With legislative pressures mounting for food and beverage companies to remove artificial colors and flavors from their products, product formulators are struggling to comply. Natural ingredients pose challenges from supply chain limitations to higher costs. Most important are the concerns about consumer acceptance. The industry is rife with examples of product changes that companies had hoped would go unnoticed or be embraced but instead inspired a revolt in consumers, with complaints that the product they knew and loved had changed. In some cases, companies reverted to the original formulation in the face of such strong consumer resistance. History has shown that ingredient substitution is indeed a risky business, and you must approach any product reformulation with care.
Key Takeaways: Product Reformulation Research Best Practices
Seeking consumer feedback before introducing product changes can help companies mitigate adverse impacts. Since consumer research comes at a cost, companies often start with a basic risk assessment. Products in the top tier of sales volume deserve a much greater investment in research than those with low sales. For the latter, a management decision without research might be justifiable.
A sensory evaluation using a discrimination test can be a good starting point for determining the consumer impact of an ingredient substitution. Discrimination testing can reveal whether a change is detectable. Unfortunately, replacing artificial ingredients with natural ones often leads to noticeable differences. For starters, natural colors may not be as bright as artificial ones. Even when the color matches, natural colors can add an unexpected or unwanted flavor.
When these differences are noticeable, learning whether consumers think the reformulated product is as good as (or better than!) the current product requires additional research. To answer that question with confidence, research should follow a few critical practices.
- Recruit current product users
Companies need to avoid disappointing current users—which makes current users the best research target. Whether the reformulated product can attract new users is a separate research question.
One key consideration is whether the research target should consist exclusively of heavy users. After all, disappointing heavy users is likely to do the greatest damage to the franchise. On the other hand, with a natural product that shows a lot of variability under normal production, heavy users might be more used to product differences. As a result, they could be more forgiving of a change that is not too far outside the range of normal variability. In that case, lighter users may be more critical of a product change, and including them in the research could offer a more complete risk assessment.
- Choose a sample size that reflects the decision risk
When testing a small sample of consumers, the research is more likely to conclude that the original and reformulated products are equally liked. However, these small samples don’t provide the statistical power to confidently decide that the reformulation is not inferior to the current product. Especially for products with high sales, a larger sample is required.
- Define clear criteria for judging the product reformulation
Is preference in a central location test sufficient? Should a home use test be run? Is a limited test market needed before launching the reformulation nationwide? Keeping potential business impact in mind, you need to decide what proof is enough to say that the reformulation is an acceptable substitute for your current product.
- Align the research with marketing plans
Does your company intend to call out the product change? Perhaps the packaging will include a burst that says “No artificial colors!” or product advertising will highlight this feature. If so, this communication should accompany the product presented to consumers during research. Study participants can view a picture of the new packaging or hear a verbal statement that reflects the anticipated message. The research will always be more valid when it mirrors the reformulation marketing.
Go Deeper: How an Alienation Analysis Can Help
When conducting a preference test, digging deep into the results with an alienation analysis can provide further insight into the risk of an ingredient substitution. In a preference test, product users (often only heavy users) are presented with the original and reformulated product. While other measures can be included in an alienation test, the key outcome measures are purchase interest (on a 1-5 scale) and preference.
To measure alienation, researchers look at what percent of people who prefer the current product would reject the reformulation. After all, some consumers might prefer the current version but still be willing to buy the reformulated product.
Alienation is the percentage of participants who prefer the original and would not buy the reformulated one. An acceptable degree of alienation is one that falls below a threshold set by the client or does not statistically exceed a measure of respondent error (see graphic). If alienation exceeds that threshold or fails that statistical criterion, the reformulated product poses an unacceptable risk of hurting the product franchise.
Final Takeaways:
In P&K’s experience, the alienation analysis is an appealing way to quantify the risk of an ingredient substitution or other product reformulation. However, brand stakeholders can struggle with what level of alienation is safe to accept. For them, statistics such as equality in liking or preference may carry more weight. Therefore, alienation may not serve as the sole decision criterion, but as an ancillary one.
While no one research design fits all circumstances, the above considerations and performance metrics can provide strategic guidance on whether to proceed with your current reformulation or to continue formulating to better meet consumer expectations.
If you’d like to discuss your upcoming product changes and research needs, contact P&K Research today.