Aussie readers may know that Kraft Foods has just released the name of its new-look Vegemite after running a much-publicised competition to come up with a new name. And you’ll probably also know that there has been an uproar with virtually the whole nation bagging the new name, “I-Snack2.0″.

First, let me say that Kraft involving their customers in the naming process is a fantastic idea. It gives them power. It achieves buy-in on the new product. It creates loyalty. All awesome stuff. Plus, it gets Kraft a lot of publicity.

But what happens when that power you give to the customer blows up in your face?

After the horrendous backlash, is Kraft in a situation where they now need to change the name to save face? After all, they initially gave consumers the power to name the product and now consumers are saying in no uncertain terms that they hate it.

Does that give consumers the right then to demand a name change? And what if Kraft says “no”?

The lesson in this?

First, let me say that I’m not going to speculate on what the judging process involved or how it went wrong.

What I will say is, market research exercises like this one (that involve consumer opinion) can be a double-edged sword.

The lesson?

When you involve your customers in market research don’t completely hand over power to them. Don’t trust that just because they represent the market they know what will work. Unfortunately, it often doesn’t work that way.

Survey your customers, yes. Analyse the findings, sure. Respect what they have to say – absolutely. But before making a decision on anything, please also understand this…

Understand that customers (like all people) enjoy being heard and enjoy being creative. But often the feedback and the ideas they give you aren’t a true reflection of what their opinion is when they have their “shopper hats” on. In other words, consumers come up with creative names because it’s a way for them to express their own creativity and individuality (and win something) NOT because it’s a name that would attract them to buy the product off a shelf. Important distinction.

This also happens with focus groups. Get 10 customers in a room and ask them their feedback on an advertising campaign. Those customers will tell you what they like or dislike creatively about that advertising campaign. At the end of the day though, those creative opinions may not (and often don’t) have any bearing on whether those customers would actually buy the product when they have their “shopping hats” on. It’s simply, their creative opinion.

I’m not saying that focus groups don’t have their place because they do … absolutely. It’s just that there is a potential downside.

On a final note… regardless of whether or not Kraft end up changing ISnack2.0 to something more attractive, they have certainly got a lot of free publicity out of the exercise, which will undoubtedly lead to increased sales. So – good luck Kraft, with your next step. I hope whatever you do from here, has a more favourable impact.