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Tag Archives: Nielsen

Do Your New Products Have Real Competitive Advantages?

First published on 09/02/2014 on www.marketingprofs.com – a preminent resource on best practice marketing techniques for the benefit of the members. What is MarketingProfs? Individual marketers, teams, and entire marketing organizations at the world’s largest corporations rely on us to cut through the chaos to find the marketing experts you can trust and the information you need. Trusted by 618,000 professionals globally, MarketingProfs is the only resource you need to stay ahead of the curve. Read more:

Do Your New Products Have Real Competitive Advantages?

Think Outside The Box Image
It’s a well known fact that brand marketing and new products have radically changed as portrayed by Don Draper and his team in AMC’s “Mad Men” TV series. Back in the 50’s/60’s, mass marketing / advertising / new products seemed to be more of an art than science. Things like intuition, gut feel and luck seemed to have more to do with brand and new product success than a disciplined process. However, since then marketing / advertising / new products have “grown-up” with sophisticated analytical and process models. While a lot of these new tools certainly have their place I would argue some have been at the expense of solid strategic and creative thinking. This thinking “gap” means brand and new product innovations have not been as “disruptive” enough relative to the past – and thus lack real competitive advantages. Reasons include:

  • Retailer and manufacturer consolidation – Unfortunately, stock price pressures from Wall Street have created a myopic view of how to effectively manage and grow businesses – particularly in consumer product companies. The number of retailers and manufacturers serving consumers has radically dwindled since the 60’s. A lot of companies and retailers either no longer exist or now part of bigger concerns. The result has been lower headcount, lower tolerance for long term payback and lower new product activity (source: Nielsen).
  • The retail landscape continues to shift – Brick and mortar outlets have been losing share to online outlets due to consumer “show rooming” purchase behaviors. Moreover, private label / control brands now comprise roughly 25% of all retail sales dollars (source: Private Label Manufacturers Association) decreasing the importance of national brands. Finally, lack of store buyer continuity and buying habits continue to put downward pressure on retail prices – even if a disruptive new product is launched
  • Consumer demographics have shifted – Millennials are changing the face of marketing forever (source: Boston Consulting Group). Millenials will likely outnumber baby boomers 78 million to 56 million by 2030. This segment will have different habits and purchase behaviors vs. boomers and will impact marketing activities to reach them.
  • Marketing and information technology are merging – (if not done so already) – The growth of social media along with more sophisticated analytical tools are bringing these two separate functions together. Older marketers need to better understand social media and tactics and become more “tech savvy”; while younger marketers need to have a better understanding of strategy since more media is now BOTH traditional and digital. Allocation of marketing dollars to the most effective media channel to drive sales is critical since consumers are harder to reach
  • Idea generation/intellectual property have become too narrowly defined – Historically idea generation and intellectual property were sequential activities. This meant you had to have good ideas BEFORE you had a patentable intellectual property. However, some companies have recognized good ideas can come from anywhere – both from inside and outside. As a result, they have formalized their idea generation and intellectual properties processes to ensure they have both sustainable and robust streams of new product/business ideas (i.e. P&G).

As a result, many consumer product companies are losing/lost their competitive edge / advantages and not really innovating any longer. This can be seen in the Boston Consulting Group’s latest white paper: “The Most Innovative Companies 2013”. In this report, BCG continues to track the state of innovation via interviews with 1,500 senior executives which rate and rank their views of their own innovation plans and competition. They rank the 50 most innovative companies and their movement up/down this list over time. The sad fact from their latest report is only 5 consumer product companies are listed:

Boston Consulting Group’s Most Innovative Consumer Product Companies

Boston Consulting Group's Most Innovative Consumer Product Companies

So what can you do to make sure your new product programs have the right kinds of competitive advantages? I would argue you need to think big and “outside the box”. You need to persuade your CEO and CFO that investment in new product initiatives are worth the time and effort – despite the risks. However, that being said you do need to prepare compelling case(s) or basis of interest(s) so other senior line managers can better see opportunities. You can do this by following 10 steps:

1). REALLY understand your consumer / customer – Figure out what really motivates your customers / consumers to purchase your product or service. This could mean going beyond just focus groups to real quantitative analysis that gets to the core of purchase behaviors and attitudes.

2). Think big – Be creative and think outside the box. Remember the customer / consumer might not think about your product category in the same way you do. This is where creativity, intuition and gut feel really counts – if you need help get it.

3). Involve more than just marketing people – While marketing people usually drive new products, they don’t know everything. Good ideas can come from other functions beyond marketing….and also listen to your customers who resell to the ultimate end user. They see what your competitors are doing.

4). Test the validity of your ideas/concepts and prioritize them – Once you have a range of ideas you need a way to quickly screen them with the right target consumer. Quick concept market research screens are usually the best way.

5). Put together alternative business proposition(s) – At this point you need to summarize your top product ideas so senior management can better judge their attractiveness relative to other options. I recommend “single sheet of paper” approach summarizing the a) opportunity, b) barriers to entry, c) product line strategy/expansion potential and d) rough unit/$ volume potential.

6). Use a new product development process – If you don’t have a new product development process – get one. There are many staged tollgate new product models that can fit your business. Each “approved” business proposition should have its own tracking model and metrics for go/no-go decisions.

7). Put together new product roadmaps – Product life cycles are now incredibly short due to a combination of changing consumer needs and competitive offerings. You should plan a multi-year new product roadmap outlining what could be follow-up innovations to extend their new product life cycle.

8). If you sell to a reseller – be sure to highlight the opportunity from their perspective. – You need something to give your reseller (i.e. retailer) a reason to stock and carry the product. Otherwise, end users might not never see your idea.

9). Put together a comprehensive marketing plan – You will need to “broadcast” your new product news so customers/consumers can see it in the marketplace. Don’t just assume consumers will “find” your product on the internet or word of mouth.

10). Go back and re-evaluate if your new product programs were successful – Once you launch a new product or service it should be re-evaluated to see if it performed as expected and if not why?

Developing and launching new products are challenging – no doubt about it. However, if your business follows the above steps you should have much greater probability of success. You need to assume your competition ALWAYS knows as much or more than you with end users. If you keep this in mind don’t be surprised if you show up sometime on future Boston Consulting Group’s most innovative company lists. This is a great way to measure your success/failure as an innovator – because it from your peers.

Rick Steinbrenner
Global Marketing Officer
Brand Marketing Advisors
www.globalbrandguy.dot.com

Which Is Better? – Marketing or Unmarketing™

Post first published 4/2/13 in the “MENG Blend” on the Marketing Executives Networking Group website – www.mengonline.com.  The destination site for leading marketing executives looking to stay ahead of the curve.  We have more than 1800 of the leading marketing minds in the world eager to meet, communicate, help and share our expertise. 

Which is Better? – Marketing or Unmarketing™ 

Does Marketing Really Work?

Does branded marketing and/or national brands really work anymore? Some people don’t think so. Whatever your point of view is you can’t ignore this simple truth. The combination of retailer and manufacturer consolidation combined with shareholder pressure to have successive quarterly earnings growth has done a lot to commoditize consumer product businesses. This has led some consumer product companies to stop innovating/marketing altogether because some don’t see it working anymore. There are many reasons why, but here a few big ones:

Innovation activity has and will most likely continue to decline:

According to the Nielsen company (a major consumer products research firm), of the 11,000+ new products they’ve evaluated over last three years less than .5% of all new product introductions met their breakthrough innovation criteria for success – that’s only 34 new products! While it’s always been true only a small % of new products ever achieve commercial success even during good times, there’s no question companies have been dialing back new product programs at an ever increasing rate. Nielsen also found the total number of new product initiatives decreased 6% annually since 2008 in the consumer packaged goods sector. While some of this decline can be attributed to lower economic activity there can be little doubt companies are innovating less not more. What I’ve also personally noticed are companies have radically changed their new product initiative risk profiles due to continuing Wall Street pressures to have these programs payout in less than 12 months!!

Decreasing importance of “national” brands:

National or manufacturer brands are having a hard time holding their own these days. According to Nielsen and the PLMA, store brands now account for almost ~25% of ALL retail supermarket, drug chains and discount store sales and growing. They also state 80% of consumers now believe store brands’ quality is equal to/exceed that of their national brand counterparts. This has led to the “commoditization” of many product categories. In some categories, retailers have “kicked out” the national brands altogether in favor of their own brands. While I don’t believe store brands will ever be 100% of sales, what is true is that national brands share of retail sales is decreasing and will continue to do so in the future. This is clearly a competitive threat.

Consumers don’t really believe what brands say anymore:

According to the Futures Company, the global strategic insight and innovation consultancy, a poll of 28,000 adults in 21 markets found 86% thought big business maximized profits at the expense of customers and communities. In Jonathan Salem Baskin’s e-book “Branding still only works on Cattle”, he takes this fact one step further by saying – “Brands are suffering the same declines and shortfalls we’re seeing in corporate reputations. Trust is a synonym for BELIEF and perhaps the strongest indicator of PURCHASE INTENT and subsequent LOYALTY”. Branded marketing clearly has a integrity problem today leading more people choosing NOT TO BUY vs. buying brands that supposedly have the right feature/benefit package.

These factors and others have many now saying “Branded Marketing is Dead”. It’s obvious we need to come up with a new way of thinking about branded marketing for the 21st century.

How about Unmarketing™?
Mr. Baskin goes on to say in his e-book “the 21st century model for brands will shift the emphasis from getting consumers to say YES to entertaining but otherwise meaningless engagement, and engaging with them on substance to which they’re allowed to say NO”. This is because people don’t really want to be sold on anything anymore, they want products/services that will help solve their unique problems – even if it means you might not make a sale today.

On the sales side of things, Peter Bourke: Principal & Vice-President of The Complex Sale, Inc. – a sales leadership team consultancy (www.complexsale.com) – makes the argument sales teams (closely allied to marketing teams) needs to unsell in today’s marketplace “selling more by Unselling™” as he coins it. This is because selling has become what the buyer REALLY expects in a sales call. The problem is most buyers/clients don’t want to be sold. The goal should be to make the buyer more receptive because they don’t feel like they’re being sold. It might appear to be obvious, but many companies still resort to the “old” way of selling.

Old approach to making cold callsUnselling™ approach to cold calling
“I have a product/service that best fit your needs” (presumptive at best).“I have a product/service that MAY fit your needs and if you’ll allow me to ask a few brief questions about what/whom you’re using now I may help determine if my product/service is even worth your time evaluating.”

It’s funny; this selling approach has been used very successfully on the marketing side in the past. Please see the short video below on how 7Up developed and executed the “Uncola” campaign in the early 1970’s. It featured Geoffrey Holder before he played Punjab in “Annie,” as well as playing a supporting role as Baron Samedi in the 1973 James Bond 007 movie – “Live and Let Die”.

Case Study – 7Up – The UnCola


Geoffrey Holder – “Cola vs. Uncola Nuts”

As you can see the account team & creatives at J. Walter Thompson (7Up’s agency at the time) correctly identified a unique consumer solution – a clean, light, wet and wild refreshing soft drink that wasn’t a cola. It was also strategically correct since it allowed 7Up NOT directly compete against the soft drink giants – Coke & Pepsi. The result was increased sales and brand equity for 7Up.

Bottom Line:
It’s time for branded marketing to re-define itself. We need to start Unmarketing™ our initiatives/products focusing on a more collaborative approach helping consumers solve their problems – even it means we don’t sell anything today. This means creating programs and products that builds trust and credibility. I know this is a long term approach that might not payout in “10 minutes” as required by most Wall Street/Finance people. However, what’s the alternative – continue to do marketing the same old way and then say it doesn’t work? We need to break this self-fulfilling prophecy and really change the way we do branded marketing going forward. If we do this, I think we might find a new renaissance in marketing because it will “work” again. The question is: what are you doing in your organization to make this happen?

Rick Steinbrenner
Chief Marketing Officer/Principal, Brand Marketing Advisors
www.globalbrandguy.com
The Global Brand Guy