The more brands innovate, the more buyers they recruit. This is according to a research by Kantar Worldpanel, adding that, on the average, 12% of the FMCG (Fast Moving Consumer Goods) brand’s buyers comes from its new products. In particular, the global expert in shopper’s behaviour found that three out of 100 homes in the Philippines would have tried a new FMCG product a year after it was launched, of which only one-fourth will come back to repurchase it for their homes.
In the Philippines, Kantar Worldpanel studied product launches, including new brand releases and renovations or upgrades to existing products, across 24 FMCG categories from 2015 to 2017. The report showed how the products performed overall: how many were picked up, how many were left unnoticed, and which products stayed in the grocery lists of Filipino shoppers.
Which FMCG sector is innovating the most
Innovation, according to the InnovNation study of Kantar Worldpanel, is not limited to new brands. “There are three types of innovation,” Stephanie Tanada, Kantar Worldpanel Account Director, explained. “Aside from new brands, there are also new line extensions, which entail change in formula, variant and/or flavour. Innovation can also be seen in terms of renovation/replacement, which means an alteration in weight and/or packaging of the product.”
Kantar Worldpanel identified Personal Care as the most innovative FMCG sector with a share of 37 percent, driven mostly by new line extensions of bathsoap, shampoo, toothpaste and hair conditioner. Food followed closely behind with 34 percent based on new brand launches registered during the research period. This was evident in the form of corn snacks, sandwich biscuits, potato snacks and milk powder for kids that were introduced to Filipino consumers. The two other FMCG sectors that experienced the least innovation were Homecare (17 percent) and Beverage (17 percent).
Kantar Worldpanel research showed that, while global manufacturers still take the lead in terms of innovation in the country’s FMCG sector with a share of 57 percent, local manufacturers are following suit at 47 percent of the pie. In fact, local manufacturers took the lead (at 69 percent) in innovating the Food sector. The global manufacturers, however, drove innovation for the other FMCG sectors (beverage, homecare and personal care).
How to innovate better in 2019
While there is no fool-proof formula that will ensure a brand or a product’s success, there are three key things to remember based on the Kantar Worldpanel research. First, marketers should have a good understanding of their target market. Household products have higher tendencies to be tried, while trial generation for Food and Personal Care are more cutthroat, the study noted. Second, brands should focus more on new transactions. Innovations are more effective at tempting existing category users than recruiting new market buyers. Lastly, incrementality is key. More than units sold, success of innovation relies on new shoppers recruited.
“Various products are being launched and introduced to Filipino consumers every year. What we have found based on the InnovNation research is that innovation is correlated to brand growth. However, brands need to have a good understanding of their target market in order to experience successful innovations and win new buyers of their FMCG products,” Tanada said.