Thinking Outside The (Big) Box

Creative Disruption

Thinking Outside The (Big) Box
Julie Toscano Sequeira,
Experimentation can turbocharge innovation in the consumer packaged-goods industry.

Experimentation is an important element of emergent strategy that offers innovators the opportunity to test key assumptions early and get the information needed to move forward more efficiently and effectively.

In the world of consumer products, key assumptions that need to be tested often fall in the domain of the consumer. Will this concept resonate with target consumers? Can we convince them to shift well-established behavior patterns? What can we expect for trial and repeat? What price is appropriate?

The big box is key to volume and therefore is the ultimate goal for most new CPG products; the big box is often not the most conducive venue for testing such assumptions. From a channel perspective, shelf space is scarce and expensive, marketing costs are high, lead times are long, the environment is demanding, and product assortments are rarely dictated at the individual store level. From an internal perspective, getting the attention of the existing sales force amidst a more proven assortment can be difficult. And, from a competitive standpoint, an experimental offering in the traditional channel could tip a hat earlier than might be desired.

So experimentation in CPG often requires thinking "outside the (big) box" in order to be most successful. The results of tests run in alternative channels can offer evidence to support (or refute) a traditional launch and can help refine the concept in advance of such a launch. Further, in many cases, these channels can represent not only a venue for experimentation but also an early or alternate form of distribution.

The bottom line? Don't focus on volume when running experiments. Rather, focus intently on speed, affordability, connecting directly with consumers and concept refinement. Here are six different possibilities for structuring early experiments in CPG.

(Give It a Spot in the Company Store

Yes, this is a great way for employees to fill their pantry and demonstrate their product loyalty at a fraction of the retail cost. But the company store can offer a lot more for innovators aiming to get an early read on a product. Almost all CPG companies are diversified across categories and brands, and much (if not most) of the employee base can offer a fairly objective response to new products sprinkled onto shelves.

Offering a new product internally can enable a good-enough approach across several dimensions (i.e., packaging, messaging). True, the shelf is less crowded and the competition is less intense. But you're almost guaranteed a spot at the shelf, the price tag is cheap and the testing can happen very quickly. To get an early read on consumer appetite for a new idea, the company store offers a lot of advantages.

Leverage Cyberspace with a Virtual Launch

Want to bypass the retail channel altogether when testing a concept? The Internet enables manufacturers to conduct small-scale launches that do just that by setting up simple Web sites with order-taking and fulfillment capabilities.

To be sure, this is not the correct experiment to test uptake at the shelf or competitive positioning. Virtual launches, however, offer a lot of other advantages when testing assumptions around new concepts.

First, such launches enable rapid testing of consumer response to formulation, packaging and branding without the crippling cost of a full-scale launch. Second, such launches can create buzz as they can attract early adopters, bloggers, Twitter and Facebook users, and even the increasing numbers of mainstream press who are listening to these channels. Finally, manufacturers are able to gather valuable consumer information not possible through traditional channels, including feedback (i.e., comment boxes, chat boards), purchase behaviors (i.e., trial vs. repeat), and customer characteristics (i.e., location, demographics).

P&G ( PG - news - people ) has been very active in its experimentation with virtual launches with products including Crest Whitestrips, Pampers Change 'N Go, Swash by Tide and Align GI. And results from such launches have had a definite impact on innovation approach, whether that be doubling down or folding on an investment.
In the case of Crest Whitestrips, a virtual launch on whitestrips.com and in select dental offices generated unexpectedly high sales ($23 million from August 2000 to May 2001) and led to an acceleration of the retail launch timeline. In contrast, the information gathered from other virtual launches has ultimately led to the decision not to move forward--again, these exits are in many ways successes as the market experiments are conducted at a fraction of a cost compared to a true launch.

Reach for the TV Waves with Direct Response

Television can offer a unique placement opportunity for manufacturers seeking input on product, pricing, trial/repeat, marketing, messaging and a host of other product dimensions. These channels are typically most applicable for more complex or new-to-market products benefiting from such a high-touch sales model.

The two most common alternatives are home shopping networks (i.e., QVC) and infomercials. Home shopping networks offer a captive audience, live product demonstration and rich data analytics. This combination enables rapid iteration of messaging based on near real-time sales data. QVC, for example, boasts an 80+ million household audience to its 24/7 storefront. One well-known consumer products success story in this channel would be Bare Escentuals ( BARE - news - people ), the mineral-based beauty products company that began marketing its products on the network in 1997. However, lesser known companies such as Kim & Scott's pretzels (20+ appearances selling hundreds of thousands of pretzels) also have met with strong success.

Infomercials offer similar advantages to home shopping networks, with a twist. First, longer formats make them even more applicable for complicated sales models (i.e., devices, new platforms of products, new categories). Second, higher investment costs in the form of production make them more appropriate for later-stage tests versus a home shopping placement. Sure, there are examples of products like the Thighmaster destined for a lifespan in the world of late-night television. But, infomercials have also served as stepping stones for many products that have gone on to reach broader audiences. Looking for examples? Think of products like OxiClean (now distributed broadly in FDM channels) and Proactiv available online and through kiosks.

Consider Sampling Services

New product testing services provide another alternative for testing consumer reactions to early product ideas. Sampling services often cater to early adopters seeking the newest products on the market. While these solutions do not offer insight on pricing or at-the-shelf behavior, they do offer manufacturers the opportunity to glean valuable early perspectives on certain dimensions (i.e., formulation, packaging, marketing) before a product is ready for the mass market.
Other advantages of such services include being quick to launch, having built-in consumer bases and incorporating a feedback protocol. Several such services focusing on beauty have been gaining traction in recent years. One example is New Beauty, which offers a quarterly "TestTube" of high-end beauty products to subscribers for $29.95. After receiving the items, NewBeauty's members are invited to provide their reviews of products online. Another is BeautyFix, which combines a high-end quarterly sampling service ($49.99) with an expert panel and a beauty-focused community.

Remember that Good Things Come in Small Boxes

When key assumptions relate to at-the-shelf purchasing behavior or competitive dynamics, a more traditional shelf setting is required. In these cases, small independent retail outlets provide a great alternative for under-the-radar testing of new products. For personal care products, spas and salons can provide very relevant data points. For food products, self-serve restaurants, gourmet stores or health food stores are a good bet. For beverages, bodegas or self-serve restaurants get the job done. All of these settings can provide consumer insights similar to the traditional channel shelf in a smaller-scale experiment, often with the added advantage of providing feedback from the proprietor or salesperson.

Get Focus Fast with a Pop-Up Shop

Have a defined sense of your foothold consumer but unsure if the concept will resonate? Setting up a "pop-up shop" in close proximity to your target audience can quickly provide valuable insights at a low price tag. Further, this approach does not require a retail partner to buy-in. Of course, such an atypical buying environment can distort results, so pop-up shops should certainly be only one tool in a broader range of experiments, primarily appropriate for validating foothold consumer interest.

Think broadly and you'll surely find that appropriate venues can be found for almost all consumer segments. Interested in college kids? Try a university campus or bookstore. P&G did just that when testing Swash with such consumers. Aiming at athletes? Outside a gym might be a good bet. Have your sights on parents of young kids? A community fair will surely provide a captive audience. Urban youth? Hit the local basketball courts. Of course, approval should be gained in advance of setting up shop, but in many instances you will find that stakeholders are very open to the notion.

Another twist on the physical pop-shop is to leverage a vending kiosk or a mobile truck offering. A recent, interesting example of this type of approach is the Coke Freestyle beverage dispenser. Through this novel vending machine, Coke is able to offer over 100 different varieties of beverages (i.e., soda, tea, juice and water) by combining different "micro-doses" from about 30 cartridges in the machine.
Yes, the concept offers mass customization and drives much greater choice for the consumer. Beyond that, however, the machine offers Coke the opportunity to experiment with different flavors and beverages and to get instant feedback on consumer uptake by geography through RFID technology present on the cartridge. Of course, this type of vending experiment offers enormous cost savings versus the traditional approach of testing a concept by bottling and pushing through the traditional distribution channel to separate winners from losers.