November 22, 2013,
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So-called “Zombie” and “Cannibal” Products are killing consumer brands, according to new research which shows that over half of new launches are failing to provide growth or are eating into profits from existing products.
A study from market research agency TNS examined the product launches of 3,500 consumer goods in the savoury snacks, laundry, soft drinks and skin care market segments.
Researchers found that 60% of new product launches were either “Zombie Products” that offered no long-term growth and acted as a dead-weight or were “Cannibal Products” that failed to add incremental value to a brand portfolio and simply transferred customers from other products within the portfolio.
TNS estimated that the food and drinks industry in the UK was wasting £600m per year on R&D alone. GBP billions more could be added in the launch costs of failed products.
“Too many businesses are spending huge amounts of money on quasi-innovation that only convinces existing customers to swap within their range,” observed Phil Sutcliffe, managing director IPD UK at TNS. “The key to unlocking true growth is to focus on genuine innovations that will draw in new customers or lead to greater frequency of use by existing customers”.
TNS’s study found that companies launching new products often relied on volume alone to determine the worth of an idea, without determining the positive or negative impact the launch would have across their product and brand portfolio.
It suggested that even though Pringles Xtra, an extension of the snack foods brand, had generated significant sales, it had also heavily cannibalised the existing range, resulting in minimal franchise growth.
Too often, cannibal launches fragmented resources and could lead to shrinkage of the total franchise, the report added.
Only 15% of products launched could be termed “expansion innovations” according to TNS. These were new products that attracted sales and added to a company”s existing revenues. In the soft drinks category, however, this figure fell to just 6%.
“The rewards for those that get it right are phenomenal,” added Sutcliffe.
“Launching a successful “expansion” product, founded in genuine innovation, can rejuvenate a company”s fortunes and put it into a league of its own,” and he pointed to McCain’s Jackets as an example of this.
These ready-baked jacket potatoes had helped to deliver significant sales that were highly incremental to the existing brand franchise.
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