Sitting in a dark, climate-controlled room in a low-rise building in suburban Santa Clara, Calif., is a Web server that's transforming General Mills' market research activities. By e-mail and via the Net, the server polls thousands of consumers every year, hunting for subtle signs of their preferences -- when a toddler eats her first Cheerios, or how instant foods can improve a family's mealtime. These sorts of details were once gathered in a costly, paper-intensive operation. But now, thanks to the Web, General Mills collects this information in one of the "most efficient market research programs in the business," says David C. Nelson, a food analyst at CSFB in New York.
The switch has been five years in the making (see BW--The e.biz 25, 5/14/01, "Q&A with General Mills CEO Stephen Sanger"). Before then, the $6.7 billion food giant relied heavily on phone and face-to-face interviews to test new products and promotions. It meant hiring operators to handle the phones and clipboard-toting interviewers to corner consumers at shopping malls. Both methods are expensive and time-consuming. Plus, those dinnertime phone calls are rarely welcome, points out Nelson, and shoppers aren't usually focused on their snacking preferences while bustling through a mall.
The Web offers General Mills a less invasive, more efficient approach. The food maker might mail a test flavor of Bugles -- its salty cone-shaped corn snack -- to a consumer, along with an invitation to sign up online to take part in a study. A few days later, General Mills e-mails those who respond, directing them to a Web site where they can answer a few questions.
All together, the Web method "lets us do better research -- and more research -- for less money," says Gayle Fuguitt, General Mills' vice-president for consumer insight. Because they can answer in private, at their leisure, consumers tend to respond more thoughtfully and more consistently online. With Bugles, the Net approach slashed the time needed to field the taste test to from 12 days to 3 or 4. Time savings of up to 75% are typical, says Fuguitt.
Processes once handled manually -- and prone to human error, such as fielding the survey, entering data, and producing the final analysis -- are now automated. It all makes for lower costs. Conducted over the Web, the Bugles taste test cost about $5,000, vs. $15,000 the old way. In general, says Fuguitt, Web-based research projects, cost about half as much.
Flexibility is another benefit. With cheaper, faster tests, General Mills can run quick-strike polls to fine-tune its marketing. In a recent push to revamp its ad campaign for Hamburger Helper, the company took the time to ask consumers about their mealtime priorities. "We found that they're not willing to sacrifice taste for speed," says Fuguitt. Getting that sort of distinction right -- up front -- can make the million-dollar difference between an ad that delivers big sales and a wasted effort. In the past, Fuguitt points out, ad developers might have skipped such preliminary research as too expensive.
The transformation has been so successful that the Minneapolis-based foodmaker now conducts more than 60% of its market research on the Internet, up from just 20% in 1999. For a company that spends tens of millions of dollars on market research annually, the more the better. General Mills is aiming to hit 70% in the near term, says Fuguitt. Most packaged-good companies don't do much more than 30% of their research online, says Bob Lederer, who tracks industry innovations in his newsletter Research Business Report.
For its next trick, the foodmaker hopes to turn its Web success story into a profitable business in its own right. When the top brass got wind of Fuguitt's initial savings last year, they decided to launch InsightTools, a joint venture that combines General Mills' top-grade research knowhow with the technical expertise of its longtime Web-services provider, MarketTools. One year later, more than 15 blue-chip clients, including a major financial-services organization, are paying InsightTools to develop and conduct online market research tests.
Fuguitt expects that next year, profits from its share of InsightTools will begin to help offset the costs of General Mills' in-house research activities. Now, that's being a Web-smart marketer.
By Adam Aston in New York