According to the Nielsen China Retail Index, almost seven in ten new initiatives declined or failed within the three years after their launch in China. But innovation remains essential, as an engine of growth.
Innovative initiatives often enjoy the first-mover advantage, they have stronger potential to break through the clutter and generate awareness, and successful products aren't just unique, they inspire consumers to change their behavior.
For example, Unilever's Clear Anti-Dandruff For Men shampoo is the first male-targeted anti-dandruff product in China, while the launch of Beiersdorf's Nivea for Men skin care products prompted some male consumers to start using skin care products. The introduction of products like these brings a meaningful change to consumers.
Nielsen defines these behavior-changing initiatives as "disruptive innovations." Here are five lessons to help them work for your company.
1. Catch consumers' attention
Offer a distinct consumer proposition, either by getting their attention with a new product that leverages executional elements, such as a great name or exceptional packaging, or that brings something substantially new to the market. Disruptive initiatives stand out, but they also need to demonstrate true distinctiveness. Take Nutri-Express, a drink introduced by the Chinese beverage manufacturer Wahaha Group, which combines milk and juice, thereby creating a new sub-category, "juicy milk."
2. Convey a distinct consumer proposition
Once a distinct idea captures consumers' attention, ad messages should be clear and uncluttered. Communicate product features and benefits effectively because committed interest is significantly weaker for innovative but new concepts than for extensions of known brands--unless they are supported by great marketing. If your new product or service is trying to change consumer behavior or add new habits to an old routine, it is particularly important to educate consumers.
Knorr introduced Dense Soup Treasure in a unique gel format that brings convenience to cooking and communicated that benefit via a TV spot showing consumers how to use the product in great visual detail and eliminating their initial confusion.
3. Generate consumer attraction
Being unique does not guarantee concept appeal. You have to demonstrate that your distinctiveness is desirable. Consumers will be interested in products or services that provide a clever or unexpected solution to a need or desire that is substantially relevant to them, whether you are introducing a new benefit to the category, significantly improving upon existing category performance, or both. The solution must also be supported by credible information that will convince consumers.
Wang Lao Ji introduced a traditional Cantonese herbal tea in a ready-to-drink bottle that claims to cool down internal body heat. The drink has become a hit among consumers who lead busy lives but also care about their health. The use of traditional Chinese ingredients and the reputation of Cantonese food supported the credibility of the drink's claims.
4. Convert consumer attraction at the point of purchase
Apart from educating consumers about disruptive initiatives in TV commercials, point of purchase is a good place to have additional education about your initiatives and to limit potential store confusion. Prominent shelf displays are important. In China, promotion representatives with product demonstrations can play a strong role in educating consumers on-site, particularly if you are trying to enter a premium category and you need to justify your high price with a meaningful benefit. For example, Knorr Dense Soup and Swanson Broth are ideal products to demonstrate on-site to show how the product is used and what the end product looks like.
5. Deliver an enduring product
Nielsen has studied the survival rate of strong and weak initiatives at both the concept and product stages. Unsurprisingly, a crucial factor for success is high product performance which meets or exceeds consumers' expectations. Having a great product that really delivers can offset challenges like losing first-mover advantage. There have been cases where followers outperformed the first mover. For example, C-100 from Nongfu was the first beverage claiming supplementary vitamin C. Shortly after, Wahaha launched Hello C, which surpassed C-100 share with broader distribution and a lower price only five months after launch.
Mitch Barns is The Nielsen Company's president, Greater China based in Shanghai.
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