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Look Before Leaping
Category: Salty Snacks
Methods: Concept Testing, Product Testing, In-Home
Usage Testing, Pii® Product Improvement Index, Volumetric Forecasting, Sales
Forecasting, Conceptor® Forecasting Models
Summary
A salty snack manufacturer worked with a subcontractor to develop a completely
new salty snack product and, based on taste testing among senior executives,
made a decision to immediately launch the new product without any consumer testing
or evaluation. Once it learned of this decision, Decision Analyst persuaded
the manufacturer to evaluate the new product with consumer research as soon
as possible—to help mitigate risks. The manufacturer reluctantly agreed
to the research. Decision Analyst immediately conducted a large concept test,
followed by in-home usage product tests for each major flavor of the new salty
snack, and forecasted in-market sales volume with its Conceptor® forecasting
models. The results were a shock to the client, but an interesting turn of events
proved that the research results were accurate.
Strategic Issues
The salty snack category is dominated by one behemoth, Frito-Lay®; with
its DSD (direct-to-store delivery system) and outstanding routemen/salesmen,
it has near dictatorial control over the salty snack retail shelf space. Frito-Lay®
is also superb in product testing technology, and tends to manufacturer snack
products that are near optimal in size, taste and texture. Frito-Lay® is
skilled in quality control and manufactures its snack products with great consistency
within narrow tolerances. On top of these strengths, Frito-Lay® really understands
marketing, advertising, and packaging graphics and uses all of this knowledge
to build and maintain its consumer brand franchises.
Our client was a small, regional producer of salty snack products who wanted
to compete effectively with Frito-Lay®. Based on qualitative work (focus
groups and depth interviews, plus some awareness, trial, usage, and image studies,
and some strategy concept work), we recommended that our client focus on smaller,
highly unique salty snack flavors that were simply too low in sales potential
for Frito-Lay® to bother with. We also recommended that they try to get
shelf space in other sections of the supermarket, to avoid head-to-head competition
with Frito-Lay®, and we recommended that no matter what new snacks they
developed, those products should be carefully tested among target-audience consumers
to optimize the products before launch into the market.
Shortly thereafter we were startled to learn that our client was already manufacturing
a new snack product and preparing to ship it to warehouses for ultimate distribution
to supermarkets, and the new product had been developed and finalized without
any consumer product testing. The only taste testing of the new snack was informal
sampling by 8 to 10 senior executives. We immediately recommended extensive
consumer testing of the new snack to optimize its size, texture, color, and
flavor to maximize consumer acceptance as soon as possible.
Research Objectives
The primary objective was to assess the volumetric market potential represented
by the new snack product, and to determine if the new snack, as formulated and
manufactured, was optimal in terms of consumer acceptance and probability of
purchase.
- If the product were optimal, then what retail prices would be optimal?
- If the product were less than optimal, how should it be modified to maximize
consumer acceptance?
- Where in the supermarket would the product best fit?
Research Design and Methods
The Decision Analyst Client Service Team worked closely with the Advanced Analytics
Group and the Volumetric Forecasting Group to design a series of product tests
among the target audience for the new salty snack and its various flavors. The
Pii™ Analysis (or Product Improvement Index™) is a proprietary analytic
technique developed by Decision Analyst to provide guidance to the optimization
of products to maximize consumer acceptance. A new product concept was used
to identify potential triers of the new snacks, and to screen respondents for
participation in the follow-up product tests. The combined concept test and
product tests created the needed inputs for Decision Analyst’s Conceptor®
forecasting models to predict the “retail sales” volumetric potential
represented by the new snack.
Three flavors of the new snack were tested. A nationally representative sample
of snack consumers was pulled from Decision Analyst’s American Consumer
Opinion® Online panel, one of the largest and best Internet panels in the
world. This sample was screened online using the new product concept. Those
who indicated neutral to positive purchase interest in the new concept were
selected for the follow-up product tests. There were three matched cells of
300 target-audience respondents; that is, each flavor was evaluated by 300 target
consumers who indicated neutral to positive interest in the concept. Test products
were shipped to each participant’s home, and the follow-up online surveys
were conducted seven days later, after in-home usage of the new snacks.
All of this research was conducted on a “crash” time schedule because
of the impending introduction of the new product. Trucks were already delivering
the new salty snacks to supermarkets as the study results were processed and
the analyses concluded.
Results
The concept test results were positive and indicated a probability of success.
The product test results were dismal. The Conceptor® volumetric forecast
was dismal. The results indicated that, after trial, almost no one would buy
the product again. The Pii® product improvement analyses indicated that
major formulation changes would be necessary to improve acceptance of all three
flavors. The Client Service Team faced the daunting task of presenting these
negative results to a client glowing with optimism over the imminent success
of its new product. The presentation was met with unhappiness and great skepticism.
Within days, however, all three flavors were appearing on supermarket shelves
and consumers were buying and taking them home. The client’s switchboard
was soon overwhelmed with consumer complaints about the new products’
poor taste and texture, and with complaints from supermarkets about complaints
from their customers. Within 30 days, our client was forced to recall the new
snacks at a cost of millions of dollars and damaged reputation among supermarket
chains.
Copyright © 2009 by Decision Analyst, Inc.
This case study may not be copied, published, or used in any way without written permission of Decision Analyst.
Analytical Consulting Services
If you would like more information our our Volumetric Concept Testing services or would like to discuss a possible project, please
contact Jerry W. Thomas, President/CEO (jthomas@decisionanalyst.com),
or John Colias, Ph.D., (jcolias@decisionanalyst.com)
at 1-800-ANALYSIS (262-5974) or 1-817-640-6166.
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