True innovation brings profit and distinction

Two-thirds of German households are open to buying new products for trial and 83 per cent of Nielsen clients in Germany list innovation among their top three priorities. Innovation is also a priority for FMCG companies in the UK. A report by the German Nielsen subsidiary lists three main reasons for the increasing importance of innovation: the life cycle of products is getting shorter, the proportion of hybrid consumers who spend a lot of money on some categories while refuse to spend anything at all on others is growing and the pressure to cut costs is also growing. New products are only successful if they are really useful and represent added value for consumers. According to a Nieslen survey, only 3 per cent of new products in the German market are true innovations, which had not been available previously. 80 per cent of new products are simply copies of existing ideas. As a result, only 4 per cent of new food products and 1 per cent of new household chemical products achieve weighted distribution of over 50 per cent within a year of their introduction. Nearly 50 per cent remain below 5 per cent in terms of weighted distribution or are discontinued by stores. Nielsen has a five stage comprehensive solution for the whole process of innovation: 1. Discovering areas where innovation can be successful. 2. Systematic creation and development of ideas with regard to usefulness and brand strategy. 3. Planning of concept and positioning. Estimating potential. 4. Implementation. Execution of the concept. 5. Monitoring. Evaluation and analysis of sales using benchmarks. Sales curves rise steeply untill the sixth month of the lifecycle. This seems to be the critical point, when measures to promote repeated purchases can be helpful. Innovation helps in making products more distinct from competitors, but it requires a detailed knowledge of consumers. Questions like “Who is buying my product?; Why? How loyal are my customers?” need to be answered. Nielsen has new services for market players. For example, demand for convenience products and stores is growing dynamically in Western Europe. But it took quite a long time for the new store type and its specialised assortment to get accepted by the target group. The influence of convenience-related considerations in choosing a store by consumers is growing. Shopping decisions are becoming increasingly spontaneous.