t

os
W11338

CAMPBELL SOUP: GAINING CUSTOMER INSIGHTS THROUGH

rP
MARKETING RESEARCH 1

R. Chandrasekhar wrote this case under the supervision of Professor Dante Pirouz solely to provide material for class discussion.
The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have
disguised certain names and other identifying information to protect confidentiality.

yo
This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com.

Copyright © 2011, Richard Ivey School of Business Foundation Version: 2016-08-15

In September 2008, Bob Woodard, senior vice-president of global consumer and customer insights at
op
Campbell’s Soup Company (Campbell’s), a food and beverage company headquartered in Camden, New
Jersey, was reviewing the progress on a study he had commissioned earlier that year to suggest changes to
the label of the company’s well-known brand of soup.

The two-year study was ongoing and the final report was due by early 2010. The study was being
undertaken simultaneously by three different marketing research (MR) firms and involved the deployment
of multiple MR techniques—including some that were considered novel to the industry—in order to gain
tC

insight into the mind of the soup consumer. 2

It had become necessary to revisit the basics, in the interim, to identify the need for mid-course corrections
in the proposed change.

The proposed change involved the red and white label that had first been introduced by the company in
1898 on its soup packaging. The label acquired iconic status in 1962 when American pop artist Andy
No

Warhol made silkscreen renderings of the soup can for display at an art museum. Campbell’s soup
subsequently ranked among the four major packaging designs that had become icons among food brands in
the United States and globally. The other three designs belonged to Coca-Cola, Heinz, and Kellogg’s. 3

If the proposed change to the soup can label was implemented, the change would be fundamental, affecting
the visual identity of a brand that had endured for over a century.
Do

1
This case has been written on the basis of published sources only. Consequently, the interpretation and perspectives
presented in this case are not necessarily those of Campbell’s Soup Company or any of its employees.
2
Jennifer Williams, “Campbell’s Soup Neuromarketing Redux: There’s Chunks of Real Science in That Recipe,” Fast
Company, February 22, 2010, accessed May 18, 2016, www.fastcompany.com/1558477/campbells-soup-neuromarketing-
redux-theres-chunks-real-science-recipe.
3
David Lister, “Canned: The Soup Tin Label That Became Ultimate Icon of Pop Art,” Independent, August 27, 1999.

This document is authorized for educator review use only by MEHWISH ZAFAR AHMED, Iqra University until Nov 2024. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860
 Page 2 9B11A029

t
CONTEXT

os
Like every consumer packaged-goods company, Campbell’s focused on brand equity as the main driver for
securing improvements every quarter in sales, market share, and earnings per share. The company was re-
engineering its sales and supply chain capabilities at frequent intervals in order to strengthen its
relationships with retailers. Advertising was the primary medium Campbell’s used to stay connected with

rP
the end-users of its various brands. The company regularly evaluated the effectiveness of the advertising
medium through three conventional tools: television ratings, focus groups, and surveys.

Soup was the company’s highest-selling category. It was also the category that had reached maturity in the
home market, recording the slowest rate of growth year to year. In 2008, soup sales had grown by one per
cent in the United States. 4 Soup was, therefore, the single largest focus of the company’s marketing efforts.

yo
The need to re-evaluate Campbell’s packaging was also driven by three other factors. First, despite
marketing soups of different categories for decades, Campbell’s had no definitive information about what
prompted people to buy soup, except that consumers considered it “something warm to eat on a frosty
day.” When asked why they consumed more (or less) soup, people tended to say that they “didn’t think of
it.” 5 Second, the product line required some kind of rejuvenation to keep it relevant to the consumer.
Shopping for a soup could be made easier and more emotionally enjoyable than it was with the existing
labels. Third, the label was the major point of visual contact with consumers and changing the label would
likely enhance the emotional connection between the brand and its consumers.
op
Campbell’s had made “wellness” central to its objectives by focusing on low-calorie, low-sugar, low-fat,
and low-salt offerings. Americans consumed 4,000 milligrams of sodium per day—twice the quantity
recommended by the Dietary Guidelines for Americans. 6 High consumption of sodium, among other
factors, led to hypertension and cardiovascular diseases. In 2006, Campbell’s consequently made the
reduction of sodium in its soups the top strategic priority for its research and development (R&D)
tC

department.

MARKETING RESEARCH PROCESS

One of the first agencies that Campbell’s contacted was Innerscope Research Inc., a Boston-based
company that measured bodily responses like galvanic skin response, heart rate variability, pupil dilation,
No

physical posture, breathing rate, and a range of other involuntary bodily functions. Innerscope would work
on biometrics for a sample size of 40 individuals.

The core technology used by Innerscope Research was known as a “biometric monitoring system.” It
consisted of three components: a belt worn by an individual around the upper part of the abdomen to
monitor microscopic changes in respiration and sweat levels; finger attachments to monitor the heart rate;
and infrared cameras fitted on a television screen to monitor eye movements. The system enabled
researchers to determine which parts of a television commercial an individual was actually watching. It
helped gauge key responses in an individual—including inattention or boredom—while viewing a
Do

commercial. The system measured subconscious emotions and displayed them in easy-to-interpret

4
Campbell’s Soup Company, Form 10-K: For the Fiscal Year Ended August 3, 2008, 21, accessed May 10, 2011,
http://investor.campbellsoupcompany.com.
5
Ilan Brat, “The Emotional Quotient of Soup Shopping,” Wall Street Journal, February 17, 2010, accessed July 18, 2010,
http://online.wsj.com/article/SB10001424052748704804204575069562743700340.html.
6
“Dietary Guidelines,” Office of Disease Prevention and Health Promotion, accessed March 2, 2011,
www.health.gov/dietaryguidelines.

This document is authorized for educator review use only by MEHWISH ZAFAR AHMED, Iqra University until Nov 2024. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860
 Page 3 9B11A029

t
os
“engagement maps.” The moment-to-moment analysis of the response to stimuli was aimed at helping
marketers make informed decisions on brand management. 7

Providing additional input in this regard was Merchant Mechanics Inc., based in West Lebanon, New
Hampshire. Merchant Mechanics integrated behavioural research methods with consumer neuroscience
technologies by using a proprietary research tool box called “RealThought.” Combining time-tested

rP
approaches like intercept interviews, exit interviews, spy-shoppers, and focus groups with modern concepts
like eye tracking, electroencephalography (EEG), and functional magnetic resonance imaging (fMRI),
RealThought assessed the perceptions of shoppers in a live shopping environment rather than in a clean
room. Merchant Mechanics believed that shopping was a measurable process and that “nearly every aspect
of a retail environment, when properly evaluated, represents an opportunity to increase sales.” 8

Also part of the Cambell’s team was Olson Zaltman Associates, based in Pittsburgh, Pennsylvania. They

yo
had developed a deep interview method they called the “Zaltman metaphor elicitation technique” (ZMET).
This process was a two-hour, one-on-one interview that leveraged the power of figurative language (such
as metaphors) to ascertain the thoughts and feelings about a brand occurring in the unconscious mind of the
interviewee. An individual used, on average, five to six metaphors per minute of ordinary conversation
and, with ZMET, each metaphor could reveal a hidden orientation. At the end of the interview, the
individual directed the creation of a digital collage that was a detailed and meaningful depiction of how the
brand was viewed. 9
op
These three agencies were to interact with one another to triangulate the data collected from observations
of about 1,500 consumers over two years. The goal was to determine not just what consumers said but also
what they thought and what they actually did.

CONSUMER FOOD AND BEVERAGE INDUSTRY

tC

The United States represented the largest market for consumer food and beverage products. It was also the
single largest geographical focus globally for food and beverage companies. The retail sale of foods and
beverages in the United States, which formed part of what was called “at-home expenditure,” was valued
at US$589.5 billion 10 in 2008, up 5.1 per cent from 2007. This figure was different from that of “out-of-
home expenditures” (incurred at restaurants and eateries), which was valued separately at $458.8 billion in
2008, up 3.7 per cent in 2007. 11
No

The trend toward at-home consumption of foods and beverages, of which soups were a part, was on the
rise in the U.S. market. Manufacturers were also offering a higher share of out-of-home portable products
for consumption by time-constrained consumers. The industry was generally recession-proof because
regardless of income, consumers had to eat and drink.

Food and beverage companies were considered safe for investors even during periods of economic
downturn. The companies fell into two categories: those involved in early to middle stages (e.g.,
Do

7
Lisa van der Pool, “Wired for Marketing: Carl Marci,” Boston Business Journal, March 8, 2010, accessed February 20,
2011, www.bizjournals.com/boston/stories/2010/03/08/story14.html.
8
“Our Approach,” Merchant Mechanics, accessed February 20, 2011, www.merchantmechanics.com/our_approach.html
(page discontinued).
9
“ZMET,” Olson Zaltman, accessed May 30, 2016, http://olsonzaltman.com/zmet.
10
All currency amounts are in US$ unless otherwise specified.
11
Tom Graves and Esther Y. Kwon, “Food and Non-Alcoholic Beverages Industry Report,” Standard & Poor’s, June 11,
2009, accessed January 26, 2011.

This document is authorized for educator review use only by MEHWISH ZAFAR AHMED, Iqra University until Nov 2024. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860
 Page 4 9B11A029

t
os
harvesting, milling, and processing of raw agricultural products) and those involved in late stages (e.g.,
manufacturing and packaging of consumer products). The first was a low-margin, low-value category
because of the commodity nature of its operations, which did not allow much room for differentiation. The
second was a high-margin, high-value business because it offered scope for brand building.

Companies in neither category had direct interaction with end-users. Their customers were other

rP
businesses (e.g., processors, packers, and retailers). The interaction was business-to-business (B2B) rather
than business-to-customer (B2C). The food and beverage companies spent an average of 15 per cent of
sales revenue every year on marketing and selling expenditures, but the industry was not known for
shopper research. The companies used a large part of their MR budgets on understanding how the end-
users consumed their products at home rather than on how they shopped for them at the store. However,
this trend was beginning to change. 12

yo
The food and beverage industry was regulated by federal and state or provincial governments. There were
laws governing different elements of the value chain. The industry was also characterized by consolidation.
The top 15 companies held nearly 50 per cent of the market share in the United States (see Exhibit 1).
There was fierce competition for market shares. Winning required four prerequisites. A company must:

• be present in categories that were large and growing;

• have a pool of managerial talent;
•
op
be cash flow positive; and,
• have brand equity.

Late-stage companies were under constant pressure from retailers to reduce prices and improve quality.
Global retailers had also consolidated and many of them were bigger than their vendors. For example,
Nestle SA, the largest consumer packaged-goods manufacturer in the world, had sales revenue of $108
billion in 2007 while Wal-Mart, the largest retailer, had sales revenues of $345 billion. Scale had given
tC

retailers negotiating power with brand manufacturers. Retailers were also launching private labels, which
were competing directly with global brands, giving the retailers another negotiating tool.

There were three ways to achieve growth in an industry in which domestic markets in many countries had
become mature: acquisition, expansion of distribution channels, and globalization. Unrelated
diversification was a risk that many companies grappled with in pursuit of growth. Some companies were
experimenting with establishing their own food service outlets, which were not only an independent
No

channel of reaching out to consumers but also a relatively low-cost medium to test-market new products.
Joint ventures (JVs) rather than acquisitions were the preferred mode of international expansion. With joint
ventures, risks were shared with partners who understood local markets.

COMPANY BACKGROUND

Campbell’s was a global manufacturer and marketer of foods and beverages. It had seven product
categories—soup, pasta, juice, cookies, crackers, and gravy—with brands such as Campbell’s, Swanson,
Do

Pace, Prego, Pepperidge Farm, Goldfish, and V8 Beverages. Several of Campbell’s brands occupied
market-leading positions in various geographies.

12
Lynda M. Applegate and Jamie J. Ladge, Campbell Soup Co.: Transforming for the 21st Century (Brighton, MA: Harvard
Business Publishing, 2003), 9. Available from Ivey Publishing, product no. 803119.

This document is authorized for educator review use only by MEHWISH ZAFAR AHMED, Iqra University until Nov 2024. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860
 Page 5 9B11A029

t
os
Headquartered in New Jersey, Campbell’s had manufacturing facilities in the United States, Australia,
Belgium, Canada, France, Germany, Indonesia, Malaysia, Mexico, the Netherlands, and Sweden. 13 The
company owned each facility except the one in Malaysia, which was leased. Campbell’s products were
available to consumers in 120 countries. The company had 19,400 employees in 2008.

Campbell’s had sales revenue of nearly $8 billion and net earnings of $1.1 billion in 2008. It had organized

rP
its activities along a combination of business segments and geographical regions. The largest business
segment was the U.S. soups, sauces, and beverages segment and the largest geographical region was the
United States (see Exhibit 2).

History

yo
The company was founded as the Joseph Campbell Preserve Company in 1869 by Joseph Campbell, a fruit
merchant, and Abram Anderson, a packer. 14 It sold canned tomatoes, vegetables, and minced meats locally,
door-to-door. The two partners had differences that soon surfaced: Campbell wanted to expand the product
range and grow faster while Anderson preferred to grow slowly and steadily with existing products. In
1876, Campbell bought out Anderson’s stake and hired a chief executive officer (CEO) before retiring in
1884.

Two years later, John T. Dorrance, the company’s chemist, developed a method for making condensed
op
soup. The process involved draining the water from the mixture so that the water could be re-added while
preparing the soup at the time of consumption. The lighter nature of the condensate not only helped reduce
costs on all fronts (production, packaging, shipping, and distribution) but also facilitated customer
convenience—a crucial factor in marketing. The process also allowed the company to expand the market
beyond New Jersey.
tC

In 1898, on Thanksgiving Day, one of the company’s executives was watching the annual Thanksgiving
Day college football match between two traditional rivals, Cornell University and University of
Pennsylvania. The executive was so impressed by the red and white uniforms worn by the winning team
from Cornell that he thought the colours would prove similarly successful on the company’s soup label.
His intuition was correct: the red and white label became a hit with consumers, who were buying 40,000
cases of condensed soup per week by 1905. 15
No

The company was renamed Campbell’s Soup Company in 1921. While focusing on canned soup as its core
business, the company diversified into new food categories by 1930. In 1954, Campbell’s floated an initial
public offering on the New York Stock Exchange. The company went through a series of divestments and
restructurings during the next few decades before becoming one of the best-performing food companies in
the United States.

During the 1990s, Campbell’s was generating earnings before interest and tax (EBIT) of over 20 per cent,
which was the best performance among its peers in the industry. Its cash flow of 15 per cent net sales was
also industry-leading. Compelled to hold on to its EBIT leadership, Campbell’s got into a spiral of
Do

restriction: it cut operational costs severely, significantly reduced marketing expenditures, and priced

13
Campbell’s Soup Company, Form 10-K, op. cit., 10.
14
“Our Story,” Campbell’s Soup Company, accessed May 30, 2016, www.campbellsoup.ca/en-ca/about-us/our-story.
15
Arthur A. Thompson, Jr. and A. J. Strickland, “Campbell Soup Company in 2000” in Strategic Management: Concepts and
Cases, 12th ed. (Boston, MA: McGraw-Hill Irwin, 2001): 423–453.

This document is authorized for educator review use only by MEHWISH ZAFAR AHMED, Iqra University until Nov 2024. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860
 Page 6 9B11A029

t
os
products higher. Together, these changes negatively impacted the company’s competitiveness. In 2002,
under a new CEO, the company refocused its efforts toward strengthening its core business of soups.

The company was spending 1.5 per cent of its sales revenues on R&D every year. The basic mandate of its
R&D facilities, located in New Jersey, was to launch new products and new variants of existing products
regularly.

rP
Strategic Goals

Campbell’s was driven by a mission of “building the world’s most extraordinary food company by
nourishing people’s lives everywhere, every day.” 16 Its business model was built on the premise of
maximizing shareholder value by making “winning in the workplace” a prerequisite to “winning in the

yo
marketplace.” 17 The success of this strategy was demonstrated by several awards the company won for
being among the best places to work and one of the most admired companies in the United States.

Campbell’s identified long-term potential in three core categories where it saw growth prospects: simple
meals, baked snacks, and healthy beverages. The simple meals category had about 90 sub-categories of
which soup was one, ranking in the middle in terms of dollar growth. 18

In 2008, the company identified seven strategic goals:

op
• Expanding the company’s icon brands within simple meals, baked snacks, and healthy
beverages.
• Trading consumers up to higher levels of satisfaction centering on wellness, quality, and
convenience.
• Making the company’s products more broadly available in existing and new markets.
tC

• Strengthening the company’s business through outside partnerships and acquisitions.

• Increasing margins by improving price realization and company-wide productivity.
• Improving overall organizational excellence, diversity, engagement, and innovation.
• Advancing a powerful commitment to sustainability and corporate social responsibility. 19

Marketing
No

Campbell’s owned over 4,100 trademark registrations in 160 countries; together, they represented an asset
bank for the company. A portfolio of well-recognized trademarks not only ensured customer retention but
enabled the company to launch new products or variants of existing products under its umbrella brands at
relatively low cost.

The company had built a strong market position in North American markets where its brands commanded
number one or number two positions in their respective categories. Campbell’s delivered its products in
various geographies, both domestic and international, through the company’s own sales force, aided by
Do

16
Douglas R. Conant, “A Letter from Our President and CEO” in Campbell’s Soup Company, 2011 Update of the Corporate
Social Responsibility Report, 5, accessed August 03, 2011, www.campbellcsr.com/_pdfs/Campbells_2011_CSR_Report.pdf.
17
Ibid.
18
Campbell’s Soup Company, Investor Update: Q3 Fiscal 2010 (conference call presentation slides),13, May 24, 2009),
accessed May 30, 2016, www.investor.campbellsoupcompany.com/phoenix.zhtml?c=88650&p=irol-EventDetails&EventId
=3096206.
19
Campbell’s Soup Company, Form 10-K, op. cit., 1.

This document is authorized for educator review use only by MEHWISH ZAFAR AHMED, Iqra University until Nov 2024. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860
 Page 7 9B11A029

t
os
well-established broker and distributor arrangements. Its principal retail outlets were grocery chains, mass
discounters, club stores, convenience stores, and drug stores.

The company had several competitors. In the U.S. market, these included Amy’s Kitchen, Inc. (with its
Amy’s brand), ConAgra Foods, Inc. (Healthy Choice, Hunt’s, and La Choy), Del Monte Foods, Inc. (Del
Monte, S&W, and Contadina), General Mills, Inc. (Betty Crocker, Progresso, and Pillsbury), the Hain

rP
Celestial Group, Inc. (Earth’s Best, Health Valley, Imagine, and Terra), Hormel Foods Corporation (Herb-
Ox, Hormel, Spam, and Valley Fresh), and Unilever (Knorr, Lipton, and Hellmann’s). Competitors H. J.
Heinz Company (Heinz) and Kraft Food Inc. (Oscar Mayer, Jell-O, and Planters), merged and became the
Kraft Heinz Company.

A further source of competition was the private labels being regularly launched by retailers. Wal-Mart—
Campbell’s largest customer, accounting for 16 per cent of net sales during 2008 and 15 per cent during

yo
2007—unveiled a private label food line called Great Value. The brand offered healthier and more
affordable food choices, incorporating lower percentages of sodium, sugars, and fats. In this way, Wal-
Mart placed Campbell’s in a unique situation of competing with its own leading customer for market share.

International Operations

In contrast to the home market in the United States, which was mature, international sales of the company’s
op
soups, sauces, and beverages had increased 15 per cent in 2008 and 12 per cent in 2007. In addition to
volume gains, a favourable currency exchange rate also contributed to growth in markets like Canada. 20

The company divested its businesses in Ireland and the United Kingdom in 2007. It was focusing instead
on emerging markets, such as China and Russia, for future growth.
tC

Soup Business

The soup market had three major categories: canned soup, dehydrated soup, and broth and bouillon.
Canned soup was the oldest and largest category. It was also a mature category where growth could be
maintained by increasing the price of a can regularly and encouraging consumers to switch toward higher-
quality products. Canned soup had two sub-categories: condensed soup (requiring water) and ready-to-
No

serve soup (poured from a can and heated).

Dehydrated soup was sold as a dry mix and as ramen. There was a shift toward consumption of ramen,
which was priced lower than a mix. The dehydrated soup category was growing at 3 per cent per annum—
higher than canned soup.

Broth and bouillon was the fastest-growing category. Its products were sold as cans of broth for quick
heating or cubes of bouillon concentrate to be dissolved in hot water.
Do

Campbell’s soup business included many low-calorie offerings. More than 180 products—over 45 per cent
of the portfolio—contained 100 calories or less per serving. Nearly one-third of the company’s soup

20
Campbell’s Soup Company, Form 10-K, op. cit., 22.

This document is authorized for educator review use only by MEHWISH ZAFAR AHMED, Iqra University until Nov 2024. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860
 Page 8 9B11A029

t
os
products had half a cup of vegetables or more per serving. The increasing preference of consumers for
healthy food products was an opportunity for the company. 21

Another opportunity was the notoriously fast-growing consumer market in Brazil, India, China, and
Russia. The company was particularly concentrating on Russia (where soup consumption was 32 billion
servings per annum) and China (which was the world’s largest soup market by volume with 320 billion

rP
servings annually). In contrast, the U.S. soup market was only 14 billion servings per annum. 22

CONSUMER INSIGHTS FROM INNOVATIVE MARKETING RESEARCH TECHNIQUES

Historically, the world of MR revolved around finding answers to questions such as: Does the customer
notice our product? Does the customer like our product? Does the customer remember our product? Does

yo
the customer care about our product? These questions were fundamental. They were also troubling because
the answers were often uncertain. Marketing researchers were not always sure that their business decisions
were backed by accurate, reliable, and actionable knowledge about consumer behaviour.

For many decades, market researchers used three methodologies to help them with answers: television
viewership ratings, focus groups, and consumer surveys. The common feature of these methodologies was
that they were self-reported and self-articulated.
op
Viewership Ratings

The objective of television ratings was to determine the number of people viewing product commercials
aired during a certain period. Rating agencies like the Nielsen Corporation used tools like the People Meter
to estimate audience size and demographic appeal of a particular television episode. The People Meter was
tC

an electronic device placed near the television set in randomly selected households. Each member of the
household was assigned a personal viewing button they had to turn on.

The main limitation of the television rating system was that the findings were being extrapolated from a
small pool of about 5,000 households to an infinitely larger television audience size.
No

Surveys and Focus Groups

Surveys: Surveys usually formed the basis of primary data and facilitated the collection of a great deal of
information about an individual respondent. Factors pertaining to the target audience—such as its size,
mix, and age group—could be customized to certain requirements. Effective implementation required
considerable judgment both in the choice of the survey method (personal, telephonic, web-based, or drop-
off) and in survey design (in terms of specific questions). An understanding of the errors that could affect
the interactions and their interpretation was also crucial.
Do

Focus Groups: Each participant in a group of five to nine (and sometimes more) persons was encouraged
to express views on a topic and also elaborate on or respond to the views of others. The mandate was
21
Campbell’s Soup Company, 2010 Corporate Social Responsibility Report, 33, accessed May 30, 2016,
www.campbellcsr.com/_pdfs/Campbells_2010_CSR_Report.pdf.
22
Campbell Outlines Entry Strategy and Product Plans for Russia and China, Campbell’s Soup Press Release, July 7, 2009,
http://investor.campbellsoupcompany.com/phoenix.zhtml?c=88650&p=irol-newsArticle_Print&ID=1023564, accessed August
5, 2016.

This document is authorized for educator review use only by MEHWISH ZAFAR AHMED, Iqra University until Nov 2024. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860
 Page 9 9B11A029

t
os
determined in advance through what was known as “briefing.” The process of discussion was unstructured
but the course was often steered by the moderator, who played an active role. Spontaneity and candour
were the hallmarks of a focus group. Group dynamics came into play and the security of being in a crowd
encouraged everyone to speak their minds. Participants went through a debriefing at the end.

The purpose of focus groups and consumer surveys was to ascertain the experience of participants with a

rP
particular product. Participants were chosen for complying with pre-determined eligibility criteria. Both
focus groups and surveys had limitations. One or more assertive and opinionated individual could, often
inadvertently, influence the outcomes. The conscious mind of an individual had trouble recapitulating what
the subconscious mind had registered at the point of contact with the product; it also had difficulty in
translating that registration into specific language that described, accurately, its experience with the
product in the past.

yo
The major limitation of both focus groups and surveys was that what the brain of the consumer actually
perceived and recalled was not the same as what the consumer said they perceived and recalled. The
process of tapping into a reservoir of information and translating it into a verbal response often caused the
brain to alter its original perception.

Elicitation
op
Consisting of a one-on-one interview, elicitation was used to trigger creative insights and identify key
product benefits as perceived by an individual consumer. The process deployed one of three techniques:
laddering (in which there was not only a starting point, a sequence, and a conclusion but also a gradual
progression by which respondents moved from talking about the product to talking about themselves);
hidden-issue questioning (in which the focus was on deeply-felt personal concerns with the product); and
symbolic analysis (in which the respondent tried to analyze the symbolic meaning of a product by
tC

comparing it to its substitutes). Elicitation could be personal or telephonic.23

Biometrics

Biometrics consisted of psychophysical methods, such as galvanic skin response, heart rate, hormone level,
respiration rate, eye movement, facial muscle movement, and posture. It measured physiological responses
No

in the body as a whole (not just in the brain) to the stimuli provided by the senses. The limitation of
biometrics was that its metrics were lag indicators (measuring aggregate outcomes at the organizational
level) rather than lead indicators (measuring individual outcomes at the process level). In addition,
biometrics could only tell if the consumer responded to a stimulus; they could not tell whether the
consumer liked or disliked that stimulus.

Consumer Neuroscience
Do

The origins of consumer neuroscience lay in neuroscience, which investigated issues such as memory,
learning, perception, cognition, and neural disorders such as Alzheimer’s disease, autism, and paraplegia.
Neuroscientists used a number of specialized tools and methods to investigate the brain, but two major
tools were increasingly being used to understand functionality in the brain: EEG, which used sensors

23
David A. Aaker, V. Kumar, George S. Day, and Robert Leone, Marketing Research, 10th ed. (Hoboken, NJ: Wiley, 2010):
196–197.

This document is authorized for educator review use only by MEHWISH ZAFAR AHMED, Iqra University until Nov 2024. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860
 Page 10 9B11A029

t
os
placed near the scalp to capture the electrical signals produced by the brain, and fMRI, which measured
neural activity by taking scans of the brain at regular intervals.

Progressive refinements in the tools of neuroscience during the late 1990s led to the development of two
new sub-fields of research: neuroeconomics (which addressed behavioural issues concerning risk and
reward) and consumer neuroscience (which addressed issues of consumer choice and reactions to

rP
packaging and advertising). The latter, which some called neuromarketing, appealed to marketing
researchers for a number of reasons.

The human brain was known to be a network of about 100 billion individual cells called neurons. Neurons
were the building blocks of the central nervous system. Each neuron was electrically charged. Consisting
of three components (cell body, dendrites, and an axon), neurons were designed to transmit information to
other neurons through contact points called synapses. The neurons also communicated with the cells of
various muscles and glands in the human body.

yo
When a neuron transmitted or received electrical impulses to or from another neuron, the cell membrane
was subject to voltage changes. The triggers caused a reversal in the electrical potential when the neuron
switched from an internal negative charge to a positive charge; this change was called action potential. The
charge passed along the cell membrane to the axon at speeds of up to 100 miles per hour. At that speed, a
neuron could fire impulses up to about 1,000 times per second.
op
When the charge reached the end of an axon, the voltage changes triggered the release of
neurotransmitters, which were the brain’s chemical messengers. Released by nerve terminals,
neurotransmitters were bound to receptors on the surface of the target cell. These receptors, in turn, acted
as on-and-off switches for the next cell. Tracking these changes enabled researchers to accurately measure
the responses of the human brain to a particular stimulus. 24

There was merit to finding a more direct way to measure how the brain would respond to particular stimuli
tC

rather than relying on self-reported data. Consumer neuroscience offered researchers new tools, providing
a window into the centre of human behaviour to try to create a more accurate and predictive view of how
consumers processed stimuli and made choices. If the researchers could crack the code of getting a product
or service into the conscious zone of the consumer’s mind, they would be achieving a major breakthrough
in marketing. They would also likely be eliminating the uncertainties that were characteristic of self-
reported data.
No

Consumer neuroscience used the same tools as neuroscience—EEG and fMRI. Over many years of being
in use, the tools had gained credibility among researchers in neuroscience and psychology.

EEG was a non-invasive technology that used sensors to capture the minute electrical signals produced by
a particular activity of the brain (see Exhibit 3). Higher levels of electrical signals were a clear indication
of increased neural activity. Neural activity patterns could be mapped for analysis to determine which brain
areas were activated when exposed to certain stimuli.

fMRI was also non-invasive. It measured the increase in oxygen levels in the flow of blood within the
Do

brain. When neurological activity increased, oxygen-bearing blood in the brain also increased to fuel that
activity. fMRI scans picked up that increase, providing some pointers to the response. Experimental
subjects were placed on a sliding bed inside a large magnetic bore and exposed to stimuli (such as pictures
of products) while periodic scans were taken of the brain region (see Exhibit 4).

24
A. K. Pradeep, “The Brain 101” in The Buying Brain: Secrets for Selling to the Subconscious Mind (Hoboken, NJ: Wiley,
2010): 33–40.

This document is authorized for educator review use only by MEHWISH ZAFAR AHMED, Iqra University until Nov 2024. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860
 Page 11 9B11A029

t
os
fMRI had some challenges in implementation. The subjects could not carry a magnetic device (like a
pacemaker). They could feel claustrophobic and had to lie still for long periods of time. At a cost of
upwards of $400 per scan hour per subject, fMRI was also costlier than EEG.

However, both EEG and fMRI offered significant advantages over traditional research methods. They did
not rely on people to say how they felt or what they thought. Instead, the technologies measured how the

rP
brain was responding. Researchers needed to be familiar with advanced statistical analysis in addition to
knowledge of neuroanatomy in order to interpret results accurately.

ETHICAL ISSUES

As a relatively new discipline, consumer neuroscience was coping with issues of public acceptance. Some
saw it as an opportunity to gain valuable insights into the idiosyncrasies of human behaviour. However,

yo
others questioned the ethical basis of using neuroscience tools as a way of helping companies sell more
products.

One group that expressed concern was Commercial Alert, a non-profit consumer advocacy organization
founded by consumer watchdog and former U.S. Green Party presidential candidate Ralph Nader.
Commercial Alert had taken a stand that the human mind was too important “to be for sale” and urged the
federal government to investigate specific areas of research like the use of fMRI for marketing rather than
medical purposes. 25
op
There were also some ethical concerns regarding the labelling of food products by manufacturing
companies. Traditionally, consumers were making their food choices based on price, convenience, and
taste. The 1980s was characterized in the United States by a low-fat movement, making nutrition an
additional basis for food choices. The government made the display of nutritional labels on food products
mandatory for manufacturers. But there was some concern that while manufacturers complied with the law
tC

officially, some were experimenting outside the law with technicalities. For example, a label stating that
that the product was 99 per cent fat free would be true when fat content was viewed as a percentage of the
weight of the product. But it would not be so when fat content was viewed as a percentage of calories.
There was also controversy over food labels like Health Check and Whole Grain, which were self-
prescribed in places such as Canada.

ISSUES FACING BOB WOODARD IN SEPTEMBER 2008

No

• How could Campbell’s best understand the mind of their consumers?

• What was the cost of failure in changing the iconic Campbell’s soup label (a “what if” scenario)?
• How should Campbell’s handle the inherent risks that the process of both the study and the launch of a
new label involved?
• Campbell’s had decided to use elicitation and biometrics in their marketing research. Should it also
invest in using EEG or fMRI to validate their MR efforts?
• Should Campbell’s apply the findings across all categories of soups simultaneously? Or should it run a
Do

pilot by limiting the changes in labels to a few categories?

• Could the new label design be just as easily conceptualized by a designer with good instincts?

25
Gary Ruskin for Commercial Alert, “Commercial Alert Asks Feds to Investigate Neuromarketing Research at Emory
University,” press release, December 17, 2003, accessed May 30, 2016, www.commondreams.org/scriptfiles/news2003/
1217-04.htm.

This document is authorized for educator review use only by MEHWISH ZAFAR AHMED, Iqra University until Nov 2024. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860
 Page 12 9B11A029

t
EXHIBIT 1: TOP 15 U.S. FOOD & BEVERAGE COMPANIES

os
Rank Company 2007 Revenues
(US$ millions)
1 PepsiCo Inc. 39,474
2 Kraft Foods 37,241

rP
3 The Coca-Cola Company 28,857
4 Tyson Foods Inc. 26,862
5 Coca-Cola Enterprises 20,936
6 General Mills 13,652
7 Pepsi Bottling Group 13,591
8 Sara Lee 13,212

yo
9 Dean Foods 11,822
10 Kellogg’s 11,776
11 ConAgra Foods 11,606
12 Smithfield Foods Inc. 11,351
13 HJ Heinz 10,071
14 Campbell’s Soup Company 7,998
15 Pilgrim’s Pride 5,236
op
Source: Tom Graves and Esther Y. Kwon, “Food and Non-Alcoholic Beverages Industry Report,” Standard & Poor’s,
December 17, 2009, accessed May 10, 2011.

EXHIBIT 2: FINANCIALS
tC

Year Ending August (in US$ millions) 2008 2007 2006

Net sales
Less: $ 7,998 $ 7,385 $ 6,894
• Cost of goods sold
4,827 4,384 4,100
• Marketing and selling expenses
1,162 1,106 1,033
• Administrative expenses
No

608 571 552

• Research and development expenses
115 111 103
• Other expenses (income) 13 (30) 9
• Restructuring charges 175 – –
Total costs and expenses 6,900 6,142 5,797
Earnings before interest and taxes (EBIT) 1,098 1,243 1,097
Less: interest expenses 159 144 150
Earnings before taxes 939 1,099 947
Less: taxes on earnings 268 307 227
Add: earnings from discontinued 494 62 46
Do

operations 1,165 854 766

Net earnings

This document is authorized for educator review use only by MEHWISH ZAFAR AHMED, Iqra University until Nov 2024. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860
 Page 13 9B11A029

t
EXHIBIT 2 (CONTINUED)

os
$ % $ % $ %
Business segment-wise net sales
• U.S. soups, sauces and beverages 3,674 3,495 3,265
45.9 47.3 47.4
• Baking and snacking 2,058 1,850 1,747
25.8 25.1 25.3

rP
• International soups, sauces and 1,610 1,402 1,257
20.1 19.0 18.2
beverages 656 638 625
8.2 8.6 9.1
• North America food service 7,998 7,385 6,894

Business segment-wise EBIT

• U.S. soups, sauces and beverages 891 81.1 861 69.3 814 74.2
• Baking and snacking 120 10.9 238 19.1 185 16.9
• International soups, sauces and 179 16.3 168 13.5 144 13.1

yo
beverages 40 3.6 78 6.2 59 5.4
• North America foodservice (132) (12.0) (102) (8.2) (105) (9.6)
• Corporate 1,098 1,243 1,097

Geographic area-wise sales

5,448 68.1 5,133 4,834
• United States 69.5 70.1
770 9.8 680 597
• Europe 9.2 8.6
1,074 13.3 965 900
• Australia/Asia Pacific 13.1 13.1
op
706 8.8 607 563
• Other countries 7,998 7,385
8.2
6,894
8.2

Geographic area-wise EBIT

• United States 1,080 98.3 1,077 86.6 972 88.6
• Europe 42 3.8 58 4.6 44 4.0
• Australia/Asia Pacific (17) (1.5) 88 7.1 82 7.5
• Other countries 125 11.3 122 9.8 104 9.4
tC

• Corporate (132) (12.0) (102) (8.2) (105) (9.5)

1,098 1,243 1,097

Source: Campbell’s Soup Company, Form 10-K: For the Fiscal Year Ended August 3, 2008, 21, accessed May 10, 2011,
http://investor.campbellsoupcompany.com.
No
Do

This document is authorized for educator review use only by MEHWISH ZAFAR AHMED, Iqra University until Nov 2024. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860
 Page 14 9B11A029

t
EXHIBIT 3: EEG ELECTRODE CAP

os
rP
Source: Photograph by Thuglas at English yo
http://commons.wikimedia.org/wiki/File:EEG_cap.jpg.
Wikipedia (public domain), accessed May 10, 2011,
op
EXHIBIT 4: MRI 3T SCANNER AT
UNIVERSITY OF WESTERN ONTARIO’S ROBARTS IMAGING CENTER
tC
No
Do

Source: Photograph courtesy of Schulich School of Medicine & Dentistry, University of Western Ontario.

This document is authorized for educator review use only by MEHWISH ZAFAR AHMED, Iqra University until Nov 2024. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860