The Keys to Fixing the New Products System at FMI
Manufacturers need to consider two customers when developing new products: the consumer, of course, but perhaps more importantly, the retailer. As presented by ACNielsen – BASES president John Willke in his FMI Close Up session “New Product Success and Failure: Myths and Realities,” the current system by which new products are introduced and marketed is “broken”.
Over 36,000 products were launched into the marketplace last year. As is widely known, over 80% of new products are delisted within three years of their introduction. And 95% of the volume generated by new products actually cannibalizes existing brands. For a retailer, introducing scores of me-too products is clearly a waste of time, according to Willke, who submitted that successful CPG introductions come only when the manufacturer can provide retailers with brands that either add incremental volume to the category, create a new category or, in some cases, present an opportunity for a more efficient category assortment.
Willke proposed that there are basically five keys to successful launches:
- Advertising quantity and quality must both be sufficient to build a broad awareness of the product.
- Likewise, distribution quantity and quality must make the product broadly available to consumers
- The product must fulfill its advertised promise to the consumer
- The product will have a much greater likelihood of success if it is truly “new”, i.e. innovative
- The trading partners must provide long-term support for the new brand, well beyond the initial year
Willke wrapped up his position with suggestions for trading partners; ways to align reality of the new product system with expectations. “The new product listing process needs full disclosure and fact-based decision making around a simple, valid scorecard,” he said. He suggested that, during the retailer’s new product review, their scorecard questions should cover:
- The product quality and uniqueness
- The manufacturer’s commitment to supporting the brand in year two
- The potential of the product to grow the category
- The ability of the advertising to build awareness and a lasting impression
Furthermore, Willke proposed that slotting allowances should be varied depending on the score card rating and, in some cases, be non-existent, if the quality of development and support are high. Finally, he proposed that retailer and manufacturer plan post-introductory meetings to jointly evaluate delisting the product, considering at that time if both had successfully fulfilled their obligations to the process.
Moderator’s Comment: Of Willke’s keys for a successful
new product, which do you feel is most critical?
Rick says he “was most impressed with the concept that
the product’s trial is actually on-going and doesn’t end in the launch
year. To replace any natural attrition of brand loyalty, new customers must
be converted into on-going, loyal customers all the time. With that mindset,
the process of finding new “tryers” and converting the into “repeaters” is never-ending.”