| New Product Launches in the UK: Nine Out of 10 Set to Fail | ||
| 5/6/00 | ||
|
With 90,000 new products launched in the UK annually, manufacturers and retailers are increasing the use of advertising to ensure their product is not one of the estimated 90% that fails, according to a new ACNielsen report. The findings also reveal an overwhelming preference for television as an advertising vehicle, to promote the attributes of brands over those of competitor brands. This year's New Launch Barometer report revealed television advertising was eight times more popular than press and radio as a way of reaching a mass audience. ACNielsen carried out analysis of advertising spend during the first six months and second six months after launch for a selection of brands introduced over the last four years. Advertising spend on these new products in the first six months following their introduction was £93.9m, double that spent in the second six months (£44.4m). In fact, as a general premise, nearly 40% of campaign spend took place during the crucial first three months of launch in an attempt to create awareness, increase the impact of a brand and encourage people to trial the product. Where over half of pre- and new families stated magazines were a good source of information for new products, figures showed that television advertising encouraged nearly a third of all households to try new products after viewing a particular advert. This rate is more pronounced in the new family lifestage where 45% of households subsequently purchased a product as a result of seeing it advertised on the television - perhaps highlighting the growing influence of pester power. Although pre-awareness of products increases the likelihood of the consumer trying them, nearly two thirds of households across the spectrum stated that they are increasingly irritated by the amount of advertising aimed at children. Despite this, pester power is one of the key drivers of new product development activity, alongside convenience with the increase in 'ready to go food' offerings, and health with the development of functional food such as 'probiotics'. Despite the influence of advertising on the consumer, 13% of shoppers rely on others to recommend new products. Once in-store, nearly a third of households shop on automatic pilot. Despite this, almost 50% of households still make their final purchase decision at the shelf. A large proportion, 64% of households prefer to stick to well-known and trusted products - consumers must feel confident if they are to switch brands. In fact, nearly two-thirds of brands in ACNielsen's Top 100 Grocery Brands ranking have been around for over 31 years. Despite this, expenditure on new own label products in some retailers is on the rise - not surprising when two thirds of all households consider own label to be as good as well-known brands. Ultimately, consumers make their purchase decisions based on price and promotions available at the time with one fifth of households trying a new product when first seen on a shelf - even if they have a preferred brand. According to Richard Cook, Marketing Director at ACNielsen, "Failure rates of new products are still excessively high, with 90%of product launches in Europe failing within two years. As a result, research combined with a genuine understanding of this area is crucial. Retailers and manufacturers need an in-depth knowledge of market dynamics pre-launch, continuous tracking during the launch period and an effective evaluation process post-launch." Cook continued: "With companies investing large sums in new product launches, only an effective evaluation process can ensure appropriate corrective action be taken to minimise chance of failure and increase the opportunity for success." ACNielsen's New Launch Barometer report provides a review of new product development in the grocery sector. The report includes key insights into consumer attitudes, advertising, retailer and promotional support. Data is taken from two sources:
| ||
