Blog Lisette Kruizinga – de Vries – Methodologist
On Thursday the 3rd of October, our annual Brand Growth Event took place in the Miele Experience Center. This year’s theme was the role of innovation on brand growth. In this inspirational setting, we were inspired by several interesting presentations from academia and practice. Since I have a background in academia, here are my main takeaways as seen from my perspective.
Failure rates are much lower
For firms, innovation is seen as the biggest driver for growth. It is commonly thought that failure rates for new product introductions are between 80% to 95%. However, professor Tammo Bijmolt provides results from empirical research that shows that failure rates are much lower; in Europe only 43%. Surprisingly, there is relatively little research on innovation in the academic marketing world, he tells us. Innovation research is more in the field of technology management or economics. So, what is in fact being researched on innovation in marketing, is more about what you can do as a marketer to make a product successful.
As many stores as possible
Bijmolt provides findings from a meta-analysis from over 200 studies. He reveals the most important factor for market potential and growth: the new product should be available in as many stores as possible. This is also something that relates to the works of Byron Sharp, who states that penetration or availability is the main driver for growth. Next to that, the meta-analysis shows that the second important factor for market potential is to make sure that your product is clearly visible in the store by putting a feature and/or display next to the product. So, make the product more salient.
Shortcuts and discounts
This finding also relates to psychological research which Tom de Bruyne presented. Most of our decisions are based on System 1, the automatic system, as stated by Daniel Kahneman. This entails that you, as a marketer, have to provide people with shortcuts. In this case a display for example, to drive people to certain decisions. However, the second most important factor for growth of new products are discounts. Discounts make it easier for people to try the product and is also something you can use to ‘steer’ consumers. De Bruyne also provides several examples of how to place your product in a certain context. With this, prices also play an important role. For example, in the luxury tax free stores, putting sunglasses of €200 next to bags of €10,000 makes the sunglasses look like a bargain. However, the same sunglasses would not sell in a H&M store.
To conclude, it was an inspiring evening, with interesting presentations on the topic of innovation. Luckily, we see many similarities and corresponding findings across different studies and research disciplines. Unfortunately, practice and academia still too often remain two separate worlds. Therefore, I look forward seeing more learnings from both practice and the academic world come together like we saw happening that Thursday evening.