DEVELOPING and launching a new innovative product can be like running the gauntlet. There are many hurdles to jump long before the product even gets to the supermarket shelves.
And that’s when the real contest starts.
But what can companies do to ensure its new product is a hit with the public. Is there a science behind innovation? Is there a formula which can be followed to ensure the success and longevity of a new product.
In Nielsen’s Breakthrough Innovation Report, research shows that in the past two years, only 48 out of 10,700 innovation launches in the Australian grocery sector have turned out to be ‘breakthrough innovation’.
According to Nielsen, to fit the bill for ‘breakthrough innovation’, the product must be distinctive (it must deliver a new value proposition to the market), relevant (defined as a willingness to spend and an ability to generate broad penetration and have generated a minimum of $4.5m in annualized first year sales) and have endurance (have achieved at least 90 per cent of year-one sales in 2015).
According to the report 53 per cent of products on grocery shelves today were launched in the last five years.
One-quarter of new products do not make it past year one of launch and of those that do make it past the year one mark, 35 per cent will not achieve the same level of sales as the previous year. Breakthrough products, however, show the potential for longevity and category growth.
Product of the Year’s Global CEO Mike Nolan says: “New technologies and an increasingly globalised world requiresbrands to rethink their product marketing strategies. Human insight remains global, and marrying that to local cultural insight is the sweet spot for great product innovation.”
According to the report, breakthrough innovation is rare, and it delves into the “Jobs Theory”.
“But, is it a coincidence of unpredictable events and luck? The findings of our investigation is clear: innovation is neither magic nor random,” the report says.
The report says in order to understand what causes a person to consume a particular product in a given situation, we first need to understand what the consumer desires in that particular circumstance.
“It turns out that people don’t so much buy products; they hire them to perform jobs in their lives.
“Consumers pull brands into their lives to address circumstances in which they need some help to resolve a struggle or fulfill an aspiration—to make progress.
“Consequently, for marketers to develop successful innovations, they need a deep understanding that centres neither on the consumer nor on the product, but rather on the circumstance.
“What causes a person to consume is neither the identifiable qualities of the consumer (such as demographics) nor the product attributes, but rather it is the circumstance-specific job to be done.”
To read the entire report, click here: Nielsen Breakthrough