King's Hawaiian Case Study Notes

INTRODUCTION TO KING'S HAWAIIAN CASE STUDY

  • Authors: Sheri Lambert and Sara Honovich

  • Purpose: To provide material for class discussion.

  • Disclaimer: The case does not illustrate effective or ineffective handling of managerial situations. Certain names and identifying information may be disguised for confidentiality.

  • Copyright Information: Material reproduction requires permission from the copyright holder (Ivey Publishing).

BACKGROUND ON KING'S HAWAIIAN BAKERY

  • Company Overview:

    • In October 2018, Troy Figgins became head of consumer insights at King’s Hawaiian Bakery, Torrance, California.

    • Company history: Founded by Robert Taira in the 1950s, initially as Robert’s Bakery in Hawaii.

    • Expanded to mainland U.S. in 1977 with a facility in Torrance, California.

    • King’s Hawaiian bread categorized under consumer packaged goods (CPG) within the bread industry.

  • Company Growth:

    • Experienced steady growth for over a decade.

    • Sought to establish a strong market research function to better identify consumer needs.

    • Past product risks led to suboptimal performance due to lack of data-driven insights.

FIGGINS' ROLE AND INSIGHTS DEVELOPMENT

  • Troy Figgins' Background:

    • Prior experience with PepsiCo as marketing director of transformation innovation for Frito-Lay.

    • Faced challenges of being a performance-driven public company with limited luxury for experimentation.

  • Expectations from Mark Taira:

    • Taira emphasized the need for better insights as the company expanded into new categories and retail areas.

    • Clear expectations set for insights development:

    1. Frequent, agile research.

    2. Quick, directional understanding.

    3. Cost-effective do-it-yourself (DIY) insights.

    4. Emphasis on speed rather than 100% accuracy in product research.

UNDERSTANDING CONSUMER INSIGHTS

  • Definitions:

    • Consumer Insights: Findings from data analysis aimed at understanding consumer behavior and preferences.

    • Market Research: Process of collecting and analyzing data related to market conditions, often focusing on data collection.

    • Critical for CPG and other industries, helping avoid costly product launch failures.

    • Statistical failure rate of new products reported as 95% by Clay Christensen.

RESEARCH METHODOLOGIES

  • Types of Research:

    • Primary Research: Involves original data collection tailored to specific objectives using methods like surveys, interviews, and focus groups.

    • Secondary Research: Utilizes existing data and research previously collected by others through databases, publications, etc.

  • Market Research Process:

    • Involves multidisciplinary collaboration among marketing, finance, supply chain, and product development teams.

    • Budgeting and prioritization of research areas like consumer behavior and market testing.

  • Research Categories:

    • Qualitative Research: Focuses on understanding underlying motivations; results are directional without strict quantifiable metrics.

    • Quantitative Research: Yields measurable and statistical data, providing concrete answers to research questions.

INSIGHTS OPTIONS FOR KING'S HAWAIIAN

  • Options Evaluated by Figgins:

    1. Build Internal Insights Department:

    • Hire marketing research professionals, estimated salary of $65,000 each.

    • Invest in DIY market research tools (e.g., SurveyMonkey, Qualtrics) costing about $4,000 annually.

    • Challenges: Need for collaboration with other departments, adequate technology, and managing overhead costs.

    1. Partner with Full-Service Marketing Research Agency:

    • Engage an agency for tailored research projects, including long-term tracking studies.

    • Average cost for custom project estimated at $18,000, with timelines ranging from two to three months.

    • Risk of less personalized service due to agency’s multiple clients and potential staff turnover.

    1. Develop a Marketing Research Online Community (MROC):

    • Form an online community for ongoing consumer engagement, facilitating deeper, more consistent insights.

    • Average setup cost of $125,000 with annual operational costs approximating $300,000.

    • MROC offers both qualitative and quantitative insights while mitigating geographical constraints of traditional methods.

COSTS AND CONSIDERATIONS

  • Comparative Analysis of Options:

    • Partnering with an MR agency incurs higher costs due to additional staff and longer timelines.

    • Internal department building involves upfront hiring costs and ongoing maintenance.

    • An MROC can yield significant qualitative and quantitative insights but requires extensive initial investment.

CONCLUSION

  • Figgins faced the challenge of deciding whether to build the insights capability internally or leverage external expertise for King’s Hawaiian.

  • Necessity to navigate budget constraints while aiming for effective consumer understanding to drive growth.