Innovation is the corporate buzz word of the decade, and the talk cuts across all product categories/industries. Within packaged consumer goods the rate of NPD has never been higher, but the success rate of new products is still very low (less than 10% according to a WARC paper based on UK market data).
The main reason for this low success rate is the absence of a real unmet consumer need. Consumers are largely happy with the product performance and thus opportunities for real “performance” breakthroughs are fewer. As a result most NPD in FMCG categories is line extensions, packaging formats, product tweaks. What is really priming this NPD race is the relentless pressure from modern retail on brand owners to either launch new products which can command a price premium or give them more margin/fees to list the current product range. So money is being poured into innovation projects, costs are ballooning and margins are shrinking.
Ask any CMO where is he spending more time and money : (a) on developing better brand ideas and insightful communication OR (b) on developing the innovation strategy and NPD pipeline. Chances are the balance is tipped in the favour of latter. It is time to re-think this balance, more so given the recession and budget cuts.
I thought it will be useful to highlight some recent examples where growth has been delivered largely via an insightful commuunication campaign without significant “innovation” investment.
1. Dove – Campaign for real beauty (Sep’ 2004- till date)
Enough has been written about this campaign. It speaks for itself. Olay’s “Be comfortable in your own skin” also played in similar territory but Dove’s creative expression and activation is superior with greater level of emotional engagement.
2. Persil – Dirt is Good (2004- till date)
Laundry communication had mainly talked about “whiter whites” , “stainfree/ spotless clothes”, “color protection” , “stays like new”, ” a brilliant wash even at 30 degree”, “convenient cleaning/wash” and thus a happier/satisfied/more fulfilled mom, individual or family. Dirt/stain was the enemy to remove (via the laundry brand) to have a winning child and a happy mom. “Dirt is good” turned that logic upside down. It talked about how getting DIRTY is an essential and necessary part of a child’s life, to unleash a child’s potential by liberating them to express, indulge, play..get dirty. How powerful is that ! See the latest UK TVC here.
My connections in P&G say that their analysis doesn’t show strong evidence of business growth due to this campaign. I don’t have the actual business results but Unilever clearly feels it has worked (from what one can gather from their annual reports). Read about the Ireland results here. Here is something to think about for P&G : (a) What would have happened to the business without this campaign? Maybe even holding share under severe competition is a good result and (b) Isn’t the emotional connection of the Brand stronger with the consumer than before?. Surely that is a good thing.
3. HP – Computer is Personal again ( May 2006- till date)
In 2007, HP became the no 1 PC seller overtaking Dell. “The Computer is Personal Again” campaign helped the HP brand gain 9 percent in brand value, (measured by Interbrand), in 2007 (compared to the previous year) and 18 percent since 2005, compared to a drop of 10 percent from 2004 to 2005. While everyone was talking about technology and features, HP tapped into the insight that technology needs to be made more accessible, personal and less intimidating. The contrast with the campaigns put out by DELL, TOSHIBA, ACER etc is stark to say the least. Just compare the typefaces of the tagline and you will see the difference.
4. SONY BRAVIA- Color like no other (2006-2008)
Till 2005, SONY was a distant # 3 or 4 in the flat panel TV-plasma and LCD- category with Panasonic, Samsung and Sharp way ahead. With the launch of the BRAVIA range supported by the brilliant ‘color like no other” campaign, SONY grew market share faster than anybody else and is now a serious (and in some markets leading) player. Most technical people will perhaps tell you that while BRAVIA was a good product it was not significantly superior to other competitive TV offers, i.e product superiority itself hasn’t driven growth. It is the singular communication focus on COLOR (one of the key attribute in the category, which was perhaps seen as a generic and no longer an area of differentiation by others) brought alive by a superb creative campaign- advertising as well as activation. After 4 years, the campaign has evolved and SONY has decided to move on from COLOR to MOTION.
I am sure there are other examples. I would love to hear about them, especially from China as the pace of new product introduction is staggering here. Sooner or later as categories mature/penetration increases and the low hanging fruit is gone, companies in China will need to look beyond the NPD rat race and complement it with real brand building.
The above also highlights the need for brand owners to again start “loving” their original partners in crime – the communication agencies- and not push them down the food chain. Advertising agencies still perhaps know and understand more about the brand than media, research, innovation agencies . Leveraging this brand (and category) knowledge to develop big brand ideas and communication campaigns is one of the most efficient ways to deliver business growth. At the same time, advertising agencies also need to get back to the core job and not run after extending their offer to areas where they will always struggle vs the specialists.
FINAL THOUGHTS : While the need for a powerful brand idea brought alive by (a) communication and (b) product might sound like Marketing 101, the reality is a bit different. Its rare to find brands which have cracked all three-
1. An inspiring, relevant and strategic brand idea/essence ,
2. An outstanding communication and activation campaign and
3. A product range and NPD pipeline which consistently derives itself from the brand idea ( thus providing a clear strategic direction internally and a clear reason for being externally, for the consumer and customer).
This is the MAGIC MIX.