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  • 1. TNS April 11, 2014 Bringing Functional Foods to Market An innovation journey
  • 2. TNS April 11, 2014 The Innovation Journey Innovation & Product Development Identifying Market opportunities Creating , Identifying and refining promising Concept ideas Final product distribution and Launch Communication Plan Creating Synergistic products to promising Concept ideas
  • 3. TNS April 11, 2014  Senior executives are unsatisfied with the financial returns on their investment in innovation  80% of new products fail and the cost of failure is high  Successful product launches don’t always result in top-line growth It is getting increasingly hard to find and launch successful innovations 3
  • 4. TNS April 11, 2014 Companies struggle along the continuum of innovation 24% 12% 14% 17% 18% 25% 44% Other causes Technical problems Poor launch timing Competitive strength or reaction Higher costs than anticipated In-effective marketing Inadequate market analysis SOURCE: Cooper and Kleinschmidt 24% Main causes of new product failure 4
  • 5. TNS April 11, 2014 Pinpointing opportunities for growth 5
  • 6. TNS April 11, 2014 Identifying high potential product-led growth opportunities is essential for long-term success 6
  • 7. TNS April 11, 2014 Underperformance is the norm Less than 1% of ideas succeed in-market 7
  • 8. TNS April 11, 2014 The cost of underperformance extends beyond financials Credibility impact among external stakeholders (shareholders / trade) Impact on brand equity Opportunity cost KPI impact for the development team 8
  • 9. TNS April 11, 2014 Causes of underperformance Too narrow a focus leading to a battle for share of aisle not consumer occasion Healthy Nutrition All foods Healthy foods Functional Foods 9
  • 10. TNS April 11, 2014 Causes of underperformance Chasing empty spaces Product cluster Empty space Empty spaceProduct cluster Product cluster Product cluster Product cluster Product cluster 10
  • 11. TNS April 11, 2014 Where opportunity hides Core needs Passport expectations all products are expected to deliver – by all consumers in all occasions Enjoyment Tastes great Satisfies a craving Convenience Convenient to use out of the home Is not messy to use Quality Confident of food safety Value Is good value GAP GAP 11
  • 12. TNS April 11, 2014 Where opportunity hides Occasion needs Versatile Flavorful Future orientated, ideal benefit bundles valued by a large number of consumers in a large number of occasions 27%Tasty balance ($178m) Mindless nibbles ($119m)18% 20%Enhancers ($132m) 14%Home style sensory ($92m) Ultra indulgence ($139m)21% a I am looking for the best of both worlds – the perfect blend of taste and satisfaction without the guilt associated with unhealthy diet choices Solutions to this need are expected to not only taste good, but also provide some added benefit such as energy, mood lift, or relaxation I will not accept packaged, for the masses options and expect home-style products with unmatched freshness and wholesomeness Ultra-convenient options optimised for multi-tasking so you can enjoy a treat without stopping what you are doing The ultimate indulgence when only the best will do. All the senses are engaged with this rich taste and textural experience 12
  • 13. TNS April 11, 2014 Opportunity identification The difference between ideal and best available is the opportunity Tasty balance ($178m) Consumer perceptions of best available Client Product A Competitor Product Y Product category 1 Product category 2 Client Product C % agree Improvement opportunity (less than 35% agree) SecondarySecondaryPrimaryPrimaryPrimary Sensible balance Is low in cholesterol 25 20 10 8 10 Is low in fat 48 40 35 30 34 Easy to portion into small servings 28 50 45 40 38 Is low in calories 40 35 35 33 34 Satisfaction Tastes great 38 41 42 45 46 Satisfies my cravings 40 30 28 35 29 Is rich and creamy 35 36 34 35 35 Natural goodness Is all natural 38 34 33 31 30 Not overly processed 34 32 30 29 32 Not a lot of artificial ingredients 36 38 35 36 36 Is made with real milk 48 28 28 26 40 Experiential Has a unique taste 50 45 50 44 35 Has a distinctive taste 42 38 48 35 30 Is a nice change from the usual 38 34 33 35 30 Ideal requirements 13
  • 14. TNS April 11, 2014 Where opportunity hides What is a Convergence opportunity- what is a breakthrough opportunity Tasty balance Enhancers Home-style sensory Ultra indulgence Home-style sensory Versatile Flavorful Convergence Convergence Unique expressions of different occasion need Combinations highlighting more niche opportunities a Mindless nibbles Home-style sensory Breakthrough- Home baked delights ($80m) Pick me up ($120m) 14
  • 15. TNS April 11, 2014 15 Being “healthy” used to be all that was required. Manufacturers could communicate around general long term health and that was enough. These health promises though really required “faith” as there were no tangible/visible proofs of efficacy Consumers have become more demanding and the proof of efficacy timeline has shortened as is not more TODAY focused than FUTURE focused. Most of the functional health claims noted in the attached are health benefits I can experience today (digestive, joint, memory, energy, etc.). It is not that people no longer care about longer term health – they do. However, a long term health claim without TODAY functional claims will likely not be as successful. The evolution continues still as there is evidence “Energy” has become table stakes in many markets and now functional and emotive REJUVENATION is the new territory. What we have learnt about the evolution of health while identifying opportunities across the world
  • 16. TNS April 11, 2014 Case study 16 The Danone brand strategy evolution is an example: In the 1970’s, Danone ran a very successful ad talking about long term health – it is known as the Russians commercial. They showed a handful of people from Russia who lived over 100 years and they all shared frequent consumption of yogurt. Inference-> a yogurt makes you live longer – a distant future promise. Today, Danone has gone almost 100% into functional health. Their main product Activia, makes digestive health claims. Benefits you can see today rather than 50-60 years from now. 70s 80s Now
  • 17. TNS April 11, 2014 Creating Concepts and product ideas which will resonate with consumers 17
  • 18. TNS April 11 2014 How you say it matters as much as what you say 18 Consumers need to be able to relate the technical innovation to solving the “tensions” in their everyday life.- The ‘Aha’ factor makes the opportunity come to life WITH Insight WITHOUT Insight ‘Appeal’ 166 100 150‘Definitely Buy ’ 100 Presence of an Insight impacts product acceptance Scores expressed as indices Source : TNS R&D work
  • 19. TNS April 11 2014 Opportunity Identification Its all about tensions (tradeoffs existing products force me to make) 19 Unless a new product or package resolves an existing market tension, consumers are not anxiously awaiting your new offer, decreasing odds of success. What are the tensions in your market Spoil Child Child Health Convenience Wholesome Satiety Obesity Child’s Needs My Needs
  • 20. TNS April 11 2014 The structure of a compelling concept Strapline Reason to Believe Benefit Insight Title/ Concept Name 20
  • 21. TNS April 11 2014 Addressing Objective 1: Creating a Compelling Concept Role of concept is to communicate product details to the consumer in an effective and realistic way. It should provide them with the type of information and level of detail that they would be likely to have in a real life purchase situation. A good concept should: Use language that works with the target audience – not marketing or technical jargon Give as much information as a 30 second advert Be written in the right tone for the brand 21
  • 22. TNS April 11 2014 How to Create a Compelling Concept - Insight All good concepts start with a brilliant insight “Getting to the heart of why people do what they do, and using that knowledge to help us grow” 22 The insight is the reason why consumers keep reading – draws the consumer into the idea and shows you understand them An insight is the premise on which the idea is based and creates a situation or perspective for the benefit & Reason To Believe Needs to be based on true understanding of a consumer situation – they are the needs, wants or beliefs identified from the consumer portraits not just facts Thoughts that express a feeling and a need in a very subjective way
  • 23. TNS April 11 2014 How to Create a Compelling Concept - Insight tips 23 All good concepts start with a brilliant insight “Getting to the heart of why people do what they do, and using that knowledge to help us grow” Insights should not be too extreme or worthy, patronizing or preachy Use toned down language like "sometimes", "often", "at times" and "now and then" avoids consumers rejecting the concept because it feels too extreme for them …but try not to fall back on expressions such as “wouldn’t it be great if…” Consumers need to relate to the insights so try to make them feel more personal “you” can feel accusing or intimidating whereas “I”, “I feel” and “some people feel” are often better received. An insight should be expressed as a “need”, “want” or “belief”. Avoid excessive negative phrasing – the insight should leave you feeling positive Should express the basic “tension” in consumers life – a common structure – I would like to … But ….
  • 24. TNS April 11 2014 How to Create a Compelling Concept- Benefit 24 Should be something that perfectly answers the need identified in the insight, with a real, noticeable benefit in a compelling way. Give consumers what they want (benefit), not what you’ve got (feature) Does it pass the “so what” test? Consumers are very cynical about being told to buy a new product simply because it is new. The benefit is the reason consumers want to buy the product Ensure your benefit is distinct, compelling and original Benefits can be functional and/or emotional but must be different and better than competitors Functional - the tangible difference a product makes in the consumers life Emotional - the difference a product makes in how the consumer feels Often the benefit is emotional and the reason to believe is functional The benefit that your product or innovation will give to people it’s the difference the product makes in a consumer life and answers “what’s in it for me”?
  • 25. TNS April 11 2014 More detailed description that persuades people to buy it. It should support the differentiated benefit in a compelling way Avoid technical language that is not easily understood by normal people Consumers are not often swayed by complicated technical words Not always about “special ingredients” Try to provide rational and emotional reasons to believe that will persuade consumers to try the product RTB should be distinctive from other products in the category 25 How to Create a Compelling Concept - Reason to believe The Reason to Believe supports the benefit It convinces consumers they will receive the benefits promised.
  • 26. TNS April 11 2014 How to Create a Compelling Concept - Reason to believe can take many forms 4 Basic types of RTB • Logical Explanation • Describe why or how the product will solve consumers’ problem •Build from consumer insight about how things work • Hard Evidence • Show Results - graphs, pictures • Identify the source - special ingredients (including explanation as appropriate) • Give Data - % improvement, probability of success, etc. • Outside Recommendations • Professional Organizations e.g Doctors, Dental Associations, Nutritionists • Independent research/study results • Celebrity Spokespersons • Brand Track Record • Relies on strength of brand heritage 26
  • 27. TNS April 11 2014 How to Create a Compelling Concept - Strapline The Strapline A short, snappy sentence that sums up and reinforces the benefit of the concept. Leaves the consumer with a clear, last thought. 27
  • 28. TNS April 11 2014 Without insight 28 The term probiotic literally means “for life”. Probiotics are beneficial live bacteria found in the intestinal tract. Given the fact that 70% of the body’s natural defenses are inside the digestive tract, probiotics, when consumed on a daily basis, may be beneficial in strengthening the body’s natural defenses.
  • 29. TNS April 11 2014 29 Example concept - Probiotic food Body natural resistance Stresses of modern life Strapline : protect your body the natural way Consumer Insight : my body faces a lot of stress from my busy modern lifestyle but I don’t want to be popping pills all the time Consumer Benefit : Probiotic foods increase my body's natural resistance is can face the stresses of modern life in a natural way Reason to Believe : Independent research/study results , Healthier Choice labels , ingredients like Inulin
  • 30. TNS April 11 2014 Exercise : Omega 3 30 Omega-3 refers to omega-3 fatty acids. Fatty acids are the building blocks of fats, which, despite their misunderstood reputation, are vital nutrients. Omega-3 is used to regulate blood clotting, build cell membranes and support cell health. It's polyunsaturated, which is the relatively heart-healthy kind of fats that help reduce blood triglycerides (fats) and low-density lipoprotein (LDL), the so-called bad cholesterol. Omega-3 also curbs inflammation. Omega-3 is called an essential fatty acid
  • 31. TNS April 11 2014 A concept by Terence Chan 31 Description of the idea and benefits to Consumer: Eating/drinking the “X” product which is high in Omega 3 conveniently reduces bad cholesterol. Consumer Insights: Busy life in modern society leads to people consuming a lot of processed food which are high in fats, bad cholesterol and salt. All of which leads to high blood pressure. Products that is convenient and tasty is needed to counter high blood pressure that is a result of eating a lot of food high in bad cholesterol. Reason to believe – features (include things like pack sizes, flavours, price etc.) • The product contains “ingredients” that are proven to be high in Omega 3. For example, each bottle of product “X” is made from 500 grams of flax seed. (Flax seed is high in Omega 3). • Simple and uncluttered packaging design to differentiate the product from the “other highly processed” food products currently on the supermarket shelves. • Celebrities and common people to endorse the product. Typically celebrities and common people who have a lot in common with the target market. Tagline: Live life to the max with product ‘X’
  • 32. TNS April 11 2014 A concept by AVA 32 Description of the idea and benefits to Consumer: • Omega 3 can regulate blood fats (triglycerides) and low density lipoproteins which are the “bad cholesterol” . • Omega 3 build cell membrane and support cell health Consumer Insights: I am afraid of contracting cardiovascular diseases due to high (blood triglyceride levels) and cholesterol because I eat a lot of processed foods (high in sodium & fats). Reason to believe – features (include things like pack sizes, flavours, price etc.) • Omega 3 curbs inflammation (oxidative damage) • Research has demonstrated reduced incidence of cardiovascular diseases in populations with high Omega 3 intake • Ease of consumption due to availability of capsules. Tagline: Omega 3 is good for your heart & brain.
  • 33. TNS April 11 2014 A concept by Anonymous 33 Description of the idea and benefits to Consumer: • Omega 3 fatty acids are polyunsaturated fats that used to regulate blood clotting, builds cell membrane and support cell health. It also helps to reduce blood triglycerides and low density lipoprotein (LDL) which can lower the risk of heart disease. Omega 3 is an essential fatty acid which can also curb inflammation. Consumer Insights: I like to consume meat but hardly exercise due to my hectic lifestyle Reason to believe – features (include things like pack sizes, flavours, price etc.) • Based on research trials done on people who have higher risk of heart disease problems. The results showed that these people have reduced blood triglycerides and low density lipoprotein after consuming Omega 3 products for 6 months. Tagline: Protect your heart with natural source of Omega 3.
  • 34. TNS April 11 2014 Developing winning products 34
  • 35. TNS April 11 2014 Developing winning products – the key to success 35 Innovation is at the heart of most companies’ growth strategy. One of the most critical factors in the long-term success of new products is a strong repeat purchase rate. And to achieve that it is essential to create products that will meet consumer expectations. The strongest indicator of optimal repeat potential is the extent to which the product’s actual performance meets consumer expectations. This is called synergy. A strong product can be undermined by a poor concept. A great concept can raise expectations that an average product cannot meet - so failing to deliver repeat purchasing.
  • 36. TNS April 11 2014 It is important not to test products in a vacuum Repeatpotential Synergy High Low Product weak vs. concept expectations Product strong vs. concept expectations 36
  • 37. TNS April 11 2014 Concept A 11% 30% 300 29% Concept B 8% 45% 380 9% Same product, different concept To get the concept-product fit right you need to test the product versus expectations Trial rate year 1 Repeat rate Volume year 1 Product worse than expected 37
  • 38. TNS April 11 2014 Bringing functional foods to market- a checklist Identified a true whitespace opportunity Created an insight driven compelling concept that tests well Have you Have a product that is synergistic with your concept …then you are ready to go
  • 39. TNS April 11 2014 39 Thank You