marketing

Thirty-Four Innovative CPG Products

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:

Platinum

2010 – Glaceau vitaminwater zero

2009 – Chobani, Prevacid24HR

2008 – Zyrtec, Bud Light Lime, Arnold Select Sandwich Thins

Gold

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

Silver

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

year two.

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.

via CPGmatters_Products&Solutions.

Prepaid Card Industry On The Rise

Prepaid credit card payment volume will rise 22.4% in 2012 to $247.5 billion, according to Packaged Facts.

That’s up from $202.2 billion in 2011, on the strength of almost 10 billion transactions, reports Packaged Facts in a recent report, Prepaid and Gift Cards in the U.S.

The gain is due in part to debit-driven regulatory change. However, continued growth will depend on navigating cross-currents of challenges and opportunities, including consumers’ banking dissatisfaction and distrust issues.

According to David Sprinkle, publisher of Packaged Facts, consumers dissatisfied with their consumer banking experience are natural targets for emerging prepaid programs.

In order to continue to succeed, the industry must strike a balance between checking account profits and migration to prepaid programs. Card companies must increase prepaid cardholder retention, defuse lingering overdraft issues, harness card platforms to best meet the needs of the unbanked and underbanked, and leverage younger consumers’ financial positions while building relationships with them.

If a prepaid card product functions much like a checking account but without the fees, consumers who are disgruntled with fees and practices applied by their banks may very well try it. And Packaged Facts’ analysis shows that distrust of banks is rising among groups that are leading prepaid card candidates: Gen Y, lower-income adults, and unbanked/underbanked Hispanics.

Frustration cuts both ways: Many banks are using prepaid cards to shed lower-income consumer checking customers, raising public policy issues. Even so, a major challenge for prepaid card issuers is the high rate of product abandonment, combined with the high rate of retention of banking and checking accounts. One way to increase prepaid card retention and drive usage may be to link the cards to direct deposit.

Prepaid debit cards are positioned as an attractive alternative to traditional bank accounts for certain segments of the population, particularly those without a checking or savings account and those reliant on alternative financial services such as non-bank money orders, check cashing, rent-to-own agreements and payday loans. As a result of their lack of access to traditional bank services, many of these consumers have historically used cash as their primary payment vehicle.

However, the reliance on cash inherently limits these consumers’ purchasing power and flexibility. For this portion of the population, prepaid debit cards have emerged as an attractive alternative to cash, allowing a cardholder to participate in mainstream financial transactions by other means.

In addition, prepaid cards can suit the special niche of young adults, who may appreciate having a financial services product for which they can qualify and which can meet their relatively narrow financial service needs. The industry is working to find ways to generate profits not only from the prepaid programs themselves, but from the further development of relationships with these consumers over time, according to Packaged Facts.

via MediaPost Publications Prepaid Card Industry On The Rise 06/28/2012.