Maximize new product success
Most retailers understand that new product development on the store brand side shouldnt be based on category trends alone. To maximize the chance of post-development success, retailers also must uncover and address critical shopper insights. Private Label => Store Brands asked two experts in this area – Philip Burke, solutions architect with Wheeling, Ill.-based Segerdahl Group, and Joel Mincey, senior vice president, client services with Decision Analyst, Arlington, Texas – to share their thoughts on how shopper insights benefit the private label development process, as well as the degree to which those insights could improve the new product success rate.
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Private Label => Store Brands: How much higher of a success rate could a retailer expect to achieve by basing new product development on key shopper insights instead of simply on current category trends, and why?
Philip Burke: While its not possible to predict an exact success rate, using key shopper insights allows a retailer to account for emotion and rationalizations as key drivers for purchasing. Its good to know the high-level view of how the category is trending, but trends are the sum ... of individual shopper choices and individual consumer behavior. Key shopper insights and understanding the emotional reasons for [shoppers] choices enables you to tailor offers to better fit their needs. It increases relevance, and when you become more relevant to the shopper, results improve.
Joel Mincey: In short, magnitudes of higher success can be achieved by using shopper insights rather than current category trends. Current trends can only take you so far in new product development, giving you a general idea of what consumers are buying. But by using key shopper insights, you are far more likely to truly understand what motivates consumer purchasing decisions and design a new product that will appeal to consumers and be a success in the marketplace.
Going a step further and using key shopper insights based on an in-home usage test (IHUT) significantly increases the chances of success for new products. Our data shows that year-one sales forecasts using IHUT data are more than three times as accurate as those forecasts that do not use IHUT data.
Private Label => Store Brands: What are the most critical types of shopper insights to home in on when developing new store brand products or product lines, and why?
Burke: You need to understand the relevancy at the shelf and the emotions that are leading to the consumers action. You need to identify the emotional drivers that can get the consumer to take an action in three seconds.
The best practice is to use data analytics [and] empirical market pretesting, and [then] create multichannel communications that deliver the right products and offers to the right households at the right time in order to create the emotion.
Mincey: We use a variety of shopper insights in testing new products, including purchase interest, product uniqueness, needs fit and overall favorability. The goal is to determine what the level of interest the consumer has in the new product and how likely would [he or she] be to purchase it once it is available. In our research, we have found that consumers are much more likely to purchase a new product if they find it appealing, if it is seen as something new or unique, [or] if it meets some specific need of the consumer.
We build these measures into a composite score that allows for easy and accurate comparisons among many new product concepts. In short: The more key measures you can include in your research, the much more likely you will be to design a product that is successful.
Private Label => Store Brands: What are some of the most significant time- and money-wasters in terms of the collection and analysis of shopper insights, and how could retailers avoid them?
Burke: Traditional focus groups often deliver false positives and sometimes fail to uncover good approaches. Although the data gleaned from these exercises are worthwhile, the results need to be reviewed and analyzed with an experienced eye to determine the actions likely to yield the greatest success.
Mincey: In new product development research, there is the trap of trying to test and analyze – in-depth – every product concept that is developed. The fear is that if we dont test everything thoroughly, we might miss the one concept that is best. We employ a system with three levels to gain shopper insights on new products in order to better refine the concepts and determine which ones are the most likely to appeal to consumers.
The first level is where we screen many product concepts among consumers. The concepts are brief, often just an image and a line or two of text. Each person in the research sees all the concepts and rates each on purchase interest, uniqueness and favorability. We may test up to 50 concepts at this level.
The second level looks at the product concepts in more detail specific to each concept being tested. In addition to the standard measures, we also look at likes ... dislikes and purchase intent via unstructured, open-ended questions, allowing [consumers] to communicate in their own words their opinion about the product and why (or why not) they would purchase the product. A maximum of 10 concepts are tested at this level, with the respondent seeing all 10.
The third and final level is where we test a finalized product concept among consumers. Here, we use a battery of questions to determine the appeal and potential success of the product and learn in more detail about the shopping and purchase habits of the consumer (in order to better estimate the likelihood of purchase). Each respondent sees only one concept (called a monadic test).
By testing in detail only those few concepts that are determined to be the best by consumer choice, we greatly reduce the amount of time and money needed to determine the most successful product concept.
Private Label => Store Brands: During the actual product development stage, what specific steps should retailers take, prior to official product launch, to further increase the odds of success? To what extent do these measures typically improve the ROI?
Burke: We typically engage our clients with a business objectives discussion and prescribe a pre-market testing exercise.
Under SG360° Brand Directions, empirical testing solutions are optimized from start to finish through services that include national online testing panels, behavioral segmentation, predictive modeling and product lifecycle integration. These proprietary analytics allow you to pretest your product offer, communication vehicle (e-mail, direct mail, FSI), graphic layouts and messaging schemes.
The data will reveal the opportunities, and we use our experience to develop the best way to leverage it, which helps with target strategy, execution and tracking. Properly leveraging the data allows the product to be felt and acted on, instead of being merely seen and considered.
In cases where weve had apples-to-apples comparisons, weve seen single-digit to low double-digit response increases.
Mincey: First, understand the unmet – and in many cases, unarticulated – needs of the consumer. Nothing is more critical than voice-of-the-consumer research throughout the product development process. Gathering information from salespeople or product managers is no replacement for speaking with actual consumers.
Second, share the information with everyone in the product development process (technical, operations and marketing people) to ensure that everyone is working from the same point of view.
Third, be flexible. Things may change during the development process (the market shifts, new competitive product introduced, etc.). Your process needs to be able to incorporate this new information into the development process.
Fourth, test and refine. Use a system that will allow you to evaluate a great number of product concepts and effectively and efficiently determine which product concepts have the best chance of success. Also, wherever possible, employ an in-home usage test in your product development system. There is no better means of determining the potential success of a product than having a consumer actually use the product.
Key shopper insights will allow you to develop products in a much more cost-efficient and effective manner. They will also ensure that the product you develop has the best chance of success, thereby increasing your ROI.