Getting a new product-and particularly a new brand-into a supermarket these days is akin to running an obstacle course, only more draining.
New-product ideas confront sparse r&d budgets, nervous bureaucrats and tightly allocated marketing dollars. Even if an idea proves it has a market, it may never make it out of the corporate laboratory. If it does, it faces skeptical retailers and eager competitors ready to copy-and eliminate-the point of difference.
Then the new product faces the highest hurdle: attracting the eye of consumers who pass by 18,000 other items in a typical supermarket.
In that environment, the achievement of Advertising Age's Top New Products of 1993 is remarkable.
Compiled from raw data provided by Nielsen Marketing Research, the list is a varied one, including four new products in the food industry's most expensive and profitable category, ready-to-eat cereals.
Banana Nut Crunch, the year's best-selling new brand, has been a major part of Kraft General Foods' Post division's share gains in the $8 billion cereal category. Kellogg Co.'s Rice Krispies Treats, extending off not one, but two popular equities, was an immediate success-forcing Kellogg to apologize for shelf shortages in newspaper ads. And Quaker Oats Co.'s Toasted Oatmeal leveraged the Quaker Man heritage and spokesman Wilford Brimley to score a much-needed hit for the No. 4 player.
Also hitting the mark were extensions of popular snacks such as Hershey's chocolate bars and Nabisco Chips Ahoy!, and high-tech reformulations of two Lever Bros. standbys, Snuggle and Wisk.
But testifying to the conservative new-product climate, most of the top new products were safe bets, like a price-oriented canned spaghetti sauce under the Del Monte umbrella. Only a couple of the 14 products named here are truly new brands, like Keebler Co.'s Chacho's chips; only one, Coors Brewing Co.'s Zima ClearMalt, has created a completely new product segment.
The lists prove what everyone perceives: There are fewer meaningful new products being introduced into supermarkets, and even fewer successful new brand names.
It's not that there aren't new items out there. Every year supermarket managers rearrange their computer inventory and shelf space to accommodate thousands of new items.
"But the 13,000 or 14,000 new products introduced each of the past 10 to 15 years have been nothing more than a proliferation of new flavors, sizes and varieties," says Tom Kuczmarski, president of Kuczmarski & Associates, a new-product consultancy. "Most of it's junk."
When Meridian Consulting Group looked at 1992's 15,000 or so new supermarket items, it found less than 5%, or about 600, could be considered products with a unique twist. And they even allowed a new marketplace flavor, like the first-ever watermelon gelatin, to be considered unique.
"Consumers are always interested in things that are truly new, that offer value," says John Breuer, president of the cereal division at Quaker Oats. "There are lots of new products brought out each year, but few offer real news or real value."
David Olson, who heads up the new-product planning group at Leo Burnett Co., Chicago, says new products ought to be viewed as a tool to create new customers for a brand or company.
"But companies introduce new products for lots of other reasons: The need to please Wall Street, to meet short-term volume goals, to use excess capacity at a plant that's running at only 70% capacity," he says. "I don't think that's the right focus."
Mr. Kuczmarski agrees most marketers focus on finding great ideas first. Then they use research as a crutch instead of a tool.
"They avoid using judgment and intuition to make a decision," he says. "And lower-risk products always are going to end up being more boring."
But let's face it: The '90s are an environment of lower-cost, lower-risk companies.
"Companies say, `I want to reduce the amount of time to develop a new product, reduce the investment in launching and developing it, and reduce the risk exposure,"' Mr. Olson says. "It's get 'em out fast, and don't spend a lot of money. It's a prescription for close and easy-to-do launches."
What else can be expected of package-goods megacompanies, many burdened by debt from the acquisition sprees and leveraged buyouts of the 1980s?
"In the past, things were different," says Howard Gibson, who has consulted on new products for 20 years as head of his own consulting company. "Today, it's a fiscal orientation. A lot of the good new-product ideas are not even getting out.
"I've been associated with countless $25 million retail brands-brands that research proves will generate sales of $25 million-that will never see the light of day because they don't have the immediate profit margins a company needs. Companies face too much risk and too little time."
Mr. Kuczmarski points out that even for Fortune 500 ceos, the average job tenure is only five to seven years. "It's difficult to invest in long-term new product developments that are going to take three or four years," he says. "You're looking for quick hits ... but speed kills new products."
Most experts believe part of the problem is that new-product personnel aren't compensated properly; rather than being encouraged to try and fail, they're rewarded on the basis of sales and market share.
"If you look at new-product activity as a speculative activity, speculation is down," Mr. Gibson says. "Neither the consumer nor the corporate environment is conducive to new-brand development. The corporate orientation is on savings, not" investment.
Even when a marketer has a real technological innovation to showcase, it's choosing to place that improvement under an existing brand umbrella-further limiting the number of new brands.
"Five or 10 years ago, the prevailing philosophy at companies like Procter & Gamble was to use a new brand to introduce new technologies," says Meridian partner Jeffrey Hill. "We've seen a consistent trend away from that."
Private label is partly to blame, as marketers feel pressured to improve their national brands to stay ahead of store-brand innovation.
The slowdown in product activity and the risk-adversive climate places new-product development in the package-goods industry at "an evolutionary crossroads," Mr. Kuczmarski says.
Most experts are optimistic about what road the industry will take. They point to great new brands, like Gillette Co.'s Sensor razor, and to continual, breakthrough product improvements-seen in the disposable diaper business-as evidence that new products can overcome the obstacles.
Similarly, there are indications some of the nation's biggest product marketers also realize the value of new products-and the patience required to produce them.
Kellogg says it believes Rice Krispies Treats' success reflects the company's long-term commitment to building its core brands, a commitment that has helped it get its new-product strategy back on track after a bad run in the late '80s. And ConAgra has stubbornly stuck to its belief in its $1 billion Healthy Choice brand, while competitors and press pounced on every failure. Healthy Choice is proof big ideas still exist in the supermarket.
"There will be great new brand successes again, says Mr. Gibson. "At some point, companies will have to turn to new products for significant growth."