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A repackaged retail strategy – How FMCG brands are innovating to stay ahead

Written by Jane Hovey, Director of Communications Strategy at Vivaldi

The FMCG category has been buffeted by unprecedented change over the past year with huge disruption to traditional routes to market and dramatically altered customer behaviour. With consumers stuck at home, brands have been forced to overhaul long-running product distribution strategies and completely rethink marketing plans for product launches. Encouragingly the UK appetite for innovation remains undimmed.

According to Nielson 73% of UK customers remained interested in buying new products regardless of COVID-19 (versus Europe’s average of 67%). In fact in the UK, 4,195 new products were launched in total in the first half of 2020.  New launches from Maltesers Buttons to Bailey’s Strawberry and Cream have performed exceptionally well, capturing the zeitgeist and catering for the desire for a little indulgence at home.

Yet various studies point to an average of three out of four product innovations failing. From New Coke, Cosmopolitan yoghurt to the Watermelon Oreo, history is littered with unwanted innovations that seemed good on paper. So what is the blueprint for a successful innovation in today’s retail market? Key to this is FMCG brands moving beyond the constraints of narrow category lanes to ensure they can be truly relevant in peoples’ changing lives.

Developing ‘cultural clairvoyance’

The past year has served to shine a light on what the FMCG sector should have been grappling with all along. Namely its capacity to sense and adapt to cultural and technological changes and ensure they develop relevant products attuned to peoples’ lives. A term at Vivaldi we call ‘cultural clairvoyance’. This ability to ‘see the unseen’ will help businesses ensure they are at the forefront of new trends, rather than reacting late with me too product mimicry and missing the chance to lead a market.

Too often FMCG brands have followed the herd, relying on market research that merely tells you what consumers think today. The reality is they themselves don’t know what they will think/ do in the future.  The last year has highlighted this better than anything.

Scenario planning

The three questions brands need to ask are: Firstly, how are their consumers’ expectations changing? Secondly, how will the consumer relate to the business, brand, product in 5 years’ time if brands don’t adapt to a specific trend or series of trends? Thirdly, which of these trends are here to stay and which are temporary. The next stage is taking these robust trends and hypothesising what their consequences could be across a business portfolio. This creates a series of scenarios, and by consequence, a series of opportunity spaces, informing every innovation. Here are three ways to enact this new approach to create successful innovations.

1. Think lifestyles, not pipelines

The traditional approach within the category has been based on a pipeline model, how do I sell more of product x to target customers within the well-defined industry or category boundaries? Vertical thinking. By flipping their thinking to look at how consumers ‘behave’ and what drives them, they can support them in their lives and embrace horizontal thinking. This is the way FMCG brands can create more relevant and long lasting product innovations. Context is certainly the greatest marketing challenge of the 21st century and the same applies for product development.

Twinings Cold Infuse

The development of Twinings Cold Infuse is a great example of this process and cultural clairvoyance in action. This was based on a substantiated trend, people’s desire for healthier alternatives to sugary drinks in staying hydrated plus a heightened interest in sustainability. This was given further rocket fuel by the legislative context with the sugar tax helping to further nudge peoples’ behaviour. The confluence of factors meant consumers were using more reusable bottles prepared at home and drinking more water. Twinings used this context to move outside the narrow confines of their category and make a bold move into the soft drinks market. They developed Cold Infuse – teabags that release flavour in cold water rather than hot. This was a mould-breaking product that has won plaudits and was attuned to peoples’ changed lives. It also spawned a host of imitators.

2. Embrace Collaborative rather than competitive advantage

The old model of ‘competitive advantage’ and win/lose is becoming increasingly dated in the modern world. Forward thinking FMCG brands have succeeded by collaborating with both in market competitors and outside the constraints of their category altogether to look at win/win scenarios. The best partnerships are ones that truly recognise and capitalise on changing consumer behaviour, using the methodology of predicting lasting trends. In a world of fickle consumer loyalty embedding your brand with the right partners who are culturally relevant is key.

Marmite and Gousto

The recipe box sector has been a real winner of the past year and with a new and established audience it looks set to continue to grow even when more normal times return. Gousto saw revenues for the first six months of 2020 surpassing the £83m of sales reported for the whole of 2019 due to the coronavirus lockdown. It was able to report a profit for the first time.

Marmite recognised this trend and reacted. It partnered with Gousto to include the spread in a selection of seven limited-edition recipes. The recipes offered “umami twists to much-loved dinner classics”, created by Gousto chefs. The Marmite team again demonstrated horizontal thinking and moved outside  of the traditional retail route to market to reach consumers. While many other brands may have seen home delivery as a threat with shoppers spending less time in store, Marmite instead saw this as an opportunity.

3. Target the unmet needs of consumers

Disruptive innovation isn’t just about making sure you’re doing something different than your competitors. Solutions from FMCG brands need to target the unmet needs of customers. It links back to the development of ‘robust trends’ and working out the confluence of factors needed to predict the needs of customers in the future. This approach can uncover what consumers desire and also how to communicate how a brand can provide what they are missing.

L’Oreal Paris Match Retouch

L’Oreal Magic Retouch is an innovation in line with our present times. The instant root concealer precision brush creates an easy application without needing to visit a hairdresser. This is premised on a robust trend and context – that increasingly busy women don’t have as much time to visit a hairdresser.  Of course it couldn’t have been predicted that hairdressers would be shut for such long periods this year, but this is a product set to long outlive the pandemic. L’Oreal has reported the product selling every 30 seconds in the UK and a rating of 4.4 out of 5 from over 6,700 reviews on Amazon.

As we look forward to the next twelve months we can expect no let up in innovation within the FMCG category. However as ever, there will be far more losers than winners. It is not a roll of a dice separating the innovations that succeed with those that fail. Instead a rigorous approach will determine the robust trends that will last and need solutions. We may not be able to see into the future but we can develop cultural clairvoyance.

Jane Hovey is Director of Communications Strategy at Vivaldi. Vivaldi is one of the largest global business and brand transformation consultancies.

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