New products placed on the European market? In 76% of cases they fail, and within a year they disappear from the shelves of retail stores without even having crossed the threshold of 10 units sold. This is what emerges from the Breakthrough Innovation Report, released today, a study by Nielsen based on the analysis of 12.000 cases of launch of consumer products in Europe since 2011.
For every four new products, therefore, there are three that fail to conquer the market, generating losses estimated at millions of euros. What to worry about industries and make them change their approach to innovation. In fact, the Report outlines that marketers have all the tools to reduce these failure rates and achieve 85% success, through the application of appropriate strategic formulas in the approach to new launches and laying the foundations for a solid culture of innovation.
Of the 12.000 product launches examined (of the following categories: chocolate, coffee, carbonated and non-carbonated drinks, detergents, pet food, detergents, ice cream, deodorants, biscuits, beer, cereals, toothpastes, energy drinks, yogurt, shampoo) only seven were declared by Nielsen i winners of the 2014 European Breakthrough Innovation ranking:
Foster's Gold (beer)
Magnum Infinity (ice cream)
· Milka Choco Supreme (chocolate)
Mullerlight Greek-style Yogurt (yogurt)
Lucozade Energy Pink Lemonade (drink)
Oral-B Pro-Expert All-Around Protection (toothpaste)
· Sodebo Salade et Compagnie (salads)
In addition, three other launches are well positioned to achieve the same title in the coming year:
· Lay's Xtra (crisps)
Cadbury Dairy Milk Marvelous Creations (milks/creams)
Ariel 3-in-1 Pods (detergents)
According to a standard of excellence, a product can be classified as a winner in the ranking of successful innovations (Breakthrough Innovation Winner) if it has the following three characteristics: be differentiated (constituting a new proposal and not a simple restyling); performing (generating a minimum cash flow in one year of 10 million euro); have stability and resistance (maintaining, at least, the level of sales in the second year equal to 85% of those of the first).
The Nielsen study identifies four basic rules common to every type of successful launch:
1. Identify the right innovation – find out the motivations of consumers: why do people not use a certain category of product? What aligns consumers, what are the inconveniences, the compromises? Where does disaffection arise?
2. Giving innovation the right prerequisites – the product must respond to a real market need, it must be differentiated and of superior quality to what is already on the market; the company's approach must be able to identify those elements considered innovative but weak before the launch of the product, to avoid probable risks of failure;
3. Choosing the right launch strategy – the marketing activity must be creative, so as to be original and convincing on the type of innovation introduced
4. Create the right team of collaborators– success depends on the link between all those involved in the conception of the new product, from the most strategic to the most operational functions
“On average in Italy, successful innovation has generated sales equal to 7 times the average turnover of innovations, in line with the result at a European level. In the case of biscuits and juices, it has even come to generate sales of up to 11 and 16 times higher" - he declared Christine Gringel, head of Nielsen's innovation area in our country.
“Product innovation is therefore the key to success and is within the reach of every marketing person, regardless of whether the brand is important or not, local or international or whether the category it belongs to is growing or not. In Italy, for example, the ice cream and yoghurt categories, whose sales are down respectively by 5% and 6%, show a contribution to total sales of the category equal to 8-9%, a sign that the decline in one sector does not stops product innovation” – continued Gringel.
“Juices, cereals, sports drinks and household cleaning products were the most innovative product categories in Italy compared to the European average. If this year the Italian launches narrowly missed the sales target of 10 million euros, we are sure that the strategy proposed in the Breakthrough Innovation Report is the basis for realizing those successful innovations that will take us out of the crisis” concluded Gringel.
The Nielsen Breakthrough Innovation in Europe Report is available to download free of charge from Nielsen.com starting mid-September.
