The Secret Ingredient Celestial Seasonings on effective market research.

How did Mo's 36 Herb Tea--a hand-picked blend of herbspackaged in muslin bags and fastened with scrap telephonewire--become Celestial Seasonings, America's favorite herbaltea company? Celestial Seasonings' success has been due inlarge part to founder Mo Siegel's insistence that the companylisten to one voice: the customer's.

Dedication to discovering and fulfilling its customers'desires explains why Celestial Seasonings' Sleepytime brew isthe most popular specialty tea in the United States. With net salestotaling more than $70 million in 1996, Celestial Seasonings hasmore than 50 percent of the herbal tea market and hassingle-handedly popularized herbal tea--previously used primarilyfor medicinal purposes--as a healthy, flavorful alternative tocaffeinated beverages.

The principles that guided Siegel's earliest market researchefforts remain the foundation of market research at CelestialSeasonings today, proving that you don't need a big budget tofind out what your customers will respond to. But you do have tomake market research a priority, devoting your resources and energyto interacting with and understanding the most key component ofyour small business: your customers.

From the inception of the company, product testing has been apriority at Celestial Seasonings, even before it had a budget formarket research. Siegel loved to travel, so before he started thecompany, he went abroad to gather data about tea consumption. Whenhe returned, he tested his teas by offering samples to customers."Mo would intercept people in natural-food stores and askquestions about what they thought of the flavor of the tea,"says Michele Karrasch, senior manager of consumer and marketingresearch at Celestial Seasonings. "Even today, he will go upto anyone and ask them questions about how they feel about ourproduct or how they view us getting into a particular market.He's very much in tune with the consumer."

Karrasch offers these tips on how to create and maintain asuccessful market research strategy:

• Test market your product before you try to sell it. Youlike your product--that's why you believe in it enough to tryto sell it to others. But don't assume everyone else will likeit just because you do. It's vital that you test your productwith the people who will be buying it.

Through focus groups, concept testing and product testing, atleast 250,000 people will test Celestial Seasonings' productsnext year. Even if you can't afford to run focus groups, testyour product concept with your neighbors at local organizations,clubs or businesses.

Remember, though, that your friends and family might not bewilling to risk hurting you by telling it like it is. So make surethe opinions you solicit are objective and unbiased. Invitecriticism and suggestions as well as positive feedback, andyou'll learn more--even if the process is a little painful.

• Know your customers. You could call this CelestialSeasonings' mantra; the quest for more knowledge of who itscustomers are forms the heart of the company's market researchefforts. Find out what your customers need. What are theirlifestyles? How much free time do they have? How much money do theymake? This information is vital to your success.

"The breadth and scope of learning the attitudes andbehaviors of your customers--especially if you're going into anew business--should not relate to the size of your researchbudget," Karrasch says. "You need to find out who theseconsumers are. Get into their minds: Find out not only theirshopping behaviors, but their attitudes--everything from how manychildren they have to how they exercise." You can do this byconducting informal surveys during conversations with customers, byhaving customers fill out questionnaires that automatically enterthem in a free drawing--or even by starting a frequent-customermailing list that requires the customer to answer a briefquestionnaire in exchange for coupons, discounts or similarpremiums.

• Know your competition. You might be tempted to focusyour market research efforts on your company alone, but it's amistake not to find out what people like and dislike about yourcompetition. "It's extremely important that you identifyand understand your competition's equity. If you don't dothat, you're not clearly differentiating yourself in themarketplace," Karrasch says. "Find out what needs are notbeing met by your competition. We talk to Lipton users, forexample, and say, `Okay, you like Lipton because it's cheap andyou can find it everywhere, but how is it not meeting your needs?What would you like to see Lipton doing that they're notdoing?' "

Once you know where your competition is failing, examine yourcompany's strengths. Emphasize the things you're alreadydoing that the competition isn't doing. Accentuate thesefeatures in your advertising and sales efforts.

• Don't forget packaging. Market research has toextend to the packaging of your product as well as its contents.Finding out what will entice consumers is a crucial element of anymarket research strategy. How you package yourself--includingeverything from your employees' uniforms to your businesscards, letterhead and promotional materials--affects the way yourcustomers see you, and is often a deciding factor in where theychoose to take their business.

"People are looking at the shelf and making decisions inthree seconds," Karrasch says. "There are women who havebeen with our brand forever, but can't tell you the name of thetea. When their husbands go shopping, they'll say, `Look forthe green box with the bear on the front.' Consumers will tellyou that packages don't matter, but what they say and what theydo are two entirely different things."

To get results in this category, you have to test your packagingagainst that of your competition. The key, according to Karrasch,is shelf impact. Does your product pop off the shelf? To catch theeye of a consumer making a split-second decision, your productneeds to stand out.

• Be willing to change. "Don't be too limited byassumptions based on what your brand represents," Karraschsays. Evaluate your company to see what possibilities for growth orexpansion into new areas you may have missed because yourdefinition of what your company does is too narrow. CelestialSeasonings didn't limit its offerings to herbal teas justbecause herbal teas are what made the company successful. Instead,it looked at where it could expand most logically--and profitably.In addition to adding iced teas and specialty black teas, thecompany now markets herbal throat drops under the name CelestialSeasonings Throat Soothers.

• Go beyond your core users--the loyal customers who havestuck with your company from the beginning. "Core userswill narrow your options," Karrasch says. "They don'twant you to become the next Coca-Cola. It's almost a selfishagenda for them." Your core users may not want you to grow;they don't want to share you with the rest of the world. Theymay be afraid your commitment to them will shrink as your companygrows. Widen your focus groups to include those people who are notalready customers.

• Leverage your brand equity. This means using thereputation of your initial product (for Celestial Seasonings, hotherbal teas) to expand your product line. Celestial Seasonings nowmanufacturers an expanded line of specialty tea products, all underthe name that--through the success of its hot herbal teas--hasbecome synonymous with quality and flavor in the minds ofconsumers.

But don't try to make your name mean something it's not.You run the risk of alienating your customers: "Don't tryto be everything to everybody," Karrasch warns. "If wedid, our customers would say `Hey wait a minute . . . You'reputting the Celestial Seasonings' name on coffee?' "Make sure, through careful market research and planning, that thenew product is something your customers will accept and buy.

Above all, remember the goal of market research is to impressthe one group of people who can make or break your small business:your customers. Follow Siegel's example, and seek outinteractions with your customers every day. Listen carefully toeverything they have to say. Find out what makes your customerstick: what makes them happy, sad, bored or indifferent. Bywelcoming customer feedback and making yourself accessible tocustomers, you'll show them you care what they think. Beforeyou even translate your market research into action, you'll becreating a customer-friendly image that will keep them coming backfor more.

Jessica Hale is proof that market research pays off; she hasthree boxes of Celestial Seasonings tea in her cupboard.

Contact Source

Celestial Seasonings, (800) 351-8175