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T. SchultzT. Schultz
Polishing Nuggets into Gemstones, or Focused Innovation Application Methodologies for
Consumer Goods Successes
Thomas Schultz, Ph.D.
Vice President, Product Strategy
HCI Direct, Inc.
215-494-2900 ext 202
tschultz@hcidirect.com
3 Case Studies of Successful Competition in the FMCG world
T. Schultz
Innovation & Product Development
Consumer Needs
Technology
Benefit
Innovation
Polish the nugget into a gemstone
Brand
Technology TRUST Relevance
ConsumerNeeds
ProductAttributes
T. Schultz
Successful Products Are Difficult To Make
T. Schultz
What makes a successful product? It’s innovative.
(1) It sells. (2) It has siblings. (3) People like the family.
Case Study 1: reflect.com, Mass Customization
Case Study 2: DuPont, Repurposing commodities into higher value streams.
Case Study 3: Playtex, Inc., Predicting SLOBS and Facing the Brutal Truths
Innovation = Consumer need + technology
Consumer Hedonics Toolset
Open Sourcing & Partnering
Early Stage Gate Disciplines
T. Schultz
Stage Gate Disciplines
I. EXPLORATORY PHASE II. FEASIBILITY PHASE III. DEVELOPMENT PHASE IV. PRE- LAUNCH VERIFICATION
Determine if a business opportunity exists
Evaluate if we have a viable projectDesign the product and process to meet the consumer and business
objectives
Verify the product and process meets the consumer and business objectives
Package Design, Product & PackageInternational Market Want? Product Development Testing Completed &
Initial Marketing & Testing Specs Approved & issuedEvaluation of Concept & Commercialization & Consumer
Market Potential Value Assessment Specs & Art Developed Market Research Finalized(Verify Consumer Value)
Market Research Supply, Quality & "Wet Tests" Supply Chain Plans
Technologies linked to R&D Assessments Qualified & ValidatedConsumer Needs Supply Chain
SWAG Cost, Capital & Timing Plans Developed Finalized Marketing &Mfg. Plans / Options & Business Plans
Viability (R&D / Ops / Qual) Implications Timelines Agreed ToArtwork Completion
Basic Timeline Mapped Out Updated Cost &Capital Needs Launch Timing Finalized
Costs Analysis Prepared
Basic Timeline Alignment
Win the customer
here!
The Process and the Metrics
► Know the customer: Why do they buy what they do? Why buy mine?
Use of Consumer Hedonics= consumer buys my product.
Unless it is a radically new & unknown product idea, your iteration must outperform.
+
-Product Physical & Emotional Attributes
= Target
= To Win!
►What are the winning metrics: Cost of technology entry. Product Power. Product sibling lifetimes.
$
time
Cost of Entry
Product Power =New Sales $
# New Products
Product Siblings = Products in Portfolio with high Consumer Hedonic values
2% NOS
T. Schultz
Case Study 1: reflect.com, Mass Customization
Consumer Need: People want to personalize their Personal Care Products.
Solution: Let the consumer define their emotional and physical wants and provide a product that “hits” on these Hedonic attributes.
Innovation?: 1. Use web-based interface to allow the selection inputs
2. Develop a supply chain that will make customized products with 2500 variations.
Done: Decision trees, Deep psychographic models on buying needs (~10 US Patents): Company total: 25 employees; partners: 75.
Done: Small batch, short-term fill cycles, proprietary product formulation & processing technologies (~ 15 US patents); partnership with external sub-contractor
Metrics: $ Sales were miserable; notoriety in the web-world and the innovation sectors were great!
Solution: Went back to the consumer and asked, Why no purchase?
Answer: Emotional triggers were high, but could not sample
T. Schultz
Case Study 1: reflect.com, Mass Customization
What did we learn?
• High emotional products need to be sampled
Put a store in place on Union Square (SF) Sales $$$$$
• Making the decisions takes too much physical time as opposed to mental time.
Reduced the # questions, placed Model against another product line where the consumer base would benefit
Cost of entry > > 2% NOS
Product Power < 0.1
Product Siblings were infinite, and hence did not look like a family
T. Schultz
Case Study 2: DuPont- Repurposing technologies to higher value streams
T. Schultz
Consumer Need: DuPont wanted to move into Personal Care Products.
Solution: Match technologies to address consumer needs
Innovation?: 1. Use Consumer Hedonic toolset to identify needs (i.e. performance attributes
2. Implement FMCG product development methods
Done: Need for a skin car solution: materials identified
Done: Use of subcontractor model, brought team far upstream to consumer insights unmet product needs performance attribute maps useage.
Metrics: $ Sales beat expectations; >$20 MM ongoing. 15 Materials identifed.
Sales to manpower ratio for DuPont was below operational standard.
Answer: Sold business rights to Company X @ 15X; retained supply.
Cost of entry <0.3% NOS Product Power ~ 1
T. SchultzT. Schultz
Case Study 3: EPC Multi Brand Global Company
Consumer Need: Bring New Product contribution to sales from 10% 35+%
Solution: Make products more desireable; eliminate SLOBS
Innovation?: 1. Build Product Cupboard of new problem solving technologies with 24 month planned recycling.
2. Teach R&D organization Stage Gate process and Consumer Insights
Created 48 month product portfolio aligned with Global Market Plan
Moved Consumer Insights under R&D; all Cupboard items required top box metric of 65%.
Metrics: New product contribution moved from 11% 38% in 3 years; #1 in market share in Sun care; #2 in Fem Care; #1 in Infant. Care
T. Schultz
Mo & Yr. 2003 2004 2005 2005 2006 2006 2007 2007 2008 2008of Launch Actuals Actuals Plan Actuals Plan Actuals plan Actuals Plan Actuals
New Products
Flushables Tub Feb-2002 2,881 Flushables Refill Feb-2002 1,329 Baby Canister May-2004 769 511 797 36 2 oz. Hand Sanitizer Dec-2005 291 729 270 429 131 8 oz. Hand Sanitizer Dec-2005 49 1,476 418 904 189 16 oz. Hand Sanitizer Dec-2005 12 378 177 220 11 2pk. Hand Sanitizer, 10oz. Dec-2005 518 144 208 92 Big Ones 35 ct. Dec-2005 29 2,000 1,155 2,320 1,208 1,500 1,424 35 ct. Outdoor Unscented WipeDec-2005 91 1,000 327 949 229 890 760 Fresh n Flush Singles Jan-2006 512 124 125 988 1,210 1,388 Singles Dispenser Jul-2006 1,500 1 302 2 Hunting and Fishing Wipe Jan-2007 227 - 250 188 Sensitive Skin Travel Pack Apr-2007 2,421 1,843 2,260 2,130 Sensitive Skin Canister Apr-2007 6,356 3,673 8,900 9,325 Sensitive Skin Singles Apr-07 589 465 750 680 Total Sales of New Products 4,210 1,037 511 1,268 8,113 2,653 5,684 8,831 15,760 15,895
Total Sales - 47,005 55,918 65,917 62,566 74,018 67,968 75,008 52,922 78,200 73,210% of New Products to Total Sales 9% 2% 1% 2% 11% 4% 8% 17% 20% 22%
T. Schultz
# of
SKUs $000's# of
SKUs $000's# of
SKUs $000's# of
SKUs $000's# of
SKUs $000's
Feminine Needs 2 33,328 4 43,878 4 48,780 2 30,560 2 54320
Infant Care 18 36,902 34 47,226 28 78,379 19 49,675 13 68250
Sun Care 9 23,071 10 63,141 6 113,749 11 118230 13 121500
Wet Towelettes 5 1,268 5 2,653 6 5,684 2 8,831 3 11050
Total Sales of New Products 34 94,569 53 156,898 44 246,592 34 207296 31 255120
Product Power 0.27 0.29 0.56 0.61 0.83
% New Product Contribution to Sales 14% 23% 33% 36% 38%
2005 2006 2007 2007 2008Actuals Actual Plan Actual Plan
T. SchultzT. Schultz
Consumer Needs
Technology
Benefit
New Product Contribution
Polishing the nugget into gemstones
►The winning metrics:
•Cost of technology entry: Drive below Std. % NOS
• Product Power: As close to 1 as possible
• Product sibling lifetimes- Depending on category keep ahead of neighbors.
Special thanks to:
Jean Vernor
Don Donovan
Gary Cohen
Dave DiGiulio
And many, many others
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