The major businesses in our industry seem to have completely ceased to produce innovative new products – I’m sorry but putting a different biscuit in a chocolate bar or salt in a caramel is not innovation, at best it’s line extension. Effort and resources seem to be devoted solely to reducing costs, possibly to cover the financial commitments made to justify mergers and acquisitions.
This situation presents smaller businesses with a real opportunity to grow their market position.
Innovation can provide the opportunity for growth and value creation in our industry, through new products, lower manufacturing costs, new ingredient sources and better links with the consumer. However to create value through innovation requires that those innovations produce repeat, regular business, not a string of “once off” purchases driven solely by novelty.
Generating long term repeat purchase potential – for either an individual product or range of products – requires products which appeal to a significant number of people and which they will buy more than once. There can be opportunities for “once off” niche products to create interest, but they alone will never build a business. Building company value is long term, offering widely accepted products which create a brand and a reputation for products which provide quality, desirability and value to the consumer.
A lot of “start up” innovation seems to be concentrating on very (very) niche areas which may be very new and unusual and occasionally attract headlines but which will not necessarily meet the requirements of wide appeal, profitability, consumer value and above all, potential for repeat purchase.
Use novelty for promotional purposes by all means, but behind that novelty must sit a related range of products which will build broadly based consumer loyalty. Niche products will almost always be relatively poor value and will generate interest but little repeat purchase.
One way of gaining customer attention is through innovative packaging of an otherwise standard product. This allows you to both excite and attract the consumer with modest investment while introducing them to your normal product, with the hope that they will then become a regular customer for that standard product. It may also offer an opportunity to connect with your consumers through social media invitations and offers.
To innovate with a new product which has long term potential it perhaps helps to look at what is already successful in the market place. There are a lot of long term products out there, and they must have some lessons for us.
Examining many of these suggests that texture is at least as important as taste. If you look at most of the long term successes they all provide the consumer with a distinct textural sensation as well as a pleasurable taste.
To some extent they divide into two groups:-
– Products which are crisp or hard but which break down in the mouth – solid chocolate, “Flake” , “Crunchie”, many wafer and biscuit based products, products containing hard nougatine or nuts (eg Dime), all of these have an initial “snap” which creates interest immediately.
– Products which are soft and indulgent, easy to bite through and immediately satiating – a lot of soft centred moulded products containing soft caramel or “Turkish Delight”, count lines such as “Mars”, “Snickers”, “Starbar” and “Boost” all produce an immediate satisfaction and particularly with count lines may act as snack or meal replacements.
Most if not virtually all assortment units come under the latter category, emphasising their indulgent nature.
Note also that consumers in Europe at least would require moulded chocolate to have a good “snap” coupled with an indulgent melting mouthfeel, suggesting its premium position may be because it spans both categories.
A quick scan of the confectionery shelves will show you that most if not all of the products have been around a long time (I know, I developed some of them early in my career!) so there must be opportunity. I cannot believe that today’s key consumers only want what their parents (or even grandparents) liked.
As in other sectors like entertainment and communication, they want more than an image, they want an experience and a novel opportunity to do something they could not do previously.
All the other food sectors have changed radically in their offering and utility in the past five years, let alone the past twenty five years, but not confectionery. Look at the other food shelves in your local store, manufacturers of almost everything else are trying to respond to changes in lifestyle and priorities in the modern world
So, a few thoughts for the SME:-
Look at what other sectors are doing to appeal to “todays people” and try to see how you can shape your offering in similar ways. People travel more widely, so are open to a greater range of mainstream flavours from different cultures, they eat “on the go”, they want energy or meal replacements and in gifting they want genuine quality and novelty.
Innovative packaging may be cheaper, quicker and more effective in the short term than a lot of time and effort (and money) spent on developing and making innovative products which may not be successful. It offers the opportunity to form a relationship with the consumer through social media, promotions, offers and even simple things like messages on packs
Identify which of the sectors and usages you are aiming at very clearly – a product has to have a reason for the consumer as well as you thinking it might be a good idea
Think about how and why the consumer may be motivated to make a repeat purchase of the product – it needs more than one off novelty value, it needs to offer something which fits into their needs in itself or leads them to such a product in your range
If you do use a niche product to create interest (for example for a specific event or season) make sure it links to your existing or new products in a strong and logical way and strengthens the brand, the consumer should know immediately who the offering is from.
Consider links to other associated sectors such as beverage drinks, baked goods, ice cream, dairy products etc. Other SME’s in your area may well be interested in linking up with you on promotions or products
Think widely and openly about resource opportunities. Ingredient source options obviously, but also genuine reductions in usage of energy, water, even effluent by improving the way you make things and cutting out losses and waste.
Make manufacturing more efficient by training and empowering employees to change the way things are done. This may not seem like innovation, but it uses the power of the people actually doing the work and allows them to think differently.
Improve your QC/QA systems – this will almost always reduce costs – and make sure you are responding positively to consumers who do complain. A positive and valued response to a complaint can be highly positive in the consumer’s mind and will show you care about them. Word of mouth (and social media reaction) is vitally important in our modern world and are very efficient at spreading and promoting negativity.
Reducing cost whilst (vitally) retaining quality and value does not just improve profitability, it frees up resources for promotion of the products and brands
Within the whole business encourage commitment and the thinking that “there is no such thing as a silly question”. Some of the best and most profitable ideas come from the “that’s impossible” school but get turned into highly advantageous reality because they offer the opportunity for transformation rather than just improvement
Much of this boils down to developing a strategy for “where you want to go and how you want to get there”. No business can stand still and unless you are moving forward you will be moving backwards relative to other successful businesses and that they will be pleased to see!
Feb 13