Rethink the Product Development Puzzle – What is Innovation? – Research Vibe

The definition for innovation is “something new or different introduced” (Dictionary.com).

 What is the primary goal of every major Consumer Packaged Goods Company (CPG)? To “out-innovate the competition”. Most people equate this lofty goal to revenue, profits and the on-going business success of the company in a highly competitive market place. What successful innovation is really meant to do is create shareholder value by driving up the company’s stock price on Wall Street. Don’t get me wrong, a company must meet their financial goals to please Wall Street, but, many times, this is not accomplished through innovation. Ways such as cost reductions, restructuring, operations controls and other means are used to meet these needed financials.

To me, INNOVATION has always been a dichotomy: innovate to please the consumer by driving repeat sales and creating a permanent place on the shelf, when the real goal is to increase the share price of the company. Yet at the same time, it is also a synergy: if the consumer does not like an innovative new product, it will not succeed. If the innovation does not succeed, it does not create the shareholder value needed. What an interesting situation to think about. The success of the company is measured by both forces working directly against and with one another 

Current metrics reveal that 73% of the “innovative” new products introduced into the marketplace do not succeed (source: Accenture).

Which begs another question, how does each CPG define innovation within their product portfolio? Across companies it is often looked at and defined in many different ways. Innovation within a company can span from a new flavor to a whole new brand. The differences between these two in the “innovation lens” are quite different in terms of the activities, time, resources and costs required to get the product to the marketplace. That is why the innovation section of the product creation timeline is so critical.

How many times have you heard in a Corporate setting, “We never have time to do it right the first time, but, we always have time to do it over…”

First and foremost, a “closer in” innovation must fit with the current product portfolio so that it resonates with the consumer. Examples of this may be a line extension, a new flavor, a new usage occasion, etc. In addition the brand strategy for these types of innovations MUST fit with the current brand strategy and consumer communication. If not, while these new products may drive trial with the consumer through marketing, store placement and promotions, if it does not meet the consumer needs within the product line, there is a strong chance that it will fail.

The next level of innovation is a new product being introduced into an existing line (quite different from a closer in innovation). The new product form must fit within the existing line for the very strong reason that it meets the consumers’ needs and also makes sense to belong within the product line. For example, a company may be known for making healthy frozen entrees. Do healthy desserts or pizzas fit with the line? In other words, the food form must have a consumer relevant reason for existence – not just driving short term sales to meet a quarterly goal. And if so, as written above, things such as brand strategy, sales/promotional support and product placement are critical to success. What if the company does introduce the pizzas, but they are placed with the more indulgent pizzas? While the food may have tested off scale in concept and product tests, the consumer may become frustrated trying to find it, or, even worse, despite promotions and support, not even be aware the new form exists, making the innovation prey for that 73% failure metric. New product forms are hard unless they are closely aligned to the current products in the line and are meaningful with the consumer based on their reason for being. When working on a new product form to introduce into an existing successful line, it is critical that Marketing and R&D have done the proper exploratory work to ensure that this harmony and a reason for being for the new form really exists and is well defined.

Then, there is the largest and loftiest of goals of new product innovation – A NEW BRAND. Ask yourself as a sensory scientist, product developer or marketer how often are new brands put into the portfolio calendar, and then removed, or the brand plan changed to the point that the support does not warrant the introduction of the product. NEW BRANDS take an amazing amount of time and resources to manage through the product creation timeline. Some companies believe they do this in 18 months, but, others may take years. Why? It depends. It may be that the technology needs development. It may be that the technology is ahead of the consumer adoption curve. It may be that the product and marketing plan are not aligned. Or, it may be that a company under pressure to create shareholder value does not support and leave it in the market long enough for the “mass” consumer to adopt it. One more critical element of creating and introducing a new brand is that it aligns with the overall equity and image of the company. This is often easier to accomplish when a company has a product portfolio that is well identified by the consumer. In other words, the brand equity of the company, for example Coca Cola, Good Year Tires and Apple Inc., have product portfolios that are aligned and make sense to the consumer. In this case, it is more likely that the new brand aligns with the Company Equity in the consumers’ minds and has a higher chance of beating the odds of that 73% metric!

Ask yourself, can I quickly name three new brands that I buy or have seen on the shelves? My thirty second list: power drinks (but are they an extension of Gatorade?), the Swiffer (but is an extension of the broom and mop) and the Magic Eraser (but is that an extension of bleach and good ‘ol elbow grease)? We would love to hear your ideas for truly innovative products…
Research Vibe

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