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The Role of Product Innovation for Wrigley's in the Asian Market

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The Role of Product Innovation for Wrigley's in the Asian Market

Product innovation has been the key driver for Wrigley's success, and China has been no exception. Given the large population (four times that of the US1) and the comparatively low consumption numbers (10-15 servings per person annually versus 90-100), growth in China showed the greatest potential for further success. Wrigley gave their Chinese consumers a reason to chew by recognising cultural facets (traditional Chinese flavours and medicines) and trends in health benefits (obesity and oral health), and then innovatively developed product lines in ways which would appeal to a wide variety of segments.

Going forward from 2008, the decision to join forces with Mars, further reiterated the importance Wrigley's placed on product innovation and the potential that Mars global president Paul Michaels must have recognised. He stated that both Mars and Wrigley's share a commitment to innovation and would continue on the path of growth by jointly developing these values even further.

Wrigley's commitment to innovation was further exemplified by their decision to invest in a Global Innovation Centre which could aid the company in continued significant advancements. In addition, The Wrigley Science Institute has funded significant independent research to explore new benefits of chewing gum - including weight management, increased alertness and concentration and stress reduction. With this research, Wrigley's are giving consumers new reasons to chew Wrigley gum, and are subsequently building category consumption.

Overall, Wrigley's continue to accelerate their pursuit of new, proprietary avenues of innovation in terms of ingredients, packaging, technologies and health benefits.

Analysis of Wrigley's Products and Innovations

Whether it be radical or incremental, product innovation is critical to a firm's success.

Radical innovation involves breakthrough innovations which dramatically change social or business practices, create new markets, and lead to rapid growth.

Alternatively, firms can choose to take the incremental path of innovation, which involves lower order innovations which seek to repair or improve existing products. This approach keeps large companies competitive in the short-term; however there is a danger of being caught unaware by newcomers.

Wrigley's Product Timeline

As can be seen by the Product Timeline (above), Wrigley's largely undertook incremental innovations from 1993-2001 in order to maintain its competitive advantage and presence in the existing market space. This strategy was largely risk controlled, with some examples being the addition of new flavours to both the Extra Sugar-Free and Doublemint product lines. These simple innovations allowed the products to maintain a fresh image.

Wrigley's were perhaps too conservative in their approach to innovation, as demonstrated by being beaten to the mark by Lotte's radical Xylitol gum innovation. Wrigley's were able to regain traction in this innovative space by rapidly rolling out their version - Extra Xylitol - within the same year (2004). Later, in 2006, Wrigley's further extended this product line with the release of a Herbal Series which embraced Chinese culture by infusing the gum with herbal flowers and fruit flavours.

As demonstrated by the timeline, from 2004 onwards Wrigley's approach to innovation took a more radical direction. Perhaps drawing from the success of the herbal range, in 2007, Wrigley's took the opportunity to venture into uncontested market space with the release of a completely unique product - Langyi Sugar-Free gum. Langyi was a complete game-changer, as it symbolised Wrigley's openness to embracing the challenge of new cultures, in this case the wisdom of traditional Chinese medicine1. This newness to both market and newness to the company as a whole allowed Wrigley to captivate new consumers and broaden total market share.

Every marketplace is unique, and Wrigley's have demonstrated that by combining their global strength with a strategic, customised approach to individual geographies, learning's can be transformed into effective and competitive "go-to-market" tactics. Wrigley's product timeline includes examples of both radical and incremental innovations, and reveals how the firm has been both adaptable and intuitive to changing market and competitive conditions.

Analysis of Wrigley's Innovation Strategy in China

Wrigley's success within China is evident upon examination of the case study data. Wrigley's net sales by region data reveal a US$242,051 billion increase in Asia from 2005 to 2007. Upon viewing the product timeline, it is immediately apparent that Wrigley amped up their innovation significantly during this period, and it paid off.

Between 2006 and 2007 - a year which saw a myriad of innovations across many products - Wrigley's saw the greatest change in net earnings (19%) since 1998 (12%) when Wrigley expanded the bounds of their customer base with the introduction of Extra Sugar-Free. This product level innovation was so successful that it subsequently drove market level innovation across many competitors (including non-competitors in categories other than chewing gum) that began to replicate sugar-free products as part of their ranges. According to Sawhney's Innovation Radar3, this business innovation lies on the 'offerings' dimension of the radar.

Furthermore, in 2004, the chewing gum market saw a discontinuous leap in the benefits offered by gum, when competitor company Lotte released the first ever gum containing the ingredient Xylitol. Despite being the second brand to release a gum containing Xylitol, Wrigley's still saw its greatest increase in net sales (19%) compared to the previous year, proving that being quick to react can still produce record profitability results.

Wrigley's innovations have been so successful that the company has firmly cemented itself with accredited brand equity, by becoming the first chewing gum brand to earn the Seal of Acceptance from the American Dental Association. This seal, appearing on the pack of Wrigley's Extra, Eclipse and Orbit, is highly influential in



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