Updated: Jan 3
Written by: Evan Goodfellow
With 85% of new fast-moving consumer good (FMCG) products failing, market research online communities are a serious solution to co-creating new products with the consumer in order to increase success rate and save money.
Failure Rates of FMCG
I was recently reading an article about failure rates of fast-moving consumer good products in the marketplace. I saw that the statistics were cited from Nielsen Group and so I decided to go to the source. According to research completed a few years ago, Nielsen Group found that “85 percent of new fast-moving consumer good (FMCG) products fail in the marketplace.” They published an article around this staggering statistic entitled, How To Flip 85% Misses To 85% Hits: Lessons From The Nielsen Breakthrough Innovation Project written by Rob Wengel and Taddy Hall. In the article they state that while the odds are that new products will fail, some do amazingly well. The article looked at ways in which certain companies have broken this trend of failure and looked at keys to their success.
The Nielsen group set up the Breakthrough Innovation Project which was a multi-year-in-depth-analysis of over 17,000 new product launches from 2008-2012. They set up categories to highlight breakthrough innovations where companies had to meet certain requirements to win. Companies had to meet 3 criteria and these included:
Distinctiveness– products had to be new and not simply variations of an existing product. Relevance– they had to earn at least $ 50 million in their first year. Endurance– reaching 90 percent of sales from year one in year two.
Like Ice and Beer
One of the winners of 2014 was Anheuser-Busch’s Bud Light Lime-A-Ritas. Their idea for this new product was born in Asia from an ever growing trend of pouring beer over ice. Executives challenged the Innovation VP, Pat McGauley to find a way to capitalize on this growing trend. This growing trend had been birthed out of necessity as pouring beer over ice allowed people to drink cold beer regardless of power outages. This ice mixture also gave the feeling of drinking beer a somewhat cocktail feel. McGauley faced a series of challenges, one of which was drinking beer with ice was not necessary for western consumers. He set out to accept the challenge and had a Brewmaster create some prototypes which he tested in a St. Louis brewery tour. The feedback from the customers was straightforward. People hated it.
Proving that new product innovation and success is more science than art, the team knew they had to change their approach which corresponded with Nielsen’s Breakthrough Innovation Project findings. Wengel and Hall knew they had to:
Seek opportunities to expand and transform categories—this ‘beer-as-cocktail’ idea was new in the U.S. and could attract new consumers who prefer cocktails to beer.Introduce new rituals—the act of pouring beer over ice suggested an opportunity to innovate around experience, not just product.
McGauley looked for a middle ground stating, “If beer over ice is a bad idea, what’s good over ice?” This led him and his team to realize that what was good were cocktails, and of those cocktails, the most popular drink was a margarita. The question became could a margarita come from Anheuser-Busch? McGauley wrote, “We look at our share of throat across all alcoholic beverage consumption, not just within beer. So a hypothesis that points across category lines is actually exciting rather than problematic. The question was whether there was latent demand: could we innovate around this Bud Light Lime Margarita idea in a way that would bring new consumers into the category and also take beer into occasions where it was typically absent? You do that and you transform categories and generate commercial success.”
The combination of a beer margarita crossed over to reach individuals who were not likely to drink beer, and those who wouldn’t normally order a margarita. McGauley wrote, “Conversely, for many non-beer drinkers—especially women—the margarita dimension made beer more appealing.”
The ritual of the cocktail experience including the glass, pouring the drink over ice, the packaging, and the social experience were all part of the innovation.
The cans in which they were sold helped bring the drink out of high end restaurants and into the backyard. Hall and Wengel summarized that, “the Bud Light Ritas example illustrates a company’s ability to expand its product category in a way that gets outside the box but not off the reservation. Anheuser-Busch stayed true to its brand identity, while increasing its consumer reach.”
In this model, companies such as Anheuser-Busch rely on a talented individual such as the VP of Innovation Pat McGauley and his team to crack the code of creating a new product that consumers will buy. The emphasis rests on the Innovation team performing a sort of magic, creating a product that the company wants, that creates new users and volume, without sacrificing volume in other product lines.
For companies without the capacity and capabilities of Anheuser-Busch, a supplement or an alternative to this model might include market research online communities. Using market research community software allows a company to gather a group of individuals to ask and test concepts on products, in this case drinks, and use the collective intelligence in the group to come up with a product idea and/or refine that idea. Connecting with the customer through qualitative online community research is the only way to reduce the 85% failure rate of FMCG.
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