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NPD a risk in SE Asia

News, 18 March 2015

SINGAPORE: Just over one in every one hundred new products launched in Southeast Asia meets key innovation success criteria for distinctiveness, relevance and endurance, according to a new study.

In the Breakthrough Innovation Report, market researcher Nielsen analysed 2,500 consumer product launches in the top 20 FMCG categories in Malaysia, Indonesia, Philippines and Thailand and found that less than 2% met the fundamental criteria for a successful product launch.

It assessed products on the degree to which they delivered a new value proposition to the market (distinctiveness), their ability to generate significant year-one sales (relevance), and their ability to achieve at least 90% of year-one sales in year two (endurance).

Few were successful on all these measures. Just 10% of new products retained a retailer listing beyond their first year, highlighting the significant risk involved in investing in taking a new product to market.

"Thousands of new product launches fail in their first year, costing businesses millions of dollars, yet manufacturers can reverse these outcomes by changing their perspective on what drives innovation success," said Tobias Puehse, Nielsen's Head of Innovation Analytics in Southeast Asia, North Asia and Pacific.

He argued that successful innovation was about "deliberate attempts to touch all aspects of the innovation process and challenge everyday norms", including consumer attitudes, long-standing beliefs, launch mechanics, organisational behaviour and disciplines.

Local business appears to have taken these ideas on board to a greater extent than global brands, as the report identified 54% of innovation successes coming from local giants.

Three brands, said Nielsen, underscored the principles of breakthrough innovation, including Japanese skin care line Hada Labo in Thailand, brandy manufacturer Emperador Light in the Philippines, and Nestlé's formula milk preparation Lactogen 4 in Malaysia.

Puehse noted several common themes across these three, including "keeping the consumer's needs central to innovation investment, understanding the consumer and competitive landscape, and focusing on innovating for local market needs rather than a globally-scaled approach".

Data sourced from Mumbrella Asia; additional content by Warc staff