Report shows 76% of new product launches fail within a year, but outlines the critical steps needed to achieve ‘breakthrough innovation’, and identifies seven recent launches as iconic successes
London – 09 September 2014 – Thousands of new product launches fail in their first year, costing businesses millions of pounds, yet manufacturers can reverse these outcomes by changing their approach to innovation – according to a major European study launched today by Nielsen, a leading global provider of information and insights into what consumers watch and buy.
The Nielsen Breakthrough Innovation Report – based on an analysis of 12,000 FMCG product launches across western Europe since 2011 – shows that two-thirds of new products never even achieve a mere 10,000 unit sales, and three-in-four fail to retain a retailer listing beyond their first year. But marketers can predictably and consistently overturn historical high failure rates to achieve 85% success, by changing their approach to innovation and building a passionate culture around innovation.
Johan Sjöstrand, managing director of Nielsen’s innovation practice in Europe, and co-author of the report, explains: “Through the study process, we found proof that innovation success is never just a remarkable coincidence. It’s about deliberate attempts to disrupt all aspects of the innovation process and challenge everyday norms, such as consumer attitudes, long-standing beliefs, launch mechanics, organisational behaviour and disciplines.”
The Nielsen study identifies four principles that are common to every breakthrough innovation success:
- Choice: get the right innovation – make the right choice of innovation to pursue, by walking in the shoes of the consumer to uncover key demand-driven insights. Ask questions like, why don’t people use a category? What causes them stress, confusion, inconvenience or compromise?
- Process: get the innovation right – have the right organisational framework and processes to shape the chosen innovation into a market-ready offer that has relevance, differentiation and superiority; organisational culture must also allow weak innovation ideas to be filtered out before launch
- Marketing: get the activation strategy right – creative marketing has to be original and has to tell the story of the innovation
- Togetherness: get everyone right behind you – breakthrough success is the product of organisational togetherness, from top to bottom.
Sjöstrand continues: “The absence of any one of these four components – no matter how good the other three – severely limits the possibility of breakthrough success.”
In the report, Nielsen also spotlights real-life examples which have recently achieved breakthrough innovation success. Setting the bar high, for a product launch to earn the title of Breakthrough Innovation Winner, three criteria had to be met: distinctiveness (delivering a new proposition, not just a refinement); relevance (generating a minimum of £10million in year-one sales); and endurance (maintaining at least 85% of year-one sales in year two).
From the 12,000 product launches analysed, just seven met these testing criteria and are declared European Breakthrough Innovation Winners for 2014 by Nielsen:
- Foster’s Gold
- Magnum Infinity
- Milka Choco Supreme
- Mullerlight Greek-style Yogurt
- Lucozade Energy Pink Lemonade
- Oral-B Pro-Expert All-Around Protection
- Sodebo Salade et Compagnie
In addition, three further launches are well on the way to becoming Breakthrough Innovation Winners next year:
- Lay’s Xtra
- Cadbury Dairy Milk Marvellous Creations
- Ariel 3-in-1 Pods
Sjöstrand sums up: “While breakthrough innovation is not the product of luck, nothing in our analysis suggests innovation success is out of the reach of any marketer – regardless of whether the brand is large or small, local or multi-national, or even if the category is in decline.”
About the Nielsen Breakthrough Innovation Report
Nielsen’s European Breakthrough Innovation Report provides facts, insights and thought leadership on innovation for marketers, based on real observations of impactful launches since 2011. The report is designed to help improve innovation outcomes, and to make every penny invested in innovation go further.
The report is based on findings from the launch of 61,000 SKUs, representing more than 12,000 initiatives, from Nielsen’s proprietary ScanTrack Innovation platform, across four key western European markets: UK, France, Spain and Italy. Breakthrough innovations in other markets, particularly Germany, have also been reviewed and form part of the overall findings.
Nielsen Holdings N.V. (NYSE: NLSN) is a global information and measurement company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence and mobile measurement. Nielsen has a presence in approximately 100 countries, with headquarters in New York, USA and Diemen, the Netherlands.