Will your innovation sink or swim?

In every market, every FMCG category and with the vast majority of brands there is innovation. In some cases using the word “innovation” may be too broad – from our own experience we see that nearly two-thirds of innovations we have tested globally are line extensions (and a similar figure seen within the UK market). Extension is everywhere. When something finds unparalleled success, it’s human nature (and the nature of business) to want more of the same and to seek to replicate the initial success, but more efficiently (less effort, cost, time). Angry Birds has clocked up over 500 million downloads (with 3 versions of the game), Mission Impossible III is out in cinemas, as is Star Wars 3D which has continually pushed the boundaries of making the most of the same content; and if you walk down the majority of aisles in store, there are countless flavours and fragrances designed to give us a perception of choice.

If it ain’t broke don’t fix it – just extend it.

The traditional approach in understanding and measuring the value in this has been primarily through concept testing. Once dominated by the pervasive Purchase Intent measure, now more granular with Relevance (meeting a need...), Expensiveness (...at a price I’d pay...), and Differentiation (...giving me something different to what I already buy). High Relevance and Differentiation combine to give a 98% chance of long term success, contrasted with the weaker Purchase Intent with a slimmer 70% chance. Through forecasting if you want you can put a value on this too.

The concept of “consumer voting” has now also entered the mainstream consciousness.Not through political channels, characterised by low engagement amongst voters (particularly the young), but through entertainment channels. Reality shows, talent shows, celebrity shows often include some element of audience polling, getting the viewers involved, and generating an additional revenue stream. Brands are picking up on this, and using it as a different route to market. It provides a consumer story with the “you decide” message as well as giving a winning flavour variant a place in the market. Even the unsuccessful flavours can do well for the business as it leads to more “hits” per consumer – to judge a winner you have to try all the flavours. Several FMCG brands have used this recently – using UK consumers literally as a test market.

OK – so now there is a flavour that has proven it sells more than its cohort. Marketing isn’t just a battle of products, it’s a battle of perceptions, so what does this say about the brand itself? On the one hand it says we listen to our consumers, we have an interesting variety of ideas, and it’s empowering our consumers, and likely prompting some re-evaluation amongst non-buyers. All good things. But it can also suggest uncertainty by conveying an underlying tone of “we don’t know what you want” in the market. Should failure be kept from consumers’ view? Or is the new digital age now highlighting a fresh view of honesty, transparency and openness with consumers? A long term perspective is needed: line extensions can deliver gains in the short-term through sales, but longer term they run a risk of undermining the core essence of a brand. So understanding over what period you need to judge your success is key for a brand. An alternative view from the Emperor of Innovation, Steve Jobs, highlights that consumers can find it difficult to articulate what they really mean or actually want.

“...a lot of times, people don’t know what they want until you show it to them.” Steve Jobs 1998

However, that’s not to say dive right in and launch innovation without understanding it first. Better to understand the needs, perceptions and consumer barriers in the market today; and then look for that blue ocean of opportunity to generate some ideas.

But you can’t just jump into that welcoming ocean without testing the water first! Frequently idea testing is missed off the list, and whilst it appears in innovation funnels, the brand planning requires a tighter timeline – and then the idea screening is skipped. Ideas should be poured into the funnel, and be passed through this screening to move forwards. Measuring the ability to meet a need and be distinctive (Relevance & Differentiation again) is crucial in improving the overall success of innovation. Preceding the full concept generation at this stage with idea screening gives a clear prioritisation to maximise the chances of an innovation success and understand its scalability across markets. It also allows niche ideas to float to the surface and have their relevance tweaked – to build a brand’s reputation of driving a category, challenge competitors and put the power back in the hands of the brand.

Line extensions can and do work, but to really push your brand forwards test the ideas first and don’t just drift into concept testing. 

Jonathan Weeks is a Director at Ipsos Marketing and wrote this piece for Brand Republic.