News; Mar 5, 2008 CET

The consumer is king

Consumer-driven product development and strategic branding are the routes to organic growth. For this reason, Swedish Match focuses intently on the consumer.
Competition for consumers is increasing. To introduce new products and retain consumer interest in existing products, continuous product development is required. Accordingly, active product development is an important part of Swedish Match’s strategy for organic growth.

Kenneth Arnström, Vice President International Marketing Smokefree at Swedish Match, works on global strategies for the Group's smokefree products. He believes that consumer insight is becoming increasingly important, in part because consumers are becoming more international than national in the wake of globalization.

"Today, a consumer in New York has more in common with consumers in such cities as Paris, Stockholm or Bangkok than with people living in the provinces of the same country. This facilitates communication with new consumers in an international market for our local strong brands, such as General and Red Man. In this work, consumer insight is key," says Arnström.

The path to sound consumer insight is through consumer data, trend data, surveys, analyses of sales trends and, possibly most important of all, the long and extensive experience of employees.

"In order to grow organically, we have to listen to the consumers," says Anna Neiås, Marketing Director at Swedish Match North Europe Division.

"The combination of extensive knowledge, long experience and systematic work provides us with an opportunity to anticipate the future needs of consumers. We work proactively and must be the first to develop new offerings for new consumer categories."

Consumers have become increasingly complex and there is an enormous range of products and brands for them to choose from. For Swedish Match, having distinct offerings and the most attractive brands in each segment is crucial.

Being able to predict trends, also called trend monitoring, is a useful tool for working on consumer insight. Trend monitoring provides concrete business value by enabling Swedish Match to develop products that optimally satisfy consumers´ needs.

"Our Trend Management System will assist us in defining a number of trends and dividing them into various categories depending on the timelines for the trends. Based on the trends that we consider relevant, we will develop concepts, which will then be put into practice," says Maria Nicholl, Manager Market Research & Analysis at Swedish Match North Europe Division.

Trend monitoring provides preparedness for future developments in the market. When the premium and luxury trends in the Scandinavian snus market broke through, meaning when consumers started demanding more refined and exclusive snus, Swedish Match already had such products as General Onyx, premium, and Kardus, luxury, ready for launching.

In response to the global upswing in poker, Swedish Match launched the La Paz Poker cigar in the European market last autumn. The cigar has become so successful that distribution has been expanded, and the previously limited edition of the La Paz Poker cigars is now on its way to becoming a permanent variety in the range.

The newly launched snus product, Vertigo, is another example of how Swedish Match translated consumer needs into an entirely new product for a growing target group.

"Vertigo is Swedish Match’s first snus product for women, developed by women," says Maria Nicholl.

Consumer research showed that increasing numbers of women were using snus, but interaction with consumers indicated that none of the offerings were suitable for them. They like snus but were not completely satisfied with the products on the market because of the male image.

"From the start, female consumers were involved in designing the concept for Vertigo. They have participated in the entire process up to the launching. We also made sure that we would capitalize on the experience of our female employees in this project," says Maria Nicholl.

All product development is conducted on a cross-functional basis. This means that employees from different parts of the organization work together on projects: research, product development, marketing, production and sales. A cross-functional forum also exists for monitoring the business environment.

"This enables us to rapidly adapt to our business environment, for example, if a trend reaches the market earlier than we anticipated. Within the Group, we also assist each other and share our insights between the various markets. This helps us to predict what is about to happen globally," says Anna Neiås.

In the US, Swedish Match is now launching the new snus Triumph, another product in which consumer insight has guided and contributed at all stages of the development process.

Research indicated that smokers in the US were adopting smokefree usage in large numbers, even though smokefree tobacco in North America has a rather negative image among smokers. A major driver of this dynamic was smokers using smokefree products on an occasional basis, due to extended bans on smoking in public places.

"These smokers had no optimal smokefree alternative. Triumph was designed to fill a gap, where existing products either gave insufficient satisfaction or were extremely heavy on negative image attributes," says Ed Gee, Director Marketing Research at Swedish Match North America Division.

"The development of Triumph was guided by a fundamental understanding of who the potential consumer was, what that consumer wanted, and what proposition would best fill those needs. Initial feedback from the trade is that Triumph is exceeding expectations in its test market."