For around half a century, CPG companies have enjoyed better returns than other economic sectors, but they have also dealt with their share of bumps in the road. For example, revenue growth during the past 50 or so years has often come at the expense of margins.
CPG brands have done well historically, but they have had to revise expectations about things like margins and revenues.
The advent of the global marketplace, along with new and exciting ways to connect consumers with CPG products has offered tremendous opportunities. Yet CPG brand mistakes continue to cost companies dearly. In most cases, those mistakes could have been avoided with proper planning and testing. Here are seven new product CPG brand mistakes and how to avoid them.
1. Not Tailoring the Product Category to Local Preferences
Brands that play the hottest subcategories in the hottest markets have to be prepared to learn what those markets actually want, even if it is something unexpected. For example, Coca-Cola made a lot of money launching a fruit drink heavy on pulp to Chinese consumers, who prefer their drinks to be pulpy. Avoiding gaffes can be as straightforward as finding out what consumers actually want rather than thinking you already know their preferences.
2. Not Understanding Commodity Cost Trends
Can your company raise prices if it experiences a commodity price hike? Maybe not. Global consumption overall is up, and volatility in commodity prices can pack a big punch. Will your new product be strong enough to withstand potential commodity price effects? Understanding trends in commodity prices and doing adequate contingency planning can help brands avoid such CPG brand mistakes.
3. Not Adequately Pre-Testing the Product Idea
Anecdotal “data” is not enough to know whether a product will be a hit. To avoid problems, you have to establish your value proposition, know what the potential market for the product is, and learn everything you can about the target consumer audience for the product. Sources of demographic and other data are all around, so there is no excuse for not understanding consumer trends and demographic characteristics.
4. Not Creating a Solid Launch Strategy (Including a Marketing Plan)
Hopes and wishes are great, but they are not enough for a successful product launch.
The right launch strategy for your new CPG product will have both breadth and depth, highlighting the product benefits and the core messaging that is to surround it. Avoiding a launch strategy mistake requires understanding each phase of launch, from building awareness to encouraging the initial purchase to understanding which marketing channels will be best-suited to the product and the audience.
5. Not Tracking Performance and Correcting Course
Collecting data throughout the pre-launch and launch periods helps you detect potential problems earlier, when there is still time to fix them. Also important is going through various “what if?” scenarios in the lead-up to the launch. What if demand is significantly greater than expected? Will your company be ready? Can your website handle a potential jump in traffic? Are your suppliers ready if demand should suddenly surge? And if a product underperforms upon launch, do you have the marketing resources ready? Do you have resources for asking consumers for feedback?
6. Offering Consumers Something They Do Not Know How to Use
Sometimes products simply confuse consumers. In 2004, the P&G “scent player” that looked like a CD player and emitted aromas, caused far more confusion than enthusiasm. It did not help that the celebrity spokesperson (Shania Twain) was a music star, which led some to believe the device played music as well. Thorough testing of product ideas is mandatory, and it is always a good idea to second-guess celebrity endorsements before going with them.
7. Launching a Product for Which There Is No Market
Sometimes products get the last laugh of sorts after flopping big upon release. The Segway is an example. It never found much of a home among ordinary people, though it has found a place in niches like urban tour guide customers and companies with huge warehouses. As another example, Facebook tried to launch a virtual currency people could spend on the platform, but users did not see the need for it, and the company killed it off in 2013. It is important to find out if people actually have a need that your product fulfills before introducing it.
CPG brand mistakes happen, and they always will. Some products fail upon launch, while others may start strong and then fizzle quickly. Avoiding these mistakes is mostly a matter of testing, listening, and letting consumers tell you what they want rather than thinking that you know better than they do.
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Topics cpg, Product category