Innovate It is essential to differentiate yourself from the competition. But innovating involves investments and precise calculations to risk the assumed business risks. Cesar Valencosomarket research expert within the firm Kantar, published a book that reveals and quantifies the advantages of innovative companies compared to others. The conclusion is striking: consumer brands that succeed in innovating grow six times more than those that do not innovate.
According to “Decalogue of successful innovation”, of Valencoso, there is no doubt about it. The study is based on case analysis, including 600 real innovations launched on the market over the last decade. But good packaging or a flashy baptism are not an innovation. This expert defines the characteristics of successful innovations, which must be new, targeted, well distributed in the market and which provide clear differential values to consumers. The question becomes more complicated and shows that innovation is anything but easy.
According to the book’s findings, only 20% of launches can be considered successful, which means that there are fewer and fewer of them and that corporate caution prevails over surprise competition. For Valencoso, this high rate of low success leads brands into a pernicious cycle with disastrous consequences. The polarization between innovative brands and others tends to increase. The former obtain 8.2% higher average prices for their products and greater average penetration of their products.
Three months to determine success
But Valencoso warns that it is not worth insisting on an innovation even if it arouses all the confidence of its creators. According to their data, in just three months it is possible to determine in 80% of cases whether the innovation will be successful or not. The goal must always be profitability and economic viability of innovations. “Brands forget that the goal of a strategic plan cannot be to innovate in itself, but it is simply a tool to achieve the objectives that have been set. A very powerful tool but also very complex and expensive. This is why successful innovation must be effective, which means making few attempts but well thought out, well planned and well supported from the start,” explains Valencoso.
Valencoso urges brands to strive for innovation and suggests a total of eight golden rules for success. These recommendations can apply not only to consumer products, but probably to any industry that develops in a competitive environment and in which differentiation is essential for survival or growth.
Here are the eight golden rules:
1. That it brings something new. Novelty is the main requirement for innovation. You need an authentic product that provides a solution to a problem.
2. Let him be focused. The best innovations are those that are purchased by all audiences, but are built with a clear message aimed at a specific consumer group or benefit. Examples such as lactose-free milk or plant-based drinks demonstrate this.
3. Let it be found. It is essential that the product is well distributed upon launch. Indeed, there is a direct correlation between the distribution percentage of the innovative product and its probabilities of success, which are significantly high from a distribution percentage of 60%. The difficulty with this premise is that it is precisely the first moments of a new product that are the most complicated for distribution to grant it this precious space on the shelves.
4. Let him see. All the launch efforts are for nothing if the consumer does not see our innovation on the shelves. Using the pack and in-store communication elements before launching larger campaigns is essential.
5. Let it be syncretic. The most successful innovations combine different growth levers, such as being healthy and tasty or practical and healthy for example.
6. That it is supported. For innovations to enter homes, investments are needed to support the product from the start through advertising or promotion.
7.Do it incrementally. It is not enough to generate sales, but these must be added to the sales of the parent brand. Otherwise, there is a risk of cannibalization and, therefore, the end result would not be profitable.
8.Reevaluate the offer. Innovation involves a high degree of investment and the only way to make it profitable is to offer a higher price than already established products. Of course, consumers will only be willing to pay this extra if the novelty is real and brings them added value.