April 23, 2013
FRBuyer: What Does It Take to Achieve New Item Success?
Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Refrigerated Buyer magazine. A long-time Harris Teeter executive, Mr. Harris is a former chairman of the National Frozen & Refrigerated Foods Association and a member of the Refrigerated Foods Hall of Fame.
Everyone loves to complain about the failure rate of new items, but all too often retailers are responsible for that failure.
One of the most preventable causes of new item failure — having a rigid category review schedule — is very easy to fix. Some won’t even consider a new item until the next review, often three or four months later.
When Kraft came out with a new cheese years ago, our stores wouldn’t take it on because it was between-times on the category review schedule. Of course Kraft was promoting with TV and coupons, and we were getting consumer complaints like crazy.
Once I had the authority, the first thing I did was get it on the shelf. For basic items like margarine, dough and eggs that rarely see new launches, a delay is your worst enemy.
That also applies to speed-to-shelf. Once you’ve adopted an item, get it in the warehouse, in the stores and out the door. Too many retailers wait for a reset team to come in and get the product on the shelf. No way.
Every Friday, I used to send a note out to all the stores, explaining what the new items were and telling them not to let them sit in the cooler, but to get them up on the shelf.
Every time new numbers come out from Nielsen or IRI, you should be checking to see what items are selling well in the marketplace. If you don’t have them, get on the phone with your broker and manufacturer and say you want them. I don’t think that’s going on much anymore, but it should.
You should also be making sure that new item tags get up on the shelves, since they draw attention and help your sales. The tags help reinforce the ad messages that consumers have seen. I always left them up for six weeks.
The manufacturer has to do its part, too. Some companies work hard to make new items work with promotions, demos and TPRs. Some smaller manufacturers don’t have the resources, or don’t bother. But it’s your responsibility to stay on top of things!
BrainTrust
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Discussion Questions
In what ways do you see grocers undermining the chances for success of new products? Which do you see as the biggest process shortfalls around launches of those mentioned in the article? Are there others you would add?
Poll
Great article—thanks Johnny. Not giving a new item time to build can also undermine the success of a new product. Back in my Burke and IRI days, we would see retailers give a product 3-6 months, when trial was just building and repeat hadn’t had time to settle in because of long category purchase cycles.
Realizing that labor costs have soared in recent years, more retailers than ever have become entirely dependent on their rigid category review schedules before cutting in a new item. This can be death to a manufacturer, disappointment to a consumer, and significant lost revenue and profits to the retailer. If the product is truly “revolutionary” and a “game-changer,” I agree with Johnny—get it to the shelf! The rewards are far greater than the risk.
A hearty Amen to everything Johnny said!
The universe works on the basis of energy—always in motion, always creating and transforming; everything connected to everything. Be part of it or die.
But we humans are so locked in our greed (if you’re invested in one product make sure you kill the competing ones even if they would solve world hunger); ego (you know everything there is to know about your business) and/or rigid mind-set (you do things in one way, always have, always will) that we actually think we run things.
Life—and business—is a dance. Often it’s a chaortic one, a dance between chaos and order, but it’s a dance nevertheless. The music will keep playing whether we are dancing or not. The challenge is to stay on the dance floor. Johnny is right—”Stay on top of things!
This discussion appears to suggest that all “new” products are really new and that they would be successful if it weren’t for the shortcomings of today’s retailers.
Of course the introduction process can be improved, but so can the pre-judgement of whether a new product will really satisfy consumers’ wants and desires.
Perhaps we should go back and review the combined processes by manufacturers and retailers that made today’s top products successful.
It’s too difficult for new items to find space in grocery stores. Whether it’s the new product review process, slotting fees or being shut out by larger competitors, the process is not working. Retailers rely too much on fees from suppliers and not enough on sales to consumers. This stymies innovation and blocks entrepreneurial companies, both local and national, from succeeding.
Not every new product needs or can afford a national, or even a local, advertising effort to launch. There are many ways besides advertising to draw the public’s attention to a new product.
New products help create a better shopping experience. Retail can help itself by embracing innovation in the marketplace, rather than hanging on to time-worn traditions.
Really terrific guidance on an important topic. While the article listed several “fails” in the overall process, there is a common thread. Each of these shortcomings stems from making decisions on what’s most convenient for the retailer and/or manufacturing as opposed to what the customer wants. The bigger the company, the more pronounced this tends to be.
Introducing a new item is a big lesson in coordination. How well a retailer does it goes a long way to showing how effectively they communicate within their organization. A retailer who is challenged by new items likely has much larger problems in communication.
The whole process of introducing a new item, especially an item that requires special cold-chain consideration, must be coordinated. It likely begins with the discontinuation of another item that must be removed from the selling area. I have always believed in the “wall of discounts” method that allows the store to move the discontinued items out of the way. Special selecting slots in the warehouse should be set aside for the “first case” to go to each store. These cases should have all the instructions for implementing the new item attached, including the item to be discontinued, the shelf tag for the new item, and any other promotion materials.
If you have handheld devices in the store, a special QR code on each case may be all you need to tell the store personnel how to handle the item. The first sale of a new item can be used to complete an electronic “check-off sheet” that shows when the item was first shipped to the store and when the first sale occurred. Stores should be rewarded for implementing new items quickly. Coordination with external promotion activity should not require abandoning discipline in the aisles. Although seasonal resets will still be required, the flexibility of better communication should enable implementation of new items at any time.
But there is a dark side to all of this. Many new items fail through no fault of the retailer. Retailers have to be proactive and tell vendors when their time is up for an item that is not successful. The more efficient and accepting of new items a retailer becomes, the more items they will be discontinuing. And there is always the one $400 a week shopper that fell in love with the new item. Retailers have to be ready to handle the disappointment.
Johnny, great topic and terrific comments. Gene has a perspective that is worth reviewing further. The process of new item development, new item launch, new (and existing) item sustenance and maintenance, and ongoing support has become sub-optimized.
The need to more closely align products to a job-to-be-done and then exploiting that collectively/collaboratively between retailer and manufacturer is not well executed. Different than “need states,” the job-do-be-done and the recognition of the shopping ecosystem is essential in understanding how to better ensure success of new and existing products.
We tend (as an industry) to continue to assume that the consumer and shopper can be led/manipulated/driven to bend to our will as marketers and operators. We then scratch our heads and try to figure out why success eluded us as we pore over our syndicated data reports. The answer is no more complex than that we are looking in the wrong places and at the wrong end of the periscope. We need to engage in a dialogue with the shopper that reduces the barriers we have created in our search for efficiencies.
I agree with Bill. I might change consumer “wants” to include “needs” as they don’t always know! I like the Henry Ford quote “If I had asked people what they wanted, they would have said faster horses.”
In today’s world it is possible to use consistent data at scale (i.e. connected consumer behaviors, attitudes and research answers) all the way along the innovation chain to better identify, enable and maximize innovations. However, while this is possible, few brands have adapted their approaches to benefit more from this.
Certainly the biggest problem is items not being given time to find an audience; something comes on the shelf, it’s not promoted—or at least not effectively—and a year later, it’s gone. Now I realize there’s a reason for this, but I don’t see how one separates the eventual winners from the true losers if everyone is judged on their first lap.
Excellent discussion of a problematic area…that shouldn’t be. Most retailers like the excitement of a new product, but often this is totally lost in execution.
Some retailers say the problem is different functional teams responsible for coordination of specific phases of promotion—product ordering, shelf placement, category management—resulting in lack of coordination described above. Promotional materials are received too far in advance, then misplaced at the store by the time the intro is mobilized. In some categories third parties are used, who can add special promotional tags, etc., but this may obscure the product label. It still happens that shelf placement is an issue—it winds up on the bottom shelf because communications broke down, etc.
Harris is right that so much of theopportunity is lost here – the failure rate is not sustaianble.
With the first year failure rate of the 150,000+ new items introduced exceeding 70%, I think there is more than enough room for true shopper insights and innovation in new product development and introduction.
There are actually some great examples of CPG companies employing techniques to help ensure long-term product success. Advance social sentiment analytics is one component of this process. I recommend it highly.
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Great article—thanks Johnny. Not giving a new item time to build can also undermine the success of a new product. Back in my Burke and IRI days, we would see retailers give a product 3-6 months, when trial was just building and repeat hadn’t had time to settle in because of long category purchase cycles.
Realizing that labor costs have soared in recent years, more retailers than ever have become entirely dependent on their rigid category review schedules before cutting in a new item. This can be death to a manufacturer, disappointment to a consumer, and significant lost revenue and profits to the retailer. If the product is truly “revolutionary” and a “game-changer,” I agree with Johnny—get it to the shelf! The rewards are far greater than the risk.
A hearty Amen to everything Johnny said!
The universe works on the basis of energy—always in motion, always creating and transforming; everything connected to everything. Be part of it or die.
But we humans are so locked in our greed (if you’re invested in one product make sure you kill the competing ones even if they would solve world hunger); ego (you know everything there is to know about your business) and/or rigid mind-set (you do things in one way, always have, always will) that we actually think we run things.
Life—and business—is a dance. Often it’s a chaortic one, a dance between chaos and order, but it’s a dance nevertheless. The music will keep playing whether we are dancing or not. The challenge is to stay on the dance floor. Johnny is right—”Stay on top of things!
This discussion appears to suggest that all “new” products are really new and that they would be successful if it weren’t for the shortcomings of today’s retailers.
Of course the introduction process can be improved, but so can the pre-judgement of whether a new product will really satisfy consumers’ wants and desires.
Perhaps we should go back and review the combined processes by manufacturers and retailers that made today’s top products successful.
It’s too difficult for new items to find space in grocery stores. Whether it’s the new product review process, slotting fees or being shut out by larger competitors, the process is not working. Retailers rely too much on fees from suppliers and not enough on sales to consumers. This stymies innovation and blocks entrepreneurial companies, both local and national, from succeeding.
Not every new product needs or can afford a national, or even a local, advertising effort to launch. There are many ways besides advertising to draw the public’s attention to a new product.
New products help create a better shopping experience. Retail can help itself by embracing innovation in the marketplace, rather than hanging on to time-worn traditions.
Really terrific guidance on an important topic. While the article listed several “fails” in the overall process, there is a common thread. Each of these shortcomings stems from making decisions on what’s most convenient for the retailer and/or manufacturing as opposed to what the customer wants. The bigger the company, the more pronounced this tends to be.
Introducing a new item is a big lesson in coordination. How well a retailer does it goes a long way to showing how effectively they communicate within their organization. A retailer who is challenged by new items likely has much larger problems in communication.
The whole process of introducing a new item, especially an item that requires special cold-chain consideration, must be coordinated. It likely begins with the discontinuation of another item that must be removed from the selling area. I have always believed in the “wall of discounts” method that allows the store to move the discontinued items out of the way. Special selecting slots in the warehouse should be set aside for the “first case” to go to each store. These cases should have all the instructions for implementing the new item attached, including the item to be discontinued, the shelf tag for the new item, and any other promotion materials.
If you have handheld devices in the store, a special QR code on each case may be all you need to tell the store personnel how to handle the item. The first sale of a new item can be used to complete an electronic “check-off sheet” that shows when the item was first shipped to the store and when the first sale occurred. Stores should be rewarded for implementing new items quickly. Coordination with external promotion activity should not require abandoning discipline in the aisles. Although seasonal resets will still be required, the flexibility of better communication should enable implementation of new items at any time.
But there is a dark side to all of this. Many new items fail through no fault of the retailer. Retailers have to be proactive and tell vendors when their time is up for an item that is not successful. The more efficient and accepting of new items a retailer becomes, the more items they will be discontinuing. And there is always the one $400 a week shopper that fell in love with the new item. Retailers have to be ready to handle the disappointment.
Johnny, great topic and terrific comments. Gene has a perspective that is worth reviewing further. The process of new item development, new item launch, new (and existing) item sustenance and maintenance, and ongoing support has become sub-optimized.
The need to more closely align products to a job-to-be-done and then exploiting that collectively/collaboratively between retailer and manufacturer is not well executed. Different than “need states,” the job-do-be-done and the recognition of the shopping ecosystem is essential in understanding how to better ensure success of new and existing products.
We tend (as an industry) to continue to assume that the consumer and shopper can be led/manipulated/driven to bend to our will as marketers and operators. We then scratch our heads and try to figure out why success eluded us as we pore over our syndicated data reports. The answer is no more complex than that we are looking in the wrong places and at the wrong end of the periscope. We need to engage in a dialogue with the shopper that reduces the barriers we have created in our search for efficiencies.
I agree with Bill. I might change consumer “wants” to include “needs” as they don’t always know! I like the Henry Ford quote “If I had asked people what they wanted, they would have said faster horses.”
In today’s world it is possible to use consistent data at scale (i.e. connected consumer behaviors, attitudes and research answers) all the way along the innovation chain to better identify, enable and maximize innovations. However, while this is possible, few brands have adapted their approaches to benefit more from this.
Certainly the biggest problem is items not being given time to find an audience; something comes on the shelf, it’s not promoted—or at least not effectively—and a year later, it’s gone. Now I realize there’s a reason for this, but I don’t see how one separates the eventual winners from the true losers if everyone is judged on their first lap.
Excellent discussion of a problematic area…that shouldn’t be. Most retailers like the excitement of a new product, but often this is totally lost in execution.
Some retailers say the problem is different functional teams responsible for coordination of specific phases of promotion—product ordering, shelf placement, category management—resulting in lack of coordination described above. Promotional materials are received too far in advance, then misplaced at the store by the time the intro is mobilized. In some categories third parties are used, who can add special promotional tags, etc., but this may obscure the product label. It still happens that shelf placement is an issue—it winds up on the bottom shelf because communications broke down, etc.
Harris is right that so much of theopportunity is lost here – the failure rate is not sustaianble.
With the first year failure rate of the 150,000+ new items introduced exceeding 70%, I think there is more than enough room for true shopper insights and innovation in new product development and introduction.
There are actually some great examples of CPG companies employing techniques to help ensure long-term product success. Advance social sentiment analytics is one component of this process. I recommend it highly.