While innovation is key for a company’s survival, only one in every hundred new products launched meet key innovation success criteria for distinctiveness, relevance and endurance, said a new report republished by Nielsen.
The report, titled the Breakthrough Innovation Report ,analysed 2,500 consumer products launched in the top 20 FMCG categories in Malaysia, Indonesia, Philippines and Thailand. It found that less than 2% met the fundamental criteria for a successful product launch.
A recent TNS study has revealed the damaging effect of innovation, in the form of poorly strategised product launches. The research firm assesses close to 10,000 new products globally every year, with more than 4,000 in Asia, it said.
“Launching an unsuccessful product wastes marketing budget, undermines a brand’s credibility with vital trade channels, and can damage brand equity – reducing the business’s potential to launch new products in the future,” said a note in the study. Launches can be cannibalistic, eating into the share of a company’s existing products – and diluting customer loyalty. (Read also: Is launching a new product always the best thing?) and (7 questions to ask before launching a new product)
The study also analysed several successful product launches. One of these was Malaysia’s Nestlé Lactogen 4, which the study said saw "resounding success". In its second year the product achieved 74% growth over year one sales. “This is because the launch of Nestlé’s Lactogen 4 offering in Malaysia was driven by one simple, powerful universal insight: mothers want their children to grow, happily and healthily,” said a note in the study.
From there the Nestlé team identified a need to extend its existing Lactogen range to cater to children beyond three years of age. Nestlé’s target market, the Malay community, largely resides in rural Malaysia and are lacking in knowledge about food nutrition. Nestlé bridged this gap through healthcare professionals and government clinic nurses. The Nestlé team also went to great length to adapt its range for local cultural and religious needs, as well as simplifying the scientific messaging on its packaging.
Meanwhile Japanese skin care brand Hada Labo in Thailand and Emperador Light in Philippines also saw successful launches. Hada Labo is now ranked among the top 10 facial skin care products for women in Thailand, and achieved 6% growth in its second year, off the back of a strong first year.
Meanwhile, Emperador Light is the biggest selling brandy offering in the Philippines. The brand achieved an astounding 600% growth in its second year, following a successful first year.