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New product development: incrementality not always driven by uniqueness
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New product development: incrementality not always driven by uniqueness

Throughout my time at Nielsen, I’ve been part of a team that has tested the viability of around 200 new products and concepts for FMCG clients across a range of categories. 

One thing I’ve learned from all of this new product testing is that having a good product is only half the battle in achieving innovation success. There are a number of other strategies that can be used to achieve success in innovation; and not every new product needs to be completely unique to have a positive impact on their category. 

A well-defined strategic approach to marketing, distribution and targeting is just as crucial, as well as a clear understanding of where the launch or activation profile of a product fits. At Nielsen, we work with closely with our manufacturer clients to measure whether or not a product will deliver incremental growth with our BASES solution. We can also help them focus on exactly how to support the truly viable initiatives in a way that creates a portfolio win for their brand.

MAKE YOUR EXISTING PRODUCT ‘GOOD FOR ME’ AND ‘GOOD FOR WE’

Make it ‘good for me’ (health concerns) and ‘good for we’ (environmental concerns) are two key areas where we have seen successful innovation within existing brand portfolios.

There are many examples of where manufacturers have made product or packaging adjustments or extensions to their existing brands that tap into consumers’ growing concerns around sustainability and the environment. Skincare and personal care brands are increasingly ditching chemicals for locally-made, natural ingredient-based and cruelty-free products. In the UK, vegan and cruelty-free personal care increased 21% over the past three years, while these products in the US grew 40% over the same period. 

In Australia, 74% of consumers say we are not doing enough to protect the environment. Brands that have made strides toward plastic reduction, recycled packaging or reducing food waste have been met with favourable results in a number of grocery categories including eco household products, plant-based meat alternatives and ‘ugly’ fruit and vegetables.

UNDERSTANDING THE KEY REASONS WHY NEW PRODUCTS FAIL

Global BASES metrics have shown that 85% of new product launches fail. According to Nielsen’s 2018 How to Launch more Incremental Innovations Report, there are three major reasons why innovations often fail to deliver incremental growth:

  • Lack of action standards for incrementality: Many innovation processes don’t effectively identify the initiatives with the highest incrementality potential until it is too late. The new Activation Profiles framework from BASES incorporates incrementality from an early stage.
  • Underestimating cannibalisation from line extensions: Closer-in line extensions can be highly cannibalistic to the brand they’re trying to build upon because they’re so similar to existing products.
  • Failure to account for marketing support trade-offs: New product launches draw their funding from their parent brand’s marketing budget. BASES has a dedicated model to help understand true incrementality after taking into account how much the line extension will cannibalise the parent brand due to executional elements (i.e. stolen facings from parent brand, borrowed support, distribution, etc)

While it’s true that not all new product launches are designed to be truly unique or incremental, it’s still risky to overlook their cannibalisation potential. Some cannibalisation and marketing plan reallocation is expected when launching line extensions, but the key to incremental volume is to minimise the effects so that growth can be achieved. 

For these reasons, brands should understand the incrementality potential of their new product launches early in the innovation process. This is true even for “small” innovations, such as new flavors, varieties and package sizes, which are frequently overlooked for incrementality assessment because marketers underestimate their potential to impact the parent brand negatively.