Heinz’s New Ketchup; New Product Introductions and Social Media
I came across this a few weeks ago (actually, my wife sent it to me and if I don’t give her credit, I’ll hear about it), but have been busy reading quarterly filings. Heinz, it seems, has introduced what it considers to be upmarket ketchup blended with balsamic vinegar. Read the article here. No, no, no, there’s no surfer on the label or anything really stupid yet amusing like that.
What’s interesting is that they have introduced it and made it available initially only on Facebook, where they have 825,000 followers. At $2.49 for a 10 ounce bottle, it’s $0.60 cents more expensive than their standard product.
And the question I find myself asking is whether this product would even be introduced if it wasn’t for the internet and social media.
Heinz, the article says, has 59% of the ketchup market and has been making the stuff since 1876 so I guess they can do anything they want. It will show up in stores in late December and be available through March as a “limited edition.” If it’s selling well, they’ll make it a regular offering. I guess it will become an “unlimited edition,” so to speak.
The development and packing costs are the same no matter how they introduce it. But if there’s no social media, they have to distribute it, they have to advertise and promote it, they have to follow up with the supermarkets they tested in to see how it went, and they get no direct consumer feedback and unless they work really, really hard to get it. There’s a lot of cost there.
By introducing it on Facebook, they get immediate consumer feedback on the concept (though it will take some work to find out if they liked the taste), and they don’t have to distribute it immediately to markets. There’s not necessarily an advertising program. For all I know, they don’t even have to bottle the stuff until they get orders. Hopefully, when they do put it in the markets, it’s already sold well enough that there’s some demand from “committed” Heinz fans, whatever that means. If only because they charge $2.00 to ship each $2.49 bottle if you buy it online.
I don’t expect that Heinz’s bottom line is going to move much even if limited edition balsamic ketchup succeeds beyond their wildest dreams. (If I wanted balsamic ketchup, I’d probably just mix a bit of balsamic vinegar with my ketchup and see how it tasted, even though I’d be missing out on a limited edition). But this makes me think about the process and rationale for introducing a new product and the evolving and increasing impact of electronic interconnectedness.
I wonder if companies might start introducing new products because they can. With the cost of test marketing, if you want to call it that, so low and the feedback so immediate, what do they have to lose? Well, I suppose they might get laughed at if it’s a lame product. Negative opinions are transmitted just as fast or faster than positive ones on the internet. But there’s always that risk with any new product.
I’ve written over the years that there’s some value in products that everybody talks about even if they don’t sell that well. Maybe the internet lets new products have an advertising and promotional component that could justify the lower expense even if the product doesn’t turn out to be hit.
But then again, there’s a danger of introducing too many new products if it’s that easy (probably is for ketchup, toothpaste, deodorant, laundry detergent, etc.) and creating some consumer confusion.
You also have to wonder if your Facebook followers represent more than a small segment of your customers. I imagine they do in our Action Sports/Youth Culture market, but maybe not in ketchup, where 97% of people have it in their homes.
Most of you know a hell of a lot more than I do about using the internet and social media. I’m sure what Heinz is doing isn’t unusual. But I can’t help but think that there’s a danger in introducing a product just because you can and technology has made it cheaper and easier to do. No matter how cool the technology gets, it still matters that you offer value to your identified customer base. Make sure your version of limited edition balsamic ketchup does that before you fling it on the market via social media.
Ok Jeff I am a professed balsamic vinegar lover. I went ahead and ordered the ketchup to see how it tastes. Since ketchup is primarily vinegar and secondarily tomatoes, I’m sure its going to be different. You’ll get a report from me how heavily they market or survey as a follow up. Shipping was $2, which seems like a bargain but obviously made it a “luxury” purchase when the total cost is factored in.
Hi Rob,
Okay, I will await your report. I didn’t admit it in the article, but I don’t use ketchup at all.
Thanks,
J.
The question that immediately comes to mind is: Why are 825,000 people following Heinz on Facebook?
Hi Bruce,
Yeah I thought about that myself and after due consideration have decided I have no idea.
Thanks for the comment,
J.
Jeff, Craft Brewing meets Ketchup aside, I’m not so sure the only lesson here is about carefully rattling off product introductions. This may be a good method for “offering value to your identified customer base,” as you mention in the last paragraph. Or at least your customers that are tethered to you.
Interesting way to offer “friends, followers and connections” some value for being on your short list – as long as you’re not whipping up lame stuff (ROI on competing for the most followers still up for debate).
Outstanding connection of seemingly unconnected ideas Jeff… again. (uh, maybe your wife gets this point)
Hi Scott,
Oh my wife understands it for sure. And I completely agree with you that there are some good reasons to do this. My interest is in watching how the use of the internet/social media evolves as a selling and marketing tool and what could go wrong. In our industry, we are particularly interested in this because our customers are all over it.
Thanks,
J.