Campbell Soup Company spent five years developing a new consumer product called Soup in Hand, a concept of eating soup on the go that its marketers say “changed the way consumers think about soup.” At Sony Electronics, the quest to develop an even smaller first-generation Walkman involved dunking a prototype into a glass of water, watching the bubbles rise to the surface – suggesting unused space inside – and hearing an engineer proclaim: “See? There’s still room to go!” At Merck, it took nearly 20 years to create and launch Singulair, an asthma medication prompted by a Nobel Prize-winning study. And at Coca-Cola, 20 to 30 new products may be in the pipeline during any given year and marketing executives must be prepared to “leap frog” one product over another in order to stay competitive.
Executives from Campbell Soup, Sony, Merck and Coca-Cola participated in a Wharton Marketing Conference panel this fall moderated by marketing professor Robert Meyer and titled, “New Product Marketing: Tomorrowland – The Consumers of the Future.” The executives included Javier E. Benito, president, U.S. retail division and chief marketing officer, Coca-Cola North America; Tracy S. Brala, senior brand manager, Soup at Hand and convenience platform, Campbell Soup Co; Chris Gaebler, director of market research and strategy, Sony Electronics US; and Beverly Lybrand, vice president marketing, HPV and new products franchise, Merck Vaccine Division.
Panel members discussed the development of products that customers will want in the future, the need to constantly anticipate consumer demands and the challenge of marketing new products in an increasingly competitive world.
Meyer compared their marketing challenges to running a sports team in Philadelphia. “For those of you who know the city of Philadelphia and know the way the sports world works, fans tend to have zero memory for past success,” he said. “If the Eagles lose a football game on Sunday, all their past wins will be ancient history and the fans will be calling for the coach’s throat. When you look at what the value of a company is in the eyes of the shareholder, it’s really not how good you were in the past but what you are doing today and what you are doing going forward that matters most. The value of the company is centered on its ability to think long-term about the future.”
Meyer asked the panelists how, with thousands of potential new ideas and products out there, they decide which ones to pursue. Coke’s Benito noted that the company has a “pipeline of products” and a “pretty formal process” for estimating each product’s potential. The company also has a “gate process. With Gate One, you do research, which may change the ranking of a particular product. And then at Gate Two, you follow through the continuum until you are ready to launch. You start in a gray area where you are just thinking about new ideas and products, and as you walk through those gates, you begin to do the ranking of the products in different ways. If you don’t have a winning concept you are not going to go forward.”
Campbell’s Brala “would step back even further” to explain how a new product is developed. Several years ago, just before developing Soup at Hand, she and others asked, “What are the key growth areas that we would see in the future? There were four areas we had identified that we thought should be developed. Obviously, convenience is one of them …” She and her team also ask, “What is the vision? Where do we want this to go? There’s a master brand and a platform that we base many of our innovations on as we proceed through the process.”
At Sony, developing products is divided into two distinct categories: improving existing products, which requires a formal process where products are evaluated on their merits; and creating new products that offer radical innovations, a process that is decidedly less formal. Often, said Gaebler, who manages the collection and analysis of consumer, competitive and market information from the United States and provides it to the designers and engineers in Tokyo, “there are competing teams assigned to do the same kind of radical innovation.”
Medical needs and major health issues drive product development at Merck, including cancer, Alzheimer’s, cardiovascular disease “and some emerging targets that are linked to trends in our society like obesity as well as sleep” dysfunctions, said Lybrand. “But in terms of how we decide (what to pursue), it has to do with novel approaches and products that will address an unmet medical need.”
For instance, one new vaccine being developed by Merck will target specific types of a virus called HPV – human papillomavirus – known to cause cervical cancer. “As it turns out, if you look at cervical cancers, 99.7% are associated with or contain the presence of specific HPV types,” said Lybrand, who directs global franchise planning for HPV vaccine, HIV and new vaccines. “That discovery enabled our researchers to target a vaccine that would prevent [these kinds of] infections.”
The Company Sandbox
A member of the audience asked panel members what incentives they use to encourage innovation and new ideas to bubble up in their companies.
At Coke, teams work together to develop ideas, often from different parts of the world. At Merck, early development teams are focused not so much on “creating a vaccine that gets to market exclusively but on early milestones, identifying targets that might encourage a new generation of ideas,” said Lybrand. For Campbell, ideas may come from several areas, ranging from global symposiums looking at culinary trends and “flavor potential opportunities” to more of what Brala called Campbell’s “grass roots” input campaign: an Internet site where employees put ideas into what’s known as the “sand box,” a company initiative that “gives employees early on the opportunity to test their ideas in some capacity to see if they fit any consumer needs.”
Sony offers what Gaebler called both “carrot and stick” incentives. The obvious “carrot” is that innovation and delivering products are rewarded. The president of Sony PlayStation, Gaebler noted, actually invented the game console. The stick, he said, “is that there is a sort of shame if you don’t innovate within our company … You can really sense in a group that has not created a new product in a while that they are not happy campers. They are probably as upset as a Phillies or a Mets fan.”
The panelists had very different answers to another question: What happens when a competitor comes up with a radical innovation? How do you respond? “I think you have to move fast,” said Coca-Cola’s Benito. “You may have to leap frog – move a product ahead of where it is.” At Campbell, reacting to competition too quickly – what Brala called responding to “a fad instead of a trend” – can be a bad move, she said. “Our products have not been as successful when we say, ‘Our competition is doing this; we must respond.’ That’s when we get off track.”
“You have to learn from the competition,” according to Merck’s Lybrand. “When we launched Singulair, our competitors were very strong, very much entrenched. They underestimated the customer’s interest and need in a new product, and so when we launched, we caught them off guard. I think you have to disentangle from the situation – no matter what side you are on – and learn from it.”
Gaebler acknowledged that “in some regards, we were not paying attention” when Apple introduced the iPod. When you think about it, that’s a product we invented – the portable audio player. In the late 1980s, when we saw people walking around with boom boxes on their shoulders, we said, ‘Oh, people want their music to be portable.’ We innovated in that category for a long time. The engineers in Japan came up with the Sony Walkman, but we are still learning a lot about this ongoing battle in the portable audio market. One of Apple’s advantages is that it really has only two products. It’s easier to focus on a few.”
Another audience member asked what the key takeaways are from product launches that don’t go well, and how that experience can change a company’s marketing strategy.
At Merck, the message “when you get a launch wrong is to remember to stay within your discipline,” said Lybrand. “If you start to believe the hype and you go out of your discipline,” you can get in trouble. Coca-Cola’s Benito agreed. When the international beverage company recently launched a new flavored sports drink that had to be reformulated four times in one year, Benito pointed to one factor as the reason for its failure: “We did not stay true to consumer principles. We thought we had a great tasting energy drink, because they don’t usually taste so good. But the reality is that (consumers) don’t want a great tasting energy drink. The cue for an energy drink is just to quench a thirst. When you don’t stay true to principles, you are going to fail.”
Sources of Inspiration
The panelists answered questions from audience members about fads vs. trends; the importance of securing new product space in retail outlets; the value in educating sales teams about new products; the value of market research, and barriers to product roll-out strategies. But a simple question about market “driving” development vs. market “driven” development – “Which is it for new products?” – sparked some of the panel’s most diverse comments.
“I would like 10% of our products to be market driven,” said Sony’s Gaebler. “But I would say that 90% is market driving. This might be heresy on this panel, but I think true innovators often don’t look for inspiration from (consumers). I think they look for it from design sources, technology sources.” Merck’s Lybrand saw it differently. “I’m wondering if they both aren’t the same thing. While your customers may not be able to articulate in exact words what they need, there is – in their underlying behaviors, attitudes and influences – the kernel of the idea. It’s our job as marketers to draw that from them. It will appear as though you have driven this yourself, but you haven’t.”
Campbell’s Brala argued for market-driven products. Why? “From a food standpoint, and from Campbell’s standpoint, some of our new product failures were products that were not market-driven smart. We launched a soup in a plastic package which was on the market for three years, but the consumer could never understand what was different or better about the plastic package than the can. We had the technology, but we didn’t bring it to market appropriately in a concept that made sense for consumers. We took lessons from that and used it to create Soup at Hand.”
Sometimes, argued Benito, creating a new product for consumers is ultimately “a very crude process. It’s kind of a circle. You have to be careful, but I think it’s a little bit of both market-driving and market driven. And if you get these two things working together, what happens? The synergies begin to build and there is perhaps a wonderful technology that [can be] attractive to the consumer.”