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HARVESTING THE FRUITS OF INNOVATION DONE RIGHT
Larry Levin, Executive Vice President
Susan Viamari, Vice President, Thought Leadership
April 19 - 20, 2016
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 2
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 3
Harvest the Fruit
Increase Launch
Success and
Support Future
Brand Growth
4
New Product
Launch Success
Is Elusive
Sow the Seeds
1
Cultivate Carefully
Deliberate and
Well-Informed
Market Assessments
Breed 90-95%
Forecast Accuracy
2
Beware of Weeds
CPG Marketers
Must Abandon
Conventional
Category
Definitions
3 5
Questions
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 4
METHODOLOGY
IRI Market Advantage™ New Product Launch Module
IRI New Product Survey
GuestMetrics
IRI Social Advantage™
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 4
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 5
New or Extended
Brand, or Existing Brand in a New
Category
30% Distribution
Starts the Clock on Year-1
Top 100 Brand
Launches in Food and Beverage
and Non-Food
New Products that Completed their First Year in
Calendar Year 2015
DEFINING THE BEST OF THE BEST IRI’S NEW PRODUCT PACESETTERS GROWTH CRITERIA
5
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 6
90%
NEW PRODUCT INNOVATION SUCCESS RATE ARE PAINFULLY LOW 90% OF LAUNCHES FAIL TO MEET CRITICAL MILESTONES
Key Issues
• Achieving Forecasted Sales
• Optimizing Portfolio Assortment
• Driving Incremental Sales Volume
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 6
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 7
Share of NPP Dollar Sales by Company Size
INNOVATION IS COMING FROM CPGS BIG AND SMALL MID-SIZE COMPANIES ARE DEMONSTRATING MOMENTUM
34%
2012
14%
52%
26%
2013
12%
62%
27%
2014
13%
60%
41%
2015
10%
49%
Large
Medium
Small
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 8
LINE EXTENSIONS STILL DOMINATE NEW BRANDS VS. BRAND EXTENSIONS % PACESETTER BRANDS
12%
2010
14%
2015
88%
2010
86%
2015
Food & Beverage New Extension
8%
2010
14%
2015
92%
2010
86%
2015
Non-Food New Extension
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 9
12,000 new brands were launched in 2015
200 of these brands made IRI NPP
status
9 of these brands
achieved >$100M
THOUGH BLOCKBUSTER PRODUCTS ARE FEW AND FAR BETWEEN
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 10
37% 46%
38%
37%
14% 6%
6% 6% 3% 2% 4% 5%
1 2
$100> Million
$80-$99 Million
$60-$79 Million
$40-$59 Million
$20-$39 Million
<$20 Million
2014 2015
SUCCESSFUL NEW PRODUCT LAUNCHES BRING IN CONSIDERABLE SALES BUT NEARLY HALF OF EVEN THE MOST POWERFUL LAUNCHES FAIL TO HIT $20M
New Product Pacesetter Year-1 Sales
Note: Numbers do not add to 100% due to rounding.
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 11
TOP FOOD PRODUCTS RAKE IN HUGE MEDIAN YEAR-1 SALES: $19.6M ON AVERAGE, NEW PRODUCT PACESETTERS OUTPERFORM BY A WIDE MARGIN
Coffee
$172.7M
Luncheon Meats
$146.2M
Yogurt
$108.0M
Milk
$87.1M
Yogurt
$83.6M
Yoplait Greek
100 Whips! McCafé 1 Oscar Mayer
Deli Fresh BOLD
Dannon Oikos
Triple Zero
3 fairlife 4 5 2
Simply
Juice Drinks
Chili’s
at Home
6 Breyers
Gelato
Indulgences
8 Cobblestone
Bread Co.
9 10 7 Cheerios
Protein
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 12
AND ON THE NON-FOOD SIDE, YEAR-1 MEDIAN SALES REACHED $26.5M TOP LAUNCHES ARE HITTING IT OUT OF THE PARK
Gastrointestinal Tablets
$270.6M
Air Fresheners
$172.5M
Laundry Detergent
$167.5M
Adult Incontinence
$133.0M
Foot Care Products
$128.1M
Amopé
Pedi Perfect Nexium 24HR 1 Air Wick
Life Scents
Tide Simply
Clean and Fresh
3 Always
Discreet
4 5 2
Sally Hansen
Miracle
Gel
Purina
Beyond
6 Gillette
Fusion
ProGlide
8 Gillette
Venus
Swirl
9 10 7 Glad
OdorShield
with FlexBall Technology
with Febreze Freshness and Gain
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 13
C-STORE NPP PULL IN CONSIDERABLE REVENUE: $18.6M YEAR-1 MEDIAN SALES BY OFFERING AN ARRAY OF INDULGENT TREATS
Electronic Smoking Devices
$222.1M
Energy Drinks
$82.7M
Electronic Smoking Devices
$69.3M
Beer/Ale/ Alcoholic Cider
$43.3M
Salty Snacks
$26.5M
RUFFLES Deep Ridged VUSE 1 Monster Energy
Ultra Sunrise
MarkTen 3 REDD’S
Wicked Ales
4 5 2
Juicy Fruit
Starburst
Jack Link’s
Small
Batch
6 Monster
Energy
Unleaded
8 Wrigley’s
5 Ascent
9 10 7 Pillsbury Soft
Baked Mini
Cookies
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 14
POWERFUL BRANDS PLAY A CRITICAL ROLE IN INFLUENCING SOCIAL BUZZ…
Source: Voice of Consumer Analytics courtesy of IRI Social Advantage
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 15
…AND SPURRING PRODUCT USAGE IDEAS
#cbcbreakfast
Source: Voice of Consumer Analytics courtesy of IRI Social Advantage
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 16
SUCCESSFUL LAUNCHES ENHANCE CATEGORY SHARE GROWTH POTENTIAL
9 points dollar share gain
17% category growth
$141M revenue gain
14 points dollar share gain
11% category growth
$302M revenue gain
1 point dollar share gain
1% category growth
$142M revenue gain
3 points dollar share gain
5% category growth
$217M revenue gain
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 17
Non-Food Growth
Health Care
General Merchandise
Air Fresheners & Candles
3.4%
5.0%
3.7%
2.6%
Non-Food
Beverage Growth
Coffee/Tea
Beer/Wine/Spirits
6.5%
5.4%
2.5%
Beverages
HIGH INNOVATION SECTORS FREQUENTLY ENJOY OUTSIZED GROWTH CATEGORY DOLLAR SALES PERCENT CHANGE 2015 VS. 2014
Food Growth
Sweet Snacks
Salty Snacks
Meal Makers/ Lt Meals/Apps
2.7%
3.0%
3.0%
2.2%
Food
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 18
A REALISTIC LOOK AT THE COMPETITIVE LANDSCAPE
POWERFUL INNOVATION REQUIRES
AND A COMPREHENSIVE UNDERSTANDING OF MARKET OPPORTUNITIES AND CHALLENGES
Define the True Competitive Set
Understand Key Sources of Volume & Incrementality
Understand the True Market /
Consumer Trends, Needs & Wants
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 19
A REALISTIC LOOK AT THE COMPETITIVE LANDSCAPE
POWERFUL INNOVATION REQUIRES
AND A COMPREHENSIVE UNDERSTANDING OF MARKET OPPORTUNITIES AND CHALLENGES
Define the True Competitive Set
Understand Key Sources of Volume & Incrementality
Understand the True Market /
Consumer Trends, Needs & Wants
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 20
CONSUMERS WANT SOPHISTICATED FOOD AND BEVERAGE SOLUTIONS
enlightened elegant worldly
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 21
THIS IS FEEDING AN INFLUX OF CROSSOVERS FROM OTHER SECTORS
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 22
FOOD SOLUTIONS FOR ON-THE-GO CONSUMPTION ARE IN DEMAND CONSUMERS ARE LOOKING TO FUEL-UP WITHOUT SLOWING DOWN
of millennials
are looking for new foods that can be eaten on-the-go
of females
are looking for new foods that can be eaten on-the-go
of consumers
are looking for new foods that can be eaten on-the-go
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 23
PROTEIN IS MAKING A MARCH ACROSS AISLES 17% OF NPP TOUT PROTEIN
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THE DINE-OUT SEGMENT IS A HUGE INFLUENCER OF FUTURE CPG TRENDS
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 24
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NON-FOOD CONSUMERS WANT TO EXPRESS THEMSELVES AS UNIQUE INDIVIDUALS
stand out from the crowd personalized to
unique needs different and
delightful scents
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 26
S T A I N R E L E A S E S H I N E & P R O T E C T
POWER AND PERFORMANCE ARE STILL CRITICAL
B L O O M M I R A C L E B R I L L I A N C E
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CO-BRANDING IS STRETCHING THE VALUE PROPOSITION ACROSS BROADER USAGE OCCASIONS
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 28
CO-BRANDING IS STRETCHING THE VALUE PROPOSITION ACROSS BROADER USAGE OCCASIONS
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 29
CO-BRANDING IS STRETCHING THE VALUE PROPOSITION ACROSS BROADER USAGE OCCASIONS
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 30
AS SEEN ON TV PRODUCTS ARE BREAKING NEW GROUND IN CPG AISLES NPP BRANDS
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 31
AS SEEN ON TV PRODUCTS ARE BREAKING NEW GROUND IN CPG AISLES RISING STAR BRANDS
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 32
A REALISTIC LOOK AT THE COMPETITIVE LANDSCAPE
POWERFUL INNOVATION REQUIRES
AND A COMPREHENSIVE UNDERSTANDING OF MARKET OPPORTUNITIES AND CHALLENGES
Define the True Competitive Set
Understand Key Sources of Volume & Incrementality
Understand the True Market /
Consumer Trends, Needs & Wants
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 33
INVEST TO CLEARLY AND ACCURATELY DEFINE THE COMPETITIVE SET THE BREAKFAST MARKET IS COMPRISED OF 3 DOMAINS
DOMAIN 2 $9.0B +0.6%
Category I
Category J
Category K
Category L
Category M
Segment C
Category N
Category O
Category P
Category Q
Segment D
DOMAIN 3 $10.7B +0.2%
Category R
Category S
Category T
Category U
Category V
Category W
Segment E
Category X
Category Y
Category Z
Segment F
DOMAIN 1 $11.1B +4.3%
Category A
Category B
Category C
Category D
Category E
Segment A
Category F
Category G
Category H
Segment B
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 34
AND REMEMBER, CROSS-CATEGORY COMPETITION IS REAL & INTENSIFYING DIGESTIVE HEALTH MARKET STRUCTURE REFLECTS MULTIPLE PAIN TYPES
Reactive (OTC) Proactive (Rx)
DOMAIN 1
Category A
Category B
Category C
DOMAIN 2 DOMAIN 3 DOMAIN 4 DOMAIN 5
Category D
Category E
Category F
D I G E S T I V E H E A LT H
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 35
A REALISTIC LOOK AT THE COMPETITIVE LANDSCAPE
POWERFUL INNOVATION REQUIRES
AND A COMPREHENSIVE UNDERSTANDING OF MARKET OPPORTUNITIES AND CHALLENGES
Define the True Competitive Set
Understand Key Sources of Volume & Incrementality
Understand the True Market /
Consumer Trends, Needs & Wants
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 36
DOMAIN 1 $11.1B +4.3%
Segment A
Category C
Brand 1 Brand 2 Brand 3 Brand 4
Category B Category C
Brand 5 Brand 6 Brand 7 Brand 8 Brand 9
Category C Category C
Brand 10 Brand 11 Brand 12 Brand 13
Category D Category C
Brand 14 Brand 15 Brand 16
Category E Category C Category A
REALIZE VOLUME MAY BE SOURCED FROM WITHIN THE SAME CATEGORY…
Note: Private label excluded. Source: Transactions from HH panel data 152 weeks ending 03/23/2014; POS data latest 52 weeks ending 4/30/2014 vs. YAGO
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 37
…OR ELSEWHERE IN THE STORE, EVEN FROM BEHIND THE PHARMACY COUNTER
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 37
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 38
A 360º VIEW OF MARKET POTENTIAL IS ESSENTIAL TO ACCURATE FORECASTING
“It’s hard to forecast the impact of marketing
and innovation if you don’t know where the sales will come from.”
THE HENDRY METHOD
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 39
A 360º VIEW OF MARKET POTENTIAL IS ESSENTIAL TO ACCURATE FORECASTING
65% ACV Assumption
$52M Y1 Forecast Revenue
$50M Actual Y1 $ Sales
+96% Accuracy
90% ACV Assumption
$267M Y1 Forecast Revenue
$271M Actual Y1 $ Sales
+98% Accuracy
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 40
AND IT WILL PLAY A VITAL ROLE IN DEVELOPING OPTIMAL BRAND DEVELOPMENT PROGRAMS ADVERTISING RESPONSE CURVE FOR CASE STUDY BRAND PROVIDES SPENDING LEVELS TO OPTIMIZE PROFIT VS. SHARE DURING LAUNCH
0
50
100
150
200
250
300
3500.0
4.8
9.6
14.4
19.2
24.0
28.8
33.6
38.4
43.2
48.0
52.8
57.6
62.4
67.2
72.0
76.8
81.6
86.4
91.2
96.0
100.8
105.6
110.4
115.2
120.0
Share Optimization
Marketing Spend ($M)
$ S
ale
s (
$M
)
Profit Optimization
Assumes current levels of spend for base case study brand and key competitors remain at steady state spending levels
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 41
Harvest the Fruit
Increase Launch
Success and
Support Future
Brand Growth
4
New Product
Launch Success
Is Elusive
Sow the Seeds
1
Cultivate Carefully
Breed 90-95%
Forecast Accuracy
and Prioritize Ideas
with Deliberate and
Well-Informed
Market Assessments
2
Beware of Weeds
Abandon
Conventional
Category
Definitions
3 5
Questions
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 42
QUESTIONS & ANSWERS
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 42
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 43
THANK YOU!
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