Can you put my name on that M&M?

TakeAway: Fostering innovation for a decades old candy isn’t easy.

To come up with some new ideas, Mars implemented an innovation initiative.

The result – a new business unit making customized M&Ms.

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Excerpted from Bloomberg Businessweek, “How Mars Built a Business,” by Jessie Scanlon, December 28, 2009

“There is little reason for an individual to have a computer in their home,” Ken Olsen, the president and founder of the Digital Equipment, famously said in 1977. As Olsen’s quote suggests, predicting demand for new, innovative products and services can be difficult, in part because many of the traditional methods of market testing—using historical data to forecast sales, for instance, or asking customers in a focus group to compare a new product with an existing, competing one—aren’t well-suited to the innovation process

This was the dilemma that Dan Michael, then R&D director for Mars‘ M&Ms brand, faced in 2000. He and his research team at the advanced R&D lab in Hackettstown, N.J., had an idea: to make customizable M&Ms printed with the word or image of a customer’s choosing. …

Michael and team needed to convince management there could be a market for customized candies. To do that, they had to reinvent the development process—and the role of marketing within it.

Mars had recently launched an innovation initiative called Pioneer Week. Select research teams were given a modest budget and 90 days to build a trial production line, after which the new product would be made available to Mars’ 65,000 employees. “The teams were allowed to bypass some of the testing normally associated with product development,” says Marc Meyer, a professor at Northeastern University’s College of Business in Boston, who has studied the company.

The internal trial provided critical marketing feedback: The four-pound minimum order size was too big, and customers wanted colored candy and “party favor” packaging options.

Setting the price was another challenge. For the internal launch, the team chose $12 a pound, $4 more than the retail price for standard M&Ms. Since then, according to Cass, the price has changed four or five times.

Ready to take it to the next level, the team began selling My M&Ms, as the custom candies are now known, to the public through a small link from the main M&M Web site in March 2004. Without any marketing blitz, sales took off. That’s also when the team began to do more serious customer research. …

In 2006, Mars’ My M&Ms experiment became a formal business unit called Mars Direct. …

Edit by DMG

 

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Full Article
http://www.businessweek.com/innovate/content/dec2009/id20091217_120646.htm

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