In Marketing, Sure, a Big Splash Is Nice -- but Year Two Is Key, and Here's Why

Tom Hespos

A brand's history is one of its most valuable assets in formulating its future marketing strategy. But what if that historical view doesn't exist?

If you've ever worked on a new product launch, you know that the battles over strategic direction are hard-fought. Without a robust history, it's hard to argue for or against a particular strategic approach or marketing tactic. But what if you had access to information about what more than 2,200 new products did when they came out of the gate? Would some of those debates be more easily settled?

Knowledge Networks, an research firm that works with government agencies and has built a National Shopper Lab and the Physicians Consulting Network to dig deep into buying patterns, has quite a bit of information on what happens to new products. KN recently took a look at product launches in its database, contrasting the successful launches with the not-so-successful ones.

Of course, there's no one-size-fits-all approach to launch strategies, but KN took a look at what new brands did between year one and year two post-launch, and made some insightful observations about what drives success. As the chairman of a boutique firm that creates and manages digital marketing programs, I read the results with great interest -- as should anyone who wants to understand what makes a new product thrive.

Looking at its New Product Profiler database, KN focused on OTC and non-food CPG products. About half of those products sold more in year two than in year one. KN then focused on four popular marketing levers to see if any significant differences emerged between the half that accelerated sales in year two vs. the brands that saw a decline.

The four levers? Distribution, Media Spend, Coupon Circulation and In-Store Merchandising.

As you might expect, the products that succeeded had better distribution at launch on average, followed by a slight growth in distribution on average in year two. The clear takeaway is to be on-shelf right away, and to sustain that presence for as long as possible.

Successful product launches also spent more on average on media, particularly in year two. They also had slightly higher coupon circulation than did their unsuccessful counterparts, as you might expect. But the surprising thing to me was the role that in-store merchandising played in successful product launches.

Successful products tended to invest slightly more in in-store presence, but the real difference between success and failure emerged when looking at investments in in-store presence for year two. The successful products had more weeks in-store on average than they did in year one. The unsuccessful products had fewer. It's striking to see that difference holding up in the digital age: Brick-and-mortar presence continues to cast a long shadow.

This suggests that promotional activity at the point of sale plays a significant role in driving consumer sales of new products. Whether in-store activity reminds consumers while they're shopping about messages they've received via other media, or whether such activity plays a more direct role in compelling consideration is up for debate. But clearly, the KN data shows a correlation between the number of weeks in-store and second-year sales growth.

I don't think it's any coincidence that the in-store options for products sold at retail have expanded drastically in recent years. A good deal of this growth in options is driven by digital technologies. Whether it's simple digital displays or data-driven programs that adapt to local market conditions, in-store marketing is getting really interesting.

Let's also not forget the digital programs that major retailers are selling on their retail websites to brand marketers to enhance their presence there.

Sales-lift studies have shown many of these programs to be effective at lifting sales on both the physical shelf and the virtual one. Although KN's data doesn't cover Walmart, the nation's largest retailer is able to show that shoppers are visiting its website prior to visiting a physical retail location, and in significant numbers.

As a media guy who services OTC and CPG clients, I'm intrigued by the notion that there might be a bigger story here if KN can differentiate between different types of in-store tactics. I'm really curious to see whether there's a significant difference between digital and non-digital in-store programs.

Without a deeper peek into the story behind the data, it's only a pet theory of mine that digital innovation is a driver here.

Still, it begs the question. With digital driving much of the in-store marketing innovation, are forward-thinking marketers driving success by being among the first to commit to these newer digital options?

ABOUT THE AUTHOR

Tom Hespos is the chairman and president of Underscore Marketing. Follow Underscore Marketing on Twitter at @_MarketingLLC.