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Innovation success hinges on marketing

News, 14 October 2016

SINGAPORE: Poor execution of long-term marketing and communications is one of the main reasons to explain why the overwhelming majority of new product launches in Southeast Asia fail on innovation, a new report has found.

According to the Southeast Asia Breakthrough Innovation Report from research firm Nielsen, less than 1% of new products launched in the region meet the minimum criteria to be considered an innovation success.

Nielsen examined 12,920 new FMCG product launches across Indonesia, Thailand, the Philippines, Vietnam and Malaysia, and found only 10 met its threshold to be considered a successful innovation.

According to Nielsen, the three tests to be passed involve delivering a new value proposition to the market, generating significant year-one sales, as well as at least 90% of year-one sales in its second year, Campaign Asia reported.

Johan Vrancken, Managing Director of Innovation Practice Growth at Nielsen, said part of the problem is that brands focus too much on the product launch rather than plan for the long-term, particularly with regard to marketing.

"Too often we see brands pull off the gas pedal when it comes to supporting their new brands," he said. "Leading innovators do the opposite. When confronting a big opportunity, they push the pedal to the metal. It's not enough to launch big, you've got to sustain."

He highlighted some of the Asian brands Nielsen judged to be innovative – such as Mr. Keso from the Philippines in the beverage category and Rexona Invisible Dry from Indonesia in the personal care category – and attributed their success to their consistent engagement with local consumers across several channels.

"Many marketers restrict their focus to product formulation, communication, and pricing when designing the product mix, and they neglect the importance of execution in the brand's story," Vrancken said.

The Nielsen report also identified five emerging trends that FMCG brands should consider when aiming to achieve innovation success in the region.

It said there is growing demand for affordable luxury, consumer preference for local brands, the evolution of connected consumers, growing demand for health and wellness, and increasing demand for convenience.

"Consistency in execution that ensures consumers are exposed to the same product messages across all consumer touchpoints is pivotal to success," Vrancken concluded.

"Breakthrough winners design their product mix to deliver a 360-degree consistent consumer experience, resulting in an outstanding brand platform that reinforces the brand's position across all touchpoints."

Data sourced from Campaign Asia; additional content by Warc staff