It’s no secret that companies need to evolve their products in order to survive and stay competitive. But where does the impetus come from? While slow sales are often the catalyst for action, forging ahead without knowing the way can be more dangerous than doing nothing at all.

For Republic Flour Mills (RFM) and Universal Robina Corporation (URC), two food companies based in the Philippines, embracing market research was an important turning point in their respective businesses.
In the 1950s, both firms were flour-milling operations, and by the 1960s, both had developed branded foods businesses for consumers. The changes that have occurred since that time are remarkable – by the end of 2004, URC’s branded foods business accounted for 75.5% of its revenue.

Even though URC and RFM continue their flour-milling businesses, the evolution into branded foods has also taken them down different paths, based largely on differing results in their market research.
URC market research head Bena Gamatero claims that research has been an integral part of their business since its move into branded foods in the 1960s. “URC is one of few such firms to have an in-house market research arm – we do approximately 50 to 60% of our research in-house.”

According to Gamatero, URC’s research has underlined the role that children and young adults play in the food purchasing decisions of a family in the Philippines. As a result, URC has focused heavily on products designed to sell to children and parents – URC’s product line has a heavy emphasis on hard candy, baked sweets, chocolates and other sweet snacks.

Gamatero also notes that consumer attitudes in the Philippines are changing, and that URC has responded to take the lead in its market. Filipinos are more concerned with product quality and safety, leading URC to start packaging hard candies in a ‘pillow pack’, which is sealed on both ends, rather than the traditional twist-up packaging. As a consequence of this response, URC now has the lead share in the Philippines’ hard candy market.

Like URC, RFM also does a large amount of research in-house, stressing the importance of research to its survival. “It’s critical to develop product positioning that’s unique,” says RFM head of research Mike Magbily. “This can only be done by getting insights directly from consumers.”

With their research RFM has noted its own trends in Filipino tastes for branded foods. Through intensive work with focus groups, RFM identified a change in consumer sentiment from primarily being concerned with taste to additional concerns over nutritional value. Accordingly, RFM now markets many of its products by clearly pointing out the health benefits of its foods.

Magbily acknowledges that research is important not only in terms of what products will be produced, but also how they are packaged. RFM’s major brands include processed meats, flour products like pancake mix, fruit juices, milk products and pasta sauces. Almost every product’s marketing message includes a mention of the health benefits, from added calcium to the use of real tomatoes.

All of this has been significant to RFM’s bottom line, which has certainly seen some major improvements. Quarterly earnings statement for the first quarter of 2005 showed a net income of P4 million, compared to a net loss of P30 million over the same period in 2004.

As RFM and URC continue to evolve their product lines, the future may see them overlap or diverge into different categories. What keeps them at the forefront of their business is a steady commitment to finding out what the market really has a taste for.