Innovation pays off when it's well-calculated
WHAT IT MEANS AND WHY IT’S IMPORTANT Just goes to show that you need to spend a dollar to make a dollar because that other overused adage, “a penny saved is a penny earned,” might only earn you a penny profit even as you miss that dollar opportunity. Throw these learnings against the wall of SKU rationalization, and what sticks is that the bunker mentality has to end; you can’t grow the market without the tried and true catalyst of a new growth engine powered by innovation.
(THE NEWS: Innovation, new growth opportunities must be tackled for CPGs to stay afloat. For the full story, click here)
Of course, Wall Street only recognizes those investors of innovation if they succeed. So innovation for the sake of innovation is not necessarily the greatest play, unless of course that innovation is fulfilling a new consumer need or trading a consumer up to a higher-end product, as opposed to just cannibalizing existing sales. And that leads to the other significant takeaway — innovation might not necessarily mean reinventing the mousetrap, but rather reinventing the way that mousetrap is promoted. The report identifies emerging markets on a global basis (China, Russia), but those learnings can be just as readily applied specifically to the U.S. market by tailoring those promotional spends so that the mousetrap either reaches more consumers (through venues such as social media, for example) or appeals to more niche-market demographics (either on a regional scale, such as the Southeast, for example, or by increasing reach into specific ethnic groups).
And on a macro-economic level, enough innovation could help pave that road toward recovery — because if you reach a consumer with enough reasons to spend, they just might start spending.