Business Strategies
Incremental Steps to Death

In the interest of cost reductions, most packaged goods manufacturers reformulate their products, then test them against the current product.  As long as the result is statistically imperceptible, the new formula is introduced.  Unfortunately, over time, this allows the product to drift further and further from the attributes that at least partially drove success, and opens up a market opportunity to new competitors.  A reformulated product shouldn’t just be tested against the current version, but against earlier versions too to make sure your brand doesn’t die by a thousand cuts.

The transformation of the US yogurt market toward Greek yogurts is a prime example.  Thirty years ago, yogurts were pretty simple products:  plain yogurt with a layer of fruit to stir in. Unfortunately, not many mainstream consumers made it part of their daily routine.   Over the years, Yoplait and Dannon extended and reformulated their products to make them sweeter and more appealing to the American palate, while reducing costs too.  Eventually the ingredient list did not sound healthy, even if they tasted fine.  Then Hamdi Ulukaya of Chobani yogurt moved to the US and recognized the opportunity for “real” yogurt.  Capitalizing on the protein trend, Chobani introduced the strained Greek yogurt with cleaner ingredients, much like original yogurts but with more protein and a higher price.  They’ve since extended the brand, following the Yoplait/Dannon model of making them sweeter and more dessert-like.  More recently, awareness of the sugars in even Greek yogurt and aversion to dairy products has opened new opportunities for yogurt makers.