News Corp’s inaugural FMCG Forum marks the start of a robust and well produced claim for Food & Drink media budgets. The event was focused on marketers and supported by the AANA, with a heavyweight lineup of speakers focusing on two areas – innovation, and marketing science.
Megan Brownlow made the case for innovation as the primary growth driver in mature categories – 53% of products currently on the shelves were launched in the last 5 years, and 37% of Aussie shoppers bought something for the first time in their last shop. She focused on some of the most famous product fails, and the key reasons for their failure.
- The Ford Edsel, Ford’s biggest launch in terms of the physical size of the car as well as in investment in the NPD process, failed through lack of the right research. A big car was what the market wanted in 1955 when the development process started. By the time it launched in 1957 the growing threat of the cold war turning hot, exacerbated by Russia’s successful launch of Sputnik, consumer confidence had crashed and smaller cars were the growth sector. Saddling the biggest car on the road with an ugly name imposed by the Ford family (Edsel Ford was Henry’s son) in place of the well-researched shortlist whittled down from over 18,000 possible product names by Ford’s NPD team was the final nail in its coffin
- New Coke – the classic example of fighting on your competitor’s terms. Pepsi’s Pepsi Challenge showed how people naturally preferred Pepsi in blind taste tests. Coke saw this as a product challenge, and added sugar to change flavour profile of their core product to be more like Pepsi. They weren’t looking at the right metrics, the ones that would have told them the intangible increase in perceived taste attributable to the brand, format and packaging. When Coke stopped tasting like Coke, it bombed.
- Apple Newton – The forerunner of the iPad launched in 1993 to hit a target release date. At a late stage development meeting Apple CEO John Sculley demanded that it fit in his pocket and be ready in a month. The electronics required for its innovative handwriting recognition were squeezed to the point of not working. Condensing the project timeline failed to give the technology the right resource to succeed.
Brownlow then offered her version of the innovation star – seven areas in which to apply a cultural insight or category adjacency: Business model, Content, Distribution, Technology, Product, Service, Relationships.
For example, Janine Allis saw the trend towards healthier snacking created a Product opportunity, and built the Boost Juice brand to fill it. Mary Kay Ash saw untapped sales potential in stay-at-home mums, and created a network sales business model from door-to-door cosmetics catalogues. And when Ray Kroc went to investigate the success of the McDonald brothers’ hamburger restaurant, he found it was the use of technology to change the concept of restaurant service that powered it.
Innovation is obviously the lifeblood of the Food & Drink industry, but it featured on the agenda here for a more practical reason: that News Corp are launching and end-to-end NPD partnership service, de-risking the process by building it on insights from their food media, and running ongoing concept and product testing. And naturally we would assume, offering media and editorial support of the products.
Bernard Salt, of The Demographics Group, built on the opportunity to innovate with more practical how-to guide on how to inform an innovation strategy. Seeking to inspire innovation from data, focusing on applying long trend data from the Census and the Household Expenditure Survey to forecast the rising trends in FMCG.
Firstly, in the wider context of “outrageous consumer expectation” being the theme of the next decade, Australia tastes and trends will change faster than elsewhere because our economy will continue to be driven by immigration, increasing the exposure to new cultural influences for a population always hungry for novelty. 39% of Sydney’s population were born outside of Australia, compared to 29% of New Yorkers outside the US, 22% for Paris and 2% of Tokyo.
Household spending between 2010-16 increased by 15%. Any category in the Household Expenditure Survey with significant variances from that figure is an interesting starting point for trend hypotheses. Activewear increasing by 357% (women’s) and 151% (mens) is hardly a surprise, but the 116% increase in animal health products may tell us something about the increasing difficulty for millennial couples in affording to start a family, and therefore open opportunities to package and market pet care products differently for a fur baby than a retirement companion.
Food tastes are also indicators of longer trends. The Mediterraneanisation of the Australian diet in the ‘90s/’00s (which Bernard demonstrated with R&G coffee, pizza, olive oil and dukkah stats from previous Household Expenditure Surveys) trailed immigration by a generation, but it was also a leading indicator of the slower trend in home design evolving from the parlour-based English bungalow to the open air interior/exterior flow of a Mediterranean climate. Salt’s hypothesis was that the triple digit increase in Asian foods over the last 10 years was an indicator of a similar impact on new home designs in the ‘20s, which would influence many classes of interiors and FMCG product innovation.
The Marketing Science side of the presentation was probably less new news to media agencies. Professor Bruce McColl offered a few insightful reflections of his time as global CMO of Mars
- Mars CFO’s view on why marketing was held in such low regard was “because it you put 10 CFOs in a room and ask how to manage cashflow, you’ll get one answer. If you put 10 CMOs in a room and ask how to increase profit, you’ll get 11 different answers”
- View on agencies and procurement “if procurement is making the decision, it’s indicative of the way marketing is seen in the business: a cost rather than a growth driver”
- A simple view of what Evidence-Based means from a scientist’s perspective: evidence-based means insightful and repeatable: “if I do X, I observe that Y happens, because Z. And if I do X again, the same thing happens”
Binet and Field, interviewed on video in London, were really just summarising the IPA Databank research, and trying not to rise to the increasingly direct questioning about what media channels were better than others. It was noticeable that the event producers anticipated low levels of marketing knowledge from the audience: both McColl and Binet/Field were giving basic introductory summaries of work that is in some cases decades old: Double Jeopardy and Duplication of Purchase were introduced and explained! There were even free copies of How Brands Grow (yes, the first one!) available in the foyer.
The marketing science elements were used to promote News’ media reach. There are some interesting ad opportunities, but the media elements lost a bit of credibility for us by making a few inaccurate comparisons with TV reach. Yes, News’ total monthly reach of grocery buyers is higher than that of the top 10 TV spots of the year. But you can’t buy it in ten spots.
However, notwithstanding the numberwang, News hosted a slick and insightful event, interesting for the focus on innovation of their own ad inventory and their approach to NPD partnerships, as well as for the fact that they were pitching these innovations directly to marketers.