Staples' Evolution

The office giant used Waltham, Massachusetts-based Affinnova's innovative software to redesign and relaunch its paper brand

In 2007, Staples (SPLS) realized it needed to take a new look at paper. The branded product is an important part of the company's office supplies category, which accounts for 41.8% of sales. But two industry trends were complicating purchases. First, products had become machine-specific—some were designed for copiers, say, while others worked best in laser printers. Second, paper was being further balkanized by eco-labeling that reported its percentage of recycled content. "We wanted to make the shopping experience easy, and to do that we had to fundamentally rethink the packaging and the makeup of the line itself," says Andrew Schneider, Staples' director of strategic planning.

Typically, what would have happened next was this: A Staples brand manager would convene and observe focus groups to learn how and why customers decide what to buy, to come up with new approaches. The brand team would then decide which of those ideas seemed the most promising and would develop test products to show consumers in an online survey or in Staples' retail lab at its head office in Framingham, Mass.

This time, though, Staples hired Affinnova, a Waltham (Mass.)-based company that has helped Procter & Gamble (PG), Wal-Mart (WMT), Capital One (COF), and dozens of other companies reevaluate their products. Affinnova's strength is geeky software developed in the late 1990s by Kamal Malek and Noubar Afeyan, both engineers trained at the Massachusetts Institute of Technology. Malek is Affinnova's chief technology officer, while Afeyan is co-founder of Flagship Ventures, a venture capital firm that backed the startup in 2000.

Affinnova's premise is that over time, consumer markets evolve much like the natural world: Strong products survive while weak ones die out. Its software, a "genetic algorithm" called IDDEA, essentially simulates evolution, creating generation after generation of possible products or packaging until the strongest possible design emerges. It's not truly design by machine—human designers choose what's going to be tested and consumers then select their favorite options from each generation, thereby determining which survive—but the software is able to process and analyze these preferences in a way no focus group could.

Helping Staples Sell Paper

Affinnova set up a panel of 750 consumers across the country who, over the course of a week, participated in a 20-minute study of Staples' paper line. Each was shown a screen of three possible packaging designs and asked to select their favorite. The software analyzed their choices in real time, and presented three new designs. "In total, we put 22,000 choices in front of consumers for the Staples test," says Steve Lamoureux, Affinnova chief marketing officer. By looking at selections over multiple generations and across the whole panel, the software identified preference patterns—a tendency toward a certain color or font or wording—and ultimately identified the top concepts.

As a result of the Affinnova study, Staples made several changes. For instance, the company ditched the special green packaging of its recycled papers, instead incorporating its eco-offerings into its regular line, which is packaged in red (basic), blue (midrange), or gold (premium). A green band across the top of the new packaging indicates the percentage of recycled content, and a large triangular recycling icon just below the paper type reiterates its environmental credentials.

Other alterations were more subtle. In the blue-packaged midrange, consumers preferred the word "multipurpose" to the original "multiuse," and Staples' gold papers, which had previously been positioned simply as the highest quality, were remarketed with "machine-specific" options. "We've never run a study in which we come out with something that isn't better than what we started with," says Lamoureux.

Because Affinnova's surveys include consumer profiles that contain basic demographic information, customer beliefs, consumer habits, clients also can segment results and understand how different designs appeal to different consumers. Such data splicing is especially useful in the case of a brand redesign, when a company wants to appeal to new customers without alienating its existing base. "The insights helped us figure out how to get existing paper customers to trade up," says Schneider. "And also gave us the opportunity to get people already in our stores to buy paper."

Activia Yogurt's U.S. Launch

The new packaging makes its debut in Staples' 2009 catalog, which customers receive in December, and hits store shelves in the first quarter. Schneider admits he won't know until late 2009, at the earliest, how the new packaging affected sales. But he says, "We're confident that it will be good for business."

Other Affinnova clients have gotten a boost. Repeat customer Dannon hired Affinnova in 2006 to figure out the best way to launch Activia in the U.S. Activia, a probiotic yogurt, had generated more than $1 billion in sales in Europe in 2005, and the American unit of Groupe Danone (BN) had tried twice before to import a similarly successful European product, failing both times.

Affinnova's research helped identify imagery and messaging that would most appeal to an American consumer. For instance, consumers preferred expressions such as "body in balance" or "running smoothly" to more specific mentions of bacteria or cultures. For a graphic icon, they preferred a somewhat sexy photograph of a woman's abdomen over a technical illustration. Thanks to these insights, Activia hit $130 million in sales in 2006, its first year on the market, and $300 million last year.

Waleed Al-Atraqchi, Affinnova's chief executive and president, won't say those results are typical, pointing out that software can't turn a bad product into a good one. "It's the marketer's job to find out what products people want and need," he says. "What we do is find out how to make a product as successful as possible."

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