CPG Innovation: The Science of Success
By Rob Wengel, SVP, Nielsen, Innovation Practice
As the U.S. economy has steadily improved, the pipeline for CPG new product innovations is at an eight-year high. Historically, new product development took CPG companies between one and five years, but we are seeing this reduced significantly. The application of Lean Innovation principles, digital tools and predictive analytics are accelerating the development cycle, likely resulting in many new products hitting the market in the next 12-24 months.
Given the elusive search for CPG top-line growth, coupled with the challenge to streamline costs, best practice companies are avoiding the pressure to cut innovation budgets, and, in fact, have found ways to do both. Lessons from Nielsen Breakthrough Innovation Winners help to debunk conventional wisdom that new product success is random, lucky, magic, or reserved for entrepreneurs and risk takers. In fact, Nielsen is working with innovators to flip the odds from high failure to regular, repeatable and scalable success. Avoiding short cuts and applying the science of innovation cuts waste and inefficiency by bringing more likely to succeed products to market.
Retailers and manufacturers not investing aggressively in new branded and private brand product development risk falling behind, while competitive new products are hitting the market.
Marketers using the right “Job” spec win loyal consumers and create growth.
Just as total quality management changed supply chain and manufacturing, the science of innovation is able to transform currently disappointing innovation results.
Where some marketers see crowded and mature categories -- often developing products based on competition or current product and category definitions -- successful innovators see circumstances of non-consumption, trade-offs and unmet consumer aspirations. Consumers hire products into their lives to perform a job. Existing products often leave something to be desired, so consumers make minor trade-offs or develop compensating behaviors. Nielsen Breakthrough Innovation Winners demonstrate that applying a deep understanding of consumer circumstances is the essential unit of great innovation work. In practice, this puts the consumer solution, the “Job Spec,” at the center, from idea through development to in-market launch execution. It's the difference between a minor new product and breaking through a crowded market.
Nielsen’s Breakthrough Innovation Project reveals framework for scalable success
The 2015 Nielsen Breakthrough Innovation Award celebrates high achievement, and importantly provides our industry critical and applicable lessons. Of the 3,522 new products launched in 2013, 12 achieved the criteria to be called “Breakthrough”: distinctiveness (new value proposition, not minor product, packaging or size changes); relevance (achieving at least $50 million in retail sales in their first year); and endurance (achieving at least 90 percent of year one sales in year two). Breakthrough products are great for consumers, while energizing aisles, expanding categories for retailers, and adding loyal consumers and growth for brands.
The 12 Nielsen Breakthrough Innovation Winners for 2015:
- Advanced Haircare, L’Oreal Paris
- Atkins Frozen Meals, Atkins Nutritionals
- Duracell Quantum, Procter & Gamble
- Lunchables Uploaded, Kraft Foods
- Monster Energy Ultra, Monster Energy Company
- Mountain Dew Kickstart, PepsiCo
- Müller Yogurt, Muller Quaker Dairy (PepsiCo)
- Redd’s Apple Ale, MillerCoors
- Special K Flatbread Breakfast Sandwich, Kellogg’s
- The Red Bull Editions, Red Bull
- Tidy Cats LightWeight, Nestlé Purina
- TOSTITOS Cantina Tortilla Chips and Salsa, Frito-Lay (PepsiCo)
In our fourth year of the award, we have now studied 20,000 launches and 74 winners, and we take the optimistic view that the demonstration of innovation success is accessible in any category for any size company. We encourage marketers to take stock of their innovation prospects. Are they applying the science to innovate faster and more reliably, creating growth, or taking short-cuts and risks that create waste?