Given the high failure rate of NPD, not least in packaged goods where frankly there is quite a lot of choice already out there, why does it get such a lot of resource and attention?
The bald metrics of NPD are not attractive. First, there is the risk of getting it wrong. Then there is the sheer mountain to climb to match established brands’ margins. NPD comes with higher than existing costs and smaller margins together with upfront weighty marketing costs. Never mind the distraction. I remember being in National Accounts and half my life or more was diverted into “getting listings” of the latest brainchildren, not the core business. And guess what, ten years later the only things still on the shelf, in the main, are those core brands!
So why is it so appealing? First, I think there is a strong sense to be seen to be “doing something” not least in the eyes of the retailer. Horrible to have the annual review with no NPD in the pipeline, right? Not to mention the fear that other people’s NPD will steal your core space (the lure of new products equally seduces buyers – it’s not their risk is it – why not give the best ideas a runout, they can always cull them a few months later?).
Second, marketers seek to make their name off the back of it (and we know they move on after two years). Third, senior managers need to find revenue growth, and yes a few NPD successes could do that. At least short term. The fourth oft-discussed driver is the horrible one – factory utilisation. Can we find something else we can make when the line is lying idle? I won’t even go there.
But to what extent is all that effort a diversion from what both shoppers and retailers want: simplicity, effectiveness, value for money etc.?
So, what is my take on this? First, far less NPD should be coming forward. Internal hurdles should be higher and earlier, with very clear objective criteria. Second, every NPD project should have at least one counterbalancing and probably fairly dull “renovation” project working on the profitable, established lines – plans to make the current product better. If you make the current brand 1% better every year, then, after a decade its 10% better. Nice. When I say “better”, I don’t mean packaging design titivation. I mean product improvement (Some “NPD” is, in fact, product improvement, so that’s cool). More user-friendly pack formats, improved recipes, new usage occasions etc. Finally, suppliers and retailers should work out where to innovate – targeting categories or segments where shoppers want choice and care about change.