There are no guarantees when it comes to new-product success. After all, the market is flooded with tens of thousands of new products each year, yet estimates say that just about 20% will survive. But marketers who go through the right steps in consumer research and market insight can put the odds in their favor.
Market research is a critical part of launching a new product because it can help consumer packaged goods manufacturers find out if there's a market for their product and how it will impact the rest of their brand franchise, along with providing other important information.
"Utilizing research to develop an understanding of consumer wants and needs for new-product development process is priority No. 1," said Bryan Crowley, brand manager for Hunt's Ketchup from ConAgra Foods' Grocery Foods Group, Irvine, Calif., a division of ConAgra Foods, Omaha, Neb. ConAgra focuses heavily on new products, especially packaging innovations, because its research shows that consumers want them. A ConAgra survey showed that 80% of consumers say packaging innovations make their lives easier, and 60% say they purchased a different than usual brand because of packaging, Crowley said.
"New products can drive share and brand growth," said Crowley. "In our industry, which is not seeing considerable growth year over year, new products can be a significant driver."
Hunt's recently introduced "Perfect Squeeze" ketchup, which features an inverted "easy grip" bottle and vacuum-action cap that is said to dispense ketchup easily and neatly. "Consumers are telling us they want more convenient, all-purpose packaging and product solution. With Hunt's Perfect Squeeze, that's what we've done," said Crowley.
During the product development stage of Perfect Squeeze, Hunt's used several consumer insight/market research tools, including trial and repeat targets. In the exploratory stage, it worked with families to see how they used ketchup and to determine what challenges they faced. In the development phase, meanwhile, it conducted home-use tests and Internet studies, and used data from Information Resources Inc., to develop the scope of opportunity.
Hunt's learned that consumers had several complaints about ketchup, including the mess around the cap, the shape of the bottle and difficulty getting the ketchup out of the bottle. This proved that there was a consumer need -- which is key to the success of a new product, said Crowley.
"If a true consumer need has been identified and you provide a product that meets that need, your chances of success are greatly increased," he said. Other marketers agree, saying a new product or packaging innovation must be truly warranted. If it is, the product can drive consumer interest and differentiate one brand from another.
"There can't be innovation just for innovation sake," noted Justin Lambeth, general manager for ketchup/condiments/sauces, Heinz North America, a division of the H.J. Heinz Co., Pittsburgh.
Heinz North America has introduced an inverted ketchup bottle of its own: Heinz Easy Squeeze. The bottle features a patented silicone valve that "gives consumers better control when squirting, while eliminating the 'messy goop' that sometimes forms on the cap," according to the company.
Along with determining whether or not a product fills a consumer need, Heinz uses consumer insight and market research to answer other important questions, among them:
1. Is it a viable proposition for Heinz?
2. Can it be made the right way?
3. Is it a smart move from a profit perspective?
4. Will retailers accept it?
While speed-to-market is critical for Heinz, it was equally as important to make sure the product is right. For instance, during the Heinz Easy Squeeze development process, the company detected a potential dispensing problem on the larger, 32-ounce size. So it went back and improved the valve to make sure it dispensed correctly. Doing so added a few extra months and about $50,000 to the product-development process. But it was worth the effort because it could have impacted the product's performance, he said.
"The cost for an unsuccessful product is enormous, so market research is critical for us," Lambeth noted.
The same goes for Reckitt Benckiser's Food Division, Wayne, N.J. The division couldn't be more familiar with product introductions, launching more products this year than in the last 10. Over 90% of its brand portfolio this year either has an improved formula, or new packaging or graphics, according to Elliott Penner, president of the company's French's Foods division.
"As a company, we value innovation more than ever," Penner said.
The company has relaunched its French's mustard brand and, more recently, has introduced GourMayo, a line of flavored light mayonnaise in three flavors: Sun-Dried Tomato; hot-and-spicy Chipotle Chili; and tangy Wasabi Horseradish. It also has added a new flavor -- Cheddar -- to its French's French Fried Onions brand and is rolling out an easy-to-hold bottle for its Frank's RedHot hot sauce.
Its efforts are aimed at competing better in a changing marketplace. While it has strong brands, many of which are leaders in their categories, it is placing more emphasis on innovation.
"Due to mergers and acquisitions, large companies that never thought about the condiments category are now thinking about it," he said.
The company relies on both formal and informal methods of consumer insight. On the formal side, it uses attitude and usage studies to understand how people are using its brands, and qualitative and quantitative positioning groups to understand how to position a product. It also works with ACNielsen.
On the less formal side, it works with chefs at casual dining restaurants like T.G.I. Friday's and the Outback Steakhouse to find out what's influencing consumer tastes. The reason for this is that these are the places where the majority of taste preferences are formed.
It also gets retailer insight, asking customers what they think about the product concept. For French's mustard, for instance, the company learned that shelf space was a big retailer concern. So it designed a new bottle that was 40% more efficient on the shelf.
Tools of the Trade
Manufacturers need to be in the new-product business to generate top-line growth and keep the company vital to the investment community, suppliers and retail customers.
"All our manufacturer partners are aggressively pursuing new-product strategies," said Nick Sorvillo, senior vice president, ACNielsen Homescan.
But the new-product marketplace has become increasingly competitive. Ed Kuehnle, president of Information Resources Inc., North America, said there's no longer room for five or six similar products. So, true innovation is key. And if a product isn't the first or second to market, it could fail.
That's where consumer insight comes into play. Both ACNielsen and IRI offer tools to help marketers understand consumer behaviors and reactions, as well as the potential for new-product success.
ACNielsen is based is Schaumburg, Ill.; IRI, Chicago. ACNielsen Homescan, for instance, is a multi-outlet panel that captures all consumer package goods purchase information, as well as non-UPC coded random-weight perishable products.
Homescan measures the actual development of brand in terms of what percentage of the population tries it, how many of those people buy a brand after they've tried it, and how many times they purchase it during a certain period of time. Manufacturers that use Homescan get a historical assessment of all the new brands that have arisen in the last five years. There's also ACNielsen BASES, a simulated test-market service for forecasting product development.
Such tools are necessary because -- due to the flood of new-product and line extensions occurring in the industry -- marketers need a solid means of evaluating their brands' introduction into the market, said Sorvillo.
"Our clients are interested in trying to understand -- by category -- whether line extensions have the potential to be truly incremental to business," Sorvillo said.
IRI, meanwhile, has expanded its consumer panel, which now reaches 70,000 households. The panel enables clients to gain a greater understanding of the underlying consumer behavior driving sales.
"Market research gets to the core of what the trends are, helping to find out how consumers think about products and to capture opportunities that may be being missed," said Kuehnle.