Strategic Marketing: The Importance of Innovation and

Relevance

Annual Agricultural OutlookKennedy Hall

December 10, 2002

Brian M. Henehan,Senior Extension Associate

bmh5@cornell.edu

Department of Applied Economics and ManagementCornell University

Today’s Objectives

Brief Review of Research Focusing on Consumer Attitudes Toward Processed Apple Products

Summarize Key ResultsDiscuss Implications for Keeping

Products Relevant to Today’s Consumers

Review Need for Ongoing Innovation

Project Backgroound

Project Involved a Multi-Disciplinary Team at Cornell Ithaca Campus and at Geneva over three years: 1999-01

AEM Was Responsible for Marketing Research Component

Acknowledge Contribution of Colleagues: Kristin Rowles Gerry White

Marching Orders from Advisory Council

Need to be Forward LookingDon’t Duplicate What’s Already Been

DoneProduct Concepts Have to Be

Relevant to Today’s ConsumersMaintain a Focus on Strategic Issues

Marketing Research Overview

Market Analysis

Marketing Research Plan

Primary Research

Reporting

Industry Overview

Outreach on Marketing

New products workshop, hard cider & apple wine, apple juice and cider

Advisory Council, literature survey, processor survey, universe of products, foreign markets

Nat’l consumer survey, consumer & foodservice focus groups, school foodservice survey Industry meetings, articles, final report, website

Identify objectives and methods, input from advisory council, select moderators

Smart Marketing columns, assistance to commercial partners, training for food entrepreneurs

Methods

Extensive Review of Current ResearchProcessor surveyFoodservice focus groups and interviewsSchool foodservice surveyNew product development workshopNational consumer surveyConsumer focus groups

Successful Marketing

“The aim of marketing is to know and understand the customer so well that the product or service fits them and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed then is to make the product or service available…”

- Peter Drucker

Consumer Survey Methods

Telephone surveySample of 1,011 women

age 18 and older private households continental U.S.

Conducted September 21-25, 2000

Consumer Survey

A limited number of broadly appealing apple products indicates a need for new product development.

Purchase of apple products is greatest in households with children.

African American and Hispanic American households have a high incidence of apple juice purchases

These households are likely to be the best target for new apple products.

Consumer Survey

Families with children and African American and Hispanic American households showed an interest in the following new product concepts:

Snack packs with pre-sliced apples(caramel dip, cheese, crackers)

Apple juice & spring water beverage for toddlers Pre-sliced apples for eating & cooking Apple juice spritzer (non-alcohol)

“POP” Quiz

How Many of You Have Purchased Fresh Apples or Apple Products Over the Past 30 Days?

How Many Have Purchased Fresh Cut Fruits or Vegetables (baby carrots, salad)?

How Many Eat Fresh Apples Cut Into Slices? Whole, Uncut?

Consumer Focus Groups

Six groups, two each with: Women with children under 6 Women age 50-69 Women age 25 - 49 who drink wine

Eight participants per groupGroups held in Manhattan and

Paramus, NJ

Focus Group Discussions

Use of fresh fruit Use of fresh apples Perceptions of apples Use of processed apple products Perceptions of apple products Sampling of products Consumer Recommendations

Consumer Focus Groups

Consumers know that apples are “good for you” and good for their children, but they are not sure why.

Consumers perceive fresh apples as a traditional fruit that they want their children to grow up with. The traditional appeal of apples is

important in promoting fresh apples and apple products.

Consumer Focus Groups

Some mothers are concerned or confused about whether their young children should consume full-strength apple juice.

Expansion of current apple product consumption may be limited by a narrow range of available products and a perception of limited menu compatibility. New product development could help to add new

choices and to enliven consumer interest in apple products.

Consumer Focus Groups

Focus group participants reacted enthusiastically to samples of sparkling hard cider and spicy apple butter.

Consumers are concerned that processed apple products may not offer the same level of nutrition as fresh apples, and they are cautious about eating processed products that they perceive to contain added sugar, high levels of fat, and added preservatives or chemicals.

Consumer Focus Groups

Consumers may be interested in apple products with new variations on flavors.

Fresh apple slices and baked apple chips were also well received by focus group participants.

Focus group discussions point to an unfilled need in the market that pre-sliced apples may fill. These consumers appear to favor a sweet tasting slice.

Maintaining Product Relevance

Understanding What Is Relevant to Today’s Consumers

Primary motivators of today’s consumers: convenience, wellness, safety, and gratification.

Understanding Consumers

Target GroupYoungerFemaleEthnically DiverseUrbanEats Away From

HomeSeeks Convenience

& Gratification

Decision MakersOlderMaleWhiteRuralEats Home Cooked

MealsTraditional

Preferences

Why Innovation?

Key to Staying RelevantResearch and Development

New ProductsCreate Lower Cost Structure

TechnologyContinuous Innovation Needed:

Production, Processing, Distribution, Marketing

Role of this Research

To act as a catalyst for innovation in the market To stimulate interest in new product concepts

and new markets To analyze the competitiveness of the regional

industry To provide assistance to commercial partners To complement, not duplicate, on-going market

research in this industry NOT to Provide a Magic Bullet

Remaining Strategic Questions

Apples and Apple Products Retain Positive Image

Perceived as Healthy ChoiceInterest in New Product ConceptsMore Resources Needed to Keep

Products RelevantContinuous Innovation Needed

Publications

Processed Apple Product Marketing Analysis: Hard Cider and Apple Wine, Staff Paper 2000-06

“Adapting to Changing Markets with New Products”, Smart Marketing Column, March 2000

“Are Your Products Relevant?”, Fruit Grower News, October 2000 “Market Research for New Products”, Smart Marking Column,

September 2000 “Marketing Apple Products”, New York Fruit Quarterly, December 2000 Processed Apple Product Marketing Analysis: Apple Juice & Cider, Staff

Paper 2001-01 Northeastern Apple Processors: Situation and Outlook, Staff Paper

2001-02, February 2001 Thinking Afresh About Processing (Final Report), Staff Paper, available

late June 2001

www.aem.cornell.edu