Triscuits are my favorite cracker. I've been eating them for as long as I can remember. I recently asked my wife to buy a box of Triscuits when she went grocery shopping. When she returned home she told me it was difficult to find "regular" Triscuits as there must be a dozen varieties from which to choose. Can you believe there are 15 flavors of Triscuits?
My question is, do consumers really ask for 15 different varieties of Triscuits? I wonder if they go to the store and say, "I'm tired of the plain old Triscuits I want something like sweet potato and sea salt Triscuits, or fire roasted tomato Triscuits." Or is it more likely the senior marketing manager said to the brand manager, "We need more new products in our line. What flavors appear to be most popular among consumers today?" And voilà, we now have Dill and Sea Salt Triscuits.
This has to be marketing at its worst. But I'm really not picking on Triscuits because I think virtually every product group does the same thing. If I look in my own pantry I can find loads of other examples. For example there are 11 varieties of Bush's Baked Beans, and 13 varieties of Cheerios. All products I love!
However good marketing should begin with finding out what consumers really want, and then making it. It is not deciding that the company needs some new products and using the latest trends to create new products. I am aware these types of brand extensions can also satisfy other strategic objectives -- for example, creating a billboard effect on the shelf, or even just using shelf space rather than giving it up to a competitor. But previous research has shown that when you continually split your promotional dollars among special varieties of the main brand you often get diminishing returns from those special flavor brands.
Some years back I did research on looking at the return on investment for spending money, advertising and promotion on brand extensions of pasta sauce. We found the company was more profitable if it took all the money that would be standard on promoting the brand extensions and put it all in the main brand.
Someone once asked Sir Edmund Hillary why he climbed Mt. Everest, and he responded, "Because it's there." I similarly asked the brand manager why they kept coming out with line extensions for very small niche markets. His answer was two parts. First he said because we can, and second because he was told to!
One discussion with a brand manager went a little further, and I asked if he really thought all of these brand extensions would be successful. His frankness surprised me when he said, "No. But by the time the product is made, the channel is full, the promotions are over, and repeat purchases fall to nothing, I will most likely be working on another product or in another company."
I am keenly aware that the process of developing products that people really want is a risky and sophisticated process. But we can certainly identify some incredible successes. But virtually all of the product successes come from true innovation versus simply brand extension.
I think there's a simple fix for this problem (but maybe not easy). It would require the cooperation of a number of different entities within the business. To begin with, the leadership has some level of commitment that encourages marketing and product development to look for products that consumers really want and not just what is convenient to make. Additionally, it will take discipline to search for real innovation that satisfies customers' current and new desires. You'll absolutely never become profitable by convincing consumers to buy something that is convenient for you to make.
Peter Drucker once said the only two important functions of the company are innovation and marketing. He was not referring to specific departments within the company but to the two basic concepts of creating something new and letting people know it was available. In my opinion our legacy food companies have lost that sense of the importance of innovation and marketing, and have focused on products and sales.
I once had an MBA from a very prestigious Ivy League school tell me I didn't understand the objective of business was to make a profit. I told him I agreed, that I did not understand that. I believe the objective of the business is to create a satisfied customer, and profit is the reward we receive for doing a good job. When profit is your objective it often leads you down paths of short-term, cost-cutting, irrelevant product behavior.
The legacy food companies have not had a good track record over the past few years, and my belief is it comes from the internal focus on products and sales instead of the external focus of consumer innovation. Don't take my word for it, go back and read Peter Drucker; he is a genius.