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C,1tjoY INDUSTRY AND C01iFECTIOhERS ]OURNA4 NE'a YGRr<, N. Y. E. 0. WEEK 5,000 J;iL 2 3153.9 V, -f` IARKET :F PROS SHARPENING NEW PRODUCT KNOW-HOW by Phillip Fitzcll National cnmp:u,ies in the can- dy iiadiishy havc, in the last five years, been acctuiring some so- phisticated approaches to the markctin;; of their products- c~,;)ccially brand new items. While smaller finns generally pasti up attitudihal studies or sta- tistical data in their marketing ef- fort, the liu ger firms have become merc keenly aware of marketing il,formation, according to indtistry' executives questioned by CI. There are innovations in candy pmckugini;, im up.vard& pricing, in lcu•gcr product sizes, in improve- melDt of flavor or formula, and in variations of an item's fonn- all working to enhance a candy fii7n's sales success. 13ut the mar- keting 'savvy' behind' introduc- tion of brand new candies has become especiiilly important, since a relatively low percentage of new products continue to claim sneces.s. (Some candymen esti- mate new cindies' mortality rate as high as 7,5 per cent.) ~ Part of candys new thrust In mnrketing comes from the rash of mergers and acquisitions; from nn influx of new, younger market- ing men; and fiYim an awareness of other food industries"advanced market plans. The effect, it is viewed, has worked to shake the cundy business loose from, pastt le th,irgy. . By researching the consumer, candy's marketing effort in new - - , products has lately risen to a truly professional level. CI asked one major candy firm, a subsi- diary of a non-candy corporation, how new candy items are intro- duced. A spokesman said his firm has employed all the "basic text book type" consumer research on preferential tastes and textural studies. After first developing a (I •. : Pros sharpen know-how (Continued from page 3) ~ of this kind, he continued, can ~ cost from $1,000 up to $8,000 -but sometimes with a really t exciting item could soar to over $50,000. (One of the recent test products is now proving to be an excellent bar prospect in ` regional markets. The firm, he " said, is backing the item with television, rach'o and bil.lboard advertising.. ) The company representative observed that once these find- ings are evaluated, the company is then ready for te.st market. Traditionally, he noted, a candy firm started with 2 to 4 per cent of the total United States popu- lation. But today, candy firms ;, regard this as too expensive and k;; have cut back to "mini-mnr- kets," representing about 0.5 per cent of the population. ;These tests, he said, determinee whether or not the product'can , move into regional markets. Overall, the executive said, testing of new items can run up- wards of $1 million to $'11.4 mill lion at' the bigger firms. The program could last up to two years: almost a year in product development, and from nine to 12 months test marketing (be- cause of the seasonal buying in candy, tests sometimes continue into summer months to measure ^ number of prototype candies (each with different ingredients), e the company evaluates them to select the best one(s). He noted , that recently the firm~ weeded down 10 candy items to two firi- al choices. They were then sub-- mitted to test market ex- _ posure. Product development (Conttnued on page 38) sales). Most companies, he indi- cated, expect a payback invest- mertt on their new products to come on the average within 24 to 30 months. Another marketing man - re- ported on a 10-cent bar that evolved in three years to a truly big seller. First, he explained, the company considered' creat- ins an enrobed bar, then mak- ing it a dime candy rather than a nickle item, and, based on current trends in public taste, selecting a top flavor of the time -caramel. But his firm decided its bar had to be different-not imitative. The company, with outside help condticted~ taste tests. The final score being good, consideration was then given to whether the firm's fi- nances permitted a competitive buying allowance, and adver- tising and promotion spending. The choice followed whethe'r to use a big test market (in t'erms of per capita purchases) or, a small market. He emphasized that the test area had to be pro- jectable: allowing the fiim to reason what amomit of the volL ume can be attaine& in that area. Using the technique of iso- lation, the finn tconsidered "going way out," in one market with - coupons, unique packag- ing, or a game on the back of (Continued`on page 42)

Pros sharpen know-how (Continued from page~38) Morristown, N. J. Visitors to the candy package, th`e other New York, daily averaging 2,7 markets using only the candy 500 to 3,000 (60 per cent chil- item. Finally the firrn,measured dren), sample unmarked candy, the level of advertising to be used-determined by whether or not the volume will be enough to generate funds. This entice marketing ap- proach, he stressed, is for t}ie larger nationali company. - CI went tn Phd tt,-~ `inrris a sophisticated market-oriented firm which aims for high-vol- ume sales. According to a com- pany representative, Philip Mor- ris' idea of marketing translates "To be emotionally committed to spend money to motivate consumers to buy products." Its approach, he continued, must typically follow an initial market- ing venture into about 1 per cent of the country - backed with $200,000. With favorable result's,, the test grows to 20 per cent of the population at a$4' million in- vestment. Up to seven "welI known" firms are reported to have gone to an outside professional test- ing service for new products. Allied Chemical Corp. as a customer service offers use of its taste evaluation center in the New York Exhibit Center, plus its Food Terhnology Center in soft drinks, etc. In New Jersey; Allied has set up three taste panels of 160 to 170 people each, to handle concept testing of new product tastes or flavors. The success of Peter Paul's 1965 - entry, the Caravelle bar, came out in an initial test mar- ket in Spokane, Wash., after al- most 18' months of pla:nning, re- search, and production pro- graming. Ten months later, Pe- ter Paul entered six more mar- kets, and a half year litter the decision to go national was made. Another market research suc- cess was Nestle's "$100,000" bar introduced in 1964 and put into national distribution in 1967. Nestle told CI it now has six products in test, but expects only half to succeed. Hershey Foods in its 1968 .report stated: "Before a new item can add significantly to profit, it must pass through three stages: development, man- ufacturing and marketing." The last stage sets Hershey apart't from most other large candy firms in that Hersheyy does not invest in consumer advertising, for its confections in this coun- tTy. An executive of the firm said advertising has not been imple- mented in the company's mar- keting effort because of the es- tablished Hershey name in this country. In Canada; he indicat- ed; Hershey, im breaking into an unestablished market, uses con- sumer media. The Hershey no-advertising approach has worked for such en- tries as Milk Chocolate Covered Almond Marshmallow Cup (1965) an& the Butter Chip bar (1963). Now the firm has a "Rally" peanut bar im nine test markets. Interestingly, Hershey for the first time is using the tech- nique of sampling and mailing co6pons to certain areas for re- dernption on a six pack of Rally. But still no consumer adVertising. New candy marketing ap- proaches have allowed many new items to squeeze onto erowde& grocery shelves. Pop- pycock Candies spent over two years test' marketing "Fiddle Faddle," a product of glaze, popcorn and peanuts. The firm last May began expanding the product nationally-but only after employing all the "classic tools" of consiuner research, store au- diting, pre-research, in an at. tempt' to (as a company man said), "scrupulously appeal to (Continued on next page)

Pros sharpen know-how (Continued from page~38) Morristown, N. J. Visitors to the candy package, th`e other New York, daily averaging 2,7 markets using only the candy 500 to 3,000 (60 per cent chil- item. Finally the firrn,measured dren), sample unmarked candy, the level of advertising to be used-determined by whether or not the volume will be enough to generate funds. This entice marketing ap- proach, he stressed, is for t}ie larger nationali company. - CI went tn Phd tt,-~ `inrris a sophisticated market-oriented firm which aims for high-vol- ume sales. According to a com- pany representative, Philip Mor- ris' idea of marketing translates "To be emotionally committed to spend money to motivate consumers to buy products." Its approach, he continued, must typically follow an initial market- ing venture into about 1 per cent of the country - backed with $200,000. With favorable result's,, the test grows to 20 per cent of the population at a$4' million in- vestment. Up to seven "welI known" firms are reported to have gone to an outside professional test- ing service for new products. Allied Chemical Corp. as a customer service offers use of its taste evaluation center in the New York Exhibit Center, plus its Food Terhnology Center in soft drinks, etc. In New Jersey; Allied has set up three taste panels of 160 to 170 people each, to handle concept testing of new product tastes or flavors. The success of Peter Paul's 1965 - entry, the Caravelle bar, came out in an initial test mar- ket in Spokane, Wash., after al- most 18' months of pla:nning, re- search, and production pro- graming. Ten months later, Pe- ter Paul entered six more mar- kets, and a half year litter the decision to go national was made. Another market research suc- cess was Nestle's "$100,000" bar introduced in 1964 and put into national distribution in 1967. Nestle told CI it now has six products in test, but expects only half to succeed. Hershey Foods in its 1968 .report stated: "Before a new item can add significantly to profit, it must pass through three stages: development, man- ufacturing and marketing." The last stage sets Hershey apart't from most other large candy firms in that Hersheyy does not invest in consumer advertising, for its confections in this coun- tTy. An executive of the firm said advertising has not been imple- mented in the company's mar- keting effort because of the es- tablished Hershey name in this country. In Canada; he indicat- ed; Hershey, im breaking into an unestablished market, uses con- sumer media. The Hershey no-advertising approach has worked for such en- tries as Milk Chocolate Covered Almond Marshmallow Cup (1965) an& the Butter Chip bar (1963). Now the firm has a "Rally" peanut bar im nine test markets. Interestingly, Hershey for the first time is using the tech- nique of sampling and mailing co6pons to certain areas for re- dernption on a six pack of Rally. But still no consumer adVertising. New candy marketing ap- proaches have allowed many new items to squeeze onto erowde& grocery shelves. Pop- pycock Candies spent over two years test' marketing "Fiddle Faddle," a product of glaze, popcorn and peanuts. The firm last May began expanding the product nationally-but only after employing all the "classic tools" of consiuner research, store au- diting, pre-research, in an at. tempt' to (as a company man said), "scrupulously appeal to (Continued on next page)