New Product Launches: Why the Second Year is More Important

By Larry Levin

Product innovation is vital for CPG companies that want to continue to grow, and those that fail to innovate can find themselves literally pushed off of store shelves. However, while most new brands have robust launch year plans that include maximum marketing support, many brands don’t actually hit their stride until the second year.

According to IRI’s latest New Product Pacesetters report, which analyzes the most successful new product introductions, thousands of new brands were introduced last year but just seven of them made over $100 million – in fact, three-quarters of them earned less than $40 million. But, among the top CPG products launched in 2013, 70 percent had year two sales growth and 25 percent hit $100 million in their second year.

So how can a brand best plan for year two? Just like year one, it requires a comprehensive strategy based on your target shoppers, promotions and distribution.

First and foremost, it’s important to have realistic expectations for year one. It takes a lot of work to get on the radar of consumers who may already have several other choices in your category and whose paths-to-purchase are no longer a straight line. Instead, understand what level of year one sales is really achievable and manage expectations across your organization.

Secondly, continue to focus on advertising and other promotions during the second year. Many brands pour all or most of their budgets into year one, but your best awareness-building and consumer trial efforts shouldn’t conclude at the end of the product’s first year. These efforts must be maintained at least through several purchase cycles. 

During year two, you also want to broaden product distribution and grow shelf space, whether in brick and mortar retailers and/or online. Most consumers are too time crunched to go on a mad hunt to find new products, so it’s up to marketers to have their products in places where their core consumers shop and ensure that there are enough inventories to fulfill demand.  

Finally, sustain merchandizing and couponing support. There are over 40,000 products in an average-size grocery store, so you have to continue to find ways to stand out in order to grow volume and share. According to New Product Pacesetters, three-quarters of brands that surpassed $100 million in year two had continued their merchandising support and 60 percent maintained their couponing levels. Shoppers still value good deals, and this isn’t going away anytime soon.

By taking a longer-term approach, including tweaking marketing plans continuously and maintaining well-rounded support, new brands can stay top of mind and top of basket.

To hear more on this topic, join IRI for our upcoming webinar “Product Innovation: Who’s Winning and How?”

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