Marketing fails: 7 dangerous assumptions of product innovators

MARK HOBART profile picMark Hobart writes that, while there has never been a one-size-fits-all approach to product innovation, many brilliant minds fall into the same thinking and make assumptions that lead to failure.

Think about the ritual of unintended cannibalistic launches that simply bite into existing product revenue… or worse, that lead previously loyal customers to start exploring other options on the shelf.

For some, it is essential to get a new launch right the first time or risk undermining brand credibility and crucial stakeholder relationships. While perfecting the offer, these brands often miss the first-mover advantage and risk launching ‘me-too’ products.

For others the greatest risk lies in being too late. This can create a sense of urgency that leads to moving products to market quickly, often launching a good but suboptimal offer with the intent of improving quickly based on market reactions.

We work with an FMCG client in Australia that regularly achieves success in taking a ‘nail the need’ approach, placing great emphasis on market understanding and a rigorous stage gate process to ensure they get the product right. However, our client came to understand this approach would not work in every situation: they introduced a new manufacturing technology that would give them a short lived advantage so long as they could get to market first.

So how do you know if you’re stuck in rigid thinking or leaning too much on precedent? What are the circumstances that should lead you to pivot your approach?

Every year we assess close to 10,000 new products globally and the factors that influenced their market success or failure. Here, we have identified the most common assumptions innovators make that led them into innovation fail territory.

“We’ll find the time.”

Before beginning the journey, businesses must first ask whether the time exists to develop a product effectively before the opportunity closes. Innovation opportunities tend to be time sensitive in two related ways: a product must reach the market before the needs it addresses are taken care of by others; and it must deliver results within the time period to meet the business’ ROI. Successful products can be developed rapidly but this can only happen when the business knows what is required to make the product a success, is willing to take calculated risks – and is fully geared up to deliver it.

“Good enough is good enough.”

The assumption that overselling a product and masking its deficiencies through marketing spend will hit targets. But the initial uptake only delays failure; it cannot avert it. Deliberately avoiding overselling the product benefits delivers better prospects for long-term growth than promising benefits that the experience cannot deliver. In order to achieve sustainable success, the new product must deliver against the expectations that consumers have when first buying it.

“I know what my customers need.”

The earliest stage of the innovation process must include a precise examination of customers’ ideal needs in order to look beyond what existing products provide. You must understand the emotional, functional and social benefits required to meet those needs, the size of the prize to be gained by doing so and the challenges on a business’s existing portfolio once a new product launches. It is critical that innovators find the consumer product tensions – the unmet needs in the market – and address these them with the new products they bring to market.

“The most popular ideas deliver the best business performance.”

Innovators can’t afford not to ask where their sales are really going to come from. They need to know the incremental potential of ideas before reaching the point of no return. Often it is better to not just back the most appealing or promising ideas but to measure the incremental growth potential of ideas at a very early stage before significant investment is made. Analysis of the TNS and Kantar Worldpanel database of new product launches reveals that basing the choice of which ideas to develop on incrementally would have resulted in a better launch decisions 44% of the time.

“We’ll find a way to do it.”

Anybody can talk a good innovation game. An innovation-friendly culture is a great start, but it needs the support of the right systems and structures if it is to translate into growth – that is, a clearly defined process for generating, developing and launching ideas, and the necessary level of financial support. A business must have a culture that is reasonably able to operate with clarity, supported by strong leadership and accountability, and it must have the commitment to stick with an innovation program rather than abandoning it and writing off its investment. Just because a genuine opportunity exists, it does not necessarily mean that your business is in the best position to be able to realise it.

“We can use our existing brand.”

New products tend to require heavyweight marketing campaigns if they are to establish themselves in the market, yet many innovators assume they can leverage the existing brand and this ultimately compromises a new launch’s potential. The advertising spend for the first year of a new brand is typically double that for a line extension. Meanwhile advertising for line extensions is noticeably less effective. Moreover, research from Millward Brown shows that ads are wrongly attributed to the parent brand on one third of occasions and that this leads to a 35% drop in effectiveness. The business must be prepared to put its money where its mouth is. It’s here that many innovation strategies tend to fall down.

“Product development is all about finding breakthrough innovations.” 

Understandably breakthrough innovation is the sexiest part of the innovation business. Yet 80 per cent of incremental revenues come from line extensions or product upgrades and not from the big breakthroughs. This applies to most brands in most categories. Even Apple which year-on-year earned more incremental revenue from launching new versions of the iPhone, than from the original – a phenomena true for nearly all their products. Research insights into the complexities of line extensions that do not cannibalise is time better spent.

It’s important to consider how these assumptions can so often lead to product launch failures. Innovation success will not come through the same strategies for all companies. Each company needs to ask whether they are product led or customer led, and what is the bigger risk: being late or being wrong.

And it’s not simply enough to ask these questions once and expect the same answers will always apply. There will be times when a pivot in approach is needed to increase odds of innovation success.

Businesses that are able to identify these situational opportunities and flex across innovation strategies will undoubtedly be in the strongest position.

Mark Hobart is head of product innovation at TNS.