“Changing demographics are changing the product development process,” said Susan Viamari, vice president of Thought Leadership for IRI, during an education session discussing the report. “Millennials have money, jobs and opinions, and they are looking for new products that are helping them have experiences and find solutions.”
She said 40 percent of the 2017 New Product Pacesetters over-indexed with millennials.
“They account for one-third of overall CPG sales and they are really changing the marketplace,” she said. “They are more educated, women in particular, and they are more connected. They have gobs of information available and they Google everything.”
The changes to the product development process are changing the very definition of a successful product launch. New product success is not about launching the next $100 million new product, according to the New Product Pacesetters report. It’s about building relationships that will last a lifetime, and consumer-packaged goods manufacturers need to invest in innovation that supports building relationships.
Of the food and beverage New Product Pacesetters, only one product, Halo Top, generated more than $100 million in year-one sales. This is indicative of a trend that has been taking place over the years, Viamari said.
“This year in food and beverage the median sales (of first-year products) was $14.5 million,” she said. “We’ve been seeing a downward trend because consumers are looking for products that target their needs.”
In addition to experiences and benefits, millennial consumers are looking for products with ingredients they perceive as natural.
“They are moved by new products that embrace the natural phenomenon,” Viamari said. “Natural ingredients have more of an impact on millennials than they do on older shoppers. This is really spawning more natural innovation.”
“Marketers are earning a premium bringing these brands to market,” Viamari added.
Natural ingredients fit the millennial consumer’s definition of health, but Viamari emphasized indulgence is also a part of the equation.
“We are seeing a lot of blurring of healthy and indulgent,” she said.
Product examples she highlighted included Yoplait Dippers and Larabar Bites, both from General Mills, Inc.
Another unique aspect of this year’s New Product Pacesetters list is the success of new brands to the marketplace.
“Just five years ago, an estimated 9 out of every 10 Pacesetters launched were extensions of existing brand lines,” Viamari said. “In 2017, 40 percent of food and beverage and 25 percent of non-food Pacesetters were brands entirely new to the CPG marketplace. This clearly demonstrates consumers’ willingness to try ‘unknown’ brands. Millennials, in particular, are more moved by experiences and solutions to their needs and less likely to purchase based solely on brand name.”
In the end, though, a key component of new product success is delivering products and messages in the right places at the right time.
“Innovating to meet core needs and wants is crucial to ensuring new product success, but the challenge doesn’t end there,” she said. “For a new product to be truly successful, it is up to marketers to ensure that the product — and messaging — are where the shopper is, when the shopper is ready to buy. Through big data and advanced analytics, CPG marketers do have visibility into where shoppers go to learn about new products, as well as into what the highest-potential retail banners are, and even where the highest potential locations exist within each of these banners.
“By understanding key shoppers — what they want, where they go to learn about products and where they go to try new brands — marketers can influence purchase decisions with messaging and assortment that drive sales.”