Oops…Arnotts, we have a problem

Disgusting, terrible, revolting and rubbish. Not usually terms you would associate with Arnott’s iconic Shapes Biscuits right? Well, not anymore as angry consumers take to social media slamming the ‘new and improved’ Shapes.

Arnotts Shapes

New & Improved Arnott’s Shapes

As Arnotts desperately responds to the consumer backlash, lets dig into some marketing theory and consider where Arnotts might have gone wrong.

Top Down, Bottom Up Product Development

One method of new product development is the top down or bottom up approach. Iacobucci (2013, p.91) asserts a top down approach is initiated and driven by the company and in a bottom up approach, ideas spring from the customer, which the company then pursues.

In a statement to the press Arnott’s announced “We’ve made changes to the Shapes flavours as fans have been asking us to make the flavour bigger and bolder”. This would indicate a bottom up approach, however there is more to it, the new products now also have an improved health star rating. In a statement to news.com.au Arnotts declared, “The main goal of this project was on achieving more flavour and more authentic flavours. However, happily we have improved the Health Star Rating on nearly the entire range by removing some salt and saturated fat”. This indicates part of the development has been initiated from the company in a top down approach.

Here’s where the problems start

Beshears & Gino (2015, p. 54) assert that ‘there are two main causes of poor decision-making: insufficient motivation and cognitive bias’.

Beshears & Gino (2015) identified confirmation bias as a common bias that affects business decisions. Considering Beshears & Gino’s findings, one could reasonably question if confirmation bias influenced Arnott’s decision-making process. Applying this theory, an argument could be made that Arnotts have incorrectly interpreted the bottom up feedback of consumers desire for ‘more flavour’ and in their top down approach, have favored their own beliefs on what is important to it’s customers.

Screen Shot 2016-04-24 at 12.10.20 PMCustomer feedback posted on Arnott’s Facebook Page

When brand extensions fail

Kotler and Keller (2012, p. 282) would define Arnott’s brand strategy as a ‘line extension’. Furthermore Kotler and Keller asserts that ‘the worst possible scenario is for an extension not only to fail, but to harm the parent brand in the process’ (2012, p. 287). Kotler and Keller also identifies that product failures can negatively impact brand equity when the extension is seen as very similar to the parent brand. Kotler and Keller’s theories would support that Arnotts have not only hit upon the worst possible scenario, but have damaged brand equity in the process.

Okay, so you did your research, but…

Arnotts claim they have spoken to ‘thousands of fans’ and ‘done extensive taste testing with groups of fans and the reactions were overall really positive’. However, considering that consumer feedback has been overwhelmingly negative, an assumption could be made that the development process has been flawed.

According to Rao (2014 p. 1) ‘consumers typically make trade-offs among the attributes of a product or service’. Rao explains ‘Conjoint analysis is a set of techniques ideally suited to studying customers choice processes and determining trade-offs’ (2014, p. 1).

One could argue that Arnotts have not effectively conducted a conjoint analysis. The basis of this argument would be that although consumers may have indicated they would like more flavour, their reaction to the new products validates that they were not prepared to trade-off existing attributes.

Arnotts could look to Coca Cola’s ‘new coke’ for answers

So what next?

Perhaps Arnotts can look to Coca Cola’s 1985 decision to replace its old formula with a sweeter variation dubbed, New Coke (Kotler & Keller, 2012 p. 264). Kotler and Keller states that ‘market researchers had measured the taste but failed to measure the emotional attachment consumers had to Coca Cola’ (2012, p. 264). After weeks of consumer backlash, angry letters and general community outrage, the company ‘withdrew New Coke and reintroduced its centurys-old formula as “Classic Coke”’ (2012 p. 264). Kotler and Keller believes that ironically, this may have given the old formula ‘even more status in the marketplace’.

How Arnotts can turn this around remains to be seen.

Blog by Chris NoonanWordPress Username: cnoona, email: cnoona@deakin.edu.au

References:

Iacobucci, D 2013, Marketing Management, student edition, South-Western Cengage Learning, Ohio, USA

Beshears, J & Gino, F 2015, ‘Leaders as decision architects’, Harvard Business Review, May 2015

Kotler, P & Keller, K 2012, Marketing Management, Global edition 14, Pearson, Essex, England

Rao, V 2014, Applied Conjoint Analysis, Springer, London, England

Image & Video:

New and Improved Arnott’s Shapes, http://www.arnotts.com.au/products/shapes/

Facebook Feedback, https://www.facebook.com/arnottsshapes

New Coke: 30 years later, https://www.youtube.com/watch?v=scYHDAVADYQ

 

 

 

 

 

 

 

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