Just who are your products fighting?

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In my day-to-day work focusing on product development and product testing related issues, it’s always interesting to see that some of the seemingly most basic questions are the ones that are the most difficult. One of the struggles I’ve witnessed most recently is the struggle to identify the “right” competitive benchmark, whether the objective is to innovate or renovate.

There are numerous trends impacting or fundamentally changing our ability to identify that one key competitor. I was reminded of this when I was reading about McDonald’s Q3 performance just last week, which saw a decline partly due to the fact that Millennials are moving to QSR alternatives including Panera and Chipotle. Obviously there are numerous factors feeding into this sales decline – but with my product testing hat on, I found myself considering the product development implications. In McDonald’s product development initiatives, should they benchmark product performance vs. tacos or turkey sandwiches or other QSR burgers? What menu are they really competing with?

The question is also plaguing food & beverage manufacturers who are modifying ingredient lines or launching products in the organic or less-processed spaces. With these types of product changes, manufacturers are asking themselves – what is this product competing with? Is it competing with other, traditionally manufactured products? Or is it now competing with other “natural” products, some of which are much smaller brands and/or have limited distribution? To make it even more complicated, some manufacturers now find themselves competing with the offerings of QSR’s or casual dining options or even fresher, prepared foods sold by grocers. The idea of a Pepsi challenge to benchmark performance is now but a memory of simpler times for all of us.

The changes in the marketplace have complex implications for those testing products. There continues to be great benefits to testing versus physical benchmarks (competitive ones included) as they provide a 1:1 comparison on numerous product dimensions and provide valuable information for product developers. But is this still a realistic expectation in the changing CPG (and beyond) landscape?

At Ipsos, there are a number of ways we like to think about competition and identifying the best competitive benchmark for product testing.

First and foremost, clear research objectives are critical. Even when testing a product, one must identify if the over-arching goal is to (a) assess interest in the full proposition relative to competitive propositions OR (b) assess pure product performance vs. competition with the goal of future product optimization or modification. The specific objective has implications for the competitive benchmark chosen. If one is looking to assess interest or potential for the full proposition (e.g., concept and product), then the “best” benchmark is often the product that most consumers may be trading off in order to buy the new offering, even if that means the competitive product is in an adjacent or different category. Alternatively, if the focus is on benchmarking pure product performance with the goal of identifying how exactly to modify one’s product, then a close-in benchmark (e.g., one in the same category, with more similar benefits and physical properties) can be beneficial. The path here also has implications for design and methodology, but consensus on this objective can lay the groundwork for data that will guide both marketing and product developers.

Second, at a more rigorous level, manufacturers should be thinking about conducting on-going category appraisals at regular intervals as a means of base lining performance in the category. In a Category appraisal, consumers evaluate several products (usually all existing in the same, agreed upon category, yet which span the sensory space), typically including one’s own product(s) as well as competitive products. While we recognize this type of work is an investment, the insights it can provide are invaluable – one can assess the competitive landscape, identify clusters of similar/different products (from the consumer perspective) and with the addition of technical or descriptive data, can uncover the analytic product characteristics driving liking. With the inclusion of products on the “edges” of the category, you can begin to see how well liked these newer, “alternative” formulations are and if they are in fact similar or vastly different to the traditional players.

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Finally, I fully acknowledge that there are cases where there may not be an easy way to effectively identify the right product to test against. Yet I’d argue that even for breakthrough innovations, testing of some type of competitive benchmark product(s) are necessary to fine tune the various dimensions of a formula at some point during the product development process. However, when it comes to one’s overall reaction to a product, perhaps the simplest and most effective way to get a read on product acceptance relative to competitive products is to simply ask respondents how the product compares to whatever they use now, to meet this same need. Is the new product better than, the same as or worse than what they use now? This approach simply yet effectively allows each person to compare the physical product to whatever they use now to meet that need: whether it come from a restaurant, the deli counter or it’s what their grandmother taught them to use/make. One can ask a comparable question to assess how respondents react to various product dimensions such as aroma, flavor, texture or appearance, again, relative to the product they currently use. While this data doesn’t provide explicit direction for product modification, it does allow the respondents to make the comparisons that are most meaningful to them and which will impact whether or not they like and perhaps ultimately buy the product.

So while identifying the competitive benchmark most relevant to you has become more complex, Ipsos is armed and ready to help you make a decision that is relevant to your organization today and even arm you with data that will make it easier for you to do so in the future.