Assignment No.1

Case:TastykakeSen sables

Forgenerations,Tastykakeshavebeenoneofthemostpopularsnackfoodsin and around the Philadelphia area. The local Tasty Baking Co., founded about 90 yearsago,turnsoutaboutfive millionsnackcakes,pies,cookies,anddoughnuts each day. Sales, however, had been stagnant in recent years. The top sales year was 2001, when Tasty Baking hit $166 million in sales, netting $6 million profit. About this time, new CEO Charles Pizzi announced to shareholders that in 2004, aninnovativelineextensionwouldbelaunched.Whilethiswouldnotbetheonly company action designed to boost performance, the new line would certainly be an important step.

In the snack business,the previous decade had seen a major trend toward healthier products. Nabisco SnackWell'slowfat cakes and cookies were a promi- nent example from the early 1990s. Even Tastykake had some low-fat products out at this time. By the late 1990s, a newer diet-conscious trend, low-carb prod- ucts,wasemerging,duetothepopularityofthelow-carbohydrateAtkinsDiet. By 2003, dozens of food companies had launched about 600 low-carb products onto the store shelves, and the healthy, low-carb product trend showed no signs of abating. It seemed logical to all concerned that Tasty Baking's new line would bealow-carbversionofTastykakes.Asnotedbychiefmarketingofficer Vince Melchiorre, "It was a wave, and we wanted to ride it." If successful, the low-carb Tastykakecouldbethefirst ofseveralnewlines,targetedatavarietyofhealth concerns.

KarenSchutzhadabout20yearsofmarketingexperienceatCampbellSoupbe- fore becoming a marketing manager at Tastykake. In January 2004, she was given the task of making the low-carb Tastykake a reality. The deadline was short: The product was to be out by fall. From her Campbell days, Schutz was aware of the challenge.Anewconsumerpackagedgoodofthistypemightrequireayearto18 monthsforproductformulation,assessingshelflife,markettesting,andadvertis- ing planning. As an added constraint, the new line would have to be produced using existing equipment and personnel.

Bymid-January,JohnSawicki,TastyBaking'smanagerofresearch,obtainedthe first trialbatchesoflow-carbcookiesanddoughnutsfromaningredientsupplier andarrangedforaprivatetastingbyTastyBakingmanagers,includingSchutz,at company headquarters. Schutz and her colleagues liked the taste (she feared her doughnutwouldtastelike"hamsterfood")andagreedthatthissupplier'smixeswereagoodstartingpoint.Atthistimeacodenamewasselectedforthestill- secret low-carb project: Greta (for "Greta Carbo").

Sawickiandhisteambegandevelopmentofalow-carbchocolatecookiebaron January 27, 2004. A sugar alcohol called maltitol would be the sugar substitute, andsomeflourinthemixwouldbereplacedbymodifiedcornstarch.Meanwhile, Melchiorre asked Schutz if it would be possible to make Greta sugar-free. He explained,"IneededtoaddresstheissueofpeoplewhohadgrownuponTastykakes who can't eat it any more. It was good for business, and good for them." Schutz knewthiswouldbedifficult, assugarisinmilk,berries,andotheringredients. She e-mailed Sawicki to see if this were feasible. Sawicki's response: "Possibly. It probably depends on the product. Should we be targeting this?"

Things were soon going to get exciting for Schutz and Sawicki. In February, seniormanagementrescheduledGreta'slaunchtolateJunethreemonthsearlier than expected! But early research results were promising from a low-carb view- point. Early batches of low-carb chocolate cookie bars contained only seven net carbs(thestatisticusedbylow-carbdieters),comparabletoAtkinslow-carbcook- ies.Sawickibroughtthese,aswellaschocolatecookiesandblueberrymuffins, to a taste test attended by Schutz and her co-workers. They liked the taste, but otherdetailslikeproductshapeandtoppingsstillhadtobedecidedon.Schutzre- mindedtheteamthat"peopleeatwiththeireyes,"emphasizingthattheproducts had to look good.

Shealsonotedthatthelow-carbcookies,muffins,anddoughnutswereplanned forpreviewattheupcomingMarch10boardmeeting.Consideringthatthedough- nutmixwasn'tready,theblueberriessankinthemuffins, andthecookiebars neededicing,thiswouldbedifficult. Somehow,Sawickipulleditalltogetherfor the meeting, even arranging the snacks on serving trays, and the board thanked Schutz and the Greta team for having come so far so fast.

Later that day, Schutz was speaking to a supplier, who happened to mention thathecouldnoteatproductswithmaltitol,becauseitgavehimsideeffectsinthe lower intestine. As it turned out, some people are more sensitive to maltitol. She spoketoMelchiorrethenextmorning.Heneedednoconvincingthatmaltitollevels had to be decreased: He had the same discomfort. In addition, two days after the board meeting, the FDA announced they were going to monitor the usage of termslike"carbfree"or"reducedcarb"onproductlabeling;violatingcompanies would face sanctions.

Schutz and Sawicki thought fast to solve these problems. A new cookie with polydextrose and glycerin (a sugar alcohol with fewer side effects than maltitol) was in preparation. Portion sizes were also reduced. To avoid the FDA low-carb regulatory web, Schutz decided to position Greta as a sugar-free product, with low-carb being a secondary attribute. The product was also about to get a name: "Sensables" evoked diet moderation and could potentially be reused on other snacks with different health benefits.

By May 12, Sensables were introduced to Tasty Baking's district sales managers.Theteamwasunabletoworkoutproblemswiththeblueberrymuffins (too muchsugarintheblueberries)andreplacedthemwithorangeandchocolate-chip fingercakes.Therestofthelineupwasplainandchocolatedoughnuts,andthe chocolateandchocolate-chipcookiebars.Schutzandherteamhadtriedoutthere- formulatedline,withnointestinalsideeffects.Inherpresentation,Schutzstressed the Sensables message: no sugar, low-carb, and portion control, and announced that the product would hit the shelves on July 15. At the end of her presentation, somethinghappenedthatisrareforadistrictsalesmanagermeeting:Shereceived a standing ovation. Jim Roche, a Pennsylvania district sales manager, said, "This is a winner."

AfterSensableswereintroducedtothesalesforce,consumertastetestingwasundertaken.AccordingtoSchutz,afewoftheproductsweremodestly"tweaked":the chocolatechipfinger cakesandcookiebarsreceivedmorechips,andmoreorange flavorwasaddedtoorangefingercakes.Thechocolatedoughnutwasdropped, as customers didn't like its taste or its appearance. The consumer testing delayed thelaunchbyafewweeks.Oncethefinal adjustmentsweremadetotheproduct line,SensableswerelaunchedinandaroundPhiladelphiaonAugust10,2004.The launchreceivedcoverageinPhiladelphiaareanewspapersandonnewsradio.

Question:

1. How does the Sensables process compare with the new products process in this Case?
2. Would you question anything Tastykake did?
3. Do you think the Sensables line will succeed? Why or why not?