Les Binet and Sarah Carter get a little bit angry about some of the nonsense they hear around them… like pointless new product development
Have you tried to buy mouthwash recently? We have, and it's a daunting task. The brand leader alone comes in 15 different variants, all available in a number of different sizes. Faced with such a baffling array of choices, the natural response is either to pick one at random or to move on to a less troublesome purchase. But other categories are equally confusing. Try buying shampoo, or pet food, or fruit juice.
Why do brand owners do this? Why bombard their customers with so many different options? The respectable argument is that product innovation and consumer choice are inherently good things. I might not want a tooth-whitening mouthwash, but someone, somewhere might. By constantly tweaking and expanding their range of products, brands are helping us to satisfy our needs.
But often the real reason for all this frantic innovation is a lot less worthy. Much of the time, firms are just looking for something new to say. Once again, the root of the problem is 'the message myth'. Most marketers believe that their job is to persuade people with compelling product messages. And if you follow the rational persuasion model, then nothing is quite as effective as 'new news'. Firms quickly run out of things to say about their old products, so 'message' marketers tend to focus on new ones.
A steady pipeline of new products gives the marketing and sales departments something new to talk about every year. Retailers love being able to offer their customers something new, so new product development can help brands gain extra shelf space. And people do like to try new things, so each new product launch gives sales a little short-term boost.
This approach can work if the product is really ground-breaking, but most new products aren't, at least not in mature markets such as mouthwash. Yes, the trade will give the latest variant shelf space for a while. Yes, some customers will try it once. But more often than not, that's it.
As a result, most new products fail, and firms find themselves on a treadmill of pointless pseudo-innovation. Worse still, they neglect the core products that generate most of their profits, because there's nothing new to say about them.
We came across a textbook example of this recently. The brand in question was a leader in its category, offered a huge range of products, and was constantly launching new ones. Each year, a new campaign supported the latest variant. And each year, market share slipped further downwards. The brand's owners were baffled. They had followed all the rules of message marketing, but sales kept falling. Meanwhile, the firm's rival took a different tack. They concentrated on the old, established products that generate most of the sales in this category. And because there was nothing new to say about those products, they didn't try. Instead they focused on how people felt about them, and how they related to them. By building up a strong emotional connection with their customers, this brand was able to achieve strong and consistent growth every year, without expensive NPD or price promotions.
The Foster's IPA paper, which won last year's Grand Prix, tells a similar story. Foster's was in trouble, losing market share in a declining sector. There were some new products in the pipeline, but the brand's owners, Heineken, chose instead to focus on the core product. And rather than trying to find something new to say about the beer, they concentrated on how people felt about the brand. The solution was remarkably old-fashioned – a series of funny TV ads featuring a couple of likeable Australian lads – but the sales results have been stunning.
So… support the core and eschew the new – our news message for this month.