Innovation is the life blood of a CPG company. It gives the salesforce a reason to see their buyers and generates consumer interest at the point of purchase. Ultimately, smart innovation drives profitable incremental $ sales. It “margins up” a brand for the manufacturer and the retailer. Innovation is also critical to driving market share gains, one of the critical “missing” P’s of marketing.”
Too often however, new products simply cannibalize existing products. Why?
- Appearance: Same Old, Same Old. They LOOK exactly like the base products
- Form & Function are nearly identical to base offering. The closer the form to the base, the more likely for switching to occur within the franchise
- Overall, it’s simply a “tweak” off the existing product. Different flavor. Marginally better formula. New Size.
By definition, the further away from the base, the more likely the incrementality of the new product. Risk also increases. Like investments, risk is usually correlated with reward in the new product arena.
Here are 2 examples from Billion $+ brands: Campbell’s & Pringles.
Why would I consider this “smart innovation?”
- Fits with their brand equity, they have “license” to extend into these areas.
- They are sufficiently different from base offerings
- They bring something substantially interesting to the consumer. Usage, packaging, ease of use, health benefits.
Campbell’s is clearly the riskier proposition of the two. Both brands compete in big categories, but if I were to bet, this product line would generate greater total (and incremental) sales vs the Pringles Stix, also probably requires more investment than the closer in Pringles product.
I’m sure Campbell’s did their research, but my first instinct was that the choice of all black packaging, with no reference to their nostalgic “red & white” can may be too far of a reach? Again, only the insiders understand the testing, consumer feedback and goals, so this is not a second guess (just an observation) as I’m sure they did their homework.
One observation: While doing a simple Google search on “Cambell’s Skillet Sauces” and reviewing the first page results, it seems like their was a 10:1 ratio of price promotion (store deals, coupon offers) to product reviews, blog offerings. While this is not uncommon for a new product entry, I did see one fantastic blog review with great product shots, opinions and instructions (link below).
It begs a key question: Which communication is more valuable to the brand owners, the trial incentives or the blog review? What if the 10:1 ratio of incentives vs third party reviews was flipped on the front page of Google, would this thrill the brand team or disappoint them?
If the answer is the former, did the product intro budget and resulting objectives reflect this desire? If not, why?
Would love to hear your thoughts….