Think BR: Will your innovation sink or swim?
Don't embark on innovation without first understanding your market, writes Jonathan Weeks, director, Ipsos Marketing.
Jonathan Weeks, director, Ipsos Marketing
In every market, every FMCG category and with the vast majority of brands there is innovation.
In some cases using the word innovation may be too broad - from our own experience we see that nearly two-thirds of innovations we have tested globally are line extensions (and a similar figure is seen within the UK market).
Extension is everywhere. When something finds unparalleled success, it is human nature, and the nature of business, to want more of the same and to seek to replicate the initial success, but more efficiently, with less effort, cost and time).
Angry Birds has clocked up over 500 million downloads with three versions of the game, Mission Impossible III is out in cinemas, as is Star Wars 3D, which has continually pushed the boundaries of making the most of the same content.
If you walk down the majority of aisles in store, there are countless flavours and fragrances designed to give us the perception of choice. If it ain’t broke don’t fix it - just extend it.
The traditional approach in understanding and measuring the value in this has been primarily through concept testing.
Where this was once dominated by the pervasive purchase intent measure, it is now more granular, with relevance (meeting a need), expensiveness (at a price I’d pay), and differentiation (giving me something different to what I already buy).
High relevance and differentiation combine to give a 98% chance of long term success, contrasted with the weaker purchase intent giving a slimmer 70% chance.
Through forecasting, if you want you can put a value on this too. The concept of 'consumer voting' has now also entered the mainstream consciousness.
Not through political channels, characterised by low engagement among voters - particularly the young - but through entertainment channels.
Reality shows, talent shows, celebrity shows often include some element of audience polling, getting the viewers involved, and generating an additional revenue stream.
Brands are picking up on this and using it as a different route to market. It provides a consumer story with the 'you decide' message as well as giving a winning flavour variant a place in the market.
Even the unsuccessful flavours can do well for the business as it leads to more 'hits' per consumer - to judge a winner you have to try all the flavours.
Several FMCG brands have used this recently, using UK consumers as a test market.
OK, so now there is a flavour that has proven it sells more than its cohort. Marketing isn’t just a battle of products, it’s a battle of perceptions, so what does this say about the brand itself?
On the one hand it says we listen to our consumers, we have an interesting variety of ideas, and it’s empowering our consumers and likely prompting some re-evaluation amongst non-buyers. All good things.
But it can also suggest uncertainty by conveying an underlying tone of 'we don’t know what you want'.
Should failure be kept from consumers’ view? Or is the new digital age now highlighting a fresh view of honesty, transparency and openness with consumers?
A long term perspective is needed. Line extensions can deliver gains in the short-term through sales, but longer term they run a risk of undermining the core essence of a brand.
So understanding over what period you need to judge your success is key for a brand.
An alternative view from the Emperor of Innovation, Steve Jobs, highlights that consumers can find it difficult to articulate what they really mean or actually want.
"...a lot of times, people don’t know what they want until you show it to them."
Steve Jobs, 1998
However, that’s not to say dive right in and launch innovation without understanding it first.
Better to understand the needs, perceptions and consumer barriers in the market today and then look for that blue ocean of opportunity to generate some ideas.
But you can’t just jump into that welcoming ocean without testing the water first.
Idea testing is frequently missed off the list and while it appears in innovation funnels, the brand planning requires a tighter timeline - and then the idea screening is skipped.
Ideas should be poured into the funnel, and be passed through this screening to move forwards.
Measuring the ability to meet a need and be distinctive (relevance and differentiation again) is crucial in improving the overall success of innovation.
Putting idea screening ahead of the full concept generation at this stage gives a clear prioritisation to maximise the chances of innovation success and understand its scalability across markets.
It also allows niche ideas to float to the surface and have their relevance tweaked - building a brand’s reputation as a category driver, challenging competitors and putting the power back in the hands of the brand.
Line extensions can and do work, but to really push your brand forwards test the ideas first and don’t just drift into concept testing.
Jonathan Weeks, director, Ipsos Marketing
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