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Br and Portfolio Management: How to Make More (Money) with Less (Br ands)

How do you know when you have too many br ands and variants? In my opinion the answer is that you have too many when you can’t answer the question! A couple of months ago I wrote a very popular piece called “ A Beginners Guide to Br and Portfolio Management”. This week I’d like to take it a little further and speak about some of the reasons br and portfolio management is so important.

 

Br and portfolio management

Br and management is essential to a healthy business, but marketing has one of the quickest promotion ladders of many professions. That’s great news for marketers, less so for br ands. Why? Well because marketers want to make an impression and get that promotion as quickly as possible. And one of the easiest ways is by launching a new br and or variant.

 

I believe this is one of the main reasons why we poor consumers often end up NOT buying something, because we just can’t make our minds up between the vast choice of flavours, packs and sizes on display in some large hypermarkets. More is most definitely not always better when it comes to retailing! (>>Tweet this<<)

Does a br and really need tens of flavours / aromas and hundreds of variants? I decided to take a look at the leading global br ands to help answer this. According to Interbr and, these are the top 10 most valuable global br ands:

                1. Apple
                2. Google
                3. Coca-Cola
                4. IBM
                5. Microsoft
                6. General Electric
                7. McDonald’s
                8. Samsung
                9. Intel
                10. Toyota

Now most of these br ands certainly don’t have hundreds of variants from which to choose and therefore final selection is relatively easy. However, interestingly only one of these is a CPG (consumer packaged goods) br and, so I decided to look at the sub-category of consumer br ands (Interbr and separates Food and Beverage br ands from other consumer br ands, don’t ask me why, especially when many make both! The four beverage br ands in the top 100 – Coca-Cola (3), Pepsi (22), Nescafe (37), Sprite (69) – would all fall into the top ten consumer br ands):

                1. Gillette (16)
                2. Pampers (29)
                3. Kellogg’s (30)
                4. L’Oreal (39)
                5. Danone (49)
                6. Colgate (50)
                7. Heinz (53)
                8. Nestle (56)
                9. Johnson & Johnson (81)
                10. Duracell (85)

As Elan Cole from Interbr and says in the summary of this category

“Consumer br ands bank on their unique versions of these products to generate and grow value. But as soon as one br and patents a technology, competitors ( and the retailer that sells it) race to copy it, one-up it, or make it in strawberry flavor. The advantage that technology brings to a br and is only as valuable as the window of time that the br and controls the manufacturing and access to it. For consumer br ands, that window is narrow.”

This might explain why consumer br ands tend to have far more variants than some of the other leading br ands and categories mentioned above, whose technical advances often last longer.

Two of the leaders in CPG (Unilever and P&G) both culled the number of their br ands’ SKUs about 15 years ago from thous ands down to “mere” hundreds and continue to do so on a regular basis. Taking Pareto’s Principle as a guide, it is relatively easy to cut the bottom 5%, 10% or even 20% of br and variants without losing any significant share. This is why both companies continue to do this on a frequent basis.

What is surprising however, is that other CPG giants don’t, or at least not to the same extent! It’s as if they know they should be making cuts and so make a few, but in the end they don’t go far enough because they seem to be scared of losing share. If you are struggling to make this difficult decision yourself, then perhaps I can provide a few reasons to convince you to make that much needed pruning:

  • Those multiplications of flavours, aromas, packaging etc you are making are renovations, not innovations. Wake up marketers, you are not innovating!
  • Retailers can’t stock every variant, so the more you offer the less chance you have of getting wide distribution. Think back to your pre-launch market assumptions; I bet they included a wildly exaggerated level of distribution in order to get that precious launch approval.
  • Precise targeting and a deep underst anding of your consumers are the most successful ways to limit SKU explosion. If you are suffering from too many variants, then perhaps you should go back and review what you know about your consumers and what they really need.
  • Arguably some categories need constant renovation (food?), but even that’s no excuse for simply multiplying SKUs. Use the “one in, one out” rule, because if you don’t the retailer probably will and without regard for your own plans and preferences.
  • Remember, that if you offer a vast choice of variants for each br and, consumers could get analysis paralysis and end up walking out of the store without buying anything

Coming back to the leading consumer br ands from the Interbr ands’ list, all top ten excel in br and portfolio strategies that are precisely differentiated, clearly targeted and well communicated. David Aaker wrote an article on L’Oreal a few months ago ( Which firm has the best br and portfolio?) which explains the above theories quite well.

I believe most br ands with hundreds of variants in a market, are being managed by a lazy marketer who also doesn’t have the courage to face up to the lack of success of some of his “babies”. Are you one of them? What’s your excuse? I’d love to hear your reasons for keeping all your SKUs.

C³Centricity used images from Microsoft and Dreamstime in this post.

Beginners Guide to Brand Portfolio Management

This week I want to share some ideas with you that were prompted by a client’s question. I was recently asked about brand portfolio management and what to do to ensure that a company is correctly differentiating its offers. This question was in reference to the service industry, which is arguably more challenging since there are no physical products, but the basic requirements remain the same.

Brand portfolio strategies are an essential prerequisite for the long-term success of multi-brand companies. It is vital for these organisations to consider not only external but also internal competitors.

According to marketing theory, there are two types of brand portfolio models, the house of brands and branded property. The House of Brands model refers to a portfolio where brands have different names across categories. Most of the major consumer goods companies use this model. The advantage of this model is that since the brands are independent, the failure of any single one of them has little impact on the others.

The Branded Property model uses one brand across all categories. Virgin is a good example of this, with its airline, media and train companies all being similarly identified. The advantage of this model is that positive images of one benefit all categories; however a negative publicity or event will also have a direct impact on all brands within the family.

Interestingly, both Unilever and P&G have been placing more emphasis on the company brand associated with their brands in recent years. This move followed a ruthless culling of both their portfolios of brands, from thous ands down to mere hundreds. The addition of the corporate name has come at a time of decreasing consumer trust in brands, which is certainly not helped by the growing adoption of private label, including those from discounters such as Lidl and Aldi.

Even though these two portfolio models exist, in reality firms tend to use components of both models together in their brand portfolio strategy.

For any company which has more than one or two brands, it is important to regularly review their portfolio strategy; here are some thoughts to help:

Two rules of portfolio creation

There are two basic principles for the design of a successful brand portfolio. The first is to maximise market coverage, so that no potential customers are being ignored. And second, to minimise the overlap between the company’s brands, so they aren’t directly competing with each other and trying to attract the same customers. If you can achieve both of these then your brand portfolio will have a solid foundation.

Identify the category

Surprisingly many don’t do this first essential step and end up with a sub-optimal strategy; let me explain why. Suppose you sell a carbonated soft drink and think you are in competition with other carbonated soft drinks. Consumers on the other h and see your brand as being in a larger category of soft drinks which also includes fresh fruit juices, because your product contains juice as well as being carbonated.

If you didn’t know this, you would not only miss out on identifying your true market potential, but may even alienate current users through inappropriate communications. It is essential to ask consumers about the category in which you are competing; a simple brand or pack sort is a great exercise for this.

Identify the category “need states”

Need states are the intersection between what customers want and how they satisfy this need. Although many marketers think about need states from time to time, most define their brands by consumer demographics or product attributes. This can lead to brand overlap and cannibalization.

Although the exercise of identifying needs states can be a challenge, the results can often identify new ways for existing brands to compete. It can identify “white spots” in the market as well as significant overlaps, even between brands from the same company, which is clearly undesirable. Once found, both situations can be addressed, offering the potential for significant growth, often without the need for new brand launches.

Identify the brand roles

Not all brands in your portfolio will be of equal value to the organisation. The Boston Consulting Group’s growth /share matrix is still one of the best and simplest tools for identifying those worth investing in, despite having been introduced as long ago as 1968. Since it is well-known and hopefully understood I won’t go into more detail here, but those interested in knowing more can read about it in a recent article by its creator Bruce Hendersen here.

Brand growth share matrix
Source: BCG Growth / Share Matrix

 

 

Differentiate your brands

Once the category and need states have been identified, and the current brand role is plotted, it is important to differentiate and communicate these differences to customers. Articulating each brand’s target market and value proposition will also support a review of future challenges and responses in advance of them happening.

Hopefully this short post has given you some food for thought on your own brand portfolio strategy. What you would add?

C3Centricity used images from Dreamstime and BCG in this post.

Reputation and Trust: Do you Have Both?

At the end of last year I asked readers to send me their biggest challenges for 2014. The winning question was related to innovation, which I wrote about last week: “This is why your new products crash & burn“.

Another of the questions I received was related to measuring equity and the relative importance of following the image of the br and or the corporation. I respond below to this interesting dilemma and propose some ideas about what you should be following.

The three essentials of br and valueLet me start by saying that I covered br and image metrics in some detail last year in a popular post  called “ How to Build Br and Reputation and Consumer Trust: And then Track it”. The article spoke about the three important areas that you need to measure in order to have a complete perspective of your br and image, namely Rational / Functional, Emotional / Subjective and Cultural / Relational.

Whilst this is the simplest method for measuring br and equity, it is said that there are in fact seven essential elements that make a business great in the eyes of the customer. These elements are a combination of product perceptions as above, together with those of the enterprise. Perhaps surprisingly, the latter actually trump the former in driving behaviours today, so corporate reputation is now essential to follow too. It also suggests that whilst product performance, services and innovation are important, it is the companies behind the br ands that influence a consumer’s trust and final choice. If you’d like to read more about this, please click on the above link where you can find more details.

Coca Cola logo

However, measuring br and image and corporate reputation is still not going to give you all the answers you need. One of the areas that few organisations study today, even when they measure both of these, is the relationship between the images of the br ands and the company.

Unilever AXE logoFor some br ands such as Coca Cola, the relationship is both obvious and strong, whereas for Pantene or Axe the link to P&G  and Unilever may be far less evident.

P&G Pantene logo

Despite an increasing effort by both companies to strengthen the association between their br ands and themselves as manufacturer, the connection remains tenuous at best.

So how do you measure this link and underst and what the br and brings to the corporation and vice versa? Read on for a simple process.

Following Br and & Corporate Reputations is a 3-step process

Step 1: Measure your br ands’ images

Hopefully you are already doing this on a regular basis. If not please start immediately since you cannot manage br ands without knowing where you are today, even if you have a clear idea planned for where you want to go. The post linked above gives you a start on getting this done.

The one addition that you may have to incorporate in your current questionnaire is to ensure that you clearly identify whether the respondent knows who makes each of the br ands. This will be essential for the analysis later on.

Step 2: Measure your corporate image

Again you should already be doing this, but I am always amazed how few companies collect such metrics on a regular basis. The prompt for doing so is often a crisis or a change of management and vision, but by then it is actually too late. Whatever you measure in such circumstances will be difficult to analyse since you don’t know what the figures looked like before the event happened. This is why it is essential to measure it at least annually and perhaps even more regularly when a lot is happening in the marketplace.

As was also the case for your br and equity metrics, you will need to include a measurement of br and attribution for each of the companies you measure. This will again be used in the analytical phase.

Step 3: Analyse and cross-reference the information gathered

The third step of the process is to first review the images of each br and by the knowledge and awareness of the consumers about its parent company. Then review the corporate images based upon whether each is attributed or not to each of its br ands, or maybe even to competitive br ands. Then by crossing these two sets of relational information, you will get a clear picture of what the br and brings in terms of reputation to the company and what the corporate reputation adds to or detracts from each br and. Once you underst and the relationship between your br ands and your business, you can start to lay out a plan to boost your consumers’ knowledge and trust with appropriate PR and advertising.

Some organisations, including those mentioned above, find ways to associate their company name within their br and advertising. For instance Nestlé and Purina both end their ads with a company link and logo. Unilever and SCJohnson are a little more creative in showing  a fold up / down corner with their logo and name and in the case of the latter, even their corporate slogan. This is far less intrusive and leaves the br and to shine as hero in the ad.

If you already run your own br and equity or corporate reputation studies, why not combine them as suggested above, for improved actionability? If you do a different type of analysis I would love to hear about it; just add a comment below or write to me in person at denysedd@c3centricity.com. It would be great to hear your thoughts on this essential element of tracking.

Why Global Campaigns often Fail and What You Can Do So Yours Won’t

It’s been a while since we had a guest post so I am happy that this week Angelo Ponzi from C³Centricity partner PhaseOne, based in Los Angeles, has shared one of his most popular articles on taking local communications global.

If you’re a global advertiser or have done research on global advertising, you know it’s not easy to launch a global campaign.

Year after year, many br ands launch global campaigns only to have them fail.  Sometimes it’s the message that doesn’t translate.  Other times, a product name or slogan just doesn’t translate around the globe — or worse, it offends the target audience. Or, perhaps the behavior the br and is trying to influence just isn’t relevant.

What are the pitfalls that must be avoided and what strategies do you need to have in place in order to set the stage for a successful global campaign?

Benefit of a Global Campaign

Unilever Dove logoThere is a strong argument for implementing a creative campaign on a global scale.  When it works, it provides br and stewards with a high level of control.  It also ensures consistent implementation of a br and strategy, and it saves money — a lot of money.  When it works, it can work BIG.  Take for instance Unilever’s global work for their Dove br and and their Beauty campaign. This global work beat the odds, changed the way people think of beauty, and changed the way we as advertisers communicate about beauty.

Regardless of the br and, all br ands — even regional or local ones — need to think globally. Why?  Because a br and’s image or reputation is only one post, tweet, blog, pin or share away from being talked about on a global basis.  Social media has changed the way we market, but more importantly, it has changed the way we need to think.

It’s difficult enough to create relevant communications that include a strategic message, strong theme and a br and story that appeals to the target audience in one market. Creating one that appeals to multiple cultures is extremely difficult. One size fits all does not apply here folks!

Important Considerations:  A Common Voice Spoken in Many Languages

What are some of the important considerations when beginning to think about a global approach?  Certainly, humor or the use of slang when trying to establish a br and across borders does not always work.  For example, humorous TV spots that aired in the UK didn’t make audiences giggle as it traveled across borders to other English and non-English-speaking countries.   Keep in mind, the joke or “shtick” doesn’t always travel well from country to country.  The use of humor may also be impacted by cultural values, etiquette, language and dialects, as well as social economics of the audiences.  Individually, these are all important considerations to be researched when developing campaign strategies and creative executions. Br ands must learn to have a common voice that can be spoken in many languages.

Campaigns need to consider the four elements of the br and

In addition, you should take into consideration your international competition, since they are most likely exploring global and local (“glocal”) approaches as well.  But, while you’re looking in the rearview mirror at your primary competitors, don’t forget to look out in front for those local br ands that are already entrenched and may already be the leaders in the market.  Know where your br and st ands in the market.  Are you a challenger in one market and a leader in another? How you speak to your target audience will be different based on your market position, making it even more difficult to identify a distinctive message that is relevant globally from market to market.

Define your br and’s core personality, including the tone in which you speak to your audiences, and keep it consistent.  Identify a common motivation or need across cultures that speaks to their aspirations, not just your br and’s product benefits. By doing so, the overall culture of the br and remains constant and familiar to the audiences throughout the world.

Key Factors for a Successful Global Campaign

In examining the factors in developing and implementing a successful global campaign, we have found that it becomes clear that there has to be almost precise alignment across five different market factors for success.  If even one of them is off, the campaign and its investment are at risk.

As we explore these five key factors, ask yourself the outlined questions and answer them honestly as you assess the possibility of your global campaign.

#1. Your Br and’s Equity

Does your target audience think about your br and the same way across all markets (i.e., do they have the same associations)?  Do the br and’s values and its personality resonate at the same levels across all markets?  Is awareness high and attitudes strong in one market while they suffer in another?  If so, then there is a high level of certainty that the same advertising will not work in both markets.

#2. Your Br and Market Share / Market Position

Do you have consistent market share in each and every market in which you compete?  In reality, it is much more likely that your market position varies by market.  Whether you’re a strong leader with few challengers working to grow the category and retain market share or a challenger against stronger br ands trying to steal market share, it is almost impossible for the same kind of creative and messaging to work across all of these situations.

#3. Competitive Actions

In examining the competitive environment, a number of variables must be considered.  How many competitors are there?  Very crowded categories require different actions from less-crowded categories.  What is the level of spend by competitors?  Some competitors are more dedicated to certain markets, investing greatly in them.  Are they buying market share?  Are you prepared to compete?  What are your competitors claiming?  We often see that the claims competitors make vary by market.  Just because your message is perceived to be different in one market doesn’t mean it will be distinctive on a global scale. What are the environments in which your br and will compete?

#4. Category Penetration / Maturity

One of the biggest mistakes marketers make today is assuming that the advertising they create for well-established br ands within very mature markets will work in markets where the category as a whole is just emerging — those markets from which future growth will come.  What they are forgetting is that the audience’s familiarity with the category dictates how much you have to explain versus what you can assume they will already know.

#5. Target Audience / Cultural

We as human beings are complex.  Yes, there are some core things that tie us together: we all have needs that we strive to satisfy.  But even then, what our needs are and how they are expressed vary, with much of that driven by culture.  More times than not, global campaigns fail by not taking into consideration the cultural differences between the markets.  This is particularly true when humor is involved.  What one culture views as funny could be offensive to another.  Culture can also impact how our target audiences approach the category.  One example is cleaning products — what “clean” means varies across cultures.  We also see great variance for games and toys.  For example, are they for independent enjoyment or do they bring people together?

To help lay the foundation for global campaign success, a research study that examines your br and in your current and planned markets is essential, as is the same research on your competitors to see how they have succeeded and failed so you can learn from their efforts.  Underst anding where you st and and where you intend to go versus your competitors is essential to creating a successful and lasting global br and strategy.

Get thinking about what’s important in developing a global campaign.  Do your homework.  Invest the time ( and money) to underst and your target audience country by country. 

Before you start ask yourself, “What campaigns have been successful on a global basis?  How did they do it?  And, which ones failed and why?”  Learn from it.   Now go take over the world.

Walking the Talk of Customer Centricity

Do you ever get frustrated that although everyone in your organisation claims to underst and the importance of placing the customer at the heart of the business, nobody seems to be really “walking the talk” of customer centricity? If so, then this post is for you.

Thanks to Stan Knoops from Unilever, I recently came across a great video produced by their Insight Team. It is part of a series of Unilever consumer connect programs and presents a new way for connecting their R&D people at Unilever Vlaardingen to consumers. It shows how to engage and inspire a complete organisation of R&D with consumer insights and is a highly inspirational film.

This got me thinking about the problems that many- or should I say most? – organisations have to get all employees engaged and interested in better underst anding their customers. To help get them started on this essential road to customer centricity, I came up with these 6 points:

#1. Put customer connection in everyone’s annual objectives

This can be left open, or specified such as watching a certain number of focus groups or in-depth interviews, accompanying a certain number of customers whilst they shop for or use your product or service, or listening – and why not also manning, after training? – your care centres or websites.

#2. Conduct co-creation or co-elaboration sessions

Whilst it is good to get people close to your customers, you can also help the company with the development of new products, services or communications, by inviting your customers to join meetings and planning sessions. This is both fun and exciting for your customers and inspiring for company employees. And don’t forget the positive publicity and word of mouth you additionally get, since the participants will certainly talk about their experience to their friends and colleagues

#3. Work on the front line

If marketing, sales, supply chain or another department is struggling to find a solution or new development idea, put them on the front line, to talk to customers directly. If you have your own retail outlets this can be relatively easy to organise. However, even if you don’t it can still be done, with a little planning.

I remember when I first started working at Philip Morris International, I spent a week on the road with a sales representative. Not only did I see first h and some of the issues he faced in selling in his stock, but also learnt a lot from the retailers with whom we discussed. I also began to underst and consumers’ mentally whether smokers or non-smokers, when we were offering free samples in bars and cafés (not sure this goes on today, as I am speaking about 30+ years ago!) Being on the front line is both an inspiring and humbling experience and I just wish that more organisations gave this training, both to new hires, as well as all employees on a regular basis.

#4. Get out of the office

When I worked for Gillette many years ago, all br and managers had to spend one day every two weeks in the field, watching. I am not sure that many organisations still send their staff out of their offices on a regular basis – with a few notable and infamous exceptions of course – but since customers can be and often are, totally unlike the people in your organisation, it is difficult for them to appreciate the customers’ perspective.

Whether it is a difference of age, background, culture, wealth or experience, it is unlikely that the people taking the decisions about your br ands really know what their customers feel. So get them to stop sitting in their Ivory Towers and get out into the real world occasionally.

#5. Listen to the frontline staff

When was the last time you invited your promotions staff or retailers to join a meeting? Unfortunately today, many companies don’t even use their own staff to man promotions and sampling, s the wealth of information about how the events have gone and how potential customers appreciated the offer, is lost.

#6. Share the knowledge

In addition to gathering information and knowledge about your customers, it should be regularly shared so that everyone benefits from each other’s learnings. The latest topics customers are calling or writing in about can be visibly published to stimulate everyone’s thinking; how about putting weekly summaries on the notice board, at the lift, in the restaurant waiting area or anywhere else in your offices where a maximum number of people can be inspired by the information? Or what about holding monthly “lunch and learn” sharing sessions during the mid-day break, in a relaxed, fun and creative environment? A free lunch will get people more involved but won’t take valuable time out of their working day.

I hope this “Starter for 6” has got you thinking about ways that you might start walking the talk of customer centricity in your own organisation. If you are using other methods to get your company to put the customer at the heart of the business, please share them here.

If you would like to learn more about targeting, connecting with and underst anding your own customers, please check our website: https://www.c3centricity.com/home/underst and/

C³Centricity uses images from Dreamstime.com

How to Turn your Br and Issue into a Competitive Advantage

Most companies have issues with their products at times. Usually they don’t correct them unless they are considered to be significant and could have a direct negative impact on sales.

You could argue that this will always be the case sooner or later, so better resolve them as soon as they are discovered. Some companies however are creative enough to turn what others might see as an issue into a competitive advantage. Let me give you a couple of examples.

 

Pringles Freshness Seal

Pringles pack
Bursting with Flavour
SOURCE: ZIGSPICS.COM

Most consumers associate bulging lids and packs with a product that has deteriorated in some way. This is not at all the case of Pringles, for which a bulging seal under the plastic cap is a sign of freshness apparently, or at least is a normal phenomenon.

What I love about the br and is that whereas in the past the seal’s surface was used for communicating promotions and competitions, it is now used to send a positive message to their consumers about this situation.

On a pack I recently bought the seal was printed with the words “Bursting with flavour”. How is that for making a positive out of what might have been perceived as a negative? I love it! It adds to the br and’s image and also to the taste and pleasure expectations for the consumer who is about to open the pack. I can imagine that this came directly out of consumer insights, to answer a query about why the seal was always bulging, which as I already mentioned would usually be associated with a product that had “gone off”.

 

The strange taste of Marmite

Another well documented example of a product that converted an issue to its advantage, is that of Unilever’s Marmite. Marmite claims to be a nutritious savoury spread, although non-Brits would describe it more as a very strange tasting concoction. Even UK consumers are divided in their opinion of it; they either love it or hate and there is apparently no half-way sentiment here.

Marmite created a very successful campaign around this love / hate relationship with the product which has now become a social phenomenon, and this divide has even been emphasised in their advertising and on the web. In the UK they even sell Marmite flavoured food – chocolate and cashew nuts – as well as br anded T Shirts, Kitchenware, Books, Cooking, Merch andise and more. How would you like your consumers to pay their hard earned money not only for your products, but for br anded promotional goods too?

In 2011, Unilever took the love / hate relationship into the kitchen, by developing and sharing simple recipes using Marmite for people who hate to cook. Each commercial of the campaign, called “Haute Cuisine, Love Marmite Recipes” ends with the “u” in Haute being blocked by a jar of Marmite, making “Hate Cuisine” and continuing the love / hate theme with which Marmite has become associated. If you would like to see some of the ads from the campaign, you can find them here and their website is www.marmite.co.uk .

These are just two examples but there are many more br ands that have turned a negative into a positive and made it an appealing competitive advantage. Does your br and have an issue and if so could you turn it into a strength? Do you have any other examples you can think of? I would love to hear about your ideas.

For more ideas on br anding check out our website: https://www.c3centricity.com/home/engage/

C³Centricity uses images from Dreamstime.com

New Year, New Challenges: 3 Helpful Ideas for Innovators

As we ramp up to face the economic, political and societal changes that will surely continue in 2012, many organisations are challenging their R&D and hopefully marketing departments too, to develop and launch new products and services.

With luck, these developments were already in their plans and pipeline for this year, but sometimes businesses are forced into going to market sooner than they would have liked, due to market circumstances or competitive activities.

An article in Marketing Week (read here) at the beginning of last year, mentioned that Unilever said that increased investment, as well as their “Bigger, Better, Faster” innovation initiative was the driving force behind its increased profit and sales in 2010.

As we are all only too aware, today’s customers are highly dem anding of novelty and each period of satisfaction becomes shorter and shorter, as they quickly get accustomed to the latest improvements.

In an earlier post (read here), I spoke of the research carried out by Jan-Benedict Steenkamp, a marketing professor at UNC Kenan-Flagler which showed that CPG / FMCG innovation needed to be one of the two extremes of “innovativeness” to succeed:

  • either a minor improvement, or renovation, such as a new flavour, size, colour, packaging, content …
  • or a radically new product that is significantly different from anything else on the market. These are of course more breakthrough and therefore more difficult to develop. Past examples have included microwave meals, Sony Walkman, Nespresso, iPhone, Ipad,

The interesting and perhaps disturbing thing about breakthrough innovation, is that timing is everything; bring it out too early and people won’t underst and or see the need; too late and competition might beat you. This is one of the reasons that IT companies quite often offer “beta versions” of their products or software before they are 100% ready and then quickly follow with a version 2 with corrected or improved functionalities.

Other br ands such as Nestlé’s Nespresso or even Gillette’s Silkience, the first shampoo with integrated conditioner, launched almost 40 years ago, were introduced ahead of the curve, before their consumers were ready for them. The companies then had to decide to either wait it out (Nespresso waited many years to become profitable) or relaunch at a later date, but then risk being pre-empted by competition, who then have the time to copy the new product.

So how can companies better underst and their consumers’ needs, desires, or even unarticulated and unknown needs, and launch just in time to benefit from them? Here are three ideas that I came up with, but I would welcome your input too:

1. Develop Future Scenarios

Most organisations today are following trends, but as competition is almost certainly following the same ones, there is no competitive advantage and little chance of benefiting from identified tendencies. It is only when the trends are turned into future scenarios that the real competitive advantage appears.

 

2. Identify lead countries

Most industries have markets where the consumers are more dem anding or more open to innovation in certain categories. These are great countries for both market testing, as well as for showing others what is likely to happen in the near future. Such examples include:

  • fashion in France and Italy
  • technology in Japan and the USA
  • retailing in the USA

 

3. Collaborate with neighbouring industries

Several companies have formed alliances with others to either prepare first level ingredients for their own product preparation or to develop manufacturing technologies or retailing opportunities with cross-over possibilities. Examples that come to mind include:

  • Sony-Ericsson: a joint venture by Japanese consumer electronics company Sony Corporation and the Swedish telecommunications company Ericsson to make mobile phones
  • The retail giant Walmart formed a joint venture with Bharti Enterprises, Inc., one of India’s leading business groups, which led to their opening business there in 2009.
  • Nestlé and Coca-Cola formed a joint venture for Ice Tea (just ended)

 

Today’s consumers are highly dem anding of bigger, better and faster innovations, so companies must build speed and flexibility into their new product development processes and tools to answer these needs. Being better prepared is half the battle.

How are you preparing for the constant dem ands of your own customers and consumers? Please share your ideas and stories below.

For more ideas on new product and service development, please check out innovation on our website: https://www.c3centricity.com/home/vision/

C³Centricity sources images from Dreamstime.com

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