New product development is the lifeblood of every company – yet only 80% of product launches create a positive impact on the bottom line. With NPDs being one of the more challenging things to develop successfully, experts Tanja Petrovic (Innovation Strategy Director, The Coca Cola Company), Tony Marcello (Consumer Insights Manager – Morning Foods, General Mills), and Nikola Golubovic (Shopper Insights Director, EyeSee) deep-dived into where and how to approach testing NPDs.
Last year, consumer shopping and how they use products changed – and with it, so did new product development. Studies show that 40% of shoppers are ready to try new brands and products. Did the pandemic impact strategies for new products? Is brand loyalty more of a priority than before?
Due to its long-lasting legacy, credible products, and a loyal bond with the consumers, the Coca-Cola Company found itself in a privileged situation during the pandemic – most of its key brands were not negatively impacted. But what has changed, under the pressures of a health crisis, is the way people are consuming products.
Nowadays, consumers are more open to exploring new products and different types of categories – driven by two factors: the inability to travel and have new experiences, but then compensating staying at home by trying new products. According to data from the Coca-Cola Company, in Germany alone, 72% of consumers aged 16-34 are willing to try new exotic flavors. This remains true for France and Spain, where 65% stated they want to try flavors they never had before in an attempt to, in a sense, transport themselves to a different part of the world. Another pandemic-driven change is that consumers are now looking at their products as a vehicle for better health – and functionalities like immunity support, energy boost, etc. are gaining traction.
Given all of these changes in consumer behavior, how has the new product development process been impacted? What does the process in General Mills look like now?
While the change in consumer habits transformed the innovation process in General Mills, it is also a natural step for any company that comes over the years. Tony believes that it really comes down to attempting to better understand consumer habits, wants and needs – and doing a lot of research to achieve that. But apart from learning how to truly tap into shopper behavior, understanding how to better communicate at the first moment of truth and how to be better from a marketing standpoint is also crucial.
To tap into these (unmet) needs, a lot of research is needed. Consumers don’t always do as they say, so it’s important to find methods that are accurate at measuring what the shoppers are actually doing.
What are some of the key reasons NPDs fail? What are the essential things to keep in mind?
When it comes to new product developments, bottlenecks can occur at any step of the process. The most common reasons behind innovative initiatives’ failures are (mis)understanding consumer behavior, issues in product development, inadequate product communication at the first moment of truth and lack of marketing support.
On top of this, researchers are often inclined to get as much information out of the shopper as possible – but sometimes that’s not realistic. Consumers can easily state whether they like or dislike a new product or concept, but questioning beyond that is where the real insights lie. And while many shoppers say they are open to trying new products – General Mills’ expert guesses that 90% of their shopping cart is things they typically buy, meaning standing out on the shelf can be a challenge. The aid for this? Instead of doing one test to understand the first moment of truth – do a couple, and bring it earlier in the process in order to fully understand the real potential. Another game-changer is conducting the tests in the consumers’ own space.
Is there something smaller innovators and disrupters are leveraging that big companies are missing? What can we learn from them?
Big companies tend to think big – from developing new products and expanding their portfolios to launching campaigns that cover every consumer touchpoint. But, perhaps counterintuitively, small companies’ success lies in just the opposite. Here’s what small innovators are doing that bigger ones should consider, as explained by Tanja Petrovic:
- The adoption of an agile approach – big systems don’t tend to lean towards agile principles, but an iterative innovation process and constant improving along the way is the key to a successful launch
- Managing everyday uncertainties – instead of the go-to move of attempting to remove uncertainties, large companies need to learn how to deal with them as a normal part of business
- Efficient vision and mission with a purpose – with big brands come wide portfolios that need to cover different needs but staying focused on the vision and mission could resonate with the consumers
- High engagement internally and externally – what smaller businesses excel at is developing loyal relationships both with employees and consumers
- Consistent interaction with the consumer – staying in touch with the consumer through social media provides real-time feedback on a product, service or concept
- Leveraging alternative channels – instead of opting for the mainstream channels first, alternative channels are a great place to build a brand and push out products
On top of this, if small innovators are providing a better or a different quality of a product or service, they can apply premium positioning and pricing strategy OR they provide better convenience while shopping or offer the product at a more attainable price.
How has researching innovation changed over the years?
First of all, the context has changed – the ideal store and shopper habits changed and are continuing to evolve – and this has created great pressure for brands, agencies and researchers to do everything faster and more efficiently. Over time, researchers learned how to ask and listen, but nowadays, the key challenge lies in tying all the pieces together, overcoming the obstacles and obtaining the full picture. Recognizing that there is a discrepancy between what consumers say and do, usually means that the outcome wasn’t properly anticipated. As Nikola explained, for EyeSee both the voice of the consumer, and measured behavior are important – and combining the two factors unlocks risk management analyses.
By doing volumetrics it is possible to estimate actual sales potential all while listening to consumers to help improve the products. This is done through leveraging online virtual shopping environments and putting shoppers in simulated, yet typical shopping situations. The possibilities of this approach are endless – from testing different POS materials, varying different placements, planograms, and types of displays while measuring the sales potential of the new product to repeating purchases and sometimes exposing shoppers to out of stock situations in order to identify what are the risks of listing new SKU – testing in-context holds the key to NPD success.
Interested in how our experts ensure NPDs are a success? Make sure you check out the full webinar!