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Launch absorbs most budgets
Forget gut-feel; it’s the numbers, ninny
Going with the flow
Farm subsidies foreshadow famines
Cheap tricks?
US invests $100m in plant genome work
USDA seeks faster B12 analysis
Robin Hood to aid chocolateers
Robots to replace human negotiators?
Location, location, location
Personalise your coffee – 7-Eleven
Ice cream for the hunter in you
Low carbs, high hopes at Hain Celestial
Extinction looms
Stress may lead to obesity
Sony beats food firms to top UK brand
Low-fat, low-carb diets to stay
Marketing
Launch absorbs most budgets
New research from the
pharmaceutical industry suggests the way to create a blockbuster product
is to spend most of the marketing budget around the launch period.
Research house Best Practices says
“Companies that allocate marketing resources early spark sales growth
and rapid market penetration by developing new products that are better
aligned with customer needs.”
Most benchmarked companies invest
as much as 15% of a product's total marketing spend pre-launch. One
company invests in early marketing activities to cash in on consumers'
unmet medical requirements and new market opportunities. This saves
millions by avoiding low-potential products. Another allocated 55% of one
product's Phase III marketing spending on targeted advertising and
promotion to create momentum for post-submission sales.
Forget
gut-feel; it’s the numbers, ninny
Marketers rely too much on
intuition, say researchers at the McKinsey consultancy. The key to
building brands more scientifically is to combine a forward-looking market
segmentation with a better understanding of customers and a brand’s
identity.
Writing in the latest McKinsey
Quarterly, they say an explosion in the number of brands—as well as
a proliferation of ways to communicate them has made it tougher to get
messages through. Converging product performance and service levels make
it harder to sustain existing brands. And the economic downturn has led to
cut budgets. Reaching the next level requires a more rigorous, data-based
edge to branding, they say.
First, look at the real long-term
profit potential of each customer segment. If you don’t you could be
lowering the potential return on investment. Helpful as traditional
segmentation efforts are, you may be chasing customer groups with weak
long-term potential.
Next, watch trends. Major
transformations such as dietary shifts, the ageing of the baby boomers,
and the growing US Hispanic population can be the wind beneath your wings.
Third, follow the money. Make sure
the trend you spot has legs so that you aren’t caught addressing a
fashion with the lifespan of a mayfly.
Fourth, building the brand requires
new smarts. Consumers are savvy and suspicious. Breaking through the
clutter means getting to their “touchpoints”, the sites where
consumers interact with it. Apart from delivering the physical goods, it
means striking an emotional chord with them too. “The most successful
brands emphasise features that are both important to consumers and quite
differentiated from those of competitors. We call these brand
drivers," they say.
Delivering on touchpoints involves
the whole organisation. Companies may even have to develop operational
targets to help build their brands. For marketers, persuading the rest of
the firm to play along is often more difficult than sorting out the four
Ps. But getting the right numbers to back the argument will help.
Recognising antes, drivers, and
touchpoints is hard enough in retrospect. In future they will have to use
more social science techniques to identify the brand attributes that drive
loyalty among specific customers. Known as pathway (or
structural-equation) modelling, these techniques aren’t new; they rely
heavily on fundamental regression techniques. But they are only now
beginning to be applied to branding because of the crucial need to target
more precisely what customers care about most.
Next, do the consumer research.
Regression analysis of the specificity and breadth of the questions brings
out the brand’s tangible and intangible benefits in great detail.
Second, the analysis shows marketers the relationships between each of the
brand’s elements—nuances that conjoint techniques can’t provide.
Finally, rather than trying to determine the importance of individual
elements, the new approach pins down their contribution to brand loyalty.
This is important, because people don’t always do what they say.
Although pathway modelling sounds
complex, it quantifies the potential impact of brand initiatives on
customer loyalty. This translates into real money, which you can use to
estimate ROI and to make touchpoint trade-offs.
Water
Going with the flow
 The
world's clean water crisis needs vigorous and concerted action, EU
Research Commissioner Philippe Busquin told the UN this week, which marked
World Water Week.
“Providing safe water and basic
sanitation to the urban poor is a critical challenge which requires
vigorous and concerted action on an international scale,” he said.
Almost one billion people, or 32%
of the word's urban population, live in slums, most of them in developing
countries. Over the next four years, the Commission will spend over 2bn
euros to accelerate sustainable development in Europe, as well as
developing countries. Under FP6, researchers are modelling mechanisms for
water management, which can be transposed to developing countries.
Next year the Commission will call
for proposals for integrated projects to “twin” European technology
centres and developing countries for sustainable development.
Food
Farm subsidies foreshadow famines
October 16 is World Food Day, but
billions spent subsidising farmers in developed countries leads to
starvation in poor countries, reports the WorldWatch Institute.
In its Vital Signs report,
it says Organisation for Economic Co-operation and Development (OECD)
governments gave subsidies worth $311bn to their farmers in 2001. These
subsidies meant food crops exported by OECD farmers could be sold at
prices 20-50% below the cost of production, undermining farmers in
developing nations.
In addition farmers in developing
countries face trade barriers roughly twice as high as those faced by OECD
farmers.
Innovation
Cheap tricks?
Here’s a chance to poke yourself
in the eye. The following ad appeared recently. It said
“Join InnoCentive - an exciting
web-based collection of scientists with the opportunity to earn valuable
awards by solving R&D challenges for world-class companies, such as
Dow Chemical, BASF, P&G and more. Registration to InnoCentive is free
and easy, and for a limited time only, new registrants will be entered to
win a free Apple iPod digital music player.”
Wow. Let’s hope the attitude to
the intellectual property is a little more rigorous than registration.
In case you need more incentive
than an iPod to register, among the challenges that might attract you are
the chance to synthesize hexamethylene-1,6-diisocyanate
($10,000), find a new method to extract DNA ($10,000), or a simple, reliable, robust and reproducible analytical method for
determining the concentration of an active ingredient in various product
formulation matrices ($20,000).
R&D
US invests $100m in plant genome
work
The US National Science Foundation
is to spend $100m at 48 labs working on 31 new genome projects covering
cereals, fruits, legumes, and other economically key plants.
The NSF’s plant genome programme
examines the structure and function of plant genes, particularly those
important to agriculture, environmental concerns, energy and health.
The 2-5 year projects will receive
funding ranging from $600,000 to nearly $11m. A complete list of the
awards is available at http://nsf.gov/bio/pubs/awards/genome03.htm.
Since the Plant Genome Research
Program began in 1998, NSF has committed about $375 million to the effort.
USDA seeks faster
B12 analysis
With one in five Americans not
getting enough vitamin B12, and vegetarians, gastric bypass patients and
the elderly at greater risk, the US Department of Agriculture is keen to
speed up ways of measuring the B12 content of foods.
Nancy Miller-Ihli, an analytical
chemist at the USDA’s Food Composition Lab, is using capillary
electrophoresis (CE) and micro-high performance liquid chromatography (µHPLC)
combined with inductively coupled plasma mass spectrometry (ICP-MS) to
separate the different species and quantify each one in samples.
She hopes this will speed up
analysis and overcome the present limitation that natural forms of B12
must first be converted to cyanocobalamin, a form that does not occur in
nature, but which is used in vitamin pills and to fortify foods.
"We can determine the precise
amount of cyanocobalamin in a vitamin tablet in 25 minutes rather than 4-5
days, she says. Although B12 is the only vitamin suitable for such
speciation measurements, other organometallic species found in foods and
supplements can be detected using this approach.
Marketing
Robin Hood
to aid chocolateers
Here’s a way to indulge that
craving for chocolate and do some good at the same time. Chocaid.com is
“a new venture based on the Robin Hood theory of business”, to quote
their PR.
The company collects money for
hunger relief projects worldwide by redirecting part of the money spent on
each chocolate purchase. Recipients can choose which project gets the
money by taking their unique wrapper code number to the Chocaid.com
website (unallocated donations to the project of the month).
The projects are run on site by
GORTA, the company's Dublin-based charity partner, under the umbrella of
the UN Food & Agriculture Organisation.
The projects provide basic self-help resources to communities in
Africa, India and South America. These can include clean water supplies,
animals, seeds, farm tools and agricultural training.
Chocaid milk chocolate & plain
chocolate bars are 100% organic and made from Fairtrade cocoa and sugar.
For the Christmas period it is launching a range of unique Fair Trade
Belgian truffles (mint, orange & champagne) from which 20p goes to the
project of the customer’s choice. More from www.chocaid.com.
Negotiation
Robots to replace human
negotiators?
Here’s a scary thought –
computers may soon be haggling over contracts for everything from delivery
times to volume discounts if Japanese computer firm Fujitsu has its way.
The company said this week it has
developed an open protocol to bring automated negotiation to the
electronic marketplace. Computers representing two sides of an e-commerce
transaction can generate and exchange proposals back and forth until they
find a set of terms that is optimal for both sides.
Experienced negotiators know that
when a negotiation is enlarged to include a richer set of business terms
it becomes easier for both sides to extract value from the transaction. If
a buyer and a seller are negotiating a deal and there is only one
parameter, typically price, the deal is zero-sum. What the buyer gets, the
seller loses, and vice-versa. However, if another parameter is added, say
delivery time, both sides can do better. The more parameters there are in
a transaction, the better all parties can do.
Computers can explore more options
much quicker than people. This allows both sides to get more value from
each transaction than before. This will make e-commerce transactions more
efficient, and potentially create entirely new markets, claims Fujitsu.
“Automated negotiation is fast,
cheap, scales well, and can handle arbitrary levels of complexity,” it
says. “Human negotiators often fail to find the combination of
parameters that would make both sides happy. They end up walking away even
though there could have been a deal that benefited everyone.”
Fujitsu believes that
computer-mediated negotiations will become the norm throughout the supply
chain. “In the near future automated negotiation systems will allow the
factory and its vendors to find the right combination of components,
prices, warranties, vendors, delivery schedules and so on. Not too much
later, automated negotiation systems will be able to automatically
generate the contracts required to complete these transactions.” For
more contact ans@fla.fujitsu.com.
Start-ups
Location, location, location
Being in the right place may be
more important than having enough money, according to a new European
Commission study on essential conditions for the development of high tech
start-ups.
Researchers found research grants
do not attract many growth-oriented companies. High tech start-ups in the
life sciences and information technology industries are homogenous, and
their development depends on a region's entrepreneurial climate, they say.
“The availability of pre-seed
capital, incubation services and the development of an entrepreneurial
community are all pre-conditions for the existence and success of
start-ups,” claims the study. “In regions where high-tech start-ups
are mushrooming and contributing significantly to economic growth, the
three dimensions are very well developed. In those regions where few
high-tech start-ups are found - despite the availability of technological
research - the three dimensions are not developed at all,” they write.
Access to research grants instead
of pre-seed capital, is not enough because they “do not require the
start-up to pass the test of commercial reality. Instead, they often allow
the start-up to continue its research-oriented activities. In short,
R&D grants do not attract growth-oriented companies.”
A region must have the necessary
infrastructure for housing high tech start-ups. However, this is not
enough on its own, and should be complemented by technical incubation
capabilities, such as patent scanning and incentive schemes for contract
research.
But the cultural richness, the
extent to which different actors in a region interact and learn from each
other, is vital.
The study also identifies three
archetypal forms of start-up: technological small and medium sized
enterprises (SMEs), prospectors (providing mainly consultancy or technical
services to local customers), and venture capital-backed enterprises. The
dominant type of start-up in a given region will depend on the
entrepreneurial climate. For example, in areas short on entrepreneurs,
technological SMEs prevail, and venture capital-backed firms are rare.
The study suggests setting up
complementary sources of capital alongside research grants to encourage
growth. The paper also suggests that regions seek to grow their potential
in steps. Trying to create a highly developed region from scratch usually
fails, it warns. Regions should develop a model appropriate to their
environment, it says.
NPD
Personalise your coffee –
7-Eleven
7-Eleven, the first US retailer to
sell hot to-go coffee almost 40 years ago but which missed the Starbucks-inspired
boom, now says coffee drinkers can create some 1,300 different hot
beverage combinations, all for just a buck, thanks for anew range of
coffees, creamers, cocoa, cappuccino, toppings, flavour syrups, steamed
milk mix and sweeteners.
7-Eleven coffee category manager
Kris Nelson said "Customers can create their own personalised hot
drink with no waiting in line. Secondly, 7-Eleven offers a greater value,
at around a dollar a cup versus typical coffeehouse prices of $3 or
$4."
Suck that through your straw,
Starbucks.
Ice cream
for the hunter in you
 With
the hunting season upon us, what better way to finish off that pheasant
breast or venison haunch than with a bowl of Star Spangled’s Gun Nut ice
cream.
The company, which bills itself as
“the conservative alternative to liberal Ben & Jerry's”, has asked
gun nut rock star Ted Nugent to front the promotion. The slogan? After You
Kill It and Grill It, Top Off Your Wild Game With a Big Bowl of Gun Nut.
Nugent is an enthusiastic support
of Americans’ right to bear arms and hunt, and has written a game-based
cookbook titled Kill it and Grill it.
Other Star Spangled flavours are I
Hate the French Vanilla, Nutty Environmentalist, Iraqi Road, and Smaller
Govern-mint. Star Spangled tithes to charities that support America's
armed forces.
Low carbs,
high hopes at Hain Celestial
US-based organic food firm Hain
Celestial has launched Carb Fit, a low-carbohydrate food brand to surf the
Atkins-inspired diet craze.
The company claims the products are
all natural, kosher, and contain no trans fat, hydrogenated oils,
or chemicals to achieve taste and stability. In addition, they will be
co-branded with well-known Hain Celestial brands to help communicate the
Carb Fit message to existing consumers.
Hain Celestial boss Irwin Simon
said "We are very conscious of the rising level of obesity in the US,
particularly among children.” The initial range has Snax Twirls, a
corkscrew-shaped crispy soy snack, Soy Nuts, a crunchy new snack in salted
and red hot flavours, Pasta, with a quarter of the
carbs of regular pasta, in penne, rotini, elbow and spaghetti, and
Valley Cookies in chocolate chip, peanut butter and almond with only 6-8
grams of net carbs per serving.
Others will launch from January
2004.
Fish
Extinction looms
Politicians are ignoring sound
science and gambling with the health of Europe's declining fish stocks,
the British Royal Society warned this week.
“Fish stocks are on the brink of
collapse, but EU ministers are opting for higher quotas than scientists
suggest,” it said in response to the Prime Minister's Strategy Unit on
UK Fisheries. “Cod and haddock stocks are now less than half those of
the early 1970s, with cod stocks in the North Sea at their lowest recorded
level.”
Royal Society vice-president
Patrick Bateson said "Current fishing practice is unsustainable. Too
many fish are being taken from the sea, leaving too few adult fish to
reproduce and rebuild the stocks. If such widespread destruction of a
natural resource were happening on the land where we could see it, there
would be outrage and condemnation, but because it is happening in our
oceans it is all too easy to ignore.
Quota deals cut by EU fisheries
ministers mean reductions are often less than required. “Unless real
action to restrain fishing is taken now there could be nothing left to
fish in the future,” he said. He added Northern cod stocks off
Newfoundland show little sign of recovery despite a nearly complete
cessation of fishing since 1992.
Health
Stress may lead to obesity
A US researcher has found that
stress hormones encourage the formation of fat cells, particularly those
that are the most harmful to health located in the abdomen. Worse, Mary
Dallman, a physiology professor at the University of California, San
Francisco, has shown how fatty sugar-rich foods can calm the body's
response to chronic stress.
Brands
Sony beats food firms to top UK
brand
Sony topped the inaugural Harris
Interactive Europe Poll conducted recently among 4,098 Britons (aged 15+).
Heinz, Marks and Spencer, Kellogg's, Tesco, Flora, Coca-Cola, Boots,
Nestle, and Cadbury complete the Top 10.
Sony won a similar poll earlier in
the US, making it one of only three, with Kellogg's and Coca-Cola, on both
lists. “Global fast moving consumer goods brands such as Kraft, Procter
& Gamble, and Pepsi-Cola made little to no impression on Britons
despite ranking among America's 10 best brands,” said HI.
Curiously, Britons chose not a
single car maker, but Americans plumped for Ford and General Motors.
Instead Britons went for nationwide retail brands such as Marks and
Spencer, Tesco and Boots. Retail brands scored zero in America's Top 10,
as did food giants Cadbury and Nestle, which make it on Britain's list.
Nutrition
Low-fat, low-carb diets to stay
Half of American consumers say they
will eat more low-fat foods and cook more meals from scratch at home in
2004, according to an exclusive survey conducted for the Grocery
Manufacturers of America by SupermarketGuru Phil Lempert.
Respondents also indicated that
convenience will remain a factor in meal planning; 29% said they will
"eat more freshly prepared foods that need to be heated," while
27% said they will "cook more meals at home using prepared
ingredients."
As to food types they will go for,
they answered low-fat (49%) low-carbohydrate (40%) and
"fat-free" (27%); 28% want nutritional value as the main
ingredient for dinner, just ahead of price (27%).
Three in four said they were
following a low-carb diet, and 60% said they were doing it to lose weight.
Low-carb protein bars and breads were the most commonly purchases (bought
by 54% and 41% respectively), followed by low-carb ice cream (31%),
chocolate (30%) and beer (20%). Perhaps most significantly, 82% of those
surveyed thought the low-carb diet trend will last, with 51% saying they
thought it would last "forever."
Shoppers also value brands; 80%
said familiarity with the company is either very or somewhat important
when buying foods. When asked about trust, four out of five chose high
food safety standards and quality as defining terms. When asked in which
categories they would buy only a brand they knew and trusted, consumers
chose sodas (47%), canned soup (44%) and breakfast cereals (40%).
Lempert’s presentation is at http://www.gmabrands.com/events/msmpresen.cfm.
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