The Nielsen Breakthrough Innovation Report – based on an analysis of 12,000 FMCG product launches across western Europe since 2011 – shows two-thirds of new products never even achieve a mere 10,000 unit sales, and three-in-four fail to retain a retailer listing beyond their first year. But marketers can predictably and consistently overturn historical high failure rates to achieve 85% success, by changing their approach to innovation and building a passionate culture around innovation.
Johan Sjöstrand, managing director of Nielsen’s innovation practice in Europe, and co-author of the report, said: “Through the study process, we found proof that innovation success is never just a remarkable coincidence. It’s about deliberate attempts to disrupt all aspects of the innovation process and challenge everyday norms, such as consumer attitudes, long-standing beliefs, launch mechanics, organisational behaviour and disciplines.”
The Nielsen study identifies four principles common to every breakthrough innovation success:
- Choice: get the right innovation – make the right choice of innovation to pursue, by walking in the shoes of the consumer to uncover key demand-driven insights. Ask questions like, why don’t people use a category? What causes them stress, confusion, inconvenience or compromise?
- Process: get the innovation right – have the right organisational framework and processes to shape the chosen innovation into a market-ready offer that has relevance, differentiation and superiority; organisational culture must also allow weak innovation ideas to be filtered out before launch
- Marketing: get the activation strategy right – creative marketing has to be original and has to tell the story of the innovation
- Togetherness: get everyone right behind you – breakthrough success is the product of organisational togetherness, from top to bottom
In the report, Nielsen also spotlights real-life examples which have recently achieved breakthrough innovation success. Setting the bar high, for a product launch to earn the title of Breakthrough Innovation Winner, three criteria had to be met: distinctiveness (delivering a new proposition, not just a refinement); relevance (generating a minimum of £10m in year-one sales); and endurance (maintaining at least 85% of year-one sales in year two).
From the 12,000 product launches analysed, just seven met these testing criteria and are declared European Breakthrough Innovation Winners for 2014 by Nielsen:
- Foster’s Gold, Magnum Infinity, Milka Choco Supreme, Mullerlight Greek-style Yogurt, Lucozade Energy Pink Lemonade, Oral-B Pro-Expert All-Around Protection and Sodebo Salade et Compagnie
- Lay’s Xtra, Cadbury Dairy Milk Marvellous Creations, Ariel 3-in-1 Pods
The Nielsen Breakthrough Innovation Report for Europe will be available from mid-September to downloaded free from Nielsen.com