Flevy Management Insights Case Study
Product Innovation Strategy for Organic Snack Food Producer in North America
     David Tang    |    Product Strategy


Fortune 500 companies typically bring on global consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture, or boutique consulting firms specializing in Product Strategy to thoroughly analyze their unique business challenges and competitive situations. These firms provide strategic recommendations based on consulting frameworks, subject matter expertise, benchmark data, KPIs, best practices, and other tools developed from past client work. We followed this management consulting approach for this case study.

TLDR An organic snack producer experienced a 20% sales decline due to competition, shifting consumer preferences, and supply chain inefficiencies. By introducing new plant-based, allergen-free products, enhancing DTC channels, and optimizing the supply chain, the company achieved a 25% sales increase and boosted customer satisfaction, highlighting the critical role of Innovation and Strategic Planning in brand revitalization.

Reading time: 11 minutes

Consider this scenario: An emerging organic snack food producer in North America is facing challenges in refining its product strategy to stand out in a saturated market.

Despite a promising start, the company has encountered a 20% decline in sales growth over the past year, attributed to fierce competition and changing consumer preferences. External challenges include rapidly evolving health trends and an influx of competitors offering similar or lower-priced alternatives. Internally, the company struggles with supply chain inefficiencies and a lack of product innovation, which impacts its ability to respond quickly to market changes. The primary strategic objective is to revitalize its product line through innovation, thereby capturing a larger market share and increasing profitability.



The organic snack food industry is experiencing dynamic shifts, driven by changing consumer behaviors and increased competition. To navigate this landscape, a strategic approach focused on product innovation and market adaptation is essential.

Industry & Market Analysis

The organic snack food industry is marked by rapid growth as consumers increasingly prioritize health and sustainability in their purchasing decisions. However, this growth attracts new entrants and intensifies competition.

Understanding the competitive dynamics involves analyzing the primary forces shaping the industry:

  • Internal Rivalry: High, with numerous brands vying for consumer attention and shelf space, leading to price wars and innovation races.
  • Supplier Power: Moderate, as the availability of organic ingredients becomes more widespread, but quality and sustainability practices can vary significantly.
  • Buyer Power: High, due to the broad range of choices available to consumers and the ease of switching between brands.
  • Threat of New Entrants: High, as low entry barriers allow new, niche brands to emerge and capture market share with unique or innovative offerings.
  • Threat of Substitutes: Moderate, with the main threat coming from conventional snack foods that compete on price and taste preferences.

Emerging trends include a shift towards plant-based and allergen-free products, reflecting a deeper consumer commitment to health and environmental sustainability. The industry is also witnessing a rise in direct-to-consumer sales channels, bypassing traditional retail constraints. These shifts present both opportunities and risks:

  • Increased demand for plant-based and allergen-free options opens new product development avenues but requires significant R&D investment.
  • Direct-to-consumer models offer higher margins and customer data insights but necessitate robust logistics and digital marketing capabilities.

A STEEPLE analysis reveals that technological advancements in food processing, evolving dietary guidelines, and changing consumer lifestyles are key external factors influencing the industry. Regulatory changes around organic labeling and sustainability reporting also pose compliance challenges and opportunities for differentiation.

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Product Lifecycle (34-slide PowerPoint deck)
Psychology of Product Adoption (46-slide PowerPoint deck)
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Internal Assessment

The organization boasts a committed team and a strong brand ethos centered on sustainability and health. However, it faces challenges in product development speed and supply chain resilience.

SWOT Analysis

Strengths include a loyal customer base and a strong brand identity in the organic market. Opportunities lie in expanding product lines to include trending ingredients and leveraging digital channels for direct sales. Weaknesses encompass slow product innovation cycles and supply chain vulnerabilities. Threats stem from intense competition and the volatility of organic ingredient markets.

Organizational Design Analysis

The current organizational structure, with its traditional hierarchies, limits agile decision-making and slows innovation. A flatter structure could enhance cross-functional collaboration and speed to market for new products.

Digital Transformation Analysis

There is a significant gap in utilizing digital tools for market analysis, customer engagement, and e-commerce. Investing in digital capabilities can enhance direct-to-consumer channels, supply chain visibility, and product innovation processes.

Strategic Initiatives

  • Launch Plant-Based and Allergen-Free Product Lines: Develop and introduce new products that align with emerging health trends and consumer preferences. This initiative aims to capture new market segments and increase brand relevance. The value creation comes from tapping into growing consumer demand for health-conscious snack options, expected to drive revenue growth and market share. Resource requirements include R&D investment, new supplier relationships, and marketing campaigns to promote product launches.
  • Strengthen Direct-to-Consumer Channels: Enhance digital platforms and logistics for direct sales, aiming to improve customer engagement and gather actionable insights. This initiative leverages digital transformation to create value through higher margins and personalized marketing. It requires investment in e-commerce technology, digital marketing skills, and fulfillment capabilities.
  • Optimize Supply Chain for Resilience and Sustainability: Implement technology solutions and partnerships to improve supply chain visibility, flexibility, and sustainability. This strategic goal is to reduce operational risks and costs. The source of value creation lies in achieving operational excellence, which can lead to improved margins and supply reliability. Resources needed include technology investments and strategic partnerships.

Product Strategy Implementation KPIs

KPIS are crucial throughout the implementation process. They provide quantifiable checkpoints to validate the alignment of operational activities with our strategic goals, ensuring that execution is not just activity-driven, but results-oriented. Further, these KPIs act as early indicators of progress or deviation, enabling agile decision-making and course correction if needed.


What gets measured gets done, what gets measured and fed back gets done well, what gets rewarded gets repeated.
     – John E. Jones

  • Revenue Growth from New Products: Tracks the financial success of newly launched products, indicating market acceptance and innovation effectiveness.
  • Direct-to-Consumer Sales Growth: Measures the increase in sales through direct channels, reflecting customer engagement and digital platform performance.
  • Supply Chain Downtime Reduction: A decrease in supply chain disruptions demonstrates improved operational resilience and efficiency.

These KPIs provide insights into the strategic initiatives' impact on the company's growth, operational efficiency, and customer engagement. Monitoring these metrics closely will enable timely adjustments to strategy execution.

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Stakeholder Management

Successful implementation of the strategic initiatives requires the support and collaboration of both internal and external stakeholders, including product development teams, digital marketing specialists, and supply chain partners.

  • Product Development Teams: Responsible for creating new product lines.
  • Digital Marketing Specialists: Key to developing and executing online sales strategies.
  • Supply Chain Partners: Essential for ensuring ingredient quality and availability.
  • Customers: Their feedback is crucial for refining product offerings and marketing approaches.
  • Employees: All staff must be aligned with the strategic objectives and involved in implementing changes.
Stakeholder GroupsRACI
Product Development Teams
Digital Marketing Specialists
Supply Chain Partners
Customers
Employees

We've only identified the primary stakeholder groups above. There are also participants and groups involved for various activities in each of the strategic initiatives.

Learn more about Stakeholder Management Change Management Focus Interviewing Workshops Supplier Management

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To improve the effectiveness of implementation, we can leverage best practice documents in Product Strategy. These resources below were developed by management consulting firms and Product Strategy subject matter experts.

Product Strategy Deliverables

These are a selection of deliverables across all the strategic initiatives.

  • Product Development Roadmap (PPT)
  • Digital Channel Enhancement Plan (PPT)
  • Supply Chain Resilience Report (PPT)
  • Market Entry Strategy for New Products (PPT)
  • Financial Projections and ROI Analysis (Excel)

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Launch Plant-Based and Allergen-Free Product Lines

The team applied the Value Proposition Canvas (VPC) to better understand customer needs and the Product Life Cycle (PLC) to strategize the introduction and growth of the new product lines. The VPC was instrumental in identifying the specific benefits that the plant-based and allergen-free products could offer to customers. It helped in aligning the product features with customer expectations and desires.

Following the implementation of the VPC, the team:

  • Conducted extensive market research to identify the key jobs, pains, and gains of the target customer segments.
  • Designed the product features and marketing messages to directly address the identified customer jobs, alleviate pains, and create gains.
  • Validated the product concepts through focus groups and prototype testing, refining the offerings based on feedback.

The PLC framework was then applied to manage the introduction and growth of these products effectively. This approach ensured that marketing, production, and financial strategies were tailored to each stage of the product's life.

Following the implementation of the PLC, the organization:

  • Launched a targeted marketing campaign during the introduction phase to generate awareness and interest among early adopters.
  • Adjusted production volumes based on sales data and customer feedback to manage costs and meet demand efficiently.
  • Planned expansion strategies for the growth phase, including new distribution channels and market segments.

The combined use of the Value Proposition Canvas and Product Life Cycle frameworks led to a successful launch and early growth of the plant-based and allergen-free product lines. The organization saw a 25% increase in sales within the first six months, with high customer satisfaction scores indicating strong market fit and acceptance of the new offerings.

Strengthen Direct-to-Consumer Channels

To enhance the organization's direct-to-consumer channels, the team employed the Customer Journey Mapping (CJM) and Service Blueprint frameworks. The CJM was crucial in visualizing the end-to-end experience of customers interacting with the brand's digital platforms. It provided insights into pain points and opportunities for enhancing the customer experience. The Service Blueprint was then used to design and implement improvements in the service delivery process.

Through the deployment of the Customer Journey Mapping, the team:

  • Mapped out all touchpoints between the company and its customers across various digital channels.
  • Identified critical pain points and bottlenecks in the current customer journey, particularly in the online purchasing process.
  • Developed strategies to enhance digital interactions, streamline the purchasing process, and personalize the customer experience.

Following the insights gained from CJM, the Service Blueprint framework guided the redesign of internal processes and interactions to support the improved customer journey.

As a result of applying the Service Blueprint, the organization:

  • Revised its online ordering and fulfillment processes to reduce delays and improve order accuracy.
  • Implemented a customer feedback loop to continuously gather insights and make iterative improvements to the service delivery.
  • Trained customer service teams on the new processes and tools to ensure a seamless and responsive customer experience.

The use of Customer Journey Mapping and Service Blueprint frameworks significantly improved the direct-to-consumer channels, resulting in a 40% increase in direct sales and a 30% improvement in customer satisfaction scores. These enhancements solidified the company's direct market presence and fostered stronger customer relationships.

Optimize Supply Chain for Resilience and Sustainability

The organization adopted the Triple Bottom Line (TBL) framework and the Supply Chain Operations Reference (SCOR) model to optimize its supply chain for resilience and sustainability. The TBL framework guided the evaluation of supply chain practices against environmental, social, and economic benchmarks, ensuring that sustainability was at the core of supply chain optimization. The SCOR model provided a comprehensive approach to improving supply chain efficiency and effectiveness.

In implementing the Triple Bottom Line framework, the team:

  • Assessed the environmental impact of the supply chain operations, identifying areas for improvement in carbon footprint and resource usage.
  • Evaluated social factors, including supplier labor practices and community engagement, to ensure alignment with corporate social responsibility goals.
  • Analyzed the economic efficiency of the supply chain, focusing on cost reduction and value creation opportunities.

With the insights gained from TBL, the SCOR model was applied to restructure supply chain operations.

Following the SCOR model implementation, the organization:

  • Redesigned its supply chain network to optimize inventory levels, reduce transportation costs, and improve delivery times.
  • Implemented advanced analytics for better demand forecasting and supply planning, reducing waste and improving product availability.
  • Established strategic partnerships with suppliers focused on sustainability and resilience, enhancing the robustness of the supply chain.

The strategic application of the Triple Bottom Line and SCOR model frameworks significantly enhanced the supply chain's resilience and sustainability. As a result, the organization achieved a 20% reduction in supply chain costs, a 15% decrease in carbon emissions, and improved supplier engagement and reliability. These improvements contributed to a stronger, more sustainable competitive advantage.

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Key Findings and Results

Here is a summary of the key results of this case study:

  • Launched plant-based and allergen-free product lines, resulting in a 25% sales increase within the first six months.
  • Strengthened direct-to-consumer channels, leading to a 40% increase in direct sales and a 30% improvement in customer satisfaction scores.
  • Achieved a 20% reduction in supply chain costs and a 15% decrease in carbon emissions through optimization for resilience and sustainability.
  • Established strategic partnerships with suppliers focused on sustainability, enhancing supply chain robustness.

The strategic initiatives undertaken by the organization to revitalize its product line and enhance market competitiveness have yielded significant positive outcomes. The successful launch of plant-based and allergen-free product lines tapped into growing consumer demand for health-conscious options, as evidenced by a substantial increase in sales. Strengthening direct-to-consumer channels not only boosted sales but also significantly enhanced customer satisfaction, demonstrating the effectiveness of improving digital interactions and service delivery. The optimization of the supply chain for resilience and sustainability led to notable cost reductions and environmental benefits, aligning with broader corporate social responsibility goals. However, the results also highlight areas for improvement. The reliance on strategic partnerships, while beneficial for sustainability, introduces dependencies that could pose risks if not managed carefully. Additionally, the focus on direct-to-consumer channels, though successful, may have limited the brand's visibility in traditional retail outlets, potentially capping market reach.

Given the analysis, the recommended next steps should include a balanced expansion strategy that continues to leverage direct-to-consumer channels while also exploring opportunities to increase presence in physical retail locations. This dual approach can broaden market reach without diluting the brand's digital strengths. Further investment in digital marketing and customer engagement tools should be prioritized to maintain the momentum in direct sales and customer satisfaction. Additionally, while the strategic partnerships have proven valuable, it's crucial to develop contingency plans and diversify supplier relationships to mitigate risks associated with over-reliance on a few key partners. Finally, continuous innovation in product development should remain a core focus to sustain growth and market relevance amidst evolving consumer preferences.


 
David Tang, New York

Strategy & Operations, Digital Transformation, Management Consulting

The development of this case study was overseen by David Tang. David is the CEO and Founder of Flevy. Prior to Flevy, David worked as a management consultant for 8 years, where he served clients in North America, EMEA, and APAC. He graduated from Cornell with a BS in Electrical Engineering and MEng in Management.

To cite this article, please use:

Source: Product Strategy Optimization for Wellness Apps in Digital Health, Flevy Management Insights, David Tang, 2024


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