Question

What is a marketer to do when their whole product category is shrinking? That’s the situation Campbell’s Soup found itself in as many consumers decided that soup was no longer “mmm mmm good.”

Campbell’s Soup was a pioneer of mass food manufacturing, making “shelf-stable” (canned) goods a fixture in American pantries. But many of today’s consumers prefer a different approach to eating—seasonal, fresh, and organic. This is particularly true for America’s 80 million millennials, an important generation that Campbell’s and other soup makers were not attracting to their traditional canned soup products. To reconnect with this market segment, new CEO Denise Morrison took the 125-year-old company in some bold new directions, using a combination of internally driven product innovation and acquisitions of food industry trailblazers.

Job one was to understand what millennials want in food. For this research, Morrison sent Campbell’s employees to cities known as hipster hubs—Austin, Texas; Portland, Oregon; London; and Paris—to learn about the preferences of these potential customers. This generation, they learned, is culturally diverse and globally connected. While they have college degrees, they also tend to be underemployed. This “dine-out” generation likes cuisines that were once considered exotic: Mexican, Indian, and Asian. Campbell’s vice president of consumer insights summed it up: “They go through life hunting out and gathering different experiences. They sample foods in the same way they sample jobs.” The Campbell’s team didn’t just ask customers what they wanted—they used a process of deep immersion, which involved executives eating meals with customers in their homes, looking in their pantries, and tagging along on trips to the supermarket.

Campbell’s also wanted to predict where food tastes would be headed in the future. For this task, the company interviewed chefs, nutritionists, and academics, but also experts of a different sort: designers, anthropologists, and futurists. Campbell’s learned not only what consumers may soon be eating, but how they want to buy their food. Technologies such as augmented/virtual reality, artificial intelligence, and new kinds of currency will affect how food is purchased—both through mobile devices and brick-and-mortar retail.

Acquisitions were one route Campbell’s took to add to its product line. Garden Fresh Gourmet was a health-focused brand with a loyal following for its salsa and hummus. Now a Campbell’s brand, it provides customers with gourmet soups in sizes to feed a whole family. Bolthouse Farms, a seller of fresh carrots and refrigerated beverages, brought additional expertise and customers. To reach millennial parents, Plum Organics was added, bringing with it a food line for babies and toddlers.

These acquisitions helped address another finding of the research: the high priority placed on healthy, fresh food. Consumers were concerned about the levels of sodium and high fructose corn syrup in Campbell’s traditional soups. The trend toward a preference for organic food also influenced the company’s innovation choices. Campbell’s launched an internally developed product, Go Soups, a premium-priced line of soups focused on freshness and packaged not in cans, but in plastic pouches designed to convey that freshness. But Campbell’s has not kicked the can completely, offering its Well Yes! Soups in a can, but without artificial ingredients. And Campbell’s Simplicity line uses high-pressure processing, allowing the product to retain its flavor and color without the use of preservatives.

This focus on health extends beyond products to education and a unique service offering. Campbell’s now offers a website and app, whatsinmyfood.com, that allows consumers to see details about the ingredients, where the food is sourced, and how it’s made. Even more revolutionary is its acquisition of Habit, a start-up providing personalized diet recommendations. Customers send an at-home nutrition test kit to a certified lab and then receive a personalized diet along with coaching from a nutritionist, all based on the consumer’s lifestyle, physiology, and health goals. For a company accustomed to a few innovations each year, the new pace of product development is breathtaking—in one year, they planned to introduce 200 new products. Not all are hits: a kit to make soup in Keurig coffeemakers was abandoned due to disappointing sales^. However, to keep pace with the changing priorities of millennials and all its customers, Campbell’s will likely have to keep up this aggressive rate of innovation, using additional acquisitions and continuous R&D to roll out more products and services.

Questions

Constant assessment of your market and target are essential in new product development.

Develop a psychological and social profile of the Campbell Soup customer to include VALS framework and its relationship to segmentation and targeting.

How do segmentation strategies change based on your analysis?

Defend Campbell's decisions in relation to the product life cycle and new product development.

In what way would strategies change based on the what stage Campbell's products are on the PLC?

Examine the advantages and disadvantages of product expansion and new product development from Campbell's marketing perspective.

Which area would be most effective and why?

Answer 1

Segmentation strategies are changed based on the analysis of customer profit, their taste, and preference. Accordingly to the product portfolio which keeps on evolving, the segmentation strategy also need to be tuned to the same. Because of the acquisitions and R&D, the product portfolio changes, and therefore the segmentation strategy also needs to be changed. For the current generation of Millenials, it is very important to keep them engaged through new products and a variety of products in the product portfolio. The strategy is different across the product life cycle which is an introduction to the decline of product and accordingly, the strategy needs to be changed. For a product in introduction phase the strategy would be promoted and establish the product as it grows and reaches towards the maturity the strategy is mainly focussed on sales and distribution and as the product reaches to the decline phase, either the product is revamped with certain feature addition or a replacement new product is launched to replace the product which is in the decline phase of its product life cycle. The advantage of product expansion is in terms of obtaining more customers and increase the size of the target segment while it also helps in retaining the customers who might have lost to the competitor brand if the products are not expanded. The disadvantage is in terms of the pressure on resources to support the expansion strategy and R&D for launching the new products. It would be advisable to go with the product expansion and new product development strategy as it also supplements the sustainability of the organization and helps in retaining more customers and keeping them satisfied.