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.

The Five Elements of Coconut Water's Success

Photo: Rin-Tin-Tin (Flickr CC)

As Al Ries pointed out recently, pioneering a new product or service category can cost a fortune. Think Webvan. Or, if you don't have a fortune to spend, and you have to build a category from scratch, it can take forever. So, when a category as distinctive as coconut water emerges from the primordial new product soup, quickly and without a huge investment spend, it's worth taking a look at the elements of its success.

Coconut water certainly seems to be headed in the right direction. In just five years, it's become a $35 million category (according to Merrill Lynch) attracting both consumer and manufacturer attention. And it's succeeding even though it has had to fight consumer perceptions that coconut products are unhealthy (specifically that coconut milk is very high in saturated fat) and that the product is apparently an acquired taste So, how?

NPR interviewed two of the entrepreneurs who have been building this new category and here are five of the elements that they talk about:

1) Existing market: Coconut water may be a new product to the States but it has been around for a long time in other countries, specifically those in the tropics. When Mike Kirban, co-founder of Vita Coco, was considering market entry, one of the reasons he settled on New York was because of its high concentration of immigrants from countries where coconut water is already popular. These consumers represented an opportunity to get some early sales while figuring out how to get those unfamiliar with the product on board.

2) Distribution: Another advantage of NYC is that the retail market still has a large number of independent food markets/delis that provide the opportunity for a store by store sales approach. Slow developing and potentially frustrating as this approach might be, it gives new products the time to gather some momentum. Gerry Khermouch of Beverage Business Insights describes the relationships between entrepreneurs, distributors and store owners in this kind of market as: "the yeast that allows new drinks to develop before they hit hard to crack chains like 7-Eleven."

3) Competition: Perhaps the most unexpected element of success is the fact that several companies entered the market more or less at the same time. As Mark Rampolla, founder of Zico points out, this helped them all gain credibility with retailers, distributors, investors and sales people as they figured: "Hey, if there are multiple brands that are being successful in a category, it must be legitimate."

4) Focus/positioning: The main competitors in the marker, Vita Coco, Zico and O.N.E. beverages, all incorporate expected tropical elements (There's a lot of sky blue, and palm green.) And each, to some extent, talk about the relevant functional benefit of the product (tons of electrolytes) but each has picked its own target and refined the positioning to tell a more specific story. As a Forbes article notes: Zico has focused on sports enthusiasts (and yoga lovers in particular), Vita Coco on young, urban hipsters as likely to use coconut water in a cocktail as drink it straight and O.N.E. is targeting moms and babies.

5) Category protection: Al Ries, posting on Brand Strategy Insider, talks about category killers, category leaders who launch line extensions to absorb or kill potentially new categories rather than let them thrive independently. (An example he uses is Diet Pepsi and Diet Coke absorbing the diet cola category established by Diet Rite.) But coconut water is too distinct and far enough away from the reach of big players to be killed off like that. Its challenge was proving relevance not differentiation.

I'm sure that these are not the only important elements. Entrepreneurial zeal, luck and hitting the right consumer trend at the right time are important too. What else?

Size matters: The verdict on the Angus Third Pounder

Photo: me

Fresh back from a trip up the coast to Oregon where we drove in our car down the Avenue of the Giants, home of some of the world's largest trees; rode in a dune buggy up and down the Oregon Dunes, the largest expanse of coastal sand dunes in North America and, in another size-related moment, sampled the now nationally released Angus Third Pounder at a conveniently-placed McDonalds.

So my thoughts on this burger, the first McD's has launched in 8 years? A hit? Or another Arch Deluxe?

1) Taste: Thumbs up from me on taste and, based on a quick search of other reviews (1, 2), that's the consensus. But the Arch Deluxe burgers also tasted pretty good (apparently) and that wasn't enough to save them.

2) Positioning: The Arch Deluxe was positioned as a sophisticated burger for the adult palate, sold on taste. In its first set of ads, McD's illustrated this positioning, perhaps unwisely, by having kids say how yucky they were. Well, that didn't work. This time around, the Angus Third Pounder is positioned primarily on the basis of its 1/3lb size with its premium quality given an Angus seal of approval. That seems a much better place for McD's to be and one that separates the Angus burger from the rest of McD's hamburgers without implicitly disparaging them.

3) Competition: McD's is late to the larger-size burger market. Carl's Jr. has its Six Dollar Burger, Burger King has its Steakhouse Burger (and, before that, its own Angus Burger) and, of course, other slightly-less-fast food restaurants all have their own versions. Now that McD's is diving in as well, a real battle is shaping up. The most likely result of this battle is that this market segment will grow (like the consumers). From McD's perspective, the earlier presence of others with even bigger, pricier items provides it some cover against Fast-Food-Nation-like criticism for the calory inflation of these products and their premium price point.

4) Timing: How about the timing of this national launch coming as it does on the heels of the McCafe launch and in the middle of a recession? Overall positive, I think. Even though these burgers are more expensive than its other burgers, they are competitively priced against equivalent sized burgers at other restaurants and McD's is still a cheaper meal out than almost anywhere else. As far coming soon after the big investment in McCafe, I think that the Angus launch is actually an important and complementary investment. As Denise Lee Yohn pointed out in a recent article in QSR, McD's focus on coffee had presented an opportunity for its traditional competitors to try and gain ground on the food front. Launching the Angus burger now helps rebalance McD's efforts and block competitive inroads.

5) Operations: One of the biggest advantages of the Angus vs. the Arch Deluxe is that it has not required the installation of expensive new equipment. The new burger is prepared on the same cooking equipment as the rest of the burger products. Franchise owners, who have already been on the hook for all the new McCafe equipment this year(estimated at $100,000 per store), would surely have pushed back hard if they been asked to invest in any more equipment. Even if the Angus fails completely it will not be the disaster that the Arch Deluxe became.

Conclusion: The Angus Third Pounder has been in test market for two years and McD's must have the data and confidence that this new product is going to hold its own and warrant the launch investment. From a taste, positioning, competitive, timing and operations perspective everything checks out. The ultimate test will be whether McD's can attract enough of the target market (young men) to its store despite its relatively stronger family appeal. As for me, I don't need to be indulging in 590 calorie burger experiences, however good they taste. Luckily for McD's, that doesn't matter. I'm definitely aged out of the target market.