Category Archives: CPG

Five Secrets of Successful Product Launches

The Nielsen Company, which knows a thing or two about product performance, provides useful insights in the latest NielsenWire into some of the key requirements needed to succeed in an ever-changing marketplace. The analysis is based on 500+ recent in-market cases globally.

It has become increasingly challenging to bring new products to market. Over the past decade, significant changes have occurred—consumers are more sophisticated, the value equation is shifting, retailers are more powerful and the communication models have been revolutionized. Additionally, product development time is now shorter, competition is fiercer than ever, and there is continued fragmentation at the shelf. Despite these changes, many new product development processes and metrics have not been adapted.
Game changing metrics
It is no secret that most new products fall short of expectations for a variety of reasons. The ones that achieve in-market success do three fundamental tasks really well:
Master the Trial Build Chain: Successful new products must have strong consumer appeal and be supported through quality distribution and awareness.
Ensure Strong Ongoing Volume: Successful new products deliver on their consumer promise, with strong performance and on-going marketing support.
Maximize Franchise Incrementality: Successful new products attract new triers or generate new usage occasions in order to minimize cannibalization of established franchises.
While these fundamentals have not changed, the media and retail landscape has, and the current metrics and action standards used in the past are no longer enough to guarantee success today. To gain a fresh understanding for new product dynamics in the context of current marketplace conditions, Nielsen BASES analyzed 1,900+ recent product launches globally and examined how each initiative did in the marketplace against its goals. The net result was a compilation of 500+ cases of in-market launches that were used to develop the next generation success models, providing a strategic framework for how to win in today’s marketplace.

It has become increasingly challenging to bring new products to market. Over the past decade, significant changes have occurred—consumers are more sophisticated, the value equation is shifting, retailers are more powerful and the communication models have been revolutionized. Additionally, product development time is now shorter, competition is fiercer than ever, and there is continued fragmentation at the shelf. Despite these changes, many new product development processes and metrics have not been adapted.

Game changing metrics

It is no secret that most new products fall short of expectations for a variety of reasons. The ones that achieve in-market success do three fundamental tasks really well:

  • Master the Trial Build Chain: Successful new products must have strong consumer appeal and be supported through quality distribution and awareness.
  • Ensure Strong Ongoing Volume: Successful new products deliver on their consumer promise, with strong performance and on-going marketing support.
  • Maximize Franchise Incrementality: Successful new products attract new triers or generate new usage occasions in order to minimize cannibalization of established franchises.

While these fundamentals have not changed, the media and retail landscape has, and the current metrics and action standards used in the past are no longer enough to guarantee success today. To gain a fresh understanding for new product dynamics in the context of current marketplace conditions, Nielsen BASES analyzed 1,900+ recent product launches globally and examined how each initiative did in the marketplace against its goals. The net result was a compilation of 500+ cases of in-market launches that were used to develop the next generation success models, providing a strategic framework for how to win in today’s marketplace.

These are the five requirements identified by The Nielsen Company as essential for new product success:

1. What worked yesterday might not be good enough for tomorrow.

Many organisations have long-established performance standards that they use to evaluate any new product. Sorry, that’s not good enough in today’s marketplace. You need to guide your new product development decisions based on the most up-to-date, multifaceted models of in-market success, to help you anticipate issues more effectively and bring more sound propositions to market.

2. Consumer adoption may be complex, but the steps of the process are clear.

Measure and optimize everything that matters. The current key measures of success—such as purchase intent, units per purchase and frequency of purchase—continue to be critically important and are key to accurate estimations of volume potential. But there are a host of new factors—such as breaking through clutter, generating buzz and offering true innovation—that also need to be considered.

In particular, positive word of mouth is essential. April’s Nielsen Global Online Consumer Survey (of over 25,000 Internet consumers from 50 countries) found that recommendations from personal acquaintances or opinions posted by consumers online are the most trusted forms of advertising in the twenty-first century: ninety percent of consumers surveyed noted that they trust recommendations from people they know, while 70 percent trusted consumer opinions posted online.

3. What it takes to be ready for a successful launch varies at each step in the adoption process.

The consumer adoption process is all about being relevant, getting noticed, getting found on-shelf, being affordable, competitively-priced and delivering on the product promise. Those attributes remain as enduring as ever.

However (depending on the category) it may not be necessary to achieve top of the line excellence for every attribute. For some measures, being “average” may be good enough for in-market readiness and improvements may have limited returns on the potential for success. For other measures, it may be more important to perform better than your competition, as this could represent an area of real competitive advantage.

4. Success is about doing most everything well enough, not about really excelling at one facet.

In-market success is not about doing one thing really well. Rather, it is about doing everything you need to do—covering every touch-point in the consumer adoption process—sufficiently. The initiative that does everything enough, but isn’t a star at any one thing is likely to be a success. A single fatal flaw can derail even the otherwise strongest of initiatives—think “weakest link”. Many marketers fall into a trap of focusing only on the one or two areas that a new product does really well, but ignoring areas that represent barriers to success.

5. Measure what matters, when it matters.

Set action standards for every new product development stage based on the relevant consumer touch-points. And the earlier you start in the new product development process, the better. Even at the earliest stages, you can understand an idea’s ability to stand out, catch attention, and meet a relevant need. As the idea progresses into a more developed concept and branding, features, and pricing are built in, more elements of the communication and point of purchase dynamics can be folded in.

There are no guarantees of success in new product development. But not taking account of these five requirements could be a quick shortcut to failure.

Retail at the Inflection Point

The Coca-Cola Retailing Research Council Europe (CCRRCE) is an organization dedicated to the development of a better understanding of the food retailing and allied merchandise distribution business in Europe. The focus of its energies is to identify and then to study selected critical issues and, when appropriate, to present the findings in a suitable forum.

The most recent study (June 2007) released by the CCRRCE is “The Inflection Point” – a report on signposts or predictors of impending change in the marketplace, how to spot them and what to do about them. As the report notes, “there are points in time in the evolution of markets when an Inflection Point is reached that predicts or even dictates changes in retail practices. Failure to recognise or respond to changes in observed or predicted consumer behaviour, market conditions or opportunities has often spelled disaster for retailers around the world.” No pressure, then.

Six impending Inflection Points identified through the study include:

Age of Wellness
An explosion of consumer interest in Health and Wellness issues, resulting in significant shifts in product mix, services and sourcing for retailers. Pushed to its extreme, we may see a world where every product has to be able to broadcast some sort of wellness benefit. The first retailers who figure out a way to integrate the larger concept of wellness into their business will turn the market to their advantage.

Format Frenzy
An increasing number of formats will be developed and managed by retailers as a way to respond to the fragmentation of both consumers and shopping occasions in their core markets. One size no longer fits all. The impending ‘death of the traditional hypermarket’, as we know it today, will force retailers to venture into new formats and to discover new functions for their asset base. Retailers who wish to grow or maintain market share will have two basic segmentation schemes: 1) by format size and 2) by format purpose. The Inflection Point will come either when one retailer manages to perfect one format, effectively becoming a format ‘killer’, or manages to create a brand which seamlessly stretches from kiosk to super-centre to virtual store.

Greentailers
Some retailers will emerge as active agents of social and environmental change, taking a pro-active role in protecting the environment and leading the charge on accountability. All retailers will have to be able to prove their environmental and ethical credentials. Currently a point of differentiation and the license to charge a price premium, the demonstration of environmental/ethical behaviours along the whole supply chain will evolve to become a hygiene factor. The ethical standard will constantly shift, following the market leaders and consumer and media demands.

Micro-tailing
Retailers will have the ability to customise the assortment and service proposition in their stores through the use of consumer insights, ultimatelycreating ‘unique’ stores for their customers: ‘MyStore’. This will be achieved through the development of the right format to fit each community and the tailoring of the assortment in that format. Mastering and applying precise consumer insights on a localised basis will be essential in these executions.

Branded Retail
Select retailers will be capable of elevating themselves to the status of true brands through unique assortments, differentiated marketing messages and an unmatched competitive position. They will effectively become a “market of one”, creating a sustainable competitive advantage.

Techno-change
Technology breakthroughs which allow relevant information transfer across platforms and systems along the supply chain right up into the consumer space will provide a sustainable competitive advantage for companies who back the right technologies and invest early. Technology breakthroughs will help substantially reduce the costs of doing business and provide consumers access to products in new and different ways.

If you’d like to future-proof your organization against these potentially-fatal disruptors, check out “The Inflection Point”. We do happen to have an electronic copy of the study, yours for the price of an email.