

I believe there are numerous reasons to avoid shock-value advertising, but the main one is that it’s not sustainable. When you resort to human’s basis instincts, there is really no where else to go. It brings instant attention and recognition because of the controversy it generates, but is does little to create staying power and branding.

Like many young Hollywood starlets have come to find out, sex appeal is fleeting, and there is always going to be someone younger, prettier and more unique waiting in the wings ready to use the “sex card” to get noticed.

If American Apparel really wants to be known for its quality cotton clothing, then maybe it should focus on a form of advertising that mirrors that same quality.

Experts Don’t KNOW Jack!

This summer I worked for a start-up that was developing a product to be launched into the outdoor technical apparel market. My job was to help them identify the biggest target market and the most probable buyer of this new heated jacket.

Having worked in the venture capital industry before returning to school, I was no stranger to identifying market potential and analyzing new products. Much of the work that I had performed as an analyst revolved around talking to industry experts and interviewing likely customers in order to validate a business concept that was under evaluation.

So using the cultivate skills I had developed, I set out to find those experts and customers that would help me predict the potential demand and the likely market response for this new product. I contacted gear editors at some of the most prominent sporting goods magazines, technical apparel buyers, and nearly 100 of the top expedition leaders/mountaineering guides in the country.

Much like the response Herman Miller got about the Aeron chair earlier on, these experts were less then excited about this product. They mentioned numerous reasons for their apprehension from reliability to functionality to novelty to market need.

When asked who they thought would be the most likely buyers of this product, most referenced novice outdoorsman or “technical weenies” to be more specific. In comparison to the mountaineering guides or the technical sport writers, who have spent the majority of their lives in the outdoors using outdoor equipment and perfecting their skills, their clients or readers haven’t. They participate in an outdoor sport sporadically. These are the “weekend warriors”, who want to fit in with the sport enthusiasts – aka the Experts, but have neither the time nor the talent. These “technical weenies” need a different kind of product to be capable, competent and competitive and they look to innovative, high-concept gear to provide that edge.

Unfortunately, I took the feedback from these experts as gospel, assuming that if heavy users of technical apparel didn’t find this product compelling that it probably wasn’t. I used these findings to further justify my recommendation that the company reallocate it resources to the luggage market, where the market size and need was much greater and the resources required to educate the market were less; listing among the most significant reasons for this switch, the relatively lukewarm response from customer surveys.

However, upon recent reflection, I have come to question whether these supposed experts were capable of seeing this product for its ultimate potential. Are experts typically the trend setters or the early adopters of innovation?

Maybe they are, but more than likely their not. When I contemplated why experts may not necessarily see the next trend or acknowledge a novel idea, I realized that much of what an expert knows has taken years to develop. By asking an expert about a disruptive technology or an innovative product, you are asking him to abandon years of experience, which centered on the old approach. Just by introducing this new concept, you force the expert to defend the old methodology or risk saying that that this is no longer valid – that his expertise is no longer valid. Pride and ego are equally important reasons that an expert might not want to acknowledge the next emerging idea, especially if he didn’t come up with it. If you were deemed an expert and knew the ins and outs of a subject matter, and didn’t identify potential needs, it could be argued that you really didn’t know that space as well as you claimed. Perhaps for some, they have too much vested in the old way or the old product to be objective. In the case of the mountain climbers, they knew what gear/apparel worked and what didn’t. This knowledge came after years of trial and error. Trying something new meant taking a significant risk, which most weren’t interested in doing while hanging from the side of a glacier in the middle of the Alaskan wilderness. They had learned to adopt the current product offerings to fit their needs and therefore, didn’t see this new product as a solution to any of their problems.

If experts might not be able to identify the next big thing, then what role should they play in innovation?

The best possible utilization of an expert’s domain expertise is in incremental product innovation. This is not to say that experts can not be instigators of emerging product innovation. On the contrary, they have such a depth of knowledge regarding what has historically and what currently exists that they may be able to see through the clutter and create something new. However, their greatest strength lies in their ability to recognize the subtle nuisances of a product and to articulate those differences between offerings in the marketplace – in critiquing and improving not creating.

So leave the coolhunting to the “weenies”, who aren’t afraid to try something new!

Creating Consumer Experiences Without Meeting the Consumer

As we continue to discuss ways to improve consumer experiences, we have focused on creating consumer experiences from the perspective of a retailer or vertically integrated company that directly interfaces with the end consumer. If you are a manufacturer that relies on various retail channels to interact with your end-consumer, how do you ensure your company’s strategy and your desired consumer experience is articulated by those selling your products?

It is a common dilemma for businesses: You can control the quality of your products and services, but you can’t control the people dealing with your consumer. So, how do you create great consumer experiences when you have little interaction with them?

Well, one solution is to only choose those retailers (dealers) that align with your company’s sales strategy and vision, but in the short term limiting your distribution network may be a devastating decision, severely hampering top line growth.

So, what should you do?

Your best option is to get involved and create a powerful experience for your customers that will trickle down to your consumers. For a hand-made bike builder in Saratoga Springs, NY that is exactly what they did.

Ben Serotta, the founder of Serotta Competition Bicycles, set out to make custom bikes frames that fit riders perfectly. However, he discovered that many of the salespeople at the independent stores carrying his frames didn’t really understand how to fit a rider for a bike. His vision of the perfect fit for riders was impeded by imprecise measurements and untrained sales people. Creating the best, custom bikes for cyclists wasn’t enough, if the service they received was far from customized. Ben had tried to educate the stores through instructional manuals, brochures and in-store demos. What more could he do? What more should he do?

Outside of opening his own stores, Serotta had only one option – train the store workers himself.

Serotta started a formal training program in “Proper Fit”, where he invited a dozen top-notch bike fitters to Serotta’s headquarters. The tuition for this 3 day course was $1000, which caused some dealers to balk, but Serotta offered a money-back guarantee and promised the techniques learned could be directly applied to any bike, not just his. He also enlisted actual bike fitters to teach the class, so that participants wouldn’t feel like they were getting a long sales pitch. The program has grown in the past seven years. Now more than 100 participants come to NY each fall and winter to attend the 3-day course. They learn about biomechanics, attend sports lectures, get tips from top fitters about interviewing clients, and practice hands-on fitting.

The company has doubled sales since establishing this school, despite slashing its dealer network from 320 shops to 130.

What are the lessons to be learned from Serotta:

1. Create value – By charging $1000 tuition for the training program, students took the class more seriously.
2. Start small – To make the program more manageable, Serotta shrank his dealer network and focused on training workers at the top stores. The basic 80/20 rule.
3. Don’t sell – Serotta taught an ideology not a brand. The techniques could be applied to any bike.
4. Be humble – By having fitters teach the class, Serotta gained credibility by acknowledging that workers on the front lines knew more than he did.
   
5. Trust training - Serotta equips dealers with knowledge to sell products, then trusts them to use it.