Is There Value in Being Different?
Highly Unique New Products Give Significant Advantages

08/11/2003 -- When marketers examine their portfolios of potential new product initiatives, there is likely a mix of closer-in line extensions as well as some "out there" ideas that represent new brands, new behaviors, or entirely new categories of products. As these ideas are exposed to consumers in concept testing or idea screens, often the more "familiar" lower risk concepts (for instance, line extensions of an established brand) rise to the top on the basis of concept purchase interest alone. Other more radical ideas may be perceived by consumers as really unique, without necessarily translating into "breakout" consumer purchase interest. Click on thumbnail to enlarge, or click here. While more products may not be clear winners in terms of concept purchase intent scores, ACNielsen BASES has found that such highly unique new products do tend to experience significant advantages over more pedestrian new products in marketing plan efficiency. That is, for a similar dollar investment, initiatives that break away from the familiar achieve stronger results in key consumer and trade marketing indicators in the real world environment. Collectively, these advantages can play out into substantial volumetric and financial benefits. How can the marketing environment differ for really innovative products? The following are two examples. Distribution Most typical close-in new products (e.g. line extensions) generate greater financial benefits for the manufacturer than for the retailer. Convincing consumers to switch brands can put more money in the manufacturer's pocket, but does little to grow the retailer's business. However, when not-so-typical new products offer the potential to stimulate new behaviors that create new categories, they tend to experience greater retailer support in terms of availability, with clear resulting benefit to volume performance. Tracked distribution in year one for innovative new products reaches over 90%; even the first follower in a new product category achieves distribution approaching 90%. This is impressive when you consider that the average new product achieves only about 70% distribution. Click on thumbnail to enlarge, or click here. Incremental Volume Introducing more unique or better differentiated new products also pays out in terms of creating new volume rather than simply stealing share from existing brands. In-market data show that brand extensions that are better differentiated in BASES testing show greater ability to grow overall franchise volume. While this may not be evident in topline "concept purchase intent", it should be recognized and valued. Click on thumbnail to enlarge, or click here. Not all new product ideas are created equal - anticipating the differences in marketing efficiency by the degree of innovation is a useful way to ensure that we are making smart bets on the highest potential new products. A thoughtful and accurate evaluation of new product sales potential requires an understanding of the circumstances that fuel these sorts of marketing issues and a process for estimating the impact. For further information about ACNielsen BASES, please contact Rob Mooth at robert.mooth@bases.com or 859.905.4000. ------------- Appeared in Facts, Figures, and the Future Magazine, © August 2003.