Progressive Grocer Product

Spring 2015

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cover feature Spring 2015 / Progressive Grocer Products Showcase 7 Hitting the million-dollar mark—let alone the multiple-million-dollar mark—is a cause for celebration, but it's important to note that it is not the norm, considering that 75 percent of products fail to hit $7.5 million in sales their frst year. Around $7.5 million is the signature number of a highly successful launch, as noted in a Harvard Business Review article, "Why Most Product Launches Fail." But before the product is even launched, simply bringing it to life is a feat of strength, starting with the idea, weighing its merit, and eventually, hopefully, developing that idea into something tangible. In 2014, Stagnito Business Information 's Progressive Grocer surveyed a sampling of suppliers and retailers on new product development and execution, and the results show that new product development is not something that can be ignored. It is essential for staying competitive, and increasingly companies are targeting more resources for the process. And yet despite its importance, only 40 percent of retailers, and 39 percent of suppliers, have a formal new product development team, according to research results. For suppliers, consumer need, retailer demand, and competition are what drive new product development; for retailers the answers are the same, though technology and other new developments also play a part. More than half of suppliers (55 percent) said their products are developed for a specifc channel, and most (80 percent) are focusing their new product eforts in the grocery channel. Retailers and suppliers polled responded that new product development processes can take on average 7.4 months (for retailers) to 15.3 months (suppliers). But no matter how lengthy the process, having clear communication and expectations for the team and the product itself are non-negotiable to make a launch successful. Best Practices for the Best Products According to Nielsen data, only 15 percent of new products will still be around two years after their debut. It can be heartbreaking, but understanding and avoiding common launch pitfalls can contribute to a product's success. Joan Schneider, CEO of Boston-based Schneider Associates, explains that the frst step in a successful product launch is to determine which category and strategic approach makes sense to use in introducing the product. Products are either revolutionary, evolutionary, or a line extension, though a product may or may not ft neatly within one category. Beyond that, Schneider says, "There are a number of questions you should be asking yourself and your team," including: • Is there a need in the market? What problem is it solving? • What is the product category and how competitive is it? • Is there a large enough market to support the product? • Crank up the "who cares?" meter—you think it's a good idea, but will anyone else? • Is the launch fnanced properly? Many great ideas never get to market because they are undercapitalized • Who are the potential partners or communities that can be brand ambassadors to help grow awareness (and sales)? Randy Burt, a partner with Chicago-based AT Kearney, says that when thinking about tactical implementation for a product, a lack of communication between the supplier and the retailer, and not being able to put enough promotional and trade spend behind the product can sink a launch. Suppliers, he notes, need to "make sure you understand the retailer's objectives and tailor what you're doing not to product itself, but also to diferent retailers and meeting their needs." Collaboration Concepts Rolling out a product launch is not a one-person efort by any means—from the idea stage to the execution, multiple people take part in launching a product out the door and into the hands of consumers. "Collaboration is critical for a successful new product launch because if all the diferent disciplines that comprise the launch team are not working together, the launch will likely fail," Schneider says. A well-orchestrated launch, she adds, requires thorough customer and product research, a great product, on-target marketing and a strong sales force to sell it. A manufacturer takes its chances if one of these elements is missing. And the onus is on the manufacturer, Schneider adds, to understand consumer purchase behavior in diferent retail environments. Take, for example, the recent launch of Kraft MilkBites. Kraft often rolls out myriad successful products, but this one, says Schneider, "just missed the mark in product development, retail positioning, and marketing." The product fell into the breakfast/snack category, similar to cereal Companies work for months, even years, to develop a product that meets a consumer need, fills a gap in the marketplace, or simply expands on a well-known or well-loved brand.

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