Reckitt Benckiser cuts the mustard

by Business Case Studies on Tuesday 19th February, 2008

Reckitt Benckiser cuts the mustard

Reckitt Benckiser was formed in 1999 from the merger of Britain's Reckitt & Colman (famous for its mustard) and Benckiser of the Netherlands and has proved very successful. Profits have almost doubled in the past four years and the share price more than quadrupled since the millennium began. The company is also expanding through acquisitions. Two years ago it purchased Boots Healthcare International and has now just completed a £1.1 billion takeover of Adams Respiratory Therapeutics, an American pharmaceuticals company. (The Sunday Times, February 17, 2008)

Reckitt Benckiser has shown great aptitude for thinking up new products that people never knew they wanted. New ideas are developed through focus groups, one-to-one interviews and even by installing their employees in people's homes to watch how they wash dishes and clean floors. The company even invites people to submit new ideas through its website. (The Sunday Times, February 17, 2008)

Bart Becht, Chief Executive of Reckitt Benckiser, said: Of all the ideas, we pick the best ones, do a feasibility assessment and pursue the ones where there's high interest and a reasonable chance of making the product. Consumers will generally not come up with the next innovation, so we try to have ideas that target consumers in specific areas. Then we screen them. We go through literally thousands of ideas every quarter. Then we ask consumers about the ideas. (The Sunday Times, 17 February, 2008)

The company currently has 18 power brands including Air Wick, Cillit Bang, Finish dishwasher tablets, Vanish stain remover, Strepsils throat lozenges and Nurofen pain relief. The company has shown a remarkable capacity for inventing things that people didn't even realise they wanted to buy, such as air fresheners that automatically give a burst of fragrance every 20 minutes and dishwasher tablets which can be put in the machine whole, wrapping and all. To ensure that consumers know about these new products, Reckitt Benckiser spends more than 12% of its entire revenues on marketing double what many of its competitors spend. (The Sunday Times, February 17, 2008)

Look at The Times 100 case study on Beiersdorf. This highlights how this international company uses market research to drive new product development on its NIVEA Deodorant brand and provide new products that meet consumer requirements. Being an innovation leader has allowed Beiersdorf actively to shape its markets and set new trends.

Sources:

The Times Online – Reckitt Benckiser cleans up with research to boost global sales, 17 February 2008

Reckitt Benckiser Innovation Centre – Homepage

The Times 100 Edition 12 Case Studies – Beiersdorf – How market research supports the new product development process

The Times 100 Edition 12 Theory Home Page

Potential study questions:

  • Define marketing.
  • Give three reasons why companies carry out market research.
  • Examine Primary Market Research theory, comparing the methods used by Reckitt Benckiser and Beiersdorf, and explain why you think these bring success in the market place.

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