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Who wears the innovation trousers?

business, idea, lightbulbSuperior market understanding and setting up your business to flex can place you in the enviable position of putting compelling ideas to retailers rather than waiting for their often short notice requests for the range review, writes Mark Hobart.

We all know the extreme pressures of demonstrating category growth and the scramble of rushing product innovation for impending range reviews.

The reality is retailers are now often asking for specific new products, when manufacturers should be leading the conversation.

In this context, understanding market opportunities and having an efficient stage gate process in place is still critical to success, but there is no one size fits all approach to new product development.

When retailers flex their muscles the traditional robust, but slow stage gate process becomes impractical. Taking time to perfect the product risks missing the boat, whether that is losing the opportunity to get the incremental facings or simply losing the first mover advantage.

Increasingly, the greatest risk lies in being too late, which creates a sense of urgency that leads to moving products to market hastily, often as a good but sub-optimal offer.

Manufacturers are often forced to make decisions based on little more than intuition, with mixed results. Launching unsuccessful products wastes money, undermines your credibility with vital trade channels, and can damage brand equity, making new product launches even harder in the future.

The market reality is that you must be nimble enough to adopt different approaches. For major launches that require significant capex or advertising investment the risk of getting it wrong means a more systematic approach is required.

For manufacturers wanting to secure the additional facings being dangled by the retailers, responding to their prescriptive requests for new products at short notice necessitates a speedier but more risky approach.

So with the added pressures coming from retailers, on top of the usual internal pressures, how do you navigate through the complexity to deliver innovation success?

Every year at TNS we assess close to 10,000 new products globally and the factors that influenced their success or failure. This allows us to identify the three top insights to allow you to drive innovation success.

1. Build a foundation of in-market opportunities

The most commonly cited cause for innovation underperformance that we hear from our clients is inadequate market analysis. One of the biggest temptations is to start the innovation process with ideas.

While we all have good ideas, often the needs and preferences of your stakeholders are vastly different to that of your target market. The innovation process must be built on a solid foundation of market understanding where genuine consumer tensions and new product opportunities are identified and sized, and where success requirements are clearly understood.

This foundation delivers confidence in choosing where to spend for big innovation projects. Crucially, this groundwork also means you also have the information you need to powerfully choose how to react to the retailers’ prescriptive demands for specific products.


2. Protect your brand and business reputation, no matter what

No matter whether you are innovating for that elusive prized facing or have carefully developed new products in your pipeline, ensure your brand credibility is top of your checklist.

Create the best product you can within the parameters you face, but remember that quality perceptions are key.

Even in the rush to get to market, do not give in to the temptation of promised new facings by putting just anything on the shelf. And also don’t assume that overselling a new product and masking its deficiencies through marketing spend will hit targets.

Any initial uptake only delays failure; it cannot avert it. You will have far better prospects for sustainable growth if your new product delivers against the brand expectations that consumers have when first buying it.

3. Measure incremental growth potential

It is not enough for a new launch to generate a high volume of sales. You must ensure that enough of those new sales are incremental to your existing portfolio. Of course, testing cannibalisation levels is a standard part of the innovation process, but generally this is undertaken too late – once too much has been invested into developing the product.

Do not just back the most appealing or promising ideas but rather measure the incremental growth potential of ideas at a very early stage before significant investment is made.

We have found that in more than 40 per cent of cases, if incrementality was assessed early in the process, different development and launch decisions would have been made.

The reality is that innovation and product development is not easy and the power of the retailers in Australia has made it even more challenging for manufacturers.

You must own your innovation. When retailers make new product requests make sure you are confident in knowing a) if you should agree to the request and b) how to respond in an agile and effective manner.

Innovation success will not come through the same strategy or process every time, so always ask yourself what the bigger risk is: being late or being wrong.

Businesses that identify these situational opportunities and flex across innovation strategies will undoubtedly be in the strongest position to wear the innovation trousers.


Mark Hobart is an executive director, innovation and product development at TNS Global, the world’s largest consumer and shopper insights agency. He advises clients on growth strategies throughout the innovation process, from identifying early stage growth opportunities through to successful launch.

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