Like new item development, the product refinement process
Daniel J. Staresinic Worldwide Director, Consumer Products and Life Sciences Siemens PLM Software
is a cross-functional, complex effort, requiring up to 1,200
interactions and decision points. How well you manage it
has a huge impact on your speed to market, shelf share
and profitability.
Books and articles continue to be written about breakthrough innovation: how to find the next innovative idea that will propel a brand to reach a higher plateau of success and achieve spectacular growth that leap-frogs the competition. And rightly so . . . a brand must remain relevant, and innovation is the engine to provide the relevance (and growth) that a consumer packaged goods (CPG) manufacturer needs.
Breakthrough innovation brings that fresh idea that zeros in on what delights a consumer and provides that growth and profitability. Perhaps less exciting and not receiving as much press coverage is incremental innovation. Some portion of the company’s resources and product portfolio is made up of incremental product introductions versus breakthrough products. It could be a formula tweak, a refreshed packaging scheme, a new size or configuration, or a variant for a new market. But whether breakthrough or incremental, CPG manufacturers are looking to improve the performance of their development process.
Table 1 below shows the findings from a recent Aberdeen Group study of CPG companies and their approach to innovation.
An ever-changing consumer and demands from retailers for new products are the drivers behind the first pressure listed below (demand for new product types). Finding that next breakthrough product that will change the category and propel a brand forward is the primary desire, but the reality is that incremental line extensions and product refreshes also must be executed by the organization. The lowest performing products on a retailer’s shelf are at risk of being dropped, and if that SKU belongs to your brand, a new offering needs to be proposed to take its place; the shelf space is far too valuable to lose to a competitor. For a CPG manufacturer, line extensions and retail replacements in markets across the globe typically add up to dozens if not hundreds of incremental products to be developed and delivered, in a window of time that is often only six to nine months.
Pressures
All Respondents
Demand for new product types
39%
Consumer demand for ‘green’ or eco-friendly products
33%
Race to be first to market with new product types around the world
23%
Compliance to regulations required for market entry
Seek lower cost supply chains by leveraging local suppliers
20%
20%
Aberdeen Group, October 2008
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