By Susan Viamari
Product innovation is the lifeblood of most CPG manufacturers. Even though consumers typically rely on a limited number of “go to” food and household staples, they’re open to new products that will make their lives easier, simpler and more rewarding. In fact, according to IRI’s 2015 New Product survey, one in five shoppers enthusiastically embrace new products.
Unfortunately, new product failure rates typically range from 60-80 percent*. Failure isn’t just about meeting sales targets. New products can also fail to meet expectations around incrementality, sustainability, or brand loyalty.
Every year, IRI analyzes the most successful CPG food and non-food product introductions as part of its New Product Pacesetters report. These powerful brands are textbook examples of innovation done right. During 2014, several CPG manufacturers showed us that they were up to the challenge of making consumers lives better, more exciting and more affordable. Here’s what they did to stand apart from the competition:
1. Understand and Deliver Simplicity – Nearly one-third of the most powerful new products made life a bit easier for time-starved consumers. They did this by creating household products that delivered convenience and quickness, and food products that had simpler ingredient lists, especially fewer ingredients and more natural ones. Products that delivered convenience and/or simplicity included Windex Touch-Up cleaner, Tidy Cats LightWeight and Wholly Guacamole Minis.
2. Delight with Excellence – Nearly four out of 10 of the year’s top selling CPG products were more powerful, more delicious and/or more rewarding. Manufacturers upped the ante with restaurant-quality cuisine, gourmet and artisan flavors, and personal products that offered more professional results. This included new products by Starbucks, Iams and Garnier Fructis.
3. Bring New and Exciting Experiences Into the Home – People want more excitement in their daily lives, and products that can give it to them can reap big rewards. For example, rather than spending a lot of money on a meal out, they can get restaurant-inspired food at home with some of the new food products. Even mundane tasks (laundry!) can feel a little more indulgent with some sensory stimulation, as P&G discovered with its Febreze Sleep Serenity products.
4. Make Sure the Price is Right – Consumers readily admit that price plays a big factor in their interest and awareness of new products, and whether they’ll even try it. But providing value is about much more than price. Many of 2014’s Pacesetter brands are adeptly addressing a number of key consumer wants and needs (like SkinnyPop does for being nutritious, high quality and portable), and consumers are paying more for those brands because the brands are meeting their needs—and that’s a great value.
5. Build Solid Trial and Repeat Patterns – With over 40,000 products in a typical grocery store, getting new products to stand out is a challenge. Deals play a major role in capturing shoppers’ attention. But, to be effective, deals need to be communicated through the right media, including online, and they need to use highly targeted messaging that will engage and influence target audiences and encourage purchase behavior.
6. Know Where to Be, and Be There – Different consumers shop different channels differently, and they prefer certain channels for certain products. For instance, 68 percent are most likely to buy a new food product at the grocery store while 53 percent will use the mass merchandise/supercenter channel to purchase a new home care product. Marketers must closely examine purchase behavior to ensure that products are available in the right stores and with the right assortment each and every time their target shopper is looking to make a purchase.
7. Set Realistic Expectations – Three-quarters of new product launches earn less than $40 million in their first year. Marketers need to clearly understand what level of year-one sales is realistically achievable and manage expectations across the organization. But new product introductions are about more than new revenue infusion. Some new products break open category definitions while others help grow share in existing categories. And, of course, new launches keep things interesting!
8. Don’t Forget About Year Two – Seventy percent of top 2013 New Product Pacesetters continued to grow in their second year. And, three-quarters of top 2013 launches did not surpass $100 million per year until their second year on shelf. Marketers must keep the wheels spinning to continue to drive awareness and ensure that brands maintain a strong shelf presence.
Curious to see the full list of new product winners for 2014? View the New Product Pacesetters report here, and then contact me at Susan.Viamari@IRIworldwide.comwith any questions.
*Harvard Business Review, April 2011