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Vol 9 No 2 Spring 2009PDF Download

Mobile Finds Girls’ Taste: Knorr’s New Product Development 

Shintaro Okazaki

Universidad Autónoma de Madrid 

Abstract

This paper describes one case pertaining to Knorr’s mobile-based new product development projects in Japan. Knorr Foods, a subsidiary of Ajinomoto Inc., has tried to involve younger female consumers in the development of a new Soup Pasta, announcing the project at a popular fashion event, the Tokyo Girls Collection (TGC), whose star models became official project members. Knorr created a mobile campaign site, on which star model members maintain their blogs and report their participation in the product development process. The discussion threads serve as input for the idea generation and screening. Through this project, Knorr developed a new Soup Pasta that embodies the key attributes identified in the mobile blogs. The new product was introduced at the following year’s TGC venue, during which sampling took place through catering trailers.

Keywords: Blogging, Events and experiences, Mobile-based campaign, New product development.

Introduction

In recent years, discussions about the effectiveness of mobile advertising keep growing. According to WirelessWeek, “Mobile advertising seems to be an industry that’s about ready to explode, chasing the billions already being spent on Internet advertising” (Smith 2007). A recent survey by Strategy Analytics also shows that mobile advertising spending reached $1.4 billion in 2007; with the wider adoption of mobile technology by both businesses and consumers, this number likely will rise to $14.4 billion by 2011 (InfoMobile 2007). As eMarketer (2008) reports,

Consumers who respond to mobile ads are most likely to engage with text messages, according to a survey of mobile users aged 15 and older in the US by the Direct Marketing Association (DMA). Seven out of 10 respondents to the DMA’s “Mobile Marketing: Consumer Perspectives” study who had acted on mobile ads said that text messages for a product or service had prompted their actions.

However, this type of rather optimistic trade report raises the question: What exactly can be prompted by mobile ads, and to what extent? Intuitively, mobile ads should be able to work as attention getters. They can stimulate and improve attitudes toward an advertised product or brand or even affect the formation of intentions to purchase such items. However, it seems naïve to assume that users always open text-based mobile ads in the first place, without considering security issues. Users are unlikely to open and read ads unless they are thoroughly convinced that not only is the message source safe and trustworthy but also that the content will provide information that they will find useful, credible, and valuable in their everyday lives. Perhaps for this reason, many firms seem to be shifting from text-based ads to mobile-based promotional campaigns, in which mobile communication is only part of a more holistic marketing strategy (Okazaki 2008). 

In general, applying traditional theories to mobile devices seems to make little sense, for two reasons. First, the mobile phone is a ubiquitous device. Unlike the desktop or laptop PC, it enables users to access diverse functions in any place and at any time. For example, the recent introduction of iPhone 3G in 22 countries-as of July 11, 2008, and in more than 70 countries by December 2008-may change the views of many academics who-regardless of how mobile devices continue to evolve-still mumble “Are they really all that different?” With the iPhone, a variety of applications, including games, business, news, sports, health, reference, and travel, function not only over cellular networks but also via Wi-Fi, “automatically switch[ing] between them to ensure the fastest possible download speeds” (Apple 2008). Second, and perhaps more important, in the real world, mobile ads that lack referents in other communication channels, such as promotions, events, experience, direct marketing, or even public relations, may be meaningless, because mobile communication provides a “tool” rather than as a “goal.” In this vein, many firms have begun to integrate mobile devices into their strategic marketing planning and execution as practical communication tools.

This article describes a specific case, in which Knorr undertook mobile-based new product development in Japan, where the mobile Internet is not a duplicate of the PC Internet experience. Rather, the mobile system was created as a unique ecosystem, specifically for deployment on mobile phones. All players in the value chain benefit from new and popular applications and services (Sharma and Nakamura 2003). Since NTT DoCoMo’s i-mode launched in early 1999, the mobile Internet in Japan has become increasingly fast, sophisticated, technically stable, and easy to use. By pressing one dedicated button on their phones, users can instantaneously go online. Alternatively, users can type in URLs or scan so-called “QR codes,”¹ the quick response codes that take them directly to mobile Web sites, which they then can browse conveniently using one-key shortcuts. Accessing the fixed Internet is also possible. In Japan, WAP never gained a foothold.

¹ A QR code is a two-dimensional bar code, originally developed by the Japanese firm Denso-Wave in 1994 to track parts in vehicle manufacturing. It contains information in both the vertical and horizontal directions and can store URLs, text, phone numbers, or short messages. Users with a mobile phone equipped with the reader software can scan the image of the QR code to access the programmed information. For a complete review of QR code usage in mobile marketing, see Dou and Li (2008).

Knorr’s Case

Company Profile

Knorr was founded by Carl Heinrich Knorr in Germany in 1873, and it produces ready-to-eat dry soups and condiments. In 1958, Knorr was purchased by Corn Products International (CPC International), which became Best Foods in 1998. As a result of its excessive debt, Best Foods then was purchased by the Anglo-Dutch company Unilever, which became the world’s leading food manufacturer, with Knorr as Unilever’s largest brand (Unilever 2004). In Japan, Ajinomoto’s subsidiary, Nihon Consommé, established a joint corporation, Nihon Shokuhin Kogyo K.K. (in English, “Japan Foods Manufacturing”), with CPC International in 1963, and this corporation was renamed Knorr Foods Co., Ltd., in 1965. In 1987, Ajinomoto acquired all outstanding shares of Knorr Foods Co., Ltd., of Japan from CPC International Inc., along with a 50% equity stake in CPC International’s seven Asian subsidiaries, located in six countries (Knorr Foods 2008).

In its domestic seasonings and foods business, Ajinomoto focuses on nurturing brands with overwhelming shares in stable markets, such as AJI-NO-MOTO (unami seasoning based on amino acids), HON-DASHI (Japanese seasonings), Cook Do (sauce-type Chinese seasonings), and Knorr. Ajinomoto has led the Japanese soup market since 1964, when it began to sell the Knorr brand through an alliance with U.S.-based Best Foods (acquired by Unilever in 2000). The brand attracts a wide range of customers, from children to adults, in a variety of eating situations. Its brand mix includes three main variants: Knorr Cup Soup (for breakfast); Knorr Soup Pasta and Knorr Soup Harusame (popular among young women for lunch); and Knorr Tamago Soup (a mainstay soup, packed with ingredients that go well with rice) (Ajinomoto 2006a). Ajinomoto’s Investor Relations department offers the following description of the Knorr brand:

Ajinomoto develops and renews Knorr products based on its philosophy of providing the fundamental value of soup: delicious ingredients and nutrition. In particular, it continues to seek out safe, high-quality ingredients through measures such as contract cultivation of all the sweet corn it uses (Ajinomoto 2006a).

In 2006, the Japanese soup market amounted to $1.43 million. With the Knorr brand, Ajinomoto held 26.5% and 42% of the instant soup and total soup markets, respectively (Agriculture and Agri-Food Canada 2006; Ajinomoto 2007). The latter figure declined to 38% in 2007 (Ajinomoto 2008). In Knorr’s product mix, Knorr Cup Soup maintained sales at the same level as the previous year, but overall soup sales decreased slightly, due to a slight decline in the sales of Knorr Soup Pasta (Aijinomoto 2007). Figure 1 provides the net sales figures, and Table 1 indicates domestic food products market shares.

Table 1. Ajinomoto’s Domestic Food Products Market Share

Notes: The market size is estimated on the basis of consumer purchases. Ajinomoto has remained the market leader in all product categories during these years.

Source: Ajinomoto 2006b, 2007, 2008. 

Figure 1. Ajinomoto’s Net Sales Breakdown

Notes: Based on fiscal year 2005. The net sales amounted to 1,106.8 billion yen (105 yen ≈ $1). Figures in parentheses represent year-to-year changes from 2004.

Source: Ajinomoto 2006b, p. 1. 

Tokyo Girls Collection

In 2007, Knorr was in the midst of developing a new Soup Pasta to target the primary gourmets of noodle cuisine: younger, female consumers. Bringing a new product to market is not an easy task, but in this case, the hardest question was how to develop a Soup Pasta that fit the target segment’s taste preferences. To generate and commercialize the product successfully, the company needed frank and honest opinions from young, female consumers during the idea generation, idea screening, concept development, product design, and detail engineering phases. To this end, Knorr decided to tie its new product development project to the Tokyo Girls Collection (TGC). Figure 2 outlines the new Knorr Soup Pasta development project. 

Figure 2. Overview of Knorr’s New Soup Pasta Development Project

Notes: TGC=Tokyo Girls Collection. 

The TGC is a twice-annual celebration of all things cute, organized by Girlswalker.com magazine to showcase the season’s fashionable streetwear produced by domestic brands (Girlswalker.com 2008) (Figure 3). Unlike typical “invitation-only” fashion events, this show is open to anyone who pays the entry fee of ¥3,000 (approximately $28), ¥5,000 ($48) for a stand seat, or ¥10,000 ($95) for a VIP seat beside the stage. The clothes are sold at in-venue stores. When it launched in 2005, TGC attracted 12,600 attendees, growing to an estimated 20,000 by 2008 (CScout Japan 2008). The fashion event includes such entertaining attractions as live performances by renowned artists, a charity auction, and the final stage selection and presentation of the TGC Contest. The fashion show uses only amateur models known as “Dokusha moderu” (in English, “reader models”), chosen from trendsetting girls’ magazines, such as Vivi or Ray. The TGC exemplifies a grassroots movement that has become so huge in Japan that it has rendered the traditional fashion houses anachronistic. Furthermore, many previous TGC tie-up campaigns have proven very successful, because young female consumers tend to spread the word about their favorite brands. All the evidence thus indicates that TGC buzz can elicit strong, enthusiastic affection, which motivated Knorr’s participation in the tied-in campaign.

Figure 3. Girlswalker.com Homepage 

Notes: At the lower right corner, a QR code appears, which consumers can scan to access the site with their mobile devices. 

Why Mobile?

The next question becomes which media to employ in this tie-in product development project. Knorr chose mobile devices for two reasons. First, up to 15 million adolescents reportedly watch the live mobile phone broadcast of TGC. Second, participants can use their mobile phones to make purchases in real time while watching popular TGC models cat-walking in the latest brand-name items (Girlswalker.com 2008). Moreover, there is good reason to believe that in Japan, women use the mobile devices in more individualized and personalized ways than do men (Hjorth 2005). Men still are dominant in the use of the PC Internet, but recent surveys show that women are more likely than men to use the mobile Internet (Habuchi et al. 2005). The post-school, pre-marriage, female segment engages in so much shopping and traveling that no fewer than five new magazines aimed at this segment begin publication in Japan each year (Griffy-Brown and Oakland 2007). This segment, termed the “parasite singles,” generally includes unmarried young women who live with their parents, pay for neither groceries nor rent, and spend their entire income on themselves in shopping, leisure, and entertainment pursuits (Okazaki 2004). It is precisely this segment that exhibits the most flexible and favorable attitude toward mobile advertising in Japan, probably because they act as venturesome market mavens, capable of adopting an innovative product and diffusing information about it to their peers. More and more mobile Internet services are delivering attractive content related to women’s wants and needs, including work, shopping, hobbies, and love (Habuchi et al. 2005).

In addition, in Japan, kawaii (in English, “cute”) culture is widespread. Users often download cute symbols and characters to personalize their e-mails and make the communication more memorable and intimate (Hjorth 2005). For example, Hello Kitty can now be seen dancing on mobile phone screens. Male and female users use kawaii characters to much the same extent, but women appear better able to articulate the symbolic meanings of these characters (Hjorth 2005). It is thus easier for women to accept a mobile device with cute symbols than it is for men. In a way, if the PC Internet is the men’s “boy-toy,” then the mobile Internet may have become the “girl-toy” in Japan, because it is considered not only a communication device but also a fashion accessory (Sato and Kato 2005). Knorr wanted to focus on this kawaii culture segment.

New Soup Pasta Development Project

In September 2007, Knorr’s new product development project was announced at the TGC venue, with star TGC models assigned as official new Soup Pasta development project members. Knorr set up a campaign booth, where the TGC project members explained the product development launch. At the same time, surveys asked the TGC participants what tastes they wanted in Knorr’s next Soup Pasta. Knorr launched a mobile site on the mobile girlswalker.com site, where TGC project members described the product development process in their blogs (Figure 4). For example, one blog comment read:

Hi everyone! My name is Ayako, and I am working as a project member. In this blog, I am going to explain to you how we are involved in Knorr’s new product development project. We are expecting to produce a Soup Pasta which has a flavor nobody tasted before…. I’ve been a fan of Soup Pasta ‘Mozzarella & Four Cheese.’ I like its rich cheese flavor a lot. You can enjoy it until the last sip of soup. I often eat it for supper, at night when I am a little bit hungry, because I don’t have to worry about calories. At the same time, it is a balanced diet. I think Knorr should develop something similar, I mean, a Soup Pasta which is very nutritious but light and healthy. Oh, by the way, this afternoon, I visited the Knorr’s factory. We discussed what kind of packaging is appropriate for our next product….

Figure 4. Knorr’s Product Development Project Site on Mobile Internet 

On this blog, other mobile users freely enter comments and opinions, creating successful discussion threads that revealed the vast majority of customers’ need for the new Soup Pasta. The bloggers’ comments thus effectively replaced traditional idea generation through qualitative research, which relies on one-on-one interviews and focus group discussions. Also, this blogging provided young consumers with real-time information, as well as entertaining reasons to talk. Knorr therefore expected project information to be spread among the blog participants’ friends, peers, and family.

The TGC model project members participated fully in the product development process, from a visit to Knorr’s factory to package design, from idea generation to taste testing. In March 2008, Knorr finally developed a new Soup Pasta called “Tarako Cream” (creamy cod roe), which embodies the key attributes identified in the new product development project (Figure 5). As with the initial project announcement, Knorr used the TGC to present samples of Tarako Cream and offered the new Soup Pasta to young girls from catering trailers located at the venue (Figure 6). In April 2008, Knorr started nationwide sales of Tarako Cream, mainly at major convenience stores. The product was received enthusiastically by young female consumers in their teens and 20s, and as a result, sales of Knorr Soup Pasta increased by 50% compared with the previous year.

Figure 5. New Soup Pasta “Tarako Cream” (Creamy Cod Roe)

Notes: The TGC star model project members participated in the taste and flavor generation, screening, testing, and package design stages. 

Figure 6. Sampling from Catering Cars at the TGC Venue

Notes: TGC = Tokyo Girls Collection. 

Country-Specific Factors

Before drawing implications from the Knorr case, country-specific factors need to be taken into account to ensure the discussion is objective and generalizable. First, Japan represents a country with one of the highest levels of 3G penetration. A staggering 90 million 3G handsets are currently in circulation, and more than 70% of the 127 million Japanese population has subscribed to the mobile Internet; since 2006, more people have been accessing the Web by mobile device rather than by PC. In contrast, the 3G penetration rate stands at 23.8% in the United States (52 million 3G handsets) and 11.1% in Europe. Only 15.6% of U.S. mobile subscribers use the mobile Internet (Toto 2008). Second, Japanese mobile phones are equipped with a vast selection of tailor-made services, with a reliable technical infrastructure and relatively sound regulatory policies. Third, the majority of Japanese people commute by public transportation, in which setting voice calls normally are prohibited. Therefore, commuters demand data services as an enjoyable way to kill time; they entertain themselves with mobile devices on their commutes (Baldi and Thaung 2002).

Lessons Learned

Even when considering these country-specific factors though, this case offers several important lessons that suggest a better understanding of the mobile device as a marketing tool. First, the mobile device should be considered a personal communication channel that enables firms to collect consumer opinions. The creation of a mobile blog can provide, from the perspective of a social-structural view of interpersonal communication, a form of community. As Kotler and Keller (2006, p. 549) recognize, many consumers see society as consisting of cliques, small groups whose members interact frequently. Clique members are similar, and their closeness facilitates effective communication but also insulates the clique from new ideas. The challenge is to create more openness so that cliques exchange information with others in the society. 

Knorr’s blogging project to support its new Soup Pasta development was an ideal way to generate such openness. It is essentially analogous to viral marketing or electronic word of mouth, because the bloggers become opinion leaders who spread new product development updates to their followers. The TGC also served as a critical mental and symbolic venue for the virtual discussions.

Second, Knorr’s mobile blogging enabled the company to minimize the risk associated with new product development in two ways. It immediately reduced the cost of idea generation. Often, a search for important ideas resembles the quest for a needle in a haystack. Firms must make substantial investments to generate many ideas, just to find one worthy of development. The ubiquitous communication device also enabled more timely and speedy comment entries in blogs, which compressed the development time.

Third, Knorr’s case exemplifies the practical use of events and experiences, as proposed by Kotler and Keller (2006), in the new marketing communication mix. Knorr wanted to convert its internal project (i.e., new product development) into a public event and therefore take advantage of three major features of events and experiences: They are relevant, involving, and implicit. The new Soup Pasta development converted a highly relevant event into a marketing tool and enabled young consumers to become personally involved. Given the real-time quality of the TGC star models’ blogging, consumers found the new Soup Pasta development actively engaging. Furthermore, the use of the TGC tie-in made the event an indirect “soft sell” (Kotler and Keller 2006).

Key Terms

Discussion Questions

1. What are the key success factors in Knorr’s new product development project?
2. Why did Knorr decide to use mobile devices instead of other media? For example, why not use “traditional” Internet in PC?
3. Describe the properties of the mobile Internet that make it a mass medium.
4. How did Knorr’s marketers make segmentation decisions? How did they establish positioning strategies?
5. Describe the different ways in which Knorr could create events and experiences based on the TGC.
6. When might this kind of product development be feasible? Identify the potential advantages and problems associated with Knorr’s new product development project.
7. What forms of marketing research should Knorr conduct before implementing this kind of mobile marketing project? What additional forms of market research could it use during and after the project?
8. The case indicates that consumers’ satisfaction may depend on their own involvement in product planning and development. What suggestions do you have for Knorr regarding how it might encourage consumers to participate in the new Soup Pasta development project, in addition to the strategies described in the case?

Exercise

Select a product or service about which you are fairly knowledgeable. Pretend you are a junior marketing manager and develop a preliminary description of a potential mobile-based marketing project. Identify a specific event that you believe would interest and involve potential customers. Explain what recommendations you would make to senior marketing executives who have only vague ideas about mobile-based advertising and promotion.

Acknowledgment

The author thanks D2 Communications Inc. and Knorr Foods Co. Ltd. for their willingness to share project information.

References

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About the Author

Shintaro Okazaki (Ph.D., Universidad Autónoma de Madrid) is an associate professor in the Department of Finance and Marketing Research, College of Economics and Business Administration, Universidad Autónoma de Madrid. He has published in various leading advertising and marketing journals, including Journal of Advertising, Journal of Advertising Research, International Journal of Advertising, Journal of International Marketing, Journal of Business Research, Journal of World Business, European Journal of Marketing, Psychology & Marketing, International Marketing Review, Information & Management, and Internet Research, among others. His primary research interests lie in international marketing communications, with an emphasis on new technology. He was named the Best Academic of the Year in 2008 by the Mobile Marketing Association.