Innovation holds a near-mythical status in the marketing world. Rare, elusive, unpredictable —innovation nevertheless remains an engine of sustained profitable growth. Innovation is mission-critical and difficult; it is also expensive: in the US, first-year marketing expenditures alone average $15 million per initiative.
Given these baseline conditions, figuring out how to improve the odds of success is both a strategic and financial imperative.
For decades, Nielsen has served as a partner and advisor to many of the world’s best consumer-facing firms. It is our job to arm companies with information, insights and expertise to launch successful new products. If there is one overarching lesson in this work, it is that successful innovation defies quick fixes, simple solutions, or formulaic reduction. Successful innovation is a journey of learning and ongoing improvement. The Breakthrough Innovation Report reflects our desire to share our experience and enhance the quest for successful innovation and profitable growth.
Nielsen analyzed more than 11,000 new consumer product introductions in the U.S. between 2008 and 2010 to determine which products demonstrated truly breakthrough results in their categories. The winners serve as an industry yardstick for evaluating success along multiple dimensions.
Successful innovation is not formulaic, but there are patterns and behaviors that winners share. By the same token, there are proven pitfalls that continue to attract many ill-fated launches. While innovation will defy any attempt to be reduced to a “how to” checklist, applying available knowledge can dramatically improve results. A high-level review of Breakthrough Innovations reveals insights into four key phases. Together, these phases provide a framework for navigating the formidable waters to innovation success.
To earn the title of Breakthrough Innovation Leader, a product needs to satisfy four requirements:
Of the 11,000+ new products evaluated over three years, only thirty-four products fulfilled all four evaluation criteria and earned distinction as a Breakthrough Innovation Leader. These products comprise less than 0.5% of all new product introductions during this period. The Breakthrough Innovation Leaders were stratified into Platinum, Gold and Silver tiers based on cumulative sales performance over their first two years inmarket.
It is worth noting that these Leaders persevered during a period of prolonged macroeconomic malaise. Since 2008, overall innovation activity in the U.S. consumer packaged goods sector has declined six percent annually. The number of BreakthroughInnovation Leaders was highest in 2009, before declining sharply by one-third in 2010. Manufacturers appeared to have responded to the decline in consumer receptivity by reducing prices of new products launched in 2011 an average of 10 percent. Time will tell if this pricing action will re-invigorate consumer demand for new products.
Despite macroeconomic uncertainty and an unrelenting competitive landscape, achieving breakthrough innovation success remains an achievable goal. For proof, look no further than the 34 new products launched between 2008 and 2010 whose performance met the rigorous requirements for Breakthrough Innovation Leaders.
Download the Breakthrough Innovation Report to learn more.