Henry Ford once said that: “If I’d have asked my customers what they wanted, they would have told me ‘A faster horse.’ ”
Similarly, asked about spaghetti sauce during the 1980s, consumers primarily knew about Ragu’s plain, marinara and meat sauces. Because other tastes and textures were not mass marketed, preferences were limited.
But then, Prego hired Howard Moskowitz, a psychologist, to build its market share. Using 45 varieties of spaghetti sauce that were designed to vary in every imaginable way including thickness, sweetness, saltiness and smell, Moskowitz had focus groups consume 8 to 10 small bowls that they rated from 1 to 100. When the test groups selected chunky as their favorite, he knew he had a winner. Prego became the first to market an extra chunky sauce and their market share soared.
Moskowitz’s approach was ideal for an oligopoly. Defined as a market in which very few firms dominate, oligopolies use product differentiation to compete. For the Prego division of Campbell’s, a chunky sauce separated them from Ragu. And now, the rest is history if you look at the array of sauces sold by Prego and Ragu.
Listening to Malcolm Gladwell tell the spaghetti story in a TED talk and then reading it, I was also fascinated by his allusion to coffee. Most people say that they enjoy a rich, dark and hearty roast when asked the kind of coffee they like. Actually though, taste tests indicate sweet, watery milky coffee is what most of us prefer. I assume that is why Starbucks has recently added a “light” alternative to its dark and medium roasts.