This one’s about a fantastic product that died a very pre-mature death due to the lack of budgets to drive any kind of awareness. Only because of agreeing to launch the product without any significant marketing spends.
CONTEXT - The chili sauce market in Indonesia is a large $200M+ category, which was growing in robust double digits between 2015 and 2017. The brand that i led was a market leader with more than 50% share, but there were other local players with significant share too. However, all of the brands played in the mass market, with products that were everyday dipping sauce accompaniments for everyday Indonesian meals. There was obviously a market for a premium tasting Chili sauce that could provide an elevated sensory experience for well-to-do Indonesians and as a market leader, we thought we’d pursue this market, with the launch of a premium variant of chili sauce.
We created a product with a complex, lovely taste palette, different from the sweet-spicy tastes of regular chili sauces. The product was made with a combination of 3 different premium chilies, some exotic spices and was perfect pairing for the top foods like fried chicken, fries, nasi goreng and the likes. The name of the product was the Indonesian name for the number 3 (not being stated for copyright reasons). The product beat all the other local products including our own, in a blind taste test.
This also gave us the confidence to price it at a significant premium to meet the targeted profitability that a premium product should give the brand. However, the costs of procuring the “premium raw materials”, the different pack shape and the changes to production line meant that the profits were even lower than the regular variant.
THE FAUX PAS
There were very few avenues left to improve profitability. Production and material costs couldn’t be reduced. The price for listing the product in modern trade stores (yes, one needs to pay retailers like Lotte, Giant, Coles, Walmart for shelf space) was the cost of distribution. Promotion costs were needed to drive conversion. The only place where optimization could be done was marketing.
We (and I) knew that compromising on the marketing costs would mean it would take much, much longer to build awareness and hence interest in the product when customers got to the chili sauce shelf. Also it was needed to overcome the skepticism around purchasing a new, unknown product.
However, in the final approval for launch, the choice came down to not launching owing to the profitability or launching with a significantly lower marketing spend in Y1. In desperation to get a superior product out and over-estimating our ability to build marketing scale with small budgets, we agreed to the latter.
THE RESULT
The product was pulled off the shelves by most retailers in a year. And we didn’t bring it back again.
We did the best we could, with limited budgets. We create a store visual that i still think is one of the most beautiful visuals i have ever created with the agency. We did a lot of KOL based content to push the taste superiority. But eventually the lack of scaled marketing awareness meant we just couldn’t generate even first-time sales to justify the investments and we couldn’t convince retailers to keep taking stock.
THE LEARNING
Never agree to compromise on marketing spends to drive awareness for a new product launch, especially if you are targeting a large customer base. It won’t matter how good the product is. After all, you can be world’s best magician but it won’t matter if no one knows you.
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