Successful product launches depend on more than just strong buzz and sales at the starting line. In fact, long-term sales are what separate the winning innovations from those that fall short. However, sustaining growth is no easy feat, especially in a market where consumers are exposed to new experiences every day.
Sales for 55% of new products begin to slide as soon as their second year in the market. By year three, sales for 69% of new products have declined. This decline isn’t trivial, either; data from Nielsen’s recent How to Succeed in Years Two and Three report reveals that, among new products with declining sales, the majority see a sales dip of 30% or more following year one.
While the data seems discouraging, it does reveal clear patterns that separate the swimmers from the sinkers—giving credence to the idea that success is the product of careful planning, not luck. For example, many manufacturers tend to devote fewer resources and less marketing support to new products in year two because they assume that growth will remain stable or grow after year one.
In reality, the brands that grow are the ones that keep their media spend constant through the second year. According to Nielsen data, growing brands maintain 94% of their media spend in year two. Comparatively, brands that see sales declines tend to slash their second year spend by an average of nearly 80%.
Relatedly, brands must continue to drive awareness among new buyers, as trial (i.e., purchasing a product for the first time) is the primary driver of sales growth in year two. According to Nielsen research, new products must generate at least 80% of their first-year trial in year two to be successful over the longer term.
In some cases where budgets are limited, it may be necessary—and ultimately more profitable—to delay new launches in favor of providing the proper support to existing ones.
While it’s difficult to overstate the importance of multi-year marketing support plans, it’s still unlikely that all the advertising dollars in the world could make a fundamentally poor product successful in the long run. Since consumers “hire” products to perform “jobs” in their lives, manufacturers must ensure that their products fulfill real consumer needs or desires. Based on Nielsen’s Factors for Success data, new product concepts that don’t perform well on need/desire in pre-market research but launch anyway succeed only 41% of the time in the long term. In contrast, concepts that perform well on this measure enjoy a 70% success rate in market*. Companies that conduct concept tests—and improve their concepts according to consumer feedback—are much more likely to make desirable products and generate long-term success with consumers.
To learn more best practices for long-term innovation success, download Nielsen’s Nurturing Innovation: How to Succeed in Years Two and Three Report.
*Source: Nielsen Factors for Success; analysis of 600 launch cases with matching survey data collected from 2008-2009. “Concepts that perform well” include those that scored “Ready” or “Outstanding” on Need/Desire Factor according to Factors for Success criteria.