• by July 30, 2013

New Product Development (NPD) is a key competitive strategy for consumer goods companies, but traditional means of identifying revolutionary ideas are falling short. Billions of dollars are invested annually throughout the NPD life cycle with nearly 20,000 new consumer goods products launching each month globally, according to Mintel. With the unprecedented amount of data available to consumer packaged goods manufacturers today, why do we continue to accept a 90% failure rate for an expensive and vital competitive asset like new product innovation?

Consumer insights have been and continue to be the industry standard for innovation planning. Often delivered as a blended cocktail of consumer sentiment, aspiration and macro trends, consumer insights paint broad strokes of consumer behavior, relying on what consumers say they do versus what they actually do. When it comes to upstream innovation, consumer insights can offer misdirected advice and blind unmet needs and opportunities for innovation. For example, consumers frequently describe themselves as health-conscious, but if we look at their previous purchase behavior through the shopper data, we see a different, more complicated story.  

Shopper insights -- insights developed from in-store purchase behavior -- offer an unbiased view into buying habits across the entire store. This massive collection of behavior opens a window to “watch” decisions being made, what works for which consumers and why some products fail to resonate. Leveraging this asset is the game-changer that could save companies millions while delivering significant resource efficiency.

Shopper insights can drive stronger results in two specific areas within the upstream NPD process.

1. Opportunity assessment to extend the brand

It's a simple premise: when identifying upstream innovation opportunities, leveraging the shopping habits of the right households will unlock the right prospective ideas. 

Start with those who are loyal to your brand -- brand equity is established, a functional loyalty exists, and for some, an emotional connection has been made. Not only do these shoppers spend the most with your brand already, they will also be the most open to meeting their unmet needs through your brand. Watch how these shoppers engage in other categories across the store, and what benefits and ingredients they seek. For example, many of your core shoppers may be buying high-protein products, just not with you. Shoppers may be shifting into other categories to satisfy this need: from meal replacement bars into yogurt & nuts. This could signal an opportunity to infuse a protein option in your category -- and to extend the brand/benefit into new categories. It isn’t enough to know that the consumer generally looks for a convenient options for adding protein to their diet -- it’s knowing how, when and where to add to it for the most impact.

Before moving to production, evaluate whether your brand has a right to win with the benefit that loyal shoppers are seeking. How engaged are loyal shoppers to other established brands in the category? Is brand repositioning necessary? Can another brand in the portfolio deliver this benefit? Should you introduce a totally new brand?  

2. Testing in a real-world learning lab

Test markets today are commonly used to forecast results for national product rollouts and not to make “go/no go” decisions. Regardless of performance, many companies will move forward with the release because of significant sunk cost already realized. Manufacturers must take advantage of a test-and-learn environment to understand how shoppers react to in-market conditions and adjust their national launch strategy. Evaluate your target audience's affinity with the product and additional spend from new or current shoppers within that audience. Understand what merchandising conditions drive the greatest trial. Uncover when “trial pricing” delivers diminished returns and simply subsidizes behavior. Isolate varieties that are not delivering expected repeat. Learn shopper perception to messaging, shelf presence and packaging.

Threading shopper insights throughout the NPD process will enable manufacturers to optimize their national launch in a relevant, personalized manner. In addition, shopper data offers a longitudinal view of how a product performs and how a shopper behaves overtime, enabling CPGs to connect these insights across their marketing mix -- including media behavior and CRM strategies -- and to drive loyalty and sales. The stakes are high, but the bar is low. Manufacturers must move beyond the art of consumer need and into the reality of how shoppers behave.