If it ain't broke, do you fix it?
Steve Jobs and Apple famously proved, with the introduction of iPhones and iPads, the successful strategy of telling consumers what they need rather than asking them what they want. But, does this same axiom hold true when “improving” the design or formulation of existing products that consumers currently purchase, use and love?
The short answer is, no. Making changes to existing products is inherently risky, as history is full of corporate blunders like the New Coke recipe replacement or Tropicana’s disappearing straw debacle. In case you’re fuzzy on these examples, a brief reminder of each follow.
Replacing Coca-Cola with “New Coke”
In 1985, Coca-Cola withdrew their flagship product from the market and replaced it with a “new” Coke formulation in the US and international markets. Even though the new formulation outperformed both traditional Coke and main competitor, Pepsi, in blind market research taste-testing, consumers and the media revolted when their favorite “traditional Coca-Cola” was permanently replaced.
Tropicana Pure Premium Orange Juice Packaging Change
In 2009, PepsiCo invested $35MM to replace the existing packaging design for its best-selling orange juice, Tropicana Pure Premium, with a new packaging design that effectively removed its most recognizable feature- the orange with a straw in it, among other changes. However, this new packaging design was rejected by Tropicana’s consumers, caused confusion at shelf, and resulted in a 20% drop in sales ($30MM). The launch of the new packaging was such a failure that Tropicana reverted back to the original packaging a month later. The total cost of the change is estimated to total $50MM.
All this is to say that abrupt departures to currently successful and much-loved products represent substantial risk to brands.
Moreover, incremental changes to successful products pose an equally perilous pitfall. Among many older marketing research professionals, there is a sagely omen often cited to warn of this risk known as the “Chocolate chip cookie analogy.”
Told to me by my former mentor, the story goes… A successful maker of chocolate chip cookies decided to do focus groups with their consumers to test a new recipe of cookies with fewer chocolate chips in order to save on the cost of goods sold. Consumers accepted the small change and the new recipe was adopted in-market.
Then, about a year later, with costs continuing to increase, that same cookie maker conducted focus groups again to test a further reduced-chocolate chip cookie recipe. And again, consumers were accepting of the incremental change.
The following year, the cookie maker decided to reduce chocolate chips in their recipe yet again, but this time the focus group participants balked, exclaiming, “What chocolate chip cookies, there aren’t any chocolate chips!”
Obviously, this is just a silly story, but the message is clear, beware making small changes to your loyal customers’ beloved products because overtime, little changes may add up to a big departure from the product’s definition and the reason they purchase.
Examples of pitfalls along the road of incremental changes…
Cadbury Cream Eggs- Recipe Change
Fans of Creme Eggs by Cadbury were dismayed when Dairy Milk in the recipe was changed with cheaper chocolate. A spokesman for Mondelez claimed that the new recipe was pre-tested with consumers and that the change was minor. Yet, the change resulted in massive losses for the company. Cadbury’s parent company Mondelez International lost more than $14 million dollars in sales of Cadbury Eggs since the company made the controversial decision to alter the Creme Egg recipe. To make matters worse, the number of Creme Eggs in a pack was reduced in 2015.
Nutella- Recipe Change
Fans of Nutella all around the world were outraged when the news spread over the Internet that Nutella had changed its original formula. Nutella now contains more powdered skimmed milk (8.7% vs.7.5%) and more sugar (56.3 % vs. 55.9%). Following the new recipe, the color became lighter. A spokesperson for Ferrero, maker of Nutella, confirmed the change and reassured the fans that the quality of the product remained the same, but customers are still grieving about the change in their beloved product.
Conclusion
In the end, the lesson is - if you are contemplating changing an existing successful product, beware the risks posed by not properly listening to your loyal consumers. And, to allay those risks, a few guiding principles should be considered:
Listen to your loyal consumer base- Evaluate alternative products (i.e., designs, formulations, or recipes) among your most loyal consumers in a test vs. control (current) methodology to confirm that the alternative is indeed seen as an improvement
Define the context- Utilizing a written concept or other description of the product's benefit(s) and reason for being, confirm that the alternative product is indeed an improvement on the existing product and not a departure into something entirely different.
Tell the whole story- When testing with consumers, set a proper understanding of whether the alternative product will replace their current product or sit side-by-side with it.
Predicting consumer appeal is complicated at best, but proper use and willingness to listen to all possible results from marketing research can be an effective (and ultimately efficient) way to mitigate the risk of changing your existing products.