The Roadmap to Breakthrough Innovation

NEW YORK – Every retailer and supplier wants their new products to be a success, but in the convenience store industry and its competing retail channels -- where hundreds of products across many different categories go up against each other -- how can one new product stand out from the rest? Nielsen presented a few possible answers to this question today in a webcast entitled, "Breakthrough Innovation Success & Endurance: Unlocking Your $100M Brand."

Hosted by Taddy Hall and Robert Wengel, senior vice presidents in Nielsen’s Innovation Practice, along with The Hershey Co.'s Michael Depanfilis, vice president of shopper marketing, the webcast was based on an extensive Breakthrough Innovation Study that examined more than two years of in-market performance by 14,000-plus consumer brand launches.

Hall kicked off the event by discussing what true breakthrough innovation can lead to – from $100 million in sales, to attracting top talent, to exciting investors, to motivating team members and energizing retailers. "As marketers, this is what you live for," he said.

When evaluating products for breakthrough innovation success, Nielsen looks at a minimum of two years worth of performance and it screens for distinctiveness, relevance and endurance. Out of 3,400 product launches from 2011, it identified 14 "winners" in 2013 and came to a simple conclusion. "Breakthrough innovation is possible in any category," Hall said. Companies can achieve innovation success in any category at any time by using “demand-driven innovation” as the driving strategy.

For example, he said Cadillac doesn't sell transportation; it sells status and its competitors include diamond rings and mink coats. When the auto manufacturer realized this and changed its strategy accordingly, sales began to improve. Breakthrough innovation success demands that companies evaluate their markets for unmet shopper needs and desires, and core jobs that are not being performed.

In another example, Colgate found success by meeting an existing desire for professional-grade teeth whitening for the price of a regular tube of toothpaste. The key is that opportunities exist in unmet consumer needs -- not existing categories -- and are defined by circumstances in consumers' lives.

The primary lessons of demand-driven innovation, according to Nielsen, are that:

• Categories mirror the daily lives of consumers. Instead of buying brands, consumers pull brands into their lives to perform jobs;
   
• Successful innovations reconfigure benefits to perform poorly addressed jobs;
   
• Nailing a job can change the basis of competition and transform a category; and
   
• Demand-driven segmentations identify opportunities and reveal the real competition.

As a result of switching to demand-based segmentation, companies often find that the market is much larger, their share is smaller, real competitors aren't in the product category, growth potential is greater, and building a valuable brand is more straightforward, Hall said. Company leadership is also critical; it bridges boundaries, drives focus, sustains execution and cultivates shared core beliefs.

Depanfilis followed up by sharing how Hershey's Reese's Minis were developed using this demand-driven approach. While Reese's was a great brand, it was not performing up to expectations. In response, Hershey examined the strength of the brand and its limitations, which led to growth identification.

Demand-driven innovation allowed Hershey to push past technological barriers and internal company skepticism to deliver the iconic brand in a small, unwrapped, easy-to-eat format. With dedicated support for both the new product and the core brand, Hershey accomplished the successful launch of a hand-to-mouth platform that's driving total category growth.

Ultimately, demand-driven innovation analytics are both informative and predictive, and greatly increase the chance of brand success, Nielsen concluded.