Developing Product and Brand Strategy

6 top food trends (2006)

     

1. Organic = healthy 2. Get well soon 3. Age awareness 4. Eat global, buy local 5. Control yourself 6. Make room kosher, halal is here

1. Organic = healthy

 U.S. organic food sales totaled nearly $14 billion in 2005, according to the Organic Trade Assn. ( 2006.

www.ota.org

), Greenfield, Mass. (OTA). Although this represents a mere 2.5 percent of all retail food sales, that total is a 31 percent increase over 2003 figures. According to OTA, sales of organic foods are expected to reach nearly $16 billion by the end of

2. Get well soon

 The twin epidemics of obesity and diabetes dominate the health and wellness category. No day passes without the mention of one, the other or both on television, radio or in newspapers. But in general, between one-fourth and one third of consumers make food choices based on health for some reason.

3. Age awareness

 Health is still the biggest part of the aging trend. Basically, like Dylan Thomas, we will “not go gentle into that good night.”

4. Eat global, buy local

 “American consumers are continuing to take advantage of the country’s diverse cultures and offerings,” “As consumer interest in new flavors and products continues to grow, so does the specialty food market. As immigrants continue to acculturate, their food traditions are becoming more mainstream. More Vietnamese, Thai and Indian flavors will continue to flourish within this category.”

5. Control yourself

 We’re controlling portions not just for health but convenience. As a trend, convenience has been high on the list of movements to follow for years. But the two aspects merged in 2004 when Kraft Foods Inc.’s Nabisco brand launched 100-Calorie Packs of some of its most popular cookies and crackers.

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6. Make room kosher, halal is here

Kosher broke away from ethnic as a trend of its own with the first wave of fear over mad cow disease. Halal certification, the Muslim equivalent of kosher, is finally grabbing at the same brass ring.

Top trends in food processing (and their trendlets)

Trend

1. Organic

Trendlets

Non-GMO, Fair Trade, Sustainability, Regional, Minimalism, “Natural” 2. Health and Wellness Diabetes and Obesity, Kids’ Health, Food Safety, Women’s Health, Allergies and Immunity, Well-Being, Energy 3. Age Awareness 4. Portion Control Aging, Teens, Kids Serving Size, Convenience 5. Globalization Ethnic Flavors, Multinational Production Regulations 6 . Kosher/Halal Food Safety, Certification and Oversight, Spiritualism

Campbell Soup Wolfgang Puck Italian Sauces

  Suggested retail price for a 16-oz. jar is $2.79.

Varieties include: Arrabbiata (spicy marinara and roasted red peppers for a distinctive sauce with kick), Creamy Vodka (a combination of tomatoes and fresh cream, finished with a splash of vodka), Four Cheese (Parmigiano, ricotta and Asiago cheeses combined with tomatoes, garlic and cracked black pepper, then finished off with Mascarpone cheese for a sweet and unexpected creaminess) and Tomato Basil (a blend of tomatoes, garlic and sweet basil).

DeMet's Candy Co. TrueNorth Chocolate Nut Crunch Bite-Size Treat

  Truenorth Chocolate Nut Crunch are nut clusters combining roasted almonds, pecans and cashews, a dash of sea salt, and a hint of natural sweetness, dipped in milk chocolate to make a crunchy, not-too-indulgent treat.

Suggested retail price for a 5 oz. package is $3.49 to $3.99.

Buddy Fruits Pure Fruit Bites

   Suggested retail price is 88 cents to $1.29. "Ideal for lunch boxes, road trips and sporting events, Buddy Fruits Pure Fruit Bites are the fruit snack you can eat anytime, anywhere," 100% fruit 95 calories no artificial flavors or colorings

Jolly Green Giant Pasta and Veggies

  Suggested retail price is $2.39.

100% natural ingredients

Ready Pac Fresh Fruit Parfaits

 Suggested retail price for an 8-oz. container is $2.99, and a 12-oz. container is $3.99.

Day-Lee Foods Crazy Cuizine General Tso Chicken

 Suggested retail price is $8.99.

Wild Planet Foods Sustainable Catch Of The Day

  Wild Planet Foods introduces Sustainable Seas, a sustainably caught and affordable line of canned tuna.

Suggested retail price for Solid Albacore is $3.29, and Solid Light is $2.49.

Brad's Raw Foods Vampire Killer Leafy Kale Chips

  Consumers can get back to basics while indulging their taste buds with healthy and flavorful raw Naked Leafy Kale Chips Suggested retail price is $7.49.

Consumers Can Now Bite Into Twilight Bella's Favorite Dish

  Bella Italia and Italian eatery in Port Angeles, Wash., has now made its most famous meal — Bella's Mushroom Ravioli — available as a frozen entrée nationally Suggested retail price is $10.99.

Smart Balance Heart Right Fat Free Milk

  Smart Balance Inc. introduced its Heart Right Fat Free Milk which tastes like 2% milk, and contains 0.4g of CoroWise plant sterols per serving Suggested retail price for a carton is $3.49 to $3.99.

Goods , Services and other Products

The Olympics Brand

      Once every 4 years Two many prepackaged events Only root for Americans Is it good to be an official sponsor Security at the Olympics Brand still good ?

How do opportunities evolve over time?

Life cycle extension Profit/unit Sales Introduction Maturity Decline or extension Growth Competitive turbulence Time (years)

Source

: Reprinted with permission from p. 60 of

Analysis for Strategic Marketing Decisions

, by George Day. Copyright © 1986 by West Publishing Company. All rights reserved.

Categories of New Products Defined According to Their Degree of Newness to the Company and Customers in the Target Market (Exhibit 8.4.)

High lines 20% New product 10% New-to-the world products Low 26% 26% Additions to existing product lines Revisions/ improvements to existing products 11% 7% Repositionings Cost reductions Low High Newness to the market

Source:

New Products Management for the 1980s

(New York: Booz, Allen & Hamilton, 1982).

Discussion Question

1.Is it better to be a market pioneer, or a follower?

First Movers who failed

 Consider that most famous industrial success story of a century ago, Henry Ford's mass produced Model T . By inventing the automated assembly line, he had a first-mover advantage that was so great that he scared England's Charles Stewart Rolls and Sir Frederick Henry Royce, even though their luxury cars were at the other end of the spectrum. But Ford overstayed the Model T. Remember, he insisted that they all be painted black and in the late 1920s lost leadership to more innovative Chevrolet.

 In most cases entrepreneurs are better off building the second or third version of the better mousetrap. Visicalc, the first desktop spreadsheet program, faded away as Lotus Microsoft's Excel. took over the field with 1-2-3. In time the Lotus software was itself crushed by

 For that matter, Microsoft has a history of succeeding by not being first. Digital Research developed the first desktop operating system, called CP/M. But Bill Gates upstaged it in the competition to supply an operating system for IBM's PC. Gates didn't even develop the original DOS ; he bought the program from Seattle Computer Works for $50,000.

 Getting in early on Web commerce was supposed to be a brilliant move. The business plan was to raise a gargantuan sum in an initial public offering and use it to construct an impregnable brand and Web presence. But roaring out of the starting gate didn't help many of these dot-coms--or their stockholders. Lord help you if you bought shares in financial news site www.TheStreet.com

at its $19 initial offering price in 1999, let alone at the $60 level to which it leaped. You could have made some decent money if you had waited. The shares were available at 99 cents in October 2001; today they go for $11.

 Prodigy Communications was a first mover in online connections. And it had powerful backers at its launch in 1984: IBM for technology, Sears Roebuck for online retail sales and CBS for news and ad sales. Prodigy's focus was on electronic shopping, but two decades too early. Subscribers back then were more interested in chat rooms, e-mail and then Web surfing. The firm was sold in 1996 to an investor group for only $250 million

 Dumont led the way in selling TV sets when they were new gadgets, but the company lost out to latecomers like RCA and Motorola. Chux was the leading disposable diaper yet succumbed to Procter & Gamble's Pampers. Ampex had a commanding position in video recorders and tapes for two decades until Sony took over. Rheingold Brewery brought out Gablinger's low-calorie beer in 1967, a cool summer with weak beer sales. So Rheingold lost interest and Miller Lite later mastered the field.

 Thomas Carter was a pioneer in competitive telecommunications services, one who lent his name to a famous legal case. He invented the Carterfone, a device that connected the telephone handpiece to an amateur radio transmitter or a mobile phone network. While only 4,000 Carterfones were ever installed, AT&T saw the device as a threat to its long-distance monopoly and its ownership of all telephone instruments. Then came the legal struggle. In 1968 the Supreme Court ruled in favor of Carter Electronics. It was a turning point in utility history, paving the way for MCI and other service competitors as well as hardware manufacturers. Carter didn't get rich. His firm voluntarily dissolved in 1969.

Some Advice for Would-Be Pioneers

 First mover advantage is trumped by pioneers who are better. first.

Best beats Concentrate on being best.

 Being a pioneer without the basis for sustainable trap competitive advantage is a

Bringing old products back

Mass Customization

 Lands End

   Quality and Design Packaging and Labeling Product Development and Management

1.

Branding

     Brand extensions Line extensions New Brands Brand Equity Private label branding

Growth Stage

Nike

        Nike  Market leader early product innovator outsource production spend lots of money on marketing Puma  European stylish K-Swiss  Hip image Vans  Niche market Skate boarders Sketchers  Cool younger market New Balance  Older audience endorsed by no one Adidas  Leader in Soccer, recently acquired Reebok Starbury One  Low Price endorsed by Stephan Marbury

   Share Maintenance  Repeat business from current customers  Capture new customers Share growth Growth stage often short (8 years)

Opportunities and risks in a growth market

    It is easier to gain share when a market is growing Share gains are worth more in a growth market than in a mature market Price competition is likely to be less intense Early participation in a growth market is necessary to make sure that the firm keeps pace with the technology

Gaining Share is Easier

  No established preferences/special needs not yet identified Established competitors less likely to act aggressively as long as their growth rate is satisfactory (Dell example)

Share Gains are worth more

     Can hold share as market grows The existence of positive network effects Future changes in technology (hd TV v Blue Ray) Future competitive structure of the industry Future fragmentation of the market

Early Entry Is Necessary for Technical Expertise

10.7 billion Projected 2012 Stents 5.3 billion in 2006 Johnson & Johnson 1994 Guidant 1997 (70%) J&J 2003 (huge demand) Boston Scientific 2004 (65% market share)

Market Leaders (retain current customers)

   Maintaining/Improving satisfaction and loyalty    Improve Quality Selective Product modification Better service Encouraging/simplifying repeat purchases  Distribution Reducing attractiveness of switching   Functional barriers to switching Compete on Price

Market Leader (stimulate selective demand among later adopters)

  Head-to-head positioning    Fighter brand Match competitor offering (confrontation strategy) Strategic withdrawal Differentiated Positioning  Market expansion  New lines   New channels New messages

Followers deciding whom to attack

    Attack the market-share leader  Frontal or Leapfrog Attack another follower Attack one or more smaller competitors who have limited resources Avoid direct attacks  Flanking (Citrus World )

Growth Stage

Johnson Controls Inc

  Batteries, seats for autos Heating and cooling for schools     Acquired weaker companies Global markets Good relations with GM, Ford, DaimlerChrysler, BMW & Toyota Market intelligence

  Mature Markets  Maintaining Market share  Adidas , Johnson’s baby shampoo, Arm Hammer & Declining Markets  Divest or liquidate, consolidate, harvest

 The shake out  Appearance of excess capacity   Difficult to maintain product differentiation Intensifying of competition   Pressures on costs and profits Weaker member fail or are acquired

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Strategic traps during transition

Failure to anticipate transition from growth to maturity   Overcapacity Replacement sales outweigh first-time purchases No clear competitive advantage as growth slows  Getting stuck in the middle

 Assumption that an early advantage will insulate the firm from price or service competition  Price versus quality ( HP vs Dell)  Sacrificing market share in favor of short-run profit  Not investing in R&D or marketing

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Strategic choices for mature markets

Business strategy to sustain a competitive advantage, customer satisfaction and loyalty Flexible and creative marketing programs to pursue new opportunities as conditions change

Analyzer or Defender

      Operational excellence Product leadership Customer intimacy Don’t get stuck in the middle Can you purse both a low cost and a differentiator strategy at the same time?

Quality might be the key six sigma

Dimension of Service Quality

Low-Cost Position

      No frills Product Innovative product design Cheaper Raw materials Innovative production Processes Low-cost distribution Reductions in Overhead

   Measuring customer satisfaction Improving customer retention and loyalty  Loyal customers  Concentrate their purchases Are all customer equally valuable   Fidelity Investments ($13 vs less than $1) Redlining  Profiles change

Extending volume growth

Increased penetration  # of potential customers   Product penetration of that segment Average frequency of use Why are non user uninterested in your product?

Convert current nonusers in target segment into users

Extended use

Market expansion

Harvesting Strategy

Maintenance

Profitable survivor strategy

Niche Strategy