Packaged Goods Case History

The manufacturer of the brand leader in a food category was considering a reformulation of their top selling SKU. The reformulation had significant financial implications since it involved adding 33% or 50% more of a costly ingredient. It was imperative for the client to know whether the change would result in incremental sales, not just whether the new formulation was preferred over the current or competitive products. The client recognized that traditional product testing would not address the real business issue.

When manufacturers consider formulation changes to existing products, traditional product tests typically place the new product and the existing product with category users and obtain product ratings for each formulation. Often a paired comparison approach is used, in which consumers make direct, head-to-head comparisons between formulations. There are a number of problems with this approach, which often lead to incorrect decisions.

First, in some traditional product tests, consumers are aware that they are participating in a research study, and therefore, use the product in an unnatural way. This can produce reward biases that can mask or exaggerate differences between the products tested.

Second, tests are often conducted in an inappropriate competitive context. Since choice is always made among an array of competitors, tests conducted in the absence of a full competitive array often produce the wrong answer about which formulation will sell more in the marketplace.

For these reasons, the client opted to conduct the study using Product-STEP®. In Product-STEP®, the product is delivered to consumers as part of a free-sampling program, ostensibly from the manufacturer. Consumers have the opportunity to use the product in the course of their everyday lives, unaware that it is related to any marketing research study. Within several weeks, respondents receive a STEP® questionnaire from Eric Marder Associates. The time lag is designed to decouple the stimuli (manufacturer's sample) from the questionnaire. The "real-life" exposure to the test product improves the validity of the results.

In this study, consumers were randomly assigned to one of three groups. In the first group (the control group), consumers received a free sample of the current product formulation. In the second group consumers received Test Product A, and in the third group, they received Test Product B. In all three groups, the product was in the brand’s usual packaging. In the two test groups, however, the package had a flag highlighting that the formulation had 33% (or 50%) more of Ingredient "Y".

Later, respondents were presented with a STEP® questionnaire that depicted a large array of products in the category. The questionnaire was identical from group to group, except for the test product depiction. Each group’s questionnaire included a test product representation consistent with the product they had sampled.

The STEP® procedure required respondents to view the products and answer several questions about each one; the questions were designed to sensitize them to the information presented. Next, they completed a simulated shopping exercise in which respondents distributed their choices among the competing products. Questions were asked about category usage to allow each respondent to be weighted appropriately.

The ability of the formulation change to build sales for the test product was assessed in terms of Strategy Share, the STEP® measure of market potential. In the vast majority of tested categories, the correlation of STEP® Strategy Shares to actual market shares is well above 0.90.

The results are shown in the chart below.