General Mills Inc.

General Mills Inc.: Yoplait CustardStyle Yogurt

MBA 582 New Product Design and Development

Section 1: Strategic NPD issues and Problems Yoplait USA, as a subsidiary of General Mills, Inc., is working on Consumer Foods Group by offering some particular range of products to market. One of the fundamental objectives of the Company`s Business Development Charter is to make Yoplait USA a multiproduct company so as to capitalize on Yoplait`s momentum and to preempt competition. On the basis of their product line expansion program, the company ultimately decided to focus on Custard-Style Yogurt to be developed. Bruce Becker, director of Business Development Department, needs to resolve some marketing issues including positioning, pricing, and final product specifications. In this regard, defining the yogurt`s consistency is key issue in its early development process. Yoplait USA is in need of new flavoring system that could meet U.S. customer tastes and further this should be bases on truly natural or non-artificial ingredients. Other than the product formulation, there are some other issues that are to be resolved such as packaging, size, positioning, and name. At this point, Bruce Becker is faced with several issues to be decided such as whether to conduct a test market simulation or to go directly to a field market test. BASES is prominent example of sales estimation technique which is offering low cost and faster results. If Becker decides to skip BASES and go directly to field market test, he had to choose offering either fullscale test market or a mini market. To prefer between these alternatives is kind of a problem for Becker because of the fact that he needs to optimize effectiveness of the research while providing the company with the most minimized cost structure. Since Yoplait USA is a start-up company, Becker needs to be sensitive on financial values. Also, the capacity had to be managed properly in the scale-up from a pilot plant to full scale production so as to maintain product quality. There are some other question marks in the mind of Becker regarding with Custard Style marketing mix. Firstly, he is almost indifferent between choices of snack positioning/Vercon cup/ 6 oz size alternative and dessert positioning/ traditional cup/ 4 oz one.

Secondly, the name of the product is needed to be decided among some alternatives including Yoclaire and Yoplait. Last but not least, Becker is in need of considering best pricing mechanism that would provide with a reasonable margin. In order to develop this particular research period and begin their marketing program, all of these steps are crucial to be resolved. Section 2: Decisions a) Next Research Method Before coming up with relevant decisions, it would be useful to show up some relative analyses including customer analysis, competitor analysis, company analyses and identification of opportunities and threats in the market. It is indicated that almost the 45% of American people had not tried yogurt. Nonetheless, the yogurt market has obvious three product segments: Sundae style with market share of %53, Swiss style with %37, and Plain style with %9. According to national surveys mentioned, the mature yogurt market was anticipating very little about just 2% in the near future. However, there was a widespread shift in the consumer perception of yogurt as a meal to an indulgence snack item. Generally, yogurt market is highly fragmented and regional. There is presence of various local private players which have remarkable amount of market shares in particular regions. In the light of these observations, Becker is faced with some important opportunities and threats. As a company aiming to become multi-product company, Becker might be successful easily on some segments. If company uses appropriate market research methods, it is high likely for Becker to penetrate market with their new style product, Custard-Style Yogurt, and to increase their market share. As it is mentioned earlier, Becker should initially decide on the most appropriate market research method among few alternatives consisting of a BASES Test, a Full Scale Test, and a Mini Market Test. In parallel with these alternatives, two main criteria will be used for determination. These are based on questions of what the best approach is in terms of market

research standpoint, and how the company can manage the capacity properly in the scale-up from a pilot plant to full-scale production without changing the quality during production. Regarding with the BASES Test, there are lots of important advantages including requirement of low investment, emerging of fast results which is about 20 weeks, being a full market test as the test obtains information on a large number of parameters like media interest, weight of the can, cannibalization of other products. Further, it provides sales estimate for the first 2 years of the product with 66% confidence with an error range of max 10%. Last but not least, for this type of test, full time production of the product is not required as the test samples can be produced with the present pilot plant. On the other hand, there are some disadvantages associated with BASES Test; such as incapability of measuring price sensitivity of consumers, lack of actual media exposure. Also, BASES test does not take logistics of transport and storage into account which would result in emerging of deviations from expectations. Lastly, validity of BASES test for this product was not substantiated as this is an entirely new product category. Another significant type of test is Mini test with several advantages and disadvantages. Main advantages include very low probability of leakage of ideas to competitors, fast completion period that is around 20 weeks, accurate measurement of the effect of cannibalization, decent measurement of price sensitivity of customers. Also, the cost of mini market test seems to be competitive as compared with the full market test even though mini market test gives almost same experience of a full market test. However, mini market test has some particular disadvantages as well; such as impossibility of test results to be up scaled to the entire U.S. market because of the presence of regional differences in the Yogurt market. Secondly, the distribution channels and sales support of the company may not be perfectly measured. As it is already stated, third alternative method is so called Full Scale Test which has again both pros and cons. First of all, correct measurement of prediction of sales seems to be

one of the most significant advantages. It is also efficient to find out suitable attributes of customers such as price sensitivity, product packaging, and media selection. As opposed with the BASES test, this particular type clearly evaluates the performance of the logistics structure and sales people. Decent prediction of future investments might be considered as another significant pro of Full Scale Tests. The most prominent disadvantage of this test is its very high investment amount. Long completion time that is around 54 weeks comes second. On the basis of these analyses, it is recommended that Becker be use BASES test for the next research method because of several advantages mentioned above. He needs to be fast as much as it is possible, and to be cost effective. Confident sale estimates is another aspect that BASES offers a decent performance. It is then suggested that, having completed BASES Test, Becker should use mini market as a field market test so as to complement the findings of the BASES test because of the lack of any marketplace exposure in the BASES test. Also, this test has the advantage of utilizing less investments and providing results in a shorter time. It also estimates the extent of the cannibalization. b) Marketing Mix Issues Relevant issues regarding with Marketing Mix that Becker needs to resolve include Positioning, key selling points, Packaging, product`s name, price and products` formulation. Positioning: Possible positioning alternatives for their new Custard Style yogurt products are offering as a Snack or as a Dessert. Main criteria to decide on better option are both market volume and profit margins. At this point, there is a kind of dilemma for Becker because of the fact that while Dessert positioning offers a higher market volume, the Snack positioning offers a higher profit margin. Even though there are no other company in the dessert market yet, it is suggested to offer it as a Snack because Custard-Style product seems more likely to attract light users and non-users.

Key Selling Point: At this point, Becker faces to decide on whether to give more importance on Taste or Texture. It is possible to argue that taste is a better selling proposition for desserts. Because our new product will be offered as a snack, it is suggested to focus on texture which is a significant differentiating factor from other yogurts. When we consider the fact that snack segment is highly competitive, texture looks to be a cut above as it is important differentiating factor. Packaging: Main options include size (4 oz. and 6 oz.) and packaging (Vercon and Traditional Cup). 4 oz size seems to be appropriate for dessert positioning because it does not aim to make people satisfied with volume but rather with taste. Also, it keeps the unit price down which makes it useful to be dessert. 6 oz size, on the other hand, seems to be fine to position it to be a snack. That is why 6 oz is suggested to be used. Another reason is that it scored highest in terms of delivered profit margins. Regarding with the packaging type, Vercon cup is preferable because of its higher score during the random supermarket shoppers’ screening. Name: Possible alternatives are “Yoclair” which is to position it differently than a original Yoplait yogurt; “Yogourt classique” or ” Crème de Yogourt” which is to bring out the Frenchness aspect, and “Yoplait custard-style yogurt” which is to leverage the brand value and position it as snack. Therefore, it is suggested to use Yoplait custard-style yogurt because it built on the brand name and it will be more useful to attract higher volume of people. Price: Here at this point, we have again two main decision criteria, namely profit margin and volume potential. It is known that the original style Yogurt is now priced at 45 cents. The two products have a similar kind of cost structure. So it’s unlikely that the price for the new product can be reduced much. That is why it is suggested that new product would have same price structure. Product Formulation and Flavors: In order to attract wider range of customers, it is claimed that all these six flavours including Strawberry, Vanilla, Raspberry, lemon, blueberry and plain

need to be offered. By doing so, the company would give customers more choices which ultimately led to customer satisfaction. We recommend company to use full fat formulation since the product would be snack and concept test results are better for this option. Section 3: Recommendation and Actions We recommend the BASES test exactly.After the BASES test, we offer “mini market” test as a follow up measure to complement the findings of the BASES test because of the lack of any marketplace exposure in the BASES test .And this test has the advantage of utilizing less investments and providing results in a short time. It also estimates the extent of the cannibalization. • We recommend the company to position the product as a snack option since the customer perception is invariably shifting towards the indulgence snack item. Also the concept fulfillment test gave favorable results for the following combination: fat based/Vercon cup/ 6oz/Custard-Style name and texture. We believe the company should launch the product in both the package options so that it may attract the customers looking for a dessert. • There is no need for any price modification for the new product, as the cost structure associated with the new variety is expected to be the same. In order to achieve these recommendations, company should make a plan including how and when objectives are to be achieved, by showing the major deliverables, milestones, activities and resources. After planning all tasks and baselines, company should try to execute the tasks according to the plan and make required adjustments according to the outputs of controlling and monitoring activities.