Why New Products Succeed ... And Fail
April 1, 2006
Why New Products Succeed … And Fail
By Jennifer Zegler
Snack and bakery companies share their methods for success in new product development.
“New!” “Try Me!” “Great Taste!” Labels scream from retail shelves, imploring consumers to buy the new products they cover.
According to the 2005 Schneider / Stagnito Communications Most Memorable New Product Launch Survey, 85% of consumers admit that they stick to the products they already like, which means new products face an uphill battle to attract loyal consumers. Although some products will make their way into the shopping cart, only a few will capture the consumer’s heart.
What does it take to make a product succeed? Each individual company swears by its own specific game plan.
Take Shearer’s Foods, Inc., which relies on brand loyalty and reputation as purchase motivators. When it comes to new products, the Brewster, Ohio-based company makes sure they fit under the Shearer’s brand image.
“Shearer’s customizes each new product launch to engineer ‘Shearer Perfection’ into every bag,” says Paul Smith, product manager.
Others develop new products based on a tried-and-true system. Tacoma, Wash.-based Roman Meal Co., for example, follows the multi-tiered Stage-Gate process, in which it critically evaluates new products throughout development. The process encourages creativity to create an immense pool of new product concepts, but critical evaluation results in the release of a mere fraction of the products to market.
“It helps us to set a high bar to reach for,” explains Todd Kluger, brand marketing director. “We have to develop a good formula, taste attributes, benefits and packaging. By the time we get to market, we’ve done so much homework and development that it takes the surprises out of the process. So many companies take products to market, and it’s the right product at the wrong time or the wrong product at the right time. With Stage-Gate, we generate about 100 great ideas, but we go to market with two items. It helps us stay focused in building a business case to determine the viability for success of a new product launch.”
Still others believe that consumer opinions hold the key to a product’s success. Two companies, Interstate Bakeries Corp. (IBC) — one of the nation’s largest wholesale bakers — and Gerard’s Bakery, a specialty wholesaler serving the foodservice market, rely on consumer research to lead their very different brands to success.
“It all goes back to understanding the consumer,” says Rich Seban, chief marketing officer for IBC, Kansas City, Mo. “It all goes back to consumer needs. Some companies just make what they can instead of understanding the wants and needs of the consumer.”
Stand By Your Brand
For many consumers, old habits are hard to break. All too often, when they find a good thing, they stick with it, which is probably why it’s so difficult to get consumers to try new products in the first place — not to mention make them loyal buyers.
At Shearer’s Foods, getting initial trial on a new product means not fooling with its respected brand name. When developing its whole grain tortilla chip line in December, the company made sure that branching out did not mean betraying the brand. Creating a new snack product that stays true to the Shearer’s brand name — and, specifically, its “gold standard” — begins with a sales volume plan even before the product goes into research and development. If it then passes taste tests and multiple trial runs, the new snack will go to product management for the marketing and business plans.
“In an effort to make sure our products are relevant in the market, Shearer’s stays ahead of trends by looking at leading indicators of consumer behavior,” Smith says. “The impact of these trends can be tremendously significant and often challenge us in our R&D effort.”
Shearer’s Foods divides new product launches into two categories, Smith explains: flavor or size extensions and new base formulations.
A flavor extension might mean a new barbeque flavor potato chip, while a new base formulation might mean making chips from a different variety of potatoes. Shearer’s will be launching new base formulations later this year. In May, the company will roll out a new premium authentic Cantina Style Tortilla Chip made from masa flour.
Not surprisingly, health is another driving force with its new product focus.
“Our commitment to healthy lifestyles and snacking in moderation led us to make a multi-million dollar capital investment that enables a new 40% Reduced Fat Kettle Cooked Potato Chip launch in June 2006,” Smith says. “Our commitment further supports consumer demand for healthier snacks that don’t sacrifice great taste.”
Process Makes Perfect
Consumer purchasing patterns are influenced by everything from impulse buys to couponing and other promotional discounts.
Although no one method exists for predicting consumer behavior, some companies follow specific methodical processes to eliminate some of the risks involved with new product development. Roman Meal’s Stage-Gate process, for instance, allows the company to freely consider concepts from all types of courses, but it develops them in such a way that it introduces only the best products with the best chances for success in the market.
With the Stage-Gate process, the product team holds weekly meetings and meets occasionally with “Gate Keepers,” who “are kind of like the Supreme Court,” Kluger says.
“Their job isn’t to kill the idea, but to look at it and see if it should go forward or if the team needs to gather more information,” he says. ”Sometimes the product gets put on hold or the idea gets recycled, but it is really exciting when the project gets to move forward.”
At any given point in the process, Roman Meal can have dozens of potential ideas in the pool, but only two or three “live” projects in each of the five stages. Certain steps, such as the business case stage, might be more time-intensive than others. At this stage, financial projections are made in relation to the investment and its possible returns.
Overall, Kluger says, the process helps the established company act more entrepreneurially, among other benefits.
“It helps us capture great ideas and focus on them with research and consumer insights,” he says. “At different steps, we evaluate if this is the right product. It causes some soul searching and thinking if this is something the consumer wants. We also establish if the product will be economically viable.”
The Stage-Gate process recently proved helpful during the development stages of Roman Meal’s newest launch, a line of 100% Whole Grain Snack Bars that debuted in March.
“The 100% Whole Grain Snack Bars started out as an idea for a whole grain cookie,” Kluger explains. “We did customer research, and using the Stage-Gate process, we learned that we had an opportunity to enter the snack bar category.
“It’s a crowded category with a lot of large companies,” he adds. “The Atkins bar was a top seller, but not anymore. Bars are rotating in and out constantly, and we saw that we could actually create something different.”
The bars are offered in classic apple-cinnamon and oatmeal-raisin flavors, as well as a trendy cranberry-walnut variety. Unlike many other companies, Roman Meals formulated its new items to fall outside the over-fortified, high-calorie bar category. Instead, the bars appeal to those who are not running a marathon, but want a healthy snack that tastes good, Kluger says. Based on whole oats, wheat and barley, the bars contain only 200 hundred or fewer calories. They are flavored with fruits and nuts, not high-fructose corn syrup, and contain one serving of whole grains.
Interstate Bakeries, home of the iconic Wonder bread brand and the more recently successful Baker’s Inn line of super-premium-style bread, focuses on the supermarket bread aisle. In contrast, Gerard’s Bakery, Longmont, Colo., creates custom breads and signature baked goods for foodservice and supermarket in-store bakery clients. Both companies, however, sing the praises of consumer research.
Specifically, IBC relies on constant consumer research from the conception stage, conducted either traditionally or on the Internet, to develop new products that are on target.
“We have a lot of internal ideation where we develop concepts that we think are interesting,” Seban says. “Those ideas may not necessarily be on target, but we use those as focus points. Then we’ll take it to consumer research and find out: What are their needs? What do they currently use? What would they use in place of this product if it did not exist? That starts a dialogue that helps [us] find out what consumers are looking for. Listening is the first step.”
After researching the initial idea, the company then develops product mockups and again turns to consumer research — this time testing its qualities. With this feedback, IBC then can re-shape the concepts, which helps ensure the right product goes to market.
That’s what it did in developing its new Wonder Whole Grain White Breads, which debuted earlier this year.
“We knew consumers wanted health and nutrition benefits, but with the taste and texture of white bread,” Seban says. “We set out to create a 100% whole grain bread that emulated the taste and texture of white bread, and that’s how we came up with Wonder White Bread Fans 100% Whole Grain.
“Then we took the concept a step further with the introduction of Wonder Made With Whole Grain,” he continues, “a whole grain bread that has the taste and texture, as well as the color, of traditional Wonder bread, enabling us to offer a menu of options to health-conscious consumers. Because of our initial focus on developing a white-like 100% whole grain bread, we were able to develop a whole grain white blended product that provides better nutrition than competitive breads.”
Keeping in line with whole grain nutrition, IBC will launch stone-ground wheat and whole grain white Wonder buns in time for the summer grilling season. Seban also hints that additional Wonder and Hostess products will be introduced before the end of 2006.
“I think we’re on a path of innovation, and we’re focused on the consumer,” he explains. “We have a talented R&D department that gives us lots of opportunity to innovate.”
Although anyone could take a stroll through their local supermarket and find myriad IBC products, Gerard’s Bakery’s breads are not sold under the company’s name by the foodservice chains and supermarket in-store bakery/delis that carry them. In order to help their customers please the consumer, the company conducts affordable Internet consumer research on trends and preferences in bread. Gerard’s uses this information as both R&D and sales tools with prospective customers.
“There are many benefits of using the Internet for research,” says Henry Haer, vice president of sales and marketing. “It’s targeted, millions of consumers belong to Internet panels, and you can easily and efficiently reach exactly who you are looking for. It’s a very quick turnaround that allows you to get almost instantaneous data returned from respondents so you can react very quickly to the findings. It is also very reasonably priced versus face-to-face interviews.”
Initially, Gerard’s Bakery develops a detailed questionnaire designed to elicit consumer opinions about products’ styles, colors, textures, sizes, tastes and ingredients or additives. The questionnaire then is given to a marketing firm with a database of millions of consumers. By selecting specific demographics, the two companies can develop a targeted list of potential consumers they want included in the survey, Haer says. In addition, the survey can be completed in weeks instead of months, which is critical to this entrepreneurial company.
With these data, Gerard’s creates its annual “Bread Report,” which drills down the data on consumers’ preferences for baked goods and other trends in quick-service restaurants. The report helps the company in its own recipes for custom breads. It also allows sales directors to advise customers on what new product will fit their image and help differentiate them from their competitors.
During test marketing, Gerard’s also can conduct follow-up research from consumers to refine the concept before the foodservice chain rolls it out system-wide. SF&WB
More in May
Next month, SF&WB will look at some additional keys to product launch success. Specifically, Joan Schneider, , president and creative director of Boston-based Schneider Associates and co-author of the “2005 Schneider/Stagnito Communications Most Memorable New Product Survey,” and Marilyn Raymond, managing director for Michigan-based NewProductWorks, help us elaborated on the five do’s and don’ts of new product launches:
• Do address a need with the product. Don’t just copy.
• Do predict trends. Don’t just jump on the bandwagon.
• Do consumer research. Don’t dismiss product testing.
• Do sample. Don’t allow too little money for promotion.
• Do consider the audience. Don’t de-value the retail channel.
Roman Meal follows the Stage-Gate process for new product development, which was created by the Product Development Institute, Inc. The steps are:
• Discovery Stage
• Gate 1: Idea Screen
• Stage 1: Scoping
• Gate 2: Second Screen
• Stage 2: Build a Business Case
• Gate 3: Go to Development
• Stage 3: Development
• Gate 4: Go to Testing
• Stage 4: Testing & Validation
• Gate 5: Go to Launch
• Stage 5: Launch