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.
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.