Nielsen’s report reveals successful product innovation trends

According to the second edition of Nielsen’s “Southeast Asia Breakthrough Innovation Report”, less than 1% of new products launched in Southeast Asia meet the fundamental innovation success criteria for distinctiveness, relevance and endurance. It analyses new products launched in more than 160 product categories, representing 71% of annual fast-moving consumer goods (FMCG) sales across Indonesia, Thailand, Philippines, Vietnam and Malaysia.The report revealed that out of 12,920 new product launches analysed, most were unable to sustain sales beyond two years, and only 10 met all three criteria for a successful product launch: distinctiveness, relevance, and at least 90% of year-one sales in its second year.It is safe to say that consumers’ demands and preferences largely influence the success of an innovation product. Keeping this factor in mind, companies have started incorporating consumer insights in the process of product innovation.In the above backdrop, the report highlighted five emerging trends influencing FMCG innovation success in Southeast Asia:Demand for affordable luxury: Due to rapidly expanding disposable income and willingness to spend, consumers in Southeast Asia are looking for affordable products that will improve their lives and allow them to enjoy small luxuries.Emergence of home-grown companies: Local and regional FMCG brands in Southeast Asia are outpacing their multinational rivals on growth. Consumers in Southeast Asia show preference for local brands largely due to factors such as affordability, national pride, and belief that local brands are more attuned their needs and tastes.Evolution of connected consumers: The exponential penetration of smart phones across the region is giving consumers greater access to information and purchasing power. Recognising the rise of connected consumers, companies are increasingly leveraging digital campaigns in their marketing mix when it comes to new product launches.4. Health and wellness: Growing access to information is leading consumers to be increasingly aware of the impact of their food and beverage choices on their health and wellness. The trend is found not only in food but extends to personal care, where consumers are seeking products with natural ingredients.Convenience: The growing demand for products which make consumers’ lives simpler and easier is influencing manufacturers to deliver convenience to consumers, be it functional as cutting down preparation time, or in its logistics such as delivery.“The dominance of beverage and personal care categories in the innovation space in recent years is an interesting trend to note,” said Johan Vrancken, managing director of Nielsen’s Innovation Practice in Growth and Emerging Markets.Highlighting how brands have started to incorporate consumer needs, Vrancken said, “Brands within these categories are really getting it right when it comes to creating innovative new products, because they’ve spent time up-front building an in-depth understanding of their end consumers’ needs and then developed a compelling way to tap into those needs.