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76% of new FMCG products launched between 2011-2013 failed within a year, Nielsen “Breakthrough Innovation 2014” report finds

Researchers behind the Nielsen Breakthrough Innovation Report for Europe 2014 have analyzed 12,000 FMCG product launches across Western Europe and revealed the trend that about 66% of those products never reached the sales volume of 10,000 items, while 76% of those new launches never survived the first year of their marketing lifecycle.

Only seven out of dozen thousand analyzed products met the criteria of “success” and were named European Breakthrough Innovation Winners for 2014.

In the report, Nielsen identifies some key rules on how to decrease failure rates launching new products in FMCG and achieve a foreseeable 85% success of what was initially planned. Predictably, the answer lies in innovation.

A company, whether an established or a challenger brand, should be innovative in four dimensions to reach success:

1. Define the right innovative strategy: what kind of genuinely new value would you create to serve customers’ needs and wants?

2. Define how to implement this strategy: set the right organizational framework.

3. Define how to market your innovation wisely: how would you communicate the novelty of your offer?

4. Manage a strong team work: let your innovation spree become infectious.

By innovation, the authors don’t just mean something “new, fresh or different,” but consider the definition from the consumer behaviour point of view. Moreover, they define 9 types of innovation.

Photo: share of each type of innovation across the 12,000 analyzed products

Photo: share of each type of innovation across the 12,000 analyzed products

Analyzing the performance of the “most innovative” categories over 2011-2013 years, the researchers found little evidence that the number of innovations (i.e. quantity) alone drove category growth, but it was down to the essence (i. e. quality) of innovation.

Photo: share of total category sales from new innovative introductions

Photo: share of total category sales from new innovative introductions

The full report with more findings and highlights is available here.

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