Expert Column: What Makes New Products Succeed?
New product innovation is exciting; it breathes new life into existing categories, sometimes creates entirely new categories, and drives the industry forward by uncovering and then fulfilling unmet consumer needs. However, the harsh reality is that literally thousands of new product launches fail within their first year, and those failures cost manufacturers millions of dollars.
The stats are staggering: Nielsen’s Breakthrough Innovation Project examined tens of thousands of new FMCG/CPG launches across the globe from 2008 to 2012 and found that 76 percent of new product launches failed and two-thirds never even achieved 10,000 unit sales.
Unravelling the DNA of Successful Product Launches
It's not all doom and gloom, however. What about the 24 percent of new products that breaks through the industry noise and category clutter to win a place in our shopping carts and daily lives? What makes those products winners in segments that seemingly become more and more difficult every day?
That success has little to do with luck or genius, and basic truths were consistent regardless of geography. In every region, there were fundamental components to the DNA of successful product launches.
Disruption Rules
Consumers respond positively when companies offer them new products that solve their problems, meet their needs, end trade-offs and do important jobs. Within the teams that got it right, four common principles were identified in each success story:
- Demand-driven insights
- Rigorous, collaborative development
- Getting the activation right
- Top-to-bottom support within the organization
Demand-driven Insights
It doesn't matter whether the brand is small or large, local or multinational; the category can even be in decline. In India, the biggest success stories came from batteries, milk and personal hygiene products -- all mainstay categories. That said, minor refinements to existing brands aren't good enough. The innovation is in delivering a new value proposition to the market, even if the product category has been around forever. The best products tend to overcome specific instances of struggle in consumers' lives.
Take pet lovers in the United States, for instance. Research shows pets love wet (canned) food, but the same research shows that for pet owners, the packaging is cumbersome, they may not like the smell of the product, and find it to be messy. The team at San Francisco-based Big Heart Pet Brands set out to solve that dilemma, creating Meow Mix Tender Centers pet food. Pet parents enjoy the easy storage and convenience of dry pet food, and pets get the moist, tender center they love from wet food. The brand story is beautiful, especially if you own a pet, but true happiness for Big Heart Pet Brands is found in the sustained revenue the product continues to generate.
Because breakthrough innovation is designed to overcome a circumstance of struggle in consumers’ lives, they may often redraw the lines of how categories are described and defined in the minds of consumers. That category disruption is a clear sign of a winning solution.
Rigorous Pre-launch Evaluation
Companies need to insist that weak innovations fail before millions of dollars and brand capital are spent on a large-scale product launch. The product has to have clear differentiation, market relevance and superior qualities to break through the commodity or novelty phase, and that requires a keen insistence on consumer testing and product adjustments. The same held true in every market across the globe; this developmental rigor helps marketers better understand a product’s potential for sustained consumer demand during the transition from trial to adoption.
Rigorous collaborative product conception increased the development speed by exploring all possible product permutations to pinpoint the product that would perform best in the market. New product teams that had higher levels of cross-functional collaboration generated higher levels of in-market success.
Collaborate, Create -- Activate
The most successful companies threw out the old activation strategy rules and took a blank-slate approach. One trend in particular among successful launches was very early collaboration between manufacturers and retailers. Collaboration accelerates time-to-market, because all functions get aligned earlier.
There's no substitute for creative marketing campaigns with the right balance of originality and brand truth. The activation strategy has to be right the first time.
The Oral B Pro Expert launch in the United Kingdom was hampered by the dominance of other prominent brands on the oral care shelf. Yet the team engaged customers early with a compelling pitch that was perfected during an interactive session with trade marketers aimed at educating them about the remarkable product performance Oral B Pro Expert. Consequently, the toothpaste gained prominent distribution and full retailer backing before competitive brands even had a chance to react.
To make good creative, marketers need comprehensive consumer insights to guide the way: what they currently buy and why, where they buy, what media they’re consuming. In addition, understanding the underlying needs and demographic or socioeconomic trends is critical. Without those third-party insights, the investments made in getting the product right are lost because the market approach for creative and advertising fail. Great creative is irreverent, original and counterintuitive, which requires knowing your consumer.
Top-to-bottom Support: Everyone's on Board
Distraction is one of the greatest threats to breakthrough success. Throughout the case histories of the most successful launches from all over the world, executives remarked that a cornerstone of the initiative was organizational togetherness and disciplined team effort. This focus yields breakthrough products with significantly faster cycle times and lower cost.
In India, Maggi Nutri-licious Pazzta Tomato Twist was conceptualized on the belief that there was potential to create a new category by introducing a pasta offering that was superior, nutritious, tasty and easy to prepare. Company insights pointed toward teenagers as the optimal primary consumer for the product. Everyone, from marketing to the team at Nestlé's R&D Center in Germany, agreed on the strategy. Because of that universal alignment, a new product category was created for the region, and the company enjoyed sustained revenue growth from the product quarter after quarter.
Success isn't a fluke. The numbers don't lie. When St. Louis-based Anheuser-Busch introduced Bud Light Lime-A-Ritas to the market, it was a true category expansion and case study in revenue growth. Bud Light Lime-A-Ritas sold more than $500 million in two years, and more than 70 percent of the revenue generated came from new consumers – mostly women.
Each of the previously mentioned strategies was embedded in the DNA of the most successful product launches of the past five years. Marketers who act on all four principles have a much higher rate of success on their innovation journeys. Regardless of category or geographic region, if you build it, the research says they probably won’t come -- unless you build it with a breakthrough approach.