Image by Fairlife.
The cost of innovation is steep. The risks are great and failure is frequent. Perhaps that is why so many retailers are happy to stick with the status quo, cross their fingers and hope that the world does not change. But for the retailers who recognize the need for change, the question becomes this: “How do I reduce the risk of innovation and increase my chances of success?”
Reducing The Risks of Innovation
While it is impossible to fully predict the future, customer insights will help to paint a clearer picture of what to expect. Consumer insights for innovation look beyond internal customer data, which only provides a picture of what is happening now and identifies opportunities based on today’s consumer. The consumer insights for innovation are focused on the consumer of tomorrow, analyzing both the consumer drivers and the external market forces at work in order to provide a holistic and forward looking perspective.
Brands That Embraced Innovation
Coke’s launch of Fairlife milk is an example of using a combination of consumer drivers and external data to deliver products based on what customers want. Fairlife milk is a “premium” milk with 50 percent more protein, 30 percent more calcium, half the sugar of typical milk — and a higher price tag. Fairlife is also lactose-free, and mimics the taste of real milk while having a longer shelf life. What did Coke—the bastion of sugary, unhealthy drinks—see that led to the launch of this product?
Changes in the social, economic, political and environmental landscape suggest that people are living longer, are relying less on the government to provide health care and thus, are interested in healthier foods. Sales of sugary soda drinks fell to a twenty-year low in 2013, and while sales of Coke are still strong, Coca-Cola needed to reinvent its beverage line to appeal to evolving consumer tastes.. Combine this with the accumulated wealth of the senior population, many of whom are actively involved in raising their grandchildren and creating a premium, healthier milk is a logical strategy. Smartly, they did not brand the beverage “Coke”.
Fairlife milk also satisfies the consumer needs for transparency and value. Consumers want to know more about the nutritional attributes of the products they are considering, how it’s made, and whether the farm adheres to sustainable farming practices. So while the product is priced at a premium compared to traditional milk, consumers will choose the product as it embodies their values and needs.
Using consumer insights and external drivers, Coke has reduced the risk of launching a premium product outside of their traditional product line by looking at external data and consumer drivers to ensure the product will meet the needs of consumers today and tomorrow.
What Does This Mean For Retailers?
Consumers are changing, faster than ever before. Typical retail bricks and mortar development takes several years to complete. Without looking beyond internal data, you will be developing stores for the consumer of today—ones that will be obsolete as soon as they open their doors. Using forward-looking consumer drivers and external data to build a strategy for the future will reduce the risk of failure. However, it’s not just enough to have this data. Having the ability to identify which insights will impact your retail business the most will allow you to turn the insights into actionable results.