Every year a lot of new products come out on the Russian market. In the FMCG market alone, roughly 40,000 are launched every year. However, most of these “new products” are actually just old ones with different packaging, an updated design, or a knock-off of something that is already on the market. The research firm Nielsen studied the criteria of a successful new product launches in Russia and we will discuss their findings in this article.
The ability to launch new products is one of the key indicators of whether a company will survive, but many companies fail to focus on innovation.
As a result, half of new products disappear from shelves shortly after launching, and nearly 80% of new products do not meet their financial objectives
Use accurate data instead of randomly guessing
A very important indicator of whether or not new products will succeed is whether they will get lost among other items on the shelf during their second life of existence. Research shows that breakthrough products continue to grow during the second year after their launch or sell at 90% or greater of the rate they did during their first year. To achieve these results and reduce the risk of failure, take these three steps
- Study market trends
- Study your consumers
- Test ideas before full-scale launches
Study market trends
To create products that are both unique and in-demand, you must analyze trends and your target buyers. You can use Google Trends, Trendhunter, or similar tools to monitor the landscape in any given industry and/or attend industry-specific international exhibitions.
Assess both long- and short-term trends so that you know how to position your product most effectively.
Consider this: when Steve Jobs and Steve Wozniak were just getting started building computers, they thought that it would be difficult to sell more than 50 units of the Apple I. As we know, however, they sold millions of the next model, Apple II, over the course of several years. In other words, the success of one of the most highly valued companies in the whole world depended on the first buyers, repeat sales, and the trend toward increased productivity that began in the 1980s.
These conditions haven’t changed much since then: the first purchase largely determines the success of new products regardless of the sales sphere. The success of a given product is still largely dependent on two factors: how unique and how in-demand it is. However, these other factors also come into play:
- Visibility — the bright packaging that the Russian ice cream brand Magnat uses received the highest scores when consumers were asked if the packaging motivated them to make a purchase. The main thing is that consumers remember the packaging and can associate it with the product that they purchased earlier.
- Clear communication — Pantene’s Micellar Cleansing Water Shampoo got the most positive ratings on its packaging among all new products released during 2017-18. Of all respondents, 78% liked the messages “cleansing and nourishing” and “new” that were printed on the packaging.
- Analysis of competing offers — Danon released its series of Danissimo Shake & Go yogurts and simultaneously created a new stand for how yogurts should look be consumed. Until then, consumers were only accustomed to seeing milkshake-style beverages sold in cafes (not in stores).
- Credibility of the offer — the Nescafe Gold Creme packaging depicts a mug of coffee topped with perfect foam. When respondents were asked to point out the one part of the image that they liked the most, the majority noted the foam. New products are more likely to be successful if the buyer can actually reproduce the same effect that is depicted on the packaging. In this case, it’s important that they get the same creamy foam when they brew their own instant coffee.
- Perceived value — among all the new products tested in 2019, the Alpen Gold with Oreo chocolate bar got the highest rating for perceived value at purchase time. The majority of respondents liked the picture of a cookie on the packaging: they got the impression that they were getting two things for the price of one.
- Match to expectations — it’s important to keep promises about product quality or else consumers will not make repeat purchases. Products that don’t keep promises only have a 5% chance of success on the market.
Study your consumers
As soon as the manufacturer starts to ask potential buyers the right questions, unsatisfied needs and the correct market direction will become clear.
When new products are launched, it’s important to understand how the product is perceived, what its optimal price is, and how it compares with current offers. The whole process of developing and launching a new product should take place based on the consumer’s needs.
However, not many companies take consumers’ opinions into account when they design new products. For example, when selecting a design, statistical research models are only used in 25% of cases. In 53% of cases, directors make design decisions themselves.
You should carefully study how consumers perceive a given product and what associations it brings to mind. The same applies to the packaging.
For example, the majority of respondents give positive ratings to packaging the shows products after they are opened or what can be prepared using the ingredients being sold. Additionally, people like hearing about key ingredients like the following: 100% chocolate, high protein content, natural ingredients, Chia seeds, real cream, cherry juice, rose oil, etc. They also have positive associations with products that indicate a particular function or benefit: low-calorie, gentle, miscellar, etc.
Test ideas before full-scale launches
There is no universal formula for success, so it’s important to test new products until they arrive on store shelves. You should figure out what conditions determine whether consumers will use the product and why some consumers don’t use it. You should try to look at the category from a different angle and analyze trends from related categories. At this stage, manufacturers can still work out some details of their product and if they don’t meet expectations, they can still fix them.
To give one simple example, imagine that a company thinks up a product after studying market trends and hopes that it has long-term potential. Unfortunately, though, it turns out that the product is not able to reach a wide audience.
Studying trends, evaluating the competition, and analyzing consumer sentiment are just a few steps that need to occur in order to successfully launch a new product. To realize a product’s full potential, you must use various tools comprehensively and adjust your strategy depending on external factors. The transformations happening now in the advertising and retail landscapes are greatly altering the purchasing experience and manufacturers must be aware of them in order to succeed.