Finding and Building the Path to Success
We wish it was as easy when introducing a new product in the retail industry. Even the best of products, based on the traditional attribute of quality, generally stand only a 25 percent chance of succeeding. As a result, today's new guidelines for strategy and execution of new products are extremely detailed and complex.
Here are some major factors to consider when attempting to build a new product "field of dreams":
- Most manufacturers emphasize brand awareness and individual product movement. Retailers stress product categories and aisle shelf management. The divergence here is an important factor to note.
- Trade promotion management (TPM) is more important than ever before in the launch of new products. And it's a more in-depth, sophisticated process than ever. TPM is the process of planning and accounting for the funding of products and events at retail, including brand management, budgeting, account management, demand planning, integrated sales and marketing, retail execution, back-end processes (including settlement) and analytics.
- Shopper insights and information are available in an incredible amount of detail. Demographics, attitudes, buying patterns, competitive data and ethnic behavior all reside in comprehensive programs. Suppliers and retailers are improving their skills in using this information to predict the success of the launch.
- A new product introduction must be executed for a variety of customers: Distributors and wholesalers; tier one, tier two, and independent retailers; regional differences; and different store sets. These variations will need to be considered when launching products in the future.
- Retailers will have to increase their participation, and invest more in new product launches. Free-standing inserts (FSIs), although still valuable, must be implemented with a host of new or improved tools to encourage shoppers to buy. Some of these include: in-aisle coupon dispensers, mobile in-store checkouts, samples, store window and shopping cart announcements, videos, store announcements, product trial packages, on-shelf flashing lights, new product locators, and more involvement with all forms of social media.
- Finally, better coordinated marketing programs between retailers and suppliers to reduce costs, support product innovation, and develop a better understanding of shopper preferences for products and packaging will increase the percentage of new product winners.
Adherence to these principles, improving collaboration, and aligning the alliance among category managers, sourcing and corporate management will result in a higher predictability on the path to new product success. For more on the keys to new product success, please read "Maximizing Speed to Market" on p.10.
President and CEO, Stagnito Media