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Brand Innovation Turning ideas into Profit Finding the next big idea Carlos Michelsen Head of NPD UK January 2008 Slide 2 So whats the plan? Well share some new product launch facts with you Well share what have we gained from the experience of 1000s of concept tests Slide 3 Old News Slide 4 Manufacturers believe that 75% of next 10 years growth will be from additional new products Successful companies need innovations New products are vital to sustained strength and growth Source: TNS World Panel 50% of consumer products sales growth over past 10 years came from new products Slide 5 62% of consumer products sales growth last year came from new products Innovation Source: TNS World Panel Innovation is NOW a priority in most firms around the world just as quality was two decades ago David Aaker Slide 6 The Bad News Slide 7 Introduction UK Grocery 2000 Launching winning brands has become more and more difficult Slide 8 fail in year one of new brands Source: TNS Worldpanel Slide 9 make more than 10m only Source: TNS Worldpanel Slide 10 Products can fail at one of two stages: At the concept stageAt the market We will talk about why many concepts fail unnecessarily at the concept stage Slide 11 Are you doing your homework? Slide 12 Weak market analysis is an important cause of new product failure Main causes of new product failure: Source: Cooper and Kleinschmidt Slide 13 In a typical project the front-end activities receive a small share of spend % of time spend Source: Cooper and Kleinschmidt Slide 14 Are you doing your homework? Factors that contributed to successful product Main causes of new product success: Source: Booz Allen & Hamilton Slide 15 Are you playing it TOO safe? The case of the safe Line extension Slide 16 Are you playing it too safe? Line extensions are the safest bet, but not the most rewarding 44 times more line-extensions but x3 smaller on average But the few new brand names are on average 3 times larger than successful sub- brands However, even at the concept stage New Products suffer when compared to line extensions. Purchase interest Source: TNS InnoSuite - Concept Screener Database Slide 17 Are you breeding cannibals? Slide 18 Most concepts are highly cannibalistic Product Category Parent Share Cannibalization Index Laundry Detergent 14 32 229 Biscuit 6.5 21 323 Non carb Soft Drink 12 15 125 Carbonated Soft Drink21 34 162 Coffee 27 36 133 Dessert 17 25 147 Household Cleaner 8 11 138 Beauty Care 24 39 163 Snack 5 7 140 Ready Meals 16 15 94 Salad Dressing 11 14 127 Pet Food 23 26 113 Average: 151 Median: 138 Source: TNS InnoSuite - Concept Screener Database Slide 19 Going down the Uniqueness avenue Are you playing it TOO safe? Slide 20 Consumers respond favourably to BelievabilityBrand Fit AppealRelevance Potential Source: TNS InnoSuite - Concept Screener Database Slide 21 but for most the quest for uniqueness has lead nowhere Uniqueness Potential Source: TNS InnoSuite - Concept Screener Database Slide 22 but a closer look yields insights Uniqueness Potential So what Uniqueness Relevant UniquenessLine Extension Me too Source: TNS InnoSuite - Concept Screener Database Slide 23 But why do completely new products fail to cause an impression? Up to now New Products not unique or engaging enough. Uniqueness Potential So what Uniqueness Relevant UniquenessLine Extension Me too Line extensions close Line extensions stretch Re-launches Existing products Line extensions close Line extensions stretch New products Source: TNS InnoSuite - Concept Screener Database Slide 24 In short, a New product with relevant uniqueness has more than twice the potential of a Me Too and more than a relevant line extension New Product with relevant Uniqueness have more potential than Line extensions Uniqueness Potential So what Uniqueness Relevant UniquenessLine Extension Me too 98 Line extension - close 94 Line extension - stretch Potential amongst concepts in Relevant Uniqueness 100 New product Source: TNS InnoSuite - Concept Screener Database Slide 25 But is it all about relevant uniqueness? Many potentially successful products are shelved because of lengthy return on investment The trick is identifying which are attractive to tomorrows consumers and also willing to risk waiting Source: TNS InnoSuite - Concept Screener Database Slide 26 Are you using the right stimulus? Slide 27 Why do we still rely so heavily on concept boards? They usually simulate advertising communication .but many products are launched with low or no advertising Slide 28 The in-store environment is increasingly important to new product success? Source: TNS OnLineBus % Reasons why bought new product Slide 29 MONADIC VIRTUAL SHELF Purchasing from Virtual Shelf Concept Exposure and Evaluation Placement of Product with those favourable to concept How to address this Product Evaluation Slide 30 Your new product development checklist Have you done your homework? Are you afraid of failure? Are you using the right stimulus? Are you breeding cannibals? Slide 31 If youre not failing every now and again, its a sign youre not doing anything very innovative. Woody Allen Slide 32 Brand Innovation Turning ideas into Profit Finding the next big idea Carlos Michelsen Head of NPD UK January 2008