You’re sitting in the board meeting and there’s a gaping hole in the business plan. It could be there’s not enough sales to fill the production capacity the business invested in a few year’s ago. It could be that the competition have just brought out a new product that is going to knock you off the #1 sales slot. Or it could be that you are the challenger brand and you really need to raise the appeal of the company to attract some financial investment for the business. Whatever the reason, the MD turns to you and asks you, the CMO, what you are going to do about it.
There was a time when you’d be straight on the phone to the ad agency to plan a new campaign, and then get some media booked. But is that going to work now? Too many devices, too much content fighting for attention, too many channels that need feeding. You might just get a blip in sales and be back to ‘square one’ in a few months time, and anyway the budgets are tight and are you really going to get funding for a new ad campaign. So what are you going to do?
Nestlé Nespresso is a great example of how business issues can be solved by an alternative approach. Nestlé created a new market in coffee consumption, leveraging proprietary internal technologies to become the icon for the best coffee worldwide with an average of 30% growth since 2000.
In their recently launched study “The Future of Marketing and Agencies – The Next 10 Years For Consumer Engagement” the IPA identified that the marketing function needs to evolve and adapt in order to be ready to meet the challenges of the new consumer landscape. This included the need to invest in innovation outside of a brand’s main business to provide a new pipeline for growth.
What do we mean by innovation?
Forrester Research defines innovation as “Any transformation of a process, offering or business model that has business impact”. This is a definition that is highly relevant to the big strategic innovations and business transformations perhaps devised and implemented by the big 4 management consultancies’ but is too broad to describe innovation in the marketing arena.
A simpler definition is provided by Warc “fresh ideas that can help Brands stand out in a cluttered, highly competitive marketplace”.
That said ‘marketing’ innovation still covers a broad spectrum – spanning the customer journey and is equally applicable to products or services:
- commercial business opportunity transformation
- new product development
- brand development
- packaging innovation
- retail and customer experience innovation
- digital and technology innovation
- and, communications innovation
Very different approaches in themselves, but, all using innovation to drive growth and competitive advantage.
Innovation case studies
To bring those innovation types to life here are some brief case studies.
1. Commercial business opportunity transformation
Unilever sought to maximise efficiencies in its global portfolio of brands going from 1600 brands worldwide to just 400. One outcome was to elevate Knorr from a well-known, but single-dimension, stock-cube label to a culinary power brand freshly positioned to aggressively go after share-of-plate with new sides and cooking sauces offerings.
2. New product development
Robinsons were challenged to increase sales of squash by launching a completely new type of product for on-the-go consumption, and create a new consumer behaviour. On the back of Britvic’s strongest-ever quantitative research results, the Squash’d brand was launched in January 2014.
3. Brand development
A thorough innovation journey was used to create a pipeline of new concepts which would raise the value of the category and defend Lurpak’s position as taste experts. Lurpak’s ‘Slowly Churned Butter’ ignited an exclusivity contest between retailers and launched with Tesco in Autumn 2013, achieving an 80% price premium. The product contributed to a 3.5% uplift in value of Lurpak sales during 2013 at a time when the overall category saw declines.
4. Packaging Innovation
P&G wanted to grow the presence of Fairy in the increasingly dominant Discounter channel. Focused on highly efficient in-store operations, Discounters demand shelf-ready packaging to provide ease of stacking and display in-store. However the design of Fairy’s shelf-ready packaging failed to reinforce the brand’s premium brand values in a very cost-sensitive environment. A new 3D design was created which would maximise the brand’s assets by creating visibility of its key message from all angles.The re-design achieved a 4% increase in sales of Fairy liquid as well as a 50% reduction in production costs vs the previous design.
5. Retail and customer experience innovation
The Australian boutique hotel group – Art Series Hotels – attracted leisure travellers by tailoring checkout times for each room, breaking a category norm. This flexible solution to the hotel operator’s problem generated $1.5 million in PR coverage, and a 400% expansion in positive online reviews from guests on its Facebook page.
6. Digital and Technology Innovation
In 2013 Nissan, the car maker, redesigned its off-roader vehicle, the Pathfinder. However, whilst Nissan had space booked at high profile US industry events and a lot of product news to communicate, there were no actual examples of the car available for the trade shows.Microsoft’s Kinnect for Windows technology, which was developed for gamers, was used to bring the experience of the new Pathfinder to life for an audience of influencers and US consumers. This feature allowed potential buyers to feel as if they were inspecting the vehicle at close hand.
7. Communications Innovation
Communications innovation covers a very broad spectrum of opportunity – the rapidly changing media and communications landscape is creating multiple opportunities and types of innovation:
– technology and devices
– and participation
Media – Coca-Cola’s ‘Chok! Chok! Chok!’campaign combined a TV ad and smartphone app to create an interactive game in Hong Kong, securing 400,000 downloads and 9m exposures.
Non-media – Coke’s ‘Share a Coke’ campaign involved bottles printed with popular first names, and built into a broader social media-driven campaign. First launched in Australia the idea has been rolled out in other major markets.
Technology and devices – combining innovative technologies and the Optus mobile network Clever Buoy was created – a smart ocean buoy that detects sharks and sends real-time alerts to lifeguards via the Optus network. The campaign was a global success, making the Optus network culturally relevant and creating a product to revolutionise beach safety.
Content – in India Lifebuoy soap ‘adopted a village’ and featured it in communications to educate people about washing their hands.
Participation – asking the citizens of Iceland to champion the country helped the tourism industry bounce back after a volcanic eruption. Based on a budget of £2.24 million, the overall payback to the domestic economy was estimated to be £138.7 million.
(Memo, all case studies from Agencies own websites, or Warc.)
The Innovation Agency Landscape
Agencies in the innovation space cover a broad spectrum of disciplines. Some focus on specific areas, some cover a number of the disciplines, and a few cover the full spectrum. Some combine their innovation services with deep research and insight capability.
While a few of the agencies in this strategic innovation space date from the 1940s/50s, since the late 1990s there has been a flurry of new innovation entrants. And recently some of the large network agencies have claimed it as a discipline.
How can Innovation benefit a business?
Regardless of category, size of organisation or market share, innovation can deliver significant business results:
- Budgets can be relatively modest – it is therefore particularly useful for not-for-profit organisations, or challenger Brands.
- For market leaders innovation can help a Brand sustain relevance and competitive advantage
- Innovation can be applied through every stage of marketing, sales and aftersales disciplines
- Innovation can create opportunities to fill production over-capacity
- And it can transform a business making it more valuable to shareholders, or a better proposition for external investment.
As stated by Jonathan Mildenhall, (formerly) VP Global Advertising Strategy and Content Excellence, Coca-Cola – “We can only achieve [our goals] if we are prepared to disrupt and innovate all aspects of our business as a route to creating greater growth”.
Naturally Innovation isn’t without risk. For example the failure rate of new production innovation in FMCG is 79%. But rather than trying to just develop new products and innovate in-house, leveraging partners in agencies allows many brands to achieve more than they could alone.
Innovation can be highly effective and it is an approach that more brands are turning to, to gain and sustain competitive advantage and address a whole range of business issues.
Innovation shouldn’t just be done for its own sake, it needs to align with the business and marketing objectives of the Company.
But understanding the Innovation landscape is complex – selecting the right type of Innovation and the right Innovation partner is key.
The writer is Richard Bleasdale, managing partner of Roth Observatory International.