Vegemite, one of the most popular savory spread brands from Australia, unveiled a product extension in 2009. Both the media and consumers have criticized the naming of the new product (iSnack 2.0) and the outrage hit the headlines all over the world that year. The company was unprepared for the anger and was forced to change the new product’s name.
How a company so customer focused could get this so wrong (and so publicly wrong) was a shock to everyone – but there are lessons to be learnt and from a branding perspective there are some elements that were intentionally part of a well-informed strategy.
Table of Contents
Background: the Aussie brand
Vegemite is a salty spread made out of yeast extract. It is a nutritious product, one of the richest known sources of Vitamin B. The brand is a leader for Kraft foods (alongside Philadelphia Cream Cheese) and has long been an iconic breakfast spread for Australians, but also a brand leader across the globe according to IBM’s brand index.
It has its own story to tell and for Australians they have built it into a big part of their culture.
But as a brand it had also not changed in decades. We all know that people don’t like change but it is vital for brands to continue to evolve, even if ever so slightly. Even changing your marketing and approach to selling to your target audience can help. But for Vegemite they kept everything the same.
So when sales started to fall (Vegemite household penetration had fallen from 80% to 72%), you can understand the apprehension of now wanting to change a brand to try and turn it around.
The challenge: an iconic brand in decline
For Simon Talbot, Kraft’s Head of Corporate Affairs, sales had been declining for over five years, market share was dropping by almost 10%, and of course for any company in this situation something had to be done.
Some explanations to this decline are:
- There was a recognition that Vegemite didn’t need to be purchased every week, with a family’s weekly shop. Because of the creation and ingredients it contained, it had no expiry date, which meant an everlasting shelf life.
- Some people said it was because people had less time for breakfast in the morning, and Vegemite was not the best “grab and go” breakfast solution.
- Australian households were getting smaller
- There was an increasing number of immigrants, who were not familiar with the product.
- The company’s marketing team also did not get away unscathed, as because the product and the brand had been so successful there was no need for innovation, entrepreneurialism or creativity in their communications. They didn’t look to target any other audiences. For Kraft with this brand and product it was as if time stood still.
Talbot, understood that he needed to do something with the aging brand. The main idea was to get some consumers’ insights to launch a new product that would boost sales.
For Talbot at the beginning it was simple, he felt that as a company they needed to get closer to their consumers in order to understand what they expected from Vegemite. Kraft searched for valuable insights for the development of a potential Vegemite product extension.
Working alongside IBM and its COBRA system, Kraft undertook a Social Listening strategy and started to gain some insights into what their customers were talking about. Not only that, they were able to tap in to what visitors to the country were also talking about.
The findings of this market research
This social media market research allowed the brand to understand the following:
- Consumers needed to feel connected to the product
- Consumers loved to personalize how they consumed their Vegemite
- Consumers spread their Vegemite over other foods (avocado, butter, Kraft’s Philadelphia cheese, cheese, tomatoes, etc)
- Consumers mainly associate the brand with words such as “Australia”, “breakfast”, and “toast”
- Expatriates were significant online influencers that were actively mentioning Vegemite in their messages.
This intelligence provided all of the brand information the team needed to focus their efforts on a hard-hitting campaign which embodied everything that people loved about the Vegemite brand and product.
But the most valuable insight, was perhaps the identification of 32 different ways people consume their Vegemite, which reflected how consumers enjoyed having their unique way to eat the iconic product. This inspired the marketing team to create a new campaign.
The “How do you like your Vegemite” campaign was born and to be honest was one of the most successful to date.
The communications campaign: “How do you like your vegemite?”
The objective of this campaign was to satisfy the need to connect with the product by giving the power to consumers, and allow them to share their thoughts and opinion about their Vegemite consumption. The marketing campaign included TV, print, OOH, PR and social media communications across the country.
The campaign was a great success, with over 300,000 submissions and plenty of new insights about the consumption of the product.
One step further – the product extension
Due to the success of the marketing campaign Kraft foods decided to take this one step further and offer consumers an alternative product – a product extension.
They found that people were consuming Vegemite with other tastes – even more so, some Moms were using it with their other popular brand Philadelphia Cream Cheese, in order to dilute the bitter taste and give it to their children. This new way of consumption made it “dip-able” and transformed it into a snack.
This insight encouraged the brand to move from breakfast to snacks. Snacks can happen any time. You’re on the go. This strategy would allow the team to boost the product’s sales by creating a new way of consuming it. There was a market for this, when they looked at the idea of creating a snack out of the product (a mixture of Kraft’s Vegemite and Kraft’s Philadelphia cream cheese).
Kraft foods developed the new snack product in record breaking time, not losing momentum on their marketing strategy success. And to continue the customer engagement theme and to help with their brand extension they actually launched their new product with no name. They wanted to keep the bond with their customer, which they had created. So when the new product first hit the shelves it was simply labelled “name me”.
One step too far – the new product’s name: iSnack 2.0
This was a great strategy as they involved the customer from the start. It was an excellent marketing tool that created engagement, excitement and because the loyalty was already with the brand they had the “right” almost to try out new things and venture into new markets.
But, and there is of course a huge but with this strategy. The name that was eventually chosen did not fit with their current brand and the image that they’d created and held for so long.
The most popular name suggested by consumers was “Cheesymite”, however Kraft wanted something that would reflect the “snacking” element to differentiate it from the classic Vegemite. Another name suggested by consumers was “iSpread 2.0” and the brand decided to twist it and name it “iSnack 2.0”, with:
- “i” reflecting the idea of personalized consumption
- “snack” to answer the need for some people to consume the product as a snack
- “2.0” reflecting that the new product is the first new version of the classic Vegemite
All of a sudden the brand product extension had caused a media storm and for days iSnack 2.0 was making headlines across the globe.
It was frowned upon due to it sounding like a technical product, it didn’t fit with their heritage and for a marketing team who assumed the much more modern name would resonate with their newly targeted audience – their loyal customer audience was too strong not to be heard.
Within a week, Simon Talbot commented to the BBC in 2009, “We have been overwhelmed by the passion for Vegemite and the new product. The new name has simply not resonated with Australians.”
iSnack 2.0 was quickly changed to “Cheesybite” – after a poll was carried out online for consumers to choose their new favourite name.
Lessons to be learnt
1. Never stand still
As a brand never believe that you can stay in one place for too long. Things change every second of everyday and to stand still, allows someone else to move in front.
2. Listen to your consumers
For Kraft Foods, they had the customer engagement, their marketing campaign showed that. They listened to their customers in their “How do you like your Vegemite” campaign, and then looking for the same connection for their product extension, they stopped listening.
The most popular name suggested by consumers was “Cheesymite”, very similar to the final name: “Cheesybite”, not “iSnack 2.0”. It’s interesting to let the public decide the new name, but you should listen to them and choose what they recommend.
3. Test the market first
Kraft let their online audience choose their new name but what they didn’t check was to make sure it would resonate with the entire target audience.
This is where for any brand, when it comes to product extensions, market testing is a must. Yes it is going to be targeted at a new consumer audience but to still have the strong affiliation with the original brand it has to be accepted by the original audience too.
4. Product extensions have to “fit” with the current image of the original brand
Launching a new product was a great way to reinvigorate the brand. But when you refresh a brand through a new product, you never throw everything out. There are some elements you need to keep to enable the customer to link the two and have the same connection. Unfortunately with iSnack 2.0 this didn’t happen, it was seen as a completely different brand with no association and so of course was never going to be able to piggy back on the success of Vegemite.
5. Take your time
You also don’t have to jump straight away just because social media is going crazy. It seems like an absurd thing to say, but because of social media now reactions are much quicker and especially knee jerk reactions.
The company soon changed the name due to customer demand (and it seems that was the right decision to make) but it also has to be recognised in that week of media hell, the company was still selling iSnack 2.0 and quite a lot of it. So they had to weigh up the pros and cons. Was the increase in sales due to a rush to see what it was like due to all of the media attention or did the name actually resonate with the younger generation they were aiming for?
You need to be ready for the PR but your strategy should be well thought out before making any hasty decisions. This is your brand and your reputation and sometimes you simply have to take a step back from it all before you can move forward again.
The iSnack 2.0 product extension shows the power of customer engagement – listening and more importantly understanding your customer can have a hugely positive impact on your new product launches.
Vegemite proved that they were great listeners in the beginning (social media listening, “how do you like your vegemite campaign”, “name me” campaign) until they chose the new name – a name that wasn’t’ suggested by their audience. Vegemite should have listened to the customer until the end to ensure a smoother acceptance of the new product!
-Keinan, A., Farrely, F. and Beverland , M. (2011) ‘Introducing iSnack 2.0: The New Vegemite’, Harvard Business School N9-512020 (Academic Article)
-Food MarketWatch (2009)’Rebranding Case Studies’ (Datamonitor)
-Food MarketWatch (2009) ‘Kraft pulls iSnack 2.0 name after backlash, but publicity may have done more good than harm (Datamonitor)