Product development
Our brand portfolio is the foundation for continued growth. Thanks to long-term strategic brand work, characterized by consumer insight and innovation, Swedish Match has established leading positions in many markets. This has taken place through the meticulous care of existing brands and the development of new products. In 2007, Swedish Match has launched some 40 new products or product varieties. Based on this platform, we are creating the Swedish Match of the future.
Onico, Vertigo and Red Man snuff
Active, consumer-driven product development is the foundation of continued organic growth. Brand loyalty among tobacco consumers is high, meaning that the Group can benefit long term from its investments in brands. The Group’s main strength in relation to its consumers is its broad portfolio of strong and well-established brands, and new brands adapted to modern and discerning consumers. Strong brands stimulate brand loyalty, and repeat purchases as well as a high turnover rate in the distribution stage sustain profitability for both Swedish Match and retailers. Accordingly, brand care and product development are important competitive tools.
The ambition of generating added value for our consumers imposes rigorous demands on the Company. The success is attributable to extensive product knowledge and in-depth consumer insight. Consumer surveys as well as studies of consumer trends and behavior are a key part of the development of both existing and new products.
Product development is driven by intense competition about consumer attention. To attract consumers, it is essential that Swedish Match offers a broad range of different product varieties in terms of flavor, size and format, regardless of the price level in which the consumer is looking for a product or experience. This requires a high pace of innovation, as reflected in intensified product development work. During the year, some 40 new products or product varieties were launched, primarily within the cigars, snuff and snus segments.
Existing brands
Swedish Match owns considerable brand capital through its numerous strong and well-known brands. Red Man and Macanudo in the US, Solstickan and General in Sweden and now also in selected locations in the US, La Paz in the Netherlands, Redheads in Australia, Taxi in South Africa and Fiat Lux in Brazil, are brands that create a stable and strong market position. Each individual brand represents unique values that are preserved and further developed with immense care. Brand work is conducted in close contact with consumers and retailers in order to ensure that products and brands fill the right needs and expectations.
Brand care also involves investing resources in maintaining a high level of quality in terms of purchasing, sales and distribution. This is essential so that the product has the same high level of quality and gives the same experience regardless of when and where the consumer purchased the product.
Some classic brands have values that are so strong that they can even be transferred to other types of products. An example is the American chewing tobacco Red Man, which is very closely related to quality, heritage and tradition – values that are highly important to the very brand-loyal Red Man consumers. To capitalize on these strong brand values, Swedish Match has expanded the Red Man brand from the chewing tobacco category to also encompass snuff products in the US.
The design of the products and packaging are additional stages in the development of existing brands. Tobacco products are often displayed in a limited space in stores and, since the marketing of tobacco products is regulated, it is important to optimize the use of the space available. A large part of the communication with consumers takes place through packaging, placement and the manner in which the products are presented in the store.
In the Scandinavian snus market, three of the largest brands, General, Ettan and Grovsnus, were redesigned during the year. The packaging of some lights products has been developed to facilitate identification of the various products. Cricket, our largest brand of disposable lighters, regularly launches new series of designs to differentiate the products from competitors and to enhance the brand image toward consumers.
New products and brands
An important part of Swedish Match’s brand strategy is the development of new products and brands. As with other fast-moving consumer goods, it is primarily trends and consumer preferences that govern product development.
To identify improvement and development opportunities for new products at an early stage, a continuous dialogue is maintained with consumers through consumer surveys. All development work is conducted on a cross-functional basis to make use of the competencies in the company. A product development team comprises employees from marketing and sales, manufacturing, packaging development and our tobacco masters. The groups analyze different consumer trends for the purpose of producing products for tomorrow’s needs. With insight into consumer preferences, new products and brands are developed for 21st century consumers.
In developing a new product, we create an offering where the product as a whole matches consumer needs. All parts of the product offering are taken into account: content and flavor, packaging, design, market communication and the brand’s role in the product portfolio. The degree of satisfaction and loyalty to the brand is based on how well the total offering meets such needs. In addition, the consumer is influenced by the stores in which the product is sold, how the product is displayed in the store, the consumer price, how the packaging is perceived and the values that the consumer associate with the brand. All of these parts must interact to make the product correspond to consumer expectations and demands.
Once a product offering has been launched, we work to ensure that the product remains the same over time by implementing internal quality controls and carrying out regular analysis of customer satisfaction with the product. This is important in efforts to create long-term trust and brand loyalty.
In view of the comprehensive marketing restrictions to which tobacco products are subject in most markets, effective distribution capacity and an effective sales force are very important. Sales work ensures that the product is available and is highly visible in as many stores as possible. By building, maintaining and developing the distribution channels, Swedish Match strengthens its market position.