2019创新增长白皮书.pdf

ISSUE 2 | JANUARY 2019 INCREMENTAL INNOVATION DRIVERS OF SUCCESS INNOVATION INSPIRATION INNOVATING FOR GR WTHCONTENTS 03 Innovating for growth 04 Incremental innovation 06 Headline measures 08 Innovation drivers 10 Country comparison 11 Case studies 14 Magnum case study 16 Carrefour interview 17 Measuring success 18 How to win 19 About us We have identified all innovations from the last two years in a sample of six markets spanning both developed and developing markets: Brazil, China, Mexico, Spain, Germany, the United Kingdom and Vietnam. In total, 107,968 new products have been in the market for at least one year. As we did in the first Innovating for Growth publication, to ensure a fair reflection from across our markets, we have filtered our study to those launches that achieve either 1% market penetration or reach at least 500,000 households in a year. Overall, we will be analysing a total of 1,825 top launches looking at each individual Stock Keeping Unit (SKU) in detail across 44 different categories. METHODOLOGY Number of launches in the market for 1 year that have exceeded 1% penetration for 500k households Source: Kantar Worldpanel, GfK MEXICO GERMANY BRAZIL TOTAL 1,825 SPAIN UK CHINA MAINLAND VIETNAM 378 242 638 148 110 246 63 METHODOLOGY 2These are competitive times for FMCG companies searching for growth. Smaller companies, being closer to individual sectors and capable of more agility, are finding success where many large brands are struggling. Low- calorie ice cream brand Halo Top, for instance, grew by 2,500% percent in 2016, leaving more established competitors trailing. But there is no need for larger companies to be disheartened. With challenge comes opportunity, and innovation remains a favoured tactic of brands seeking growth. The emphasis brand marketers place on innovation has been growing since our 2017 study. In that time, Nestl has created Nestl Research in Lausanne staffed by an 800-strong team while Kraft Heinz is investing 90 million into its Global Centre of Excellence in Amsterdam. For all the investment that goes into new product development, it is still true that of those eventually launched to market only a small proportion will go on to make a real impact. In fact, only 1.7% of new product launches that have been in the market for at least a year have exceeded 1% penetration or 500,000 households. Source: Kantar Worldpanel, GfK INNOVATING FOR GROWTH Many of these innovations have helped drive growth. In our Brand Footprint report, we identified how some of the fastest-growing global brands were using innovation as a key tool. Dove is one of the few global brands adding CRPs (consumer reach points) year- on-year, in large part thanks to its Baby Dove innovation. The skin lotion was launched first in Brazil, India and select South American markets in 2016, and then successfully rolled out the UK and the USA in 2017. Meanwhile, Trs Coraes became Brazils third-fastest-growing brand, helped by innovations in flavoured milk, powdered chocolate and a new cappuccino range including single-serving sachets. When successful, innovation has the power to propel growthbut problems of efficiency remain. This publication is designed to carry the conversation forward, and to demonstrate that sales alone are not the sole measure of success. In fact, bigger launch sales do not necessarily mean a bigger category benefitthey can also lead to higher category losses. To truly understand the value of innovation, you need to understand its category impactand that means measuring incremental innovation. Category incremental sales POSITIVE IMPACT NEGATIVE IMPACT NEGATIVE IMPACT 0 Innovation Impact on Category Sales Launch sales INTRODUCTION 3INCREMENTAL INNOVATION To calculate the success of an innovation, you need to know more than how many units have been sold. You need to identify previous buying behaviour, to calculate whether the new purchase adds value or simply shifts spend. OUR METRIC FOR SUCCESS By measuring every individual transaction in every launch, we can demonstrate whether a new product adds value, is incremental, or has a negative impact on a category. Comparing this with expected purchase behaviour if the launch wasnt present, we can also calculate the impact on value spend and volumes purchased. We judge the success of a new product launch by measuring its impact on the category: GROWING CATEGORY SPEND Launch causes existing shoppers to buy more volume than usual from that category, or to spend more during a trip Launch brings in new shoppers to the category SHIFTING CATEGORY SPEND Launch cannibalises from the manufacturers own portfolio Launch encourages steal from competitors REDUCING CATEGORY SPEND Launch causes existing shoppers to buy less volume than usual from that category, or to spend less during a trip INCREMENTAL INNOVATION 4And by analysing shopper behaviour after the purchase: 1 How long do they take to come back to the category? This tells us whether, for the new product trip itself, they increased their usage rate versus their previous norms (calculated from historical behaviour). If, for example, a larger quantity is purchased but the shopper returns within the normal expected timeframe, the launch was incremental for the category. 2 What does their repertoire look like now? As they now have a new product in their repertoire, we want to establish its impact on the other products in their basket. We look at whether any other products have lost out, for example, or whether the shopper has simply increased their overall category spend. Which allows us to attribute the purchases of the launch into four discrete groups: 3. Changed volumes Increasing or decreasing the category volume purchased in the transaction 1. New shoppers New launch transactions that are from shoppers who would not have otherwise purchased the category 4. Higher price Growing the value of the category by encouraging shoppers to buy the category at a higher price point 2. Unexpected trips Transactions where a shopper has added an additional category trip to their cycle, without product substitution INCREMENTAL INNOVATION 5MANUFACTURER VALUE The impact of a new product for a manufacturer is generally positive. All innovation will make some gains from competitors within a category, but it is important to note that the results are highly variable. While the average launch at its mid-point will win 51% of its sales from other manufacturers, the bottom 10% of launches only gain 28%. In contrast, the top 10% of launches gain 85% of shifted sales from competitors. HEADLINE MEASURES There are two types of incremental impact that we can measure: the value to the manufacturer in terms of their overall portfolio and the value to the category as a whole. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Bottom 10%: 28% Top 10%: 85% 43% 57% 15.1% SIGNIFICANT BENEFIT 28.3% POSITIVE IMPACT 29.2% NEGATIVE IMPACT 27.4% SIGNIFICANT DETRIMENT % of dollars gained from other manufacturers Source: Kantar Worldpanel, GfK Source: Kantar Worldpanel, GfK % of Positive vs Negative Launches CATEGORY VALUE Growing the value of the category as a whole is more beneficial over the long term than stealing share from other manufacturers. Yet this remains hard to achieve, as our data shows. Of the 1,825 launches analysed in our study, we found that 43% had a positive impact on category sales. Furthermore, 15.1% of these launches had a significant benefitmeaning the category growth was more than 10% of the first-year launch sales. Its crucial to note that over half of launches (57%) had a negative impact on category sales, highlighting just how difficult it is for launches to be successful. HEADLINE MEASURES 6HEADLINE MEASURES 7As previously discussed, there are four main innovation drivers. However, as the below chart shows, not all of these have an equal impact on category sales. FINDING NEW BUYERS The notion of a new launch attracting a shopper to buy the category for the first time is a very powerful one, but how often does this happen? This years study continues to suggest that bringing buyers into a category is very rare. Less than 2% (31) of the launches analysed in our study attracted new buyers at a significantly positive rate, with more than half of these occurring in Vietnam alone. Attracting new buyers to the category, therefore, should not be the main goal for a brandmeasuring success by this factor alone will never tell the full story. Trading up has a more positive impact, more often. TRADING UP We continue to see that price paid is the behaviour that moves the most often as the launch interrupts a shoppers regular purchase cycle. Therefore, trading up remains the key driver of positive category impact. Of the launches we identified, 489 have led to shoppers trading up significantly and buying at a price 10% higher on average than we would expect for the category. Two thirds (66%) of the time trading up occurs, the overall impact on the category is positive. Price Volume Trips Buyers 500 100% 400 80% 300 60% 200 40% 100 20% 0 0 # of Launches with significant positive shopper behavioural change (greater than +10%) Proportion of these launches that have a positive overall effect on category sales Source: Kantar Worldpanel, GfK 489 405 316 31% 66% 40% 59% 84% Significant benefit Positive impact Negative impact # of Launches impacting the amount of category buyers Source: Kantar Worldpanel, GfK 31 612 1,182 INNOVATION DRIVERS INNOVATION DRIVERS 8NEW INNOVATIONS TRUMP NEW COMBINATIONS Our study highlights that genuinely new innovations are more likely to be positive for the category than a new combination. In fact, a fifth (20%) of all genuinely new innovations lead to category growth of more than 10% of the launch sales in year one. With 40-50% positive impact on category sales, new combinations and renovations should not be underestimated. However, our analysis suggests that relaunches have less of a positive impact on category sales. Here, almost two- thirds (65%) of relaunches had a negative impact on category sales. Less than 2% of the launches analysed attracted new buyers at a significantly positive rate Genuinely New Significant benefit Positive impact New Combination Renovation Relaunch 28% 29% 23% 28% 20% 12% 12% 16% Positive impact by innovation type Source: Kantar Worldpanel, GfK INNOVATION DRIVERS 9VIETNAM COUNTRY COMPARISON The average product launch trades shoppers down and encourages them to buy less volume. However, this pattern doesnt always hold true at a local level. For example, your chances of launching a product with a positive category impact are much better in Vietnam than they are in the UK. The UK struggles in comparison because launches are less likely to bring new buyers and additional trips to the category. This points to penetration increases being less common in more developed countries, where most shoppers with an interest in the category will already be buying it. Similar differences can be observed at category and sector level, for both incremental impact and overall launch size. These norms should be considered at the planning stage, with expectations and forecasts altered appropriately. Our data shows that launch strategies around the world often take limited account of the category impact. UK 34% 66% SPAIN 43% 57% MEXICO 50% 50% 42% 58% CHINA MAINLAND 55% 45% GERMANY 44% 56% BRAZIL 49% 51% % of Positive vs Negative Launches by country Source: Kantar Worldpanel, GfK COUNTRY COMPARISON 10Over the coming pages we will share successful, inspirational innovations from retailers and manufacturers around the world. CORSODYL ULTRA CLEAN, UK Corsodyl was known for being a treatment toothpaste brand, therefore they launched a daily-use alternative, whilst maintaining its expertise. With an above-the-line marketing campaign educating consumers on the importance of gum health, Ultra Clean achieved 2.5% penetration and 4.3m in sales in its first year. Corsodyls ambition was to double its toothpaste sales and shares by aggressively growing the gum categoryand it achieved this, increasing overall brand penetration by 84% and annual sales to 11.4M. This equates to 637,000 new shoppers buying the new product. Of these, 75% were new to the Corsodyl brand and 64% were new to the gum segment, highlighting the incrementality of the launch. Corsodyl met new needs by creating a daily use product, while its media campaign meant Ultra Clean was front-of-mind with shoppers keen to take better care of their gums. 3 MIEN GOLD, VIETNAM Riding on the momentum from the launch of 3 Mien instant noodles, brand owner Uniben decided to launch a more premium version called 3 Mien Gold, capturing the premiumisation trend in the market. After one year, 3 Mien Gold achieved 9.6% and 38.2% penetration in the Urban 4 cities (Ho Chi Minh City, Ha Noi, Da Nang and Can Tho) and rural areas respectively, which is the equivalent to more than 6.5 million households. Undeniably, the main driver of its success lies within its high quality, whist remaining competitively priced and demonstrating an in-depth understanding of Vietnamese taste palates. 3 Mien Gold differentiated its offerings with Herbed Beef Stew and Special Sour & Spicy noodles. And, it gained a competitive advantage against other Sour & Spicy brands through offering three seasoning bags, which made it more premium than the current two seasoning bags of its competitors. This packaging strategy also gives consumers more flexibility in how they want to season their noodles. CASE STUDIES CASE STUDIES 11Pullman Artesano, Brazil Artesano bread was launched in March 2017 and was a great innovation for the Sliced Breads category. It created a new format (thicker slices) and a new claim (“homemade“) for the category.The new product played on consumer nostalgia and a desire for homemade produce, making emotional connections with customers by taking inspiration from freshly made bread associated with family occasions. Artesano also succeeded in innovating the packaging of the category, creating a matte rather than a transparent version, and created a new 30-second television commercial focusing on family moments. CASE STUDIES Suavitel Complete, Mexico Suavitel, the fabric softener brand, launched its Complete SKU in early 2017. Initially it didnt perform strongly, however with renewed focus towards the end of 2017 it has turned things around. Being 800ml, Suavitel Complete was a premium product at a higher cost and smaller size than competitors, and its benefits and positioning were not clearly communicated. Therefore, the brand used better value p