Within business strategy, innovation is always considered as a way to change a company’s fortunes as if it were so easy!
In truth, from the list compiled by Nielsen, only 12 out of 3522 fast-moving consumer goods product launches were marked as “breakthrough” in the USA.
To be considered breakthrough, three rules were applied.
The product had to:
- Deliver a new proposition rather than a refinement
- Generate over $50 million revenue in first year
- Maintain 90% of the revenues in the second year
This post examines the full list of 12 items with analysis into what made the innovations successful.
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Atkins Frozen Meals
Atkins is a company that specialises in diet plans to help people reach weight goals.
The company admits it lost its core focus by being taking a scattergun approach to innovation previously. It launched too many products and ended up going bankrupt.
After bankruptcy, they created an online forum which grew to 5 million users. This was a gold mine for consumer research.
They found that many people struggled to create healthy food in a hectic lifestyle and there was a lack of quick food options.
This inspired Atkins to create a frozen meal chain that met the health related demands of its users. This was a huge challenge for a company who had no experience in frozen meals before.
They spent a long time in getting the products right through interacting with their community. This allowed them to price the product at a premium because potential customers didn’t see other brands as competing in the same niche.
Atkins Frozen Meals had $68 million in first year sales with 40% growth in year 2!
Parent Company: Procter & Gamble
The growth of smartphones as all in one products has meant the traditional battery market has stagnated as consumers use less devices.
Procter & Gamble’s challenge was to create a premium product to improve margins in a stagnant sector.
The R&D department created a new battery with several new features alongside the lasting longer than other batteries.
Duracell Quantum has PowerCheck to solve a common problem for consumers who don’t know how much charge is left. The DuraLock feature means that consumers can buy batteries knowing that they can be stored for ten years.
Branding was essential to the products success. The batteries were coloured red to differentiate them from the standard Duracell innovations that had used the same colour scheme for decades.
The features and branding meant that Procter & Gamble were successful in converting consumers to the higher margin new product.
L’Oreal Paris Advanced Haircare
L’Oreal had established itself as the number 1 or 2 haircare brand across the world with the most notable exception being the US.
The US team wanted a custom solution for US consumers rather than simply lifting a brand from abroad.
Young American women style their hair much more than the average consumer thus many wanted a product which would undo the damage that was created as a side effect.
3000 scientists worked on the project to ensure the highest standard of quality.
Once the product was tested in by over 5000 women consumer trials, the marketing team came to the fore. The bottles were black to appear luxurious and stand out on shelves filled with white bottles.
There were in fact 5 distinct lines each which claimed to be a complete system for different types of hair. Consumers bought into the idea that there was true scientific innovation behind each line.
Parent Company: Kraft Foods
Lunchables was successful in creating food products that parents bought their children for packed lunches.
They wanted to understand why they lost consumers as they became teams and how they could recapture the market.
From surveys, they found that tastes changed as the children matured and the brand image was on associated with childhood.
A new line was introduced called Lunchables Uploaded that used more mature graphics and colour schemes.
The majority of marketing was digital. Kraft Foods partnered with MTV for this product rather than their traditional partners Nickelodeon and Cartoon Network. In total, the marketing videos were viewed 73 million times.
The brand was a hit but Lunchables further increased marketing by created a reality series called “Fully Uploaded” with MTV and is releasing a new line “Lunchables Uploaded Walking Tacos”.
Monster Energy Ultra
Parent Company: Coca Cola
Monster was aware that energy drinks tended to appeal to a relatively small market. They wanted to broaden the appeal of their drinks to draw in more consumers rather than compete for consumers already brand loyal to competitors.
Consumer research highlighted a fear of many non-users that energy drinks were unhealthy, high in calories and high in sugar. The taste was another obstacle to consumption.
This inspired Monster to create the Energy Ultra sub brand. These drinks had lower calories and was less sweet than the core brand which allayed some of the traditional barriers for non-users.
The product was launched in a variety of flavours after consumer testing. This gave it the edge by tapping into what consumers actually want to drink.
Monster made heavy use of celebrities in their marketing to draw in non-traditional customers and this paid off in demonstrating the clear difference between Energy Ultra and the incumbent energy drink offerings.
Mountain Dew Kickstart
Parent Company: Mountain Dew
Mountain Dew had a strong position in the soft drink market for the older male demographic. The current drinkers were particularly loyal and would buy the product more times on average than consumers of other soft drinks.
PepsiCo wanted to broaden the brand’s appeal to millennial males.
They talked to current consumers in the younger demographic and found that many mixed Mountain Dew with orange juice in the mornings.
This gave them better taste and was a replacement for coffee or tea.
PepsiCo leveraged this to create a product that was 5% juice, mid calorie and had more caffeine than regular fizzy drinks but less than energy drinks.
They convinced sceptical retailers to stock the product through taste sampling sessions and explanations of the strategy.
Parent Company: Theo Muller Group
Joint Venture: PepsiCo
Muller Yogurt had a very strong presence in Europe but had never entered the US market.
PepsiCo spotted a market they wanted to enter but had no experience in the yogurt segment.
As US consumers had become more health conscious, yogurt had boomed in popularity. Greek style yogurt in particular was very popular.
PepsiCo and Theo Muller seemingly had a match made in heaven.
Theo Muller had the great product which had already been massively successful in Europe. PepsiCo had the knowledge of the American market and an established distribution network.
Despite strong sales in the first and second years which meant it placed on this list, the venture did not gain enough market share to satisfy PepsiCo.
PepsiCo left the joint venture in December 2015.
Redd’s Apple Ale
Parent Company: MillerCoors
MillerCoors had a clear idea of what they wanted to achieve through innovation:
- Win back beer defectors
- Attract women
- Attract millennials
- Compete effectively against wine and spirits
They approached this from a demand perspective. Young people are more likely to mix drinks thus blurring the distinction between beer, wine and spirits and experiment.
MillerCoors discovered that the target market enjoyed sweeter tasting beverages, particularly apple and strawberry. Ciders had been growing rapidly in this demographic.
There was a lack of apple flavoured beer in the market. MillerCoors prioritised the outdoor drinking social drinking occasion and tweaked the beverage to suit this.
The marketing was focused on entertainment whilst demonstrating precisely when Redd’s Apple Ale would fit into a consumer’s lifestyle. The simple and focused nature of the brand image struck a chord with the public.
Special K Flatbread Breakfast Sandwiches
Parent Company: Kelloggs
Kelloggs had observed shifts in consumer preferences in the breakfast market.
People were consuming more savoury, more warm, more handheld and more protein at breakfast time.
These trends didn’t align with Special K’s current offerings.
Special K as a brand is women focused thus it did research into what its current consumers wanted.
Kelloggs were surprised that women wanted proper, tasty food at breakfast rather than micromanaging calories with alternatives.
The women believed this fitted Special K’s brand as long as the food was natural and they weren’t being tricked.
Kelloggs put the success of the brand down to the constant consumer interaction at every decision point.
The Red Bull Editions
Red Bull has been the market leader in the overall energy drinks market for some time.
However, competitors such as Monster were closing the gap rapidly.
Red Bull had only offered one flavour since its inception compared to the plethora Monster offered. Energy drinks traditionally haven’t been palate pleasers but Red Bull was behind the curve in this regard.
The R&D department tested many flavours with potential consumers and settled on three flavours for the launch; cranberry, lime and blueberry.
The detailed flavour research combined with the strong brand name meant the Editions were an instant success. More flavours have been added since the launch.
Tidy Cats Lightweight
Parent Company: Purina
Tidy Cats was already the leading litter brand but found many consumers considered the weight of the product to be a major inconvenience.
This meant it was hassle getting it off the shelf, to the car then into the house. Tidy Cats research suggested that 61% of cat owners would switch to another brand if it was as efficient.
The R&D department was able to engineer a material half as heavy but with all the necessary absorption qualities.
Tidy Cats had a great marketing campaign setting people a challenge that they could toss a sack of the litter and allowed them to try this in store.
Consumers were convinced by the convenience and Tidy Cats gained large swathes of the market share.
Tostitos Cantina Tortilla Chips and Salsa
Parent Company: PepsiCo
PepsiCo has multiple products on this list, each a testament to their ability to spot a consumer trend and capitalise on it.
Chips and dip are ingrained in young adults’ minds as party food.
PepsiCo conducted a survey amongst the age range 20-39. They found that 61% consider chips and dips a party staple and 74% have chips and dips at home in case they have a spontaneous party.
PepsiCo believed there was space in the market for more chips and dips to supplement their existing product line.
Capitalising on the increasing Hispanic population and popularity of Mexican restaurants, they developed the Cantina sub brand. Vibrant, colourful packaging was used to feed into the festival, party atmosphere that the chips are often used for.
PepsiCo was able to market their offering as an extension of the current brand while emphasising the different flavour and texture of the chips to draw in non-consumers and those who consumed other brands.
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