Customer Needs vs. Customer Acceptance

Tori Stuart shares lessons learned from founding Zoe Foods about developing products that will appeal to consumers.

Photo by Rachael Gorjestani on Unsplash

I was a cereal entrepreneur. That’s not a typo — I founded Zoe Foods and we launched the first granola cereal made with ground flaxseed. From my experience, successful product development is at the crux of long-term success. Two opposite viewpoints on product development are to either (1) meet customer needs today or (2) if we build it, they will come. Either can work but are dependent upon the following three factors.

1. Meeting Customer Needs vs. Customer Acceptance. We launched Zoe’s Granolas as a functional food in 2000, so that every serving contained a significant amount of ground flaxseed and soy protein to reduce perimenopausal hot flashes, a natural alternative to HRT (hormone replacement therapy). Although our research showed that gaining a small percentage of this target market would result in hockey stick-like growth, what we hadn’t factored in was our ability to educate this target market in order to gain customer acceptance. Our customers just weren’t ready to try a product like Zoe’s Granolas to alleviate their hot flashes, and we didn’t have the budget or staff to reach them cost efficiently. Since our target market wasn’t ready and we couldn’t sustain the necessary communications efforts, we decided to pivot.

2. Having The Wherewithal to Pivot. Two years of gaining shelf space in supermarkets under the guise of a functional food alternative to HRT created the perfect platform for a new brand position targeting wellness and weight loss. Same product, same name — revised branding and packaging. Zoe Foods was on its way. All we had to do was gain economies of scale to reduce our cost of goods sold in order to become profitable. To gain economies of scale, our product development efforts needed to minimize cost, while providing a competitive product based on its quality and the associated features/benefits. Our pivot in branding resulted in so much publicity that our monthly sales quadrupled to $400,000. Our new challenge was meeting consumer and channel demand, managing our inventory, and further refining product development.

3. Maximizing the Relationships Between Cost, Quality and Features/Benefits. In developing a food, the tradeoffs in product development are costs (ingredients, manufacturing, distribution), taste (quality), and nutrition facts (features/benefits). Basically, the lower our cost, the worse our nutrition facts, with taste as the wild card because sugar and salt sell — but certainly did not meet our customers’ needs or fit with Zoe’s brand positioning. Regardless of the product or service, figuring out how to develop a product that best meets customer needs that minimizes your cost of goods sold, and maximizes a competitive quality with features/benefits your customers need, or those you can afford to explain, will result in a product that drives your company’s growth and profitability. That said, product development, its life cycle, and how it fits with the customer’s needs over time must also be looked at within the context of the competitive context. Michael Porter’s Five Forces Analysis never fails: industry rivalry is driven by existing competitors, all of whom are affected by the threat of new entrants and substitute products, and the bargaining power of buyers and suppliers.

Ultimately, Zoe Foods developed three granolas, four bars, and two O’s cereals, all delicious with excellent nutrition facts at a competitive cost with help from a strategic partner. Unfortunately, this took place just before the market crash in 2008, and our momentum was destroyed and sales halved. Although we decided to close the business in 2009, our products reached the top ten in their respective categories, and our O’s outsold Cheerios in some BJ’s club stores with product sampling. As for me, the lessons learned were good ones, and I went on to become a serial entrepreneur after all.

Tori Stuart is a strategist and creative director with senior management experience in both entrepreneurial and corporate environments. As a creative director, she is able to walk the line between the creative and business arenas — and thrive in both. Armed with an MBA and a degree in photography and storytelling, she has 20+ years of strategic and operational business experience. Prior to Evoke Multimedia, she founded and ran Zoe Foods, a natural foods manufacturer with nationwide retail and online distribution. She has also consulted for Fortune 100 clients, and worked in advertising with Kraft General Foods and Unilever while at J. Walter Thompson and Grey Advertising.

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