Almond milk, enhanced water, and Greek yogurt were among the 34 products launched between 2008 and 2010 that broke through the clutter to be come innovators in their category. These products comprise less than 0.5% of all product introductions during one of the worst recessions in a generation.
Nielsen analyzed more than 11,000 these new products and selected the winners of the 2012 Nielsen Breakthrough Innovation Awards, presented recently at its Consumer 360 annual conference. In contrast to innovation awards focused on “one-year wonders,” these awards honor new products that succeed on multiple dimensions over a three-year period. This is the first year Nielsen has presented the award.
“To successfully launch a new product in any economy is beating the odds, but to launch and sustain success during a recession is remarkable,” said Vicki Gardner, senior vice president, product innovation, Nielsen. “Breakthrough Innovation Award winners have unique bragging rights among CPG innovators.”
The 2012 Breakthrough Innovation winners are:
2010 – Glaceau vitaminwater zero
2009 – Chobani, Prevacid24HR
2008 – Zyrtec, Bud Light Lime, Arnold Select Sandwich Thins
2010 – Silk PureAlmond Milk, Thomas’ Bagel Thins, U by Kotex, PF Chang’s Home Menu, Schick Hydro
2009 – SoBe 0 Calorie Lifewater, Trop 50, Trident Layers, Plan B One-Step, Budweiser Select 55, Next Choice, Dove Men+Care
2008 – Nature Sweet Cherubs, Powerade ION4 Zero, Wonderful Pistachios, Tide Total Care
2010 – Special K Fruit Crisps, Oscar Mayer Selects, Lean Cuisine Market Collection
2009 – Nature Pride Variety Bread, Olay Professional Pro-X, Align Probiotic, Tide Stain Release, Fancy Feast Appetizers
2008 – Keebler Town House Flipsides, Miller Genuine Draft 64, Always Infinity, K-Y Yours+Mine
To be considered for the award, CPG companies were expected to deliver on the following attributes:
1. Distinctiveness: A new value proposition. Brand re-stages, ingredient reformulations, re-packaging, size changes, and close-in line extensions were excluded.
2. Relevance: One-year sales of $25 million or greater in the channels Nielsen historically measures.
3. Category Impact: Outperformance of the average product in its category on sales velocity, as measured by sales per distribution point.
4. Endurance: True success is measured over time. Winners were required to at least maintain or grow sales in year two, achieving at least 90 percent of year-one sales in year two.
Although the study was conducted at the product level, there were companies whose successes underscored an organization-wide commitment to ongoing product innovation. Procter & Gamble led the way with five initiatives making the list. Anheuser-Busch, Coca-Cola, Johnson & Johnson, Kellogg, Nestlé, PepsiCo, and Unilever each had two initiatives.
Winners followed multiple paths, but shared common themes. One trait shared was the understanding that getting it right the first time is neither likely nor important. Winners built a test-and-refine process to build in iterations before launch. Also, Breakthrough Innovation Leaders followed one of two activation models:
Sprinters: Products that race out of the gate in year one, then allow momentum to sustain in-market performance in
Marathoners: Products that deliberately start out at a slower pace and build on their success in subsequent years.
The typical Sprinter profile is a larger company not straying far from the existing portfolio. They price at a premium, are aggressive with in-market trial and average nearly $50 million in one-year traditional advertising spend. After racing out of the gate, Sprinters take their foot off the accelerator in subsequent years, shifting focus from growth to profitability.
Marathoners, often smaller companies, spend one-third as much on advertising in year one, but build support in year two, realizing an average of 80 percent growth in the second year.
People may be using their smartphones as a shopping tool in the stores, but that doesn’t mean they’re buying less from the retailers. In fact, the influence these mobile devices will have on annual in-store sales is expected to increase more than threefold over the next four years.
According to a new study from Deloitte, the “mobile influence factor” (or effect of smartphones on in-store sales) on retail purchases will increase to $689 billion (or 19% of total store sales) by 2016, up from the current influence factor of $159 billion (or 5.1% of sales). (Mobile sales, meanwhile, are only expected to be $30 billion at that time.) Further evidence suggests smartphone shoppers are 14% more likely to make a purchase in the store than non-smartphone users.
“That might go against conventional wisdom,” Kasey Lobaugh, principal and multicultural channel for Deloitte, tells Marketing Daily. “[Retailers] need to provide the right information and functionality consumers are looking for. It’s really a great opportunity to aid in purchasing.”
The spike in mobile influence will likely come as smartphones become even more prevalent among consumers, along with people’s comfort level with the devices. According to the survey, 40% use the device for store-related shopping after they have owned the phone for six months. After using it, however, they consistently use their phones on more than half of their shopping trips.
According to the survey, nearly half (48%) of U.S. consumers said their phones have influenced their decision to purchase an item in-store, with usage highest at or near the point-of-purchase in a retailer. More than 60% of them use their smartphones in the store, and more than half have used them on their way to the retailer.
Regardless of where they use their phones, people who use their smartphones as a shopping aid are more likely to make a purchase than those who do not. Nearly three-quarters of smartphone users (72%) said they made a purchase on their most recent shopping trip, compared with 63% who didn’t use a phone.
The way people are using their phones is of particular importance to retailers. According to the study, 37% of smartphone owners used a third-party shopping application, while only 37% used a retailer’s mobile application. Lobaugh suggests people may not be getting what they’re looking for from the current incarnations of retailer apps.
“Most retailers are serving up their Web site on a mobile device. I would argue the Web site isn’t what they’re looking for in the conversion process,” he says. “You have consumers who are trying to make complex decisions. The more information they have at their fingertips the more likely they are to make [a purchase] decision.”