No one can argue that the primary source of growth for a company is unearthing the needs of the market and investing in the research and development of new products. But as Joan Schneider and Julie Hall have discovered most product launches fail and are never to be seen or heard of again. According to their research, about 75% of consumer packaged goods and retail products fail to achieve the $7.5 million threshold during their first year due to lack of preparation and research into the customers’ preferences.
Information Resources Inc. (IRI) documents that yearly, CPG manufacturers launch well over 10,000 new products worldwide, out of which only 10% hit the company milestones set before them. Out of the remaining 1000 products, only about 200 managed to attain the IRI New Product Pacesetter status with less than 10 new launches which capture more than $100 million in year-one sales. ”80 percent of top new brands earn less than $40 million in their first year on the market.”
New Products, Fresh Blood for Your Company
Introducing new products to the market offers certain advantages and offsets the slow market growth and the economic and political disruptions that have plagued many of developed economies in the past decade. New products will help you compete and gain a sustainable advantage within key growth pockets and bring in fresh information blood. They will revitalize your business and help you:
- Think outside the box; new products force companies to focus on fulfilling the wants and needs of their customers outside of the conventional categories set up by tradition and marketers;
- Align the market opportunities around a consumer-centric view and use predictive analysis to drive innovation and growth;
- Keep your brand on the top of your customer’s mind and take advantage of the boost in sales to grow that product’s category and draw attention to your brand and products;
- Capture the attention and the interest of your target market and create excitement around your brand;
- Offer the opportunity for smaller brands to win a hefty share in a growing market and strengthen their position – allows companies to penetrate new markets and become market leaders;
- Create awareness around your product – new products offer the opportunity to educate your customers about your product offering, create and emotional response, and engage with them omnichannel – 53% of the Americans who follow a company on social media are more loyal to their brands;
- Gather fast feedback and new ideas for future product launches;
Almost half of the new product introduction were attributed to small companies (46%) followed by medium (34%) and large (20%). Still, smaller companies claimed only 15% of the revenue, with the medium and larger companies taking the lion’s share.
Lessons in CPG Innovation
In the past few years, CPG giant P&G has proven again to be an innovation powerhouse its known for with four products in IRI’s top 10 Pacesetters, in the Non-Food category. All of these brands are household names – Gillette, Tampax, Tide, Crest – which have been improved and personalized to satisfy the latest demands of consumers. For example, the company introduced a new type of Pantene conditioner that is reported to offer better conditioning without any product built up. Similarly, P&G combined two of their foremost brands, Tide and Febreze, to create Tide PODS Plus Febreze, the first bio-based detergent which addresses the millennial need for natural detergents with odor removal from synthetic fibers. The product went on to become a top performer and brought the company an additional $87.3 million in sales. P&G’s secret recipe has been to combine research and market data to develop and deliver superior-performing products through consumer trials at every point of entry in the market.
Case Study: Beiersdorf, a world leader in the skincare industry, followed a similar strategy, in addition to consolidating their main NIVEA brand with a new NIVEA Deo Protect&Care. The Company implemented Riversand’s PIM solution to improve data analytics, reduce marketing costs and shorten time to market.
Product Information Loops
Introducing new products is a merciless process where few contenders survive and manage to succeed without high-end levels of data analysis and a quick system to test the market’s interest.
Product Information Management – PIM has been created to take the stress out of this process and increase the likelihood of success. PIM is a live information hub where CPG manufacturers can add new product data and leverage particular details to transform and shape their customer’s experience. PIM is also an excellent source for data analytics and statistics that will uncover new opportunities in the market and consumer trends and significantly increase the odds of success for all the current products you have shipped to the market.
PIM lays the groundwork for future new product introductions and helps CPG enterprises (and all the other companies who wish to develop new products or services and work with big data) to identify smaller/niche markets and develop a direct-to-consumer approach and bring products to life with rich and relevant information. With PIM you can watch the performance of your products in real-time, compare it to the competition and make incremental changes for an effective media and advertising package that will improve the brand’s offering and generate and predict sales opportunities.
4. P&G Annual report http://www.pginvestor.com/CustomPage/Index?keyGenPage=1073748359