A recent Advertising Age article caught my eye and I think it’s important. The gist: key consumer packaged goods manufacturers are promising to roll out innovative new products in 2010 after a major slow-down in 2009 due to the rocky economy.
The article: “Package-Good Players Plan New-Product Surge for 2010” states that some of the largest global consumer product companies “have said or signaled that they expect to step up new-product activity, and by extension, marketing support in 2010.” [Ad Age subscribers can access the article here. Non-subscribers can access it through BX Business Week here.]
These players include Procter & Gamble, Reckitt-Benckiser, Kimberly-Clark Corporation, Energizer Holdings and Unilever. Many retailers report they’re not seeing many new product launches yet. In fact, just the opposite, as manufacturers trim their product lines of under-performing items.
With sales flat to down in many categories, CPG companies have been reluctant to go to market with many new products of late. If anything, they’ve taken a defensive posture analyzing and lowering pricing where practicable. As a result, private label brand managers made inroads with new offerings, expanding SKUs and sales of their store brands.
National brands are beginning to respond. According to Nielsen Bases, “a dominant player in concept testing” for the consumer products industry, companies are beginning to spend market research dollars again in their new product pipelines. But, as we know, new product launches take time. Some industry analysts don’t see significant new products coming to market until late 2010. But others think manufacturers held promising new products back in 2009 due to the dismal consumer climate and are poised to position them in the marketplace.
Regardless, major CPG players have lost sales and market share to private labels so they’re likely to go on offense in 2010 to make gains and take back some of those losses. Of course for that to happen, new product launches will have to offer a bigger “wow” factor than recent introductions. That means branded products will have to offer true innovations to excite and entice consumers. Think about it: which new products can you recall being excited about lately?
Most telling at the end of the article: “But while 2010 may be a bigger year for innovation, it will probably be a lot bigger in developing markets than the U.S.” One senior package-goods executive said, ‘Focus will be skewed towards developing markets, as this is where he main battles will be and it is actually easier to innovate, as a lot can be leveraged from what has been done elsewhere.’”
What does that say about developed markets?
No matter what: buckle up, consumers and marketers. It’s going to be a bumpy ride in 2010.
Questions:
- Do you think CPG companies are right to launch innovative new products in spite of the slow economy? Or should they do it because of the economy?
- Can you think of any strong CPG product launches over the past year?
- If you’ve switched from some of your favorite brands to private label to save money recently, would you consider going back if innovative new products were launched?
- Do you think major brands can still grow in most consumer product categories, even in mature markets like the U.S.? Or do you think CPG companies should put most of their focus in developing markets?
I’d love to hear from you.
Tags: Consumer Package Goods, CPG, Marketing, product development
Sorry Ted, but I cannot think of a single “good” CPG product launch in 2009, outside of maybe Tide Basic (and that was only in select markets). The iPhone 3G S was a good one, but doesn’t count in CPG.
Now another question is, if these companies had “innovative” products in the pipeline, why did they “hold” them off til 2010? It would seem to me, unless the product was “decadent”, 2009 would have been a good time to launch (less clutter).
Thoughts?
Hi Paul,
Thanks for weighing in here, buddy. I appreciate it. Right: few of us can come up with a “good” CPG product launch over the past year. For me, as a Kashi fan, it was cool to see the brand come up with frozen meals. Quality, flavor and lots of organic ingredients made them a hit with many consumers. They cost a bit more than the usual frozen fare, but they’re worth it.
As to launching products last year, I have to disagree with you. While it’s true there were few new products in the pipeline, just take a look at the clutter that’s already out there. Retailers were culling slow movers from their shelves in direct response to the sales slow-down and the mood wasn’t too conducive to bringing in lots of new products, unless those products really had potential. . .like my frozen Kashi meals.
Thanks, Paul. Great questions. You can already see the upgrade in marketing efforts of big brands like Coke, Pepsi and P&G that are aggressively moving into the social space. CPG’s are such an integral part of people’s lives that its a natural fit. So I think it’s fine to introduce innovative products at this time as long as there is a tangible benefit to the consumer. Shying away from the U.S. is dangerous, but it’s not surprising big brands take the paths of lesser resistance and test their innovations on emerging markets. In fact, those emerging markets will be the dominant ones before we know it. So I think it’s a wise long-term strategy. Thanks for the great post, Simon Mainwaring
Hi Simon,
Thanks for sharing your thoughts with us. You’ve made some excellent points. There is plenty of room for innovative products in both emerging and developed markets. Quite right: innovations have to be meaningful and tangible to consumers, or they will drop into the marketplace with a thud. SM has its place as a marketing tool. Do I think it’s the only way to go? No, I don’t. But it has to be one tactic among others to implement a sound marketing strategy.