Campbell’s IQ Meals

Case Overview
Campbell Soup Company faced numerous challenges in the development of their new product line. The
key challenge was the high cost of the product that prevented many customers from purchasing the new
product. While the weekly sample pack was costing only $80, the price of the recommended program that
lasted ten weeks was $700, and this discouraged low-income earners who after being told the high price
would hang up. In addition, the company’s sponsored lunch which took place at the Columbus office of
the American Heart Association to promote the benefit of the new product was a total flop, as it did not
impress the numerous dieticians in attendance. Soon after, the executives of Campbell were skeptical
about the IQ Meals. Consequently, consultants were invited to evaluate the viability of the project,
leading to drastic cuts in IQ’s budget. In May 1997, the company’s sales in Ohio were minimal. The
company’s problems were far from over; most of the patients who had stuck with the IQ Meals since its
launch complained of being tired of consuming the same meals repeatedly, despite their health benefits.
Problem Analysis

 The product life cycle theory

One major reason behind many new conceptual products’ failure is the negligence of the theory product
life cycle which results in the inability to market a new product successfully in the beginning stage. As we
know from the product life cycle, a typical product or service could begin with its introduction to the
marketing, growth, maturity to its decline or reduce in demand in the market. Together with the different
stage is the varied performance of sale. In another word, it takes time for the market to generate the
sufficient market base to support the profit-making sale, for a new product to enter growth or maturity
stages. As in the case of the Campbell’s IQ Meals, the market in the 1990s in the US should have the
potential to accept the foods with medical purposes but market potential is not equivalent with sufficient
and mature market base to support project making new products. Therefore, one probable reason behind
the unsuccessfulness of the new product line with medical benefit was the company / management’s
negligence over the new product’s taking time to mature in the actual market.

 Inability to meet continual customer needs.

From the fact that many of the customers who had enjoyed the medical benefits from the new product line
finally turn away from the company’s offering because of being tired of the same nine meals repeating
repeatedly. Even from our daily life experience we can learn that it is overdemanding that a normal
person would like to have different taste of food over time though his or her choices may be restricted
because of having certain kind of diseases. Therefore, the inability to perceive the demand information
from the customers as well as researching the customer behaviors and preference certainly contribute to
the market failure of the new product line.

 Inappropriate pricing strategy.

With one week sample pack of the new product line priced at US $80 and recommended plan priced US
$700, another major reason behind the failure of the new product line is the inappropriate pricing strategy.
The rationalization is like this: assume that the company had expected great business potential from the
new product line, then it must target at the large population which concern their health a lot (example. the
large population of diabetes patients); and by targeting such large populations the company had to price
their products at reasonable level which could be accepted by most of the families. But with the fact that
many of the ordinary families would find the pricing level of the new product line costly or too high, the
company obviously was adopting a seriously wrong pricing strategy to pricing the product too high
though the company had several reasons to add various cost into the prices of the final products.

Recommendations

 Product line variation in features such as taste

From the lesson that many of the customers who had enjoyed the medical benefits from the new product
line finally turn away from the company’s offering because of being tired of the same nine meals
repeating repeatedly, one main strategy that could have been adopted by the management of the company
is that the company should timely differentiate the product offering by providing different provision of
product feature combinations. To be detailed, different tastes of the same product offering could be added
into the product line to increase the customer choices and keep the product attractive to the existing
customers.

 Adjusting the product and pricing strategies.

With the conclusion that by targeting such large populations the company had to price their products at
reasonable level, but the pricing level of the new product line was found to be too high for most families,
the company should have adopted consistent product and pricing strategy that at any time are in
accordance with the product positioning. With the clearly positioning at the common families, the
products should be developed and manufactured at a controlled cost level by adopting relevant product
strategies such as packing design and the products should be priced competitively compared to the similar
product offering to ensure that its price strategy would include its targeted customer groups.

Conclusion
From the analysis above we can see that the company started with an excellent business
opportunity but due to some strategic mistakes, the product line with medical benefits finally
turned out to be marketing / business failure which should had been avoided by adopting some
strategic changes and some of these changes are mentioned above.