1. HEALTHY, CONVENIENT BUT ABOVE ALL TASTY Vivien Wilton-Middlemass FDIN SEMINAR: Better Quicker & Cheaper NPD March 2009 Defining a Clear Direction

2. WHAT ARE THE EFFECTS OF A CREDIT CRUNCH As the credit crunch gains momentum we see:- MARKET PLACE More well established brands in financial difficulty Every aspect of business is affected - manufacture and services Same pattern throughout all industry. Companies try to reduce their losses by:- -reducing work force -cancelling expansion projects -scaling down their operations -reducing their borrowing/borrowing more cheaply -working more cost effectively

3. Defining a Clear Direction WHAT ARE THE EFFECTS OF A CREDIT CRUNCH As the credit crunch gains momentum we see:- THE CONSUMER Every aspect of the consumers’ life affected soaring prices static salaries/redundancies Consumers re-evaluate every aspect of their lives. Lifestyle Attitudes to brands and services Examine the VALUE of what they are buying Consider WHAT to do to improve their situation

4. Defining a Clear Direction HOW DOES THIS AFFECT THE FOOD & DRINK INDUSTRY FROM THE CONSUMER PERSPECTIVE In order to adjust to their situation consumers:- Buy less or cut out luxury items Trade down branded to own label/ cheaper brands Eat in rather than eat out Produce homemade rather than shop bought Question whether the benefits of “Healthy/Organic/Fair Trade/Premium” lines worth the extra cost. Buy more economical pack sizes Consider where they shop and the cost of getting there

5. Defining a Clear Direction HOW DOES THIS AFFECT THE FOOD & DRINK INDUSTRY FROM THE MANUFACTURER PERSPECTIVE In order to adjust to changing consumer behaviour manufacturers/retailers:- Squeeze their suppliers on price /larger discounts Replace ingredients with cheaper alternatives Review place and methods of production Try to take market share from their competitors Review cheaper packaging alternatives. Review methods of distribution Reduce advertising/promotional activity and review its effectiveness

6. Defining a Clear Direction AT THESE TIMES SENSORY RESEARCH CAN HAVE AN IMPORTANT ROLE IN SUPPORTING THE FOOD & DRINK INDUSTRY

7. Defining a Clear Direction Will not cover the technical aspects of sensory research but consider the benefits of using the discipline for those in manufacture/ retail of Food and Drink products. PURPOSE OF THIS TALK

8. Defining a Clear Direction WHAT IS SENSORY RESEARCH Sensory Research has been defined as “ the scientific discipline used to measure, analyse and interpret the characteristics of products as they are perceived by the senses of sight, smell, taste, touch and hearing”. Uses a panel of individuals who have been screened for their sensory acuity and trained in sensory evaluation

9. Defining a Clear Direction SENSORY RESEARCH COMPARED TO MARKET RESEARCH It is different from market research in that it requires:- - Small limited numbers of respondents (5 to no more than 30) - Respondents are not demographically representative of population - Forced choice responses - Products are always tested blind not branded - Products are presented in balanced designs/serving orders - Product trials are repeated - Respondents only react objectively to what they perceive not subjectively as to what they like - Respondents do not measure purchase intent/degree of liking -The testing facility and test protocols are controlled

10. Defining a Clear Direction HOW SENSORY RESEARCH WORKS How does it work? Sensory Research uses a variety of test methods and standardized procedures categorised as discriminative, descriptive and affective Sensory Research can show us:- How products are different What attributes make them different The magnitude of the difference

11. Defining a Clear Direction TYPES OF SENSORY TESTS Discriminative Test Are products different in any way Descriptive Test How do products differ in specific sensory attributes Affective Test How well are products liked or which products are preferred

12. TYPICAL DATA FROM SENSORY RESEARCH From the data we can produce :- -a sensory fingerprint of a product, Defining a Clear Direction -sensory maps showing product relationships,

13. Defining a Clear Direction TYPICAL DATA FROM SENSORY RESEARCH -Sensory maps which linked to consumer acceptance data the underlying sensory characteristics affecting consumer choice From the data we can produce :- - Product Optimisation Target sheets for R&D to action

14. Defining a Clear Direction THE BENEFITS OF USING SENSORY RESEARCH The following examples based on real case studies which will demonstrate the benefits of sensory research and how it can and has been used to:- Maintain market/brand share in uncertain times Assist in cost reduction/ingredient replacement exercises Use Taste to drive innovation/NPD / product optimisation Target products for specific market segments Top tips to ensure consumer acceptance and brand equity

15. Defining a Clear Direction MAINTAIN MARKET/BRAND SHARE Case Study K: A major pasta sauce company wanted to understand:- -how consumers rated their product compared to their competitors -what attributes of pasta sauce drive preference -what changes to their product are needed to maintain brand share. Sensory Research was used to:- -(a) Produce a sensory map of the PASTA SAUCE market which showed -relationships between the products -sensory attributes important in discriminating between the products The clients’ product F significantly different –in colour (more orange) and more onion pieces

16. Defining a Clear Direction MAINTAIN MARKET/BRAND SHARE Consumer Research amongst the target market was used to:- - determine acceptance of all the pasta sauce products The most liked product was a competitor brand and when correlated with sensory research data showed the main drivers of acceptance were appearance and texture and NOT Taste as previously thought. The clients product was compared to the most liked product, significant differences in the sensory attributes of appearance and texture noted and given to R&D as targets for product change.

17. Defining a Clear Direction COST REDUCTION /INGREDIENT REPLACEMENT/ PRODUCTION CHANGE Case Study A: A major dairy manufacturer wanted to:- -make economies by moving production to another site -the move carried out in a phased operation Sensory Research was used to:- -(a) Determine whether there was noticeable significant difference between products produced at the old and new production sites No: Taking part in test = 55 No: Correct identification = 31 No: Incorrect identification = 24 No: Req’d for significance = 26 at 95% CL RESULT: A SIGNIFICANT DIFFERENCE WAS OBSERVED TEST REPEATED OVER TIME OF MOVE UNTIL NO SIGNIFICANT DIFFERENCE BETWEEN OLD & NEW FOUND

18. -(b) Descriptive sensory research showed how the old and new products were different and the magnitude of difference. COST REDUCTION /INGREDIENT REPLACEMENT/ PRODUCTION CHANGE KNOWING WHICH SENSORY ATTRIBUTES WERE SIGNIFICANTLY BETWEEN OLD & NEW PRODUCTS PRODUCTION TEAMS WERE ABLE TO TWEAK THE NEW PLANT PRODUCTION PROCESS

19. Defining a Clear Direction USING TASTE TO DRIVE INNOVATION/NPD/ PRODUCT OPTIMISATION Case Study D: A major ingredient supplier was asked by major retailer to look at new product innovation for a powdered product with 90% household penetration. Sensory Research was used to:- - ( a)Produce a sensory map of 24 products in and around the fringe of the product category including, current and npd powdered, chilled, canned and frozen products. The sensory research highlighted all the appearance, aroma, taste and textural differences between the products and showed their relationship to each other.

20. Defining a Clear Direction USING TASTE TO DRIVE INNOVATION/NPD/ PRODUCT OPTIMISATION -(b) Consumer acceptance research amongst the target market on carefully selected subset of products The preference map below shows:- -the overall direction of liking (See arrow)(aggregated data) - individual preference directions - how respondents cluster in their preferences

21. Defining a Clear Direction USING TASTE TO DRIVE INNOVATION/NPD/ PRODUCT OPTIMISATION -(c) By combining both sets of data using multiple regression techniques we were able to ascertain the key positive and negative drivers of acceptance and highlight New NPD Opportunities We were also able to model the acceptability of potential new products which had not yet been produced

22. Defining a Clear Direction GET BETTER SALES BY TARGETING PRODUCTS FOR SPECIFIC MARKETS/MARKET SEGMENTS Case Study C: A confectionery manufacturer wanted to rationalise their chocolate brand across Europe. -how consumers in each country rated their product compared to their competitors -what sensory attributes of the chocolate brand drive preference -whether the same product would have same appeal to all countries. Sensory Research was used to:- -map current, competitor products and potential new products -correlate sensory data with consumer preference mapping to show the differences between consumers in different European markets Driven by sweet and flavour strength and a dislike of milky soft and cloying attributes

23. Defining a Clear Direction USING THESE MAPS, THE CONFECTIONARY MANUFACTURER DID NOT RATIONALISE THEIR BRAND ACROSS EUROPE. THEY WERE ABLE TO:- DIFFERENTIATE MEANINGFULLY BETWEEN UK, FRENCH AND GERMAN CONSUMER PREFERENCES TARGET THEIR PRODUCTS TO EACH OF THESE MARKETS GET BETTER SALES BY TARGETING PRODUCTS FOR SPECIFIC MARKETS/MARKET SEGMENTS Driven by of milky, soft and cloying attributes and a dislike of sweet and strong flavour

24. Defining a Clear Direction OTHER USES FOR SENSORY RESEARCH Product matching Product improvement -Optimise an existing formulation -Need to change raw materials/ingredients New product development Diagnostic tool Quality control Process change Selection of new raw materials Product grading and homogeneity Consumer acceptance and prediction

25. Defining a Clear Direction TOP TIPS TO ENSURE CONSUMER ACCEPTANCE AND MAINTAIN BRAND EQUITY Sensory Research :- -reduces the risks in decisions about product development and strategies for meeting consumer needs. -ensures greater and often quicker success in the market place TIPS Don’t just wait to hear from your competitor how he has changed his product - use sensory research to find how and what exactly he has done. Check out whether even small ingredient and formulation changes to your product are noticed by consumers before you make them, otherwise it could be too late and they may have switched to another brand Use sensory research to check out product deterioration/ product ageing/ in the market place Check whether all your customers are driven by the same sensory attributes in your market or could you missing a opportunity? Check whether your product is delivering all the key sensory drivers of consumer acceptance? Check you are producing the right product for you brand image?

26. Defining a Clear Direction REMEMBER You may have identified that consumers want HEALTHY AND CONVENIENT PRODUCTS…….BUT THEY DON’T NECESSARILY WANT A LEMON!

27. … defining a clear direction McCallum Layton Bramley Grange Skeltons Lane Thorner, Leeds +44 (0)113 237 5590 www.mccallum-layton.co.uk