• by Doug Ehninger , October 1, 2024

There’s a hole in the innovation strategy of most mid-market CPG brands. They focus on product systems, but miss the marketing fundamentals that can make new brands and varieties succeed.

Most innovations react to the size of a product category, or projected sales gap in the business. There’s pressure to grow, so the assumption is the brand needs a new product, line extension, or personal innovation. Other times, the sales department responds to a retailer’s demand (e.g., four- instead of six-pack formats). Or manufacturing says it can produce a flavor or package to catch the back end of a trend, or mimic what’s working in another country. 

The problem is focusing on what you can make, not how consumers will use it. A new flavor or package takes more than a year to bring to market and can’t succeed without the sustained awareness brands often don’t have money or time to build. More than 25% fail within a year, and 40% within two years -- and in the process, often cannibalize another viable SKU. That young retail buyer who made a demand has moved on, and their replacement has other ideas. And the same marketing budget gets overstretched across more products.

The solution is putting the marketing foundation first.

Start with true consumer demand. Successful innovations fill a different gap: what’s missing for consumers. Is there a new product or format that fulfills an unmet need to be fulfilled? Does the item have a rightful place in people’s lives, your portfolio, and the shelf? What’s the evidence your target consumers will choose it over specific competitors’ products?

For example, when focus groups and observational research revealed that some consumers were struggling for a way to add a certain ingredient to foods precisely without mess, the brand team had a solid foundation for launching a product with a squeeze application.

Define a scalable target. Appealing to the same consumers with more products simply spreads out the same sales level. Before long, retail buyers start shrinking your shelf space. So, define a precise, new-to-the-brand audience of magnitude, and focus on specific media with scale for the target. Showing retailers a new audience to expand traffic can open up the extra shelf space you need. 

Go full launch mode. Treating innovation as an extension sets it up as a stepchild. Naturally, you pull money out of the master brand budget to support it. Instead, treat an innovation like the launch it is. Anchor it in consumer insight. Give it a real, dedicated budget with a meaningful distribution to start. And keep increasing investment in sell-in and sell-through.

Just say no. If the full system supporting an innovation isn’t evident at concept stage, marketing needs to step in and halt the process. An incomplete launch does more harm than good. That’s a protection role marketing folks need to be able to play.