Nearly 8 out of 10 launches fail in the FMCG business.

More than three in four new FMCG product launches fail in their first year, according to an analysis by Nielsen. Why?

 

The question arising is of course how this can be possible and also how manufacturers can afford it in today´s highly competitive environment requiring instant distribution and shelf space as well as big budgets spent on advertising and promotion in order to drive consumer demand.

We can assume the majority of the manufactures have conducted some type of research in the process from mapping out behaviours and needs to idea and concept ending up in an appealing packaging design. Traditional methods as focus groups/personal interviews as well as quantitative surveys are most likely used in various degree depending on the size of the category and the brand. The research/testing must have shown favourable or more likely “interpreted” favourable results in order to justify a launch and yet the level of failures is very high.

One could always argue that several of the launches are actions just to be in line with competition as well as proving for the Retailer being proactive and acting as a forerunner in the Category. But still I believe the level of failures could be lower and success rate higher.

 

What could the reasons be for such a high level of failures?

It can of course be several but I will focus on one of them, maybe the most important one – the research.

First we need to understand how our brain works. Studies from psychology and neuroscience indicate that a majority of our decisions are made by our automatic and mainly subconscious mind.

According to HBS professor Gerald Zaltman, 95% of what drives actual consumer behaviour is unconscious.

People can´t articulate what drives their behaviour because they don´t have full access to those mental hidden processes.

Based on above we know that “self reporting” questions in traditional methods are not good enough for prediction it ´s is only individual opinions. This is basically telling us not to relay too much on them when launching a new product. There is always a gap in what people say and what the do and you don´t know why.

This type of question works in recall and recognition but most likely not for prediction.

Having said this we need to understand why do companies use flawed methods of research when launching new products?

Many marketers continue to ask for traditional methods of research because they are quick, easy and cheap to use. There may also be an element of tradition within in the organisation to use them. There is most likely also a certain amount of herd behaviour here as people see others using traditional methods and automatically assume they must provide value and generate insights. One other reason is that Research Agencies is promoting the traditional methods and it is not in their interest to invest in and/or suggest new ways of doing research.

 

What can you do to improve your success rate in new launches?

My recommendation to you is to start looking into new research methods addressing the subconscious mind! There are a number of research techniques that can access or offer insights about how the automatic and subconscious mind responds to new products/designs. These are generally referred as to implicit or indirect research techniques as they don´t rely on direct, deliberate, controlled or intentional self-reporting. It could be techniques like EEG, Eye-Tracking, Biometrics or Implicit Association Testing to mention a few.

At Straylight we have been working with these techniques for more than 5 years and our clients are convinced in the benefits, especially when used in combination with observations and explicit research.

Implicit Association Testing is a vital tool to use when launching new products revealing the subconscious response allowing you to understand how consumers value your new product in terms of Valence, Relevance, Emotions and Attributes without asking direct questions. IAT gives insight into associations and beliefs before processed by conscious thinking. This is valuable information allowing you to fine tune in the right direction.

When launching new products we always advise our clients to use Implicit Association Testing conducted in cooperation with our global partner Sentient Decision Science. It is a very powerful technique generating a high level of prediction.

Next time you are to introduce a new product, contact us and we will secure your launch!

 

 

Comments are closed.