Tips from a POMQueen: The success of POM Wonderful

Photo: Pomegranate Seed 3x: saltyseadog (Flickr CC)

What's are the seeds of marketing success? How do you launch a product made with a fruit that few people have even heard of? What lessons can we learn from the success of POM Wonderful?

Lynda Resnick (aka the POMQueen) was a keynote speaker at the UCLA Anderson Alumni Weekend this past week. She has an amazing track record. In addition to POM Wonderful, she's also had hits with Fiji Water, Teleflora and The Franklin Mint. But of all these hits, POM Wonderful may have been the highest level of difficulty. Before it was launched in 2003, only 12% of the population even knew what a pomegranate was. It's expensive ($3.00+ for a 16oz bottle) and it's a strong, acquired taste.

As I listened to the presentation, I was struck by the mixture of insight, pragmatism, ambition, inspiration, determination, bloody-mindedness, patience and luck that factored into the success. Here are six things she talked about:

1) Own the land: The Resnicks (that's Lynda and her husband, Stuart) discovered pomegranates accidentally. They bought farmland that happened to include some pomegranate trees. For the first few years, they just sold the pomegranates as fruit. But then they noticed that they produced at a healthy yield/acre. The opportunity sensors were activated.

2) Trace the lineage: The next trigger was an Italian friend of theirs. She waxed lyrical about pomegranates and talked about their mythology. In ancient times, pomegranates were symbols of everything from fertility and royalty to hope and abundance. Was there some truth to the legend of the pomegranate? Could any health benefits be scientifically validated?

3) Dip into the royal purse: The company then spent $25 million in scientific research to find out whether there were health benefits that could be turned into product claims. These studies have shown positive results in a whole slew of conditions including heart disease, prostate cancer, diabetes and erectile dysfunction. There certainly is substance to the health angle.

4) Off with their heads: The marketing team started experimenting with various pomegranate concoctions that would have broad appeal and could be competitively priced. Nonsense, said Ms. Resnick. This has to be the real thing, not some watered down juice. One of her key principles is intrinsic value. 100% juice has it. A touch of pomegranate in a grape juice wash doesn't.

5) Two orbs in the veggies: Other than the pomegranates themselves, the two most distinctive things about POM are is its double orb shape and the fact that it's sold in the produce aisle. While the distinctive bottle shape is a great example of using packaging structure for distinctive effect, the more interesting story is about the placement. Having decided to go the 100% route, the product then had to be sold refrigerated. Rather than fight for placement with hundreds of other juice products, they chose to put it in the produce aisle where they already had other products and existing relationships with the buyers.

5) Sentence first -- verdict afterwards: Although POM has spent large sums on scientific research, it didn't spend anything on consumer research to test demand. Instead it chose to go straight to an in-market test. The plan was to field the test in California and the expectation was that the product would be popular with older people looking for healthy products. But a grocery strike forced a change of plan and they ended up launching in New York. Turned out it wasn't older, health-seeking consumers who drove demand. It was 28-year olds who bought it because it was chic.

6) Believe impossible things: Could one of the large CPG companies have succeeded with a product like this? I think it's doubtful. In my experience, the financial and risk management culture of most of these companies would either have killed the product before launch or starved it soon after. I'm pretty sure that, when I was a brand manager, I would not have been able to get the money for the scientific study, I would not have been able to launch without strong research results, I would not have been able to develop a product without mass appeal, I would not have been able to launch with such expensive packaging and I would not have been able to switch test markets from one coast to the other. In short, unlike Ms. Resnick, I would not have been able to recognize the true value in what I had.

Note: A more complete account of POM Wonderful's successful launch can be found in Lynda Resnick's book: Rubies in the Orchard. I haven't read the book myself but the Amazon reviews suggest that it gives insight not just on the marketing activities that made POM Wonderful a success but also on the personality and drivers of the POMQueen herself.

Why are so few companies the hotbeds of innovation that everyone thinks they should be?

Andrew Campbell, from the Ashridge Strategic Management Centre in London, asks an important question: Why is it, given that we've known for years that the key ingredients of innovation and creativity management are collaboration, encouraging diverse perspectives, nurturing ideas etc, that so few companies adopt these practices?

His answer: "What we don't understand is that innovation and creativity are value-destroying activities unless they are carefully contained. There are many more bad ideas than good ones and many more people who are passionate about ill-conceived business models than about those that will succeed. Give all that creativity a free hand, and you will get poorer--fast."

Agree? Does creativity typically destroy value and, if so, what is realistic expectation for creative processes to thrive in profit-driven corporations?

Source: The letters section of the March Harvard Business Review (subscription required)

Six of the Best Supplemental: One more thing about Sneakers

I shouldn't let the reference to Martin Bishop's starring role in the movie, Sneakers pass by without mentioning what, for a few seconds, I thought was the best piece of marketing I had ever seen. In that movie, Robert Redford played a computer hacker who used Martin Bishop as an alias. (It's always surprised me, since then, how many people remember that.)

Anyway, I went to the movies just before Sneakers came out and was watching the previews. Then, to my amazement, I saw this screen-filling close-up of a credit card with the name "Martin Bishop" in gigantic size written on it. "Wow," I thought. "That's incredible." "How do they do that?" I was imagining (once again, just for a few seconds) that everyone in the audience was seeing their own name.

Is Folgers smokin'?

You might think, given that it's all you ever read about, that the only coffee people drink these days is Starbucks or one of the other gourmet coffees. But you'd be wrong. Last year, there were more than three times as many people drinking traditional coffee as gourmet coffee(1).

Now Folgers, the market leader of the traditional coffees, is trying to increase its leadership and get a few people to switch back from gourmet coffee with a new roasting method that it calls “the biggest innovation since the launch of decaf.” It's getting behind this new method with its biggest ever marketing campaign under the general theme: "Roasted with Care." (Here's a link to the new TV ad.) But will this move the needle?

Vote yes if you think:
1) The timing is right: People are looking for ways to save money and this innovation will give people an excuse/reason/rationalization for switching back to home brewing
2) The ad spending will work: Whether there's anything to this new roasting method or not, it gives the ad something to say and the brand team has been given a hefty budget so that alone will drive sales
3) The coffee will taste significantly better and the word will spread

Vote no if you think:
1) The coffee won't taste that much different: Folgers hasn't changed its product formulation (the percentage of arabicas in its blend) and it's doubtful that a roasting change alone will be noticeable, except in side-by-side comparisons
2) The coffee can't taste much different: There are a lot of loyal, heavy Folgers coffee drinkers out there, used to and satisfied with the taste of Folgers today. Folgers could not make a significant change in taste without risking this important franchise
3) The ad campaign is confusing and won't be effective

The most likely result, I think, is that Folgers will increase sales somewhat and possibly enough to pay for the investment. But sales will come primarily from market share gains rather than category growth. Very few people will change their coffee habits and start brewing at home again if they've already given that up. Once the coffee brewer has been put in the back of a kitchen cabinet, it's unlikely to make it out to the countertop again. Things aren't that bad (yet).

Still, overall, a nice present for the J. M. Smucker Company which bought the brand for $2.95 billion in stock earlier this year. The deal is expected to close soon just in time for the positive sales from this initiative to start kicking in.

Source/Link:
1) The National Coffee Drinking Trends 2007 market research study from the National Coffee Association: This showed that 57% of American adults drank coffee daily including 17% who drank gourmet.
2) Folgers Markets a New Coffee to Cost-Cutting Home Brewers: The New York Times

Segway Polo: "A lot like horse polo but nothing to shovel"

Photo courtesy of Franco Folini; permission being requested

As I was wandering around Golden Gate Park last weekend, I (all at once) saw a crowd of Segways. What, from a distance, looked like a demolition derby was, in fact, a game of Segway Polo being played for a good cause.

Segways are, in some respects, the epitome of a product with tons of differentiation but little to no relevance. It was launched with huge hype with expectations that it would revolutionize transportation. Steve Jobs himself predicted it would be as "big a deal as the PC" proving that even he can be wrong sometimes. Instead, the Segway sold very few units brought down by safety concerns, high price, not enough power, a dorkish design and, ultimately, because it just did not match consumers transportation needs.

But they are still around and, bit by bit, they have found some niches of transportational usefulness. Police departments from Chicago to Beijing have used them for their mobility and several tour groups have set up Segway tours so that tourists can visit more city highlights. Now we can add Segway Polo to the list.

Some have wondered whether Segway Polo might popularize the Segway the same way that auto polo apparently popularized the car in an earlier era. Frankly, I doubt it but, with a few more niches discovered and enough momentum built to warrant a radically different design, perhaps the Segway does have a future after all.

Brûlons les crocs!!! (Deux)

Good news for all you Crocs-haters out there. It looks like the Crocs' goose may be cooked. Its share price has fallen to around $4 a share from a high of $75 and the company has just reported a 95% slide in profits in the last quarter.

Ron Snyder, president and CEO of the shoe manufacturer, said in a statement that despite the company’s financial results: “We continue to be confident about the strength of the Crocs brand and we remain optimistic about the future potential of this business.” Yikes. That bad.

When I wrote about Crocs last September I said: "The challenge for the Crocs management team will be how to handle things once this first wave of growth starts tailing off (as it inevitably will). Can they prevent Crocs becoming a passing fad? Can they look for new growth opportunities without compromising the initial, simple, focused product proposition?"

This is clearly the critical time and the answer, so far, looks like "no." Sales fell 20% vs. last year in the last quarter despite a whole slew of marketing efforts including new TV advertising, beach volleyball sponsorship and new products (high-heeled crocs anyone?). But for some success in overseas markets, things would be even worse.

Is there such a thing as a new company being too successful? Was the initial surge of Crocs sales sowing the inevitable seeds of future demise? Fast growth can be very difficult for small companies to manage their cash flow--perhaps it's just as difficult for them to manage their brands too.

Links:
1) Crocs were the biggest fashion crime of 2007: official! thefashionpolice
2) Make. It. Stop. Newsweek

Bottled Jamba Smoothies launched

News from Nestlé's Beverage Division (my former place of work)--today marked the launch of Jamba Juices and Jamba Smoothies in eight western states. These products are the result of a licensing agreement negotiated between Nestlé and Jamba Juice at the end of last year.

Looks like a win-win partnership, giving Jamba Juice much needed revenue and a platform to launch in new markets and giving Nestlé the opportunity to grow its beverage business by leveraging Jamba Juice's strong and dynamic brand equity.

I just tried the Banana Berry, already on the shelves at Safeway. $2.50 well spent (in my completely biased opinion).

Absolutely Scrabulous

For a great example of what happens when the worlds of new marketing and old marketing collide, tune in to the debate currently raging about Mattel and Hasbro, joint owners of Scrabble, asking Facebook to remove the Scrabulous application from its site.

Scrabulous is one of the ten most popular Facebook applications with 600,000 active users, 2 million people signed up and 70 million page views a month. It's huge. But, unfortunately, by name and design, very similar to Scrabble.

So how should Mattel/Hasbro look at this? The way they appear to be going, the traditional way, is to put their crack legal teams on the case and get the application shut down for infringing copyright and intellectual property. It looks like an open and shut case and the only question is: Why did you wait until the game got so popular before you pulled the trigger?

But another perspective, a perspective that takes into account the marketing and corporate reputation angles is, now that someone has developed a real, huge, massively popular Web 2.0 hit, wouldn't you be better off to work with the flow than against it?

The launch of this application has generated energy and passion for Scrabble that couldn't have been bought with millions of dollars of PR and advertising. There are pages and pages of comments being posted by Scrabulous players concerned that they are about to lose "their" game. Already some people are forming boycott Mattel sites.

Yes, Mattel/Hasbro, you have the right to shut Scrabulous down. Yes, you may also have an agreement with EA about an online version and you may have something in development (according to reports). But, my advice, take a long hard think before you go down that path. The goodwill that you could generate by partnering with "the brothers" (as the developers are affectionately called by their fans) may be worth by far more than a legal victory can deliver.

Some links:
1) CNN Money article and comments: "Will someone please start a Facebook group to save Scrabulous?"
2) Someone did: A Facebook group

Meatball Sundae Thought #4: The role of innovation

Meatball Sundae can be pretty depressing reading for executives in charge of marketing meatballs. By "meatballs", Seth means "a branded item of little differentiation and decent quality." His argument - these products thrived in the period of mass marketing where TV advertising could be relied on to deliver a compelling message to the average consumer. But, with the fragmentation of media, this approach is becoming less and less effective. And this has made life difficult for marketers.

2007 was certainly the year of articles about the short life of CMOs. Here's just one of a bunch of similar articles. As this article points out: "As recently as five years ago, the CMO's role was much simpler. Chief marketers devised a brand message, hired an advertising agency to create clever ads, managed promotions, and then waited for their bonus or pink slip. "You would run a major ad campaign and trust it," says Jim Speros, a veteran marketing executive who is currently CMO at Marsh & McClennan. But that won't fly in a world where blogs, social networks, and cell phones are fast changing not just where ads go but how people shop."

So, as I said, all very depressing, but what's the way forward? Well, if mass media is becoming less effective, one area that needs to be pull more weight is innovation. If the goal is relevance and differentiation and you can't get there by saying something different, get there by doing something different instead.

A very interesting account of how to drive innovation was published by Knowledge@Wharton last summer when it interviewed Larry Huston. Larry was VP of knowledge and innovation for many years at Procter & Gamble and the innovation leader for the company's global fabric and homecare business. Here's the link to the interview (free subscription required).

Some of the key points from the article:

1) Don't try and do it all yourself: Even with its size and sophisticated internal R&D, P&G has realized that it can't embrace all the new science from nanotechnology to bioscience itself. So it's set up a new model of innovation, called Connect + Develop has encouraged collaboration with outside expertise.

2) Leadership required: P&G would not have been able to make such a radical, structural change to its innovation model without the support and leadership of its senior management team.

3) Understand the consumer: A really, deep understanding, not one that comes from focus groups. Larry goes into some and interesting detail about the research techniques that P&G uses to get to that level of understanding.

4) Set a high bar: Incremental goals lead to tweaks on what you already have. A discontinuous goal forces consideration of completely new and potentially breakthrough ideas.

Death by tools and metrics #1: DCF and EPS

2007 was the year of the death of the CMO articles and blog postings. (Here's just one that refers to the frequently quoted Spencer Stuart survey on their short life expectancy.) These days, more than ever, marketing executives need tools and metrics to help them decide what to do and to demonstrate the success of what they chose to do.

But, watch out. These tools can be dangerous. Some are so alluring that you may fall in love with them and forget their inherent flaws. Others so blunt and powerful that they can kill strategically sound business initiatives. First in what will be an occasional series: DCF and EPS or Discounted Cash Flow and Earnings per Share, if you prefer English. Both of these metrics stand accused of major crimes against innovation.

Clayton Christensen, in a recent Harvard Business Review article (subscription required), shows how the misguided application of DCF and EPS can kill innovation. The problem isn't the tools themselves, just how they are used.

For DCF, one of the problems he describes is that projected cash flows of innovations are compared to how well off a company is today, assuming that a company that does nothing will thrive forever. But we all know that, in reality, if you stand still for too long your competitors are going to catch up with you and run you down. The right comparison should be between the DCF of an innovation vs. the accelerating decline of a company if it doesn't do anything. A much more difficult analysis but a much more realistic approach.

The problem with EPS is simpler to explain. Executives who focus on share price (which is driven by EPS) are going to be reluctant to invest in innovations that have long term benefits but don't pay off immediately. As Christensen points out, senior executive compensation is now heavily weighted towards share price improvement making it more difficult to get the green light for innovation projects.

That's the risk of incentives. They are powerful motivators, effective in changing behavior but they can lead to a single-minded focus on the measures being rewarded at the expense of everything else. It's a game where smart and competitive managers figure out how to win based on the rules set by the incentives program. With EPS, it's a game where innovation has been the unwitting victim.

Really staying in touch with your customer

I ran into Robert Hurlbut, CEO of Attune Foods today. He was out there on the frontlines handing out samples of his Attune wellness bars at RJ's market.

That's one of the great things about being a start-up. You still get to do things like that. When you're the CEOs of a major CPG company, such things are out of reach.

In between handouts, Rob told me that he's had one or two major distribution successes already including H.E.B. in Texas. More to follow in the New Year.

Wow! Hallmark's Smilebox rocks!

Make a free ecard - it's easy!

Edison right and wrong

Two selections from the Top 87 Bad Predictions about the Future from Zspare.com.

"Such startling announcements as these should be deprecated as being unworthy of science and mischievous to its true progress." Sir William Siemens, on Edison's light bulb, 1880.

"The phonograph has no commercial value at all." Thomas Edison, American inventor, 1880s.

It's interesting to see how ultimately successful inventions had to run the gauntlet of strong scepticism from senior figures in the scientific or business community. Of course, in retrospect, these sceptics look ridiculous but they didn't back then. It's also worth bearing in mind that many inventions and idea deserve to be written off and need to be filtered out.

The challenge is keep the scepticism healthy: don't kill ideas before they've had a chance to grow nor pour resources into ideas that aren't going anywhere.

Brûlons les crocs !!!!

So popular that entire families are wearing them. So ubiquitous they are spawning "we hate crocs" campaigns (500,000 Google hits on "we hate crocs": this was #1). Love them or hate them, you've just got to be amazed how Crocs have managed to go from an idea originally intended as a slip-resistant boating shoe to an all-purpose, all-conquering phenom.

So, what accounts for the success:
1) Unique design: some say it's ugly but it's also bright, distinctive and simple - the shoes do their own talking
2) Unique features: slip-resistance, easy to put on, incredibly light, waterproof, aerated, comfortable (and, yes, I am a Crocs user)
3) Better than the competition - much better performance than its immediate competitors (flip flops, beach shoes..)
3) Inexpensive
4) Customizable: Thanks to Jibbitz
5) Operational excellence: Managing to handle, seamingly flawlessly, the incredible growth in sales

Not on the list - advertising and promotion. Products such as this that catch a great wave like this don't need any extra help.

The challenge for the Crocs management team will be how to handle things once this first wave of growth starts tailing off (as it inevitably will). Can they prevent Crocs becoming a passing fad? Can they look for new growth opportunities without compromising the initial, simple, focused product proposition?

Already, they have started widening the product portfolio to include all sorts of new products. Are all of these new products Croc-worthy? What are the critical things that make Crocs, Crocs? This product and this one, for example, don't fit what I think of when I think Crocs. A few product missteps won't kill them (unfortunately, if you're a Crocs-hater) but losing sight of who they are and where they are going surely will.