FMCG Forum: Finding growth in mature food markets

“Innovation is a great way to get famous,” said Megan Brownlow, principal, Housten Consulting and former PwC media guru, presenting at the inaugural FMCG Forum in Sydney last week on the subject of the need to innovate to find growth in mature markets.

The event, hosted by News Corp and supported by the Australian Association of National Advertisers (AANA), brought together senior marketers and agency directors to explore some current and future challenges facing the fast-moving consumer goods (FMCG) category. 

Brownlow ran through the ways to review processes and make changes to develop the business, using an 'innovation star' to demonstrate several different ways to innovate. The ‘innovation star’ involves these seven key elements - the business model, relationships, service, product, technology, distribution and content - all part of finding growth. And she said you only need look to the shops to see how innovation is being deployed in the food market.

“We only have to look at what's on the shelves to realise this factor because over half of our products are less than five years old,” Brownlow said.

On the demand side, Brownlow said consumers say they’ll pay a premium in these value-seeking days for something innovative because they see innovation as the greater convenience, something that solves a problem. On the industry side, data shows consumers regularly choosing new products and marketers are saying innovation is key to the challenging task of finding growth.

“What we are seeing in innovation here is a greater leveraging of your partner's assets to do research. So it's not just the old conventional ways of long market screening, pre-screening, it's actually also using some really smart new tools that can do things fast,” she said.

It's about going one layer deeper to surface the problem the target customer has, possibly using a workaround whereby they have developed some compensatory behaviour to resolve that problem. It's usually not very satisfactory. 

“Find that problem they have developed some workaround for and solve it for them. That's the real goal of research,”  Brownlow advised.

Brownlow also spoke about pivoting and innovation and used three big brands - Ford, Apple and Coke - as examples of how it can go wrong when not utilised. With Ford, it was the Edsel, the giant new car launched in 1967, where the manufacturer missed the inflection point when consumers were turning to smaller vehicles.

Coke, meanwhile, gave up its position to Pepsi by following the follower and made the mistake of stopping production of the classic Coke; assuming new Coke would be such a winner and overlooking the importance of nostalgia and loyalty in the brand and the original. The final example Brownlow used was Apple and the Newton, which tried to squeeze everything into a tiny thing because the CEO at the time said it's got to fit into my top pocket, but it didn’t work properly.

Back to the innovation star, Bronlow went through all seven elements giving marketing examples from current and past brands. In terms of innovating the business model, she nominated the subscription direct to consumer services enabled by the Internet.

In terms of relationships innovation, this is the biggest opportunity for marketers, according to Brownlow, and involves how to mutually get more from the relationship - true collaboration. “It requires trust, and it requires letting people in higher up in the process.”

When it comes to service, Brownlow recommended looking at ways to assist customers to access the product or service more easily. She used the example of online doctors’ scripts and consultations. In terms of product, it’s looking at changing consumers tastes and interests and meeting these through innovating new or existing products such as low-carb bread or low-fat snacks that take the guilt out of this part of the food market.

“So product innovation, Good, good, good,” she said. 

Technology's role in innovation

Brownlow was less convinced technology will continue to be a competitive advantage, but said it’s important not to be left behind, and nominated the new 5G mobile phone network, the Internet of things (IoT) and cloud computing as key trends.

“So you probably should be good at this, because it comes out of product innovation,” she said. “You need to know what is happening in technological innovation because you can use it to your benefit but you can be sure your competitors are.”

On distribution, it’s looking at new and different places to market and sell products and here Brownlow gave the example of pr-eloaded Berocca in a bottle which allowed the energy tablets to be sold in the drinks section.

“Sometimes you can tweak a product to make it live in a new category. And by thinking about where else could my product be distributed, I think is a really healthy practice for marketers,” she said. “It's never too old to innovate.”

Finally, content, the collection of brand stories and tweaking brand narratives to be more transparent about their purpose or to surface their purpose and share that not just with customers, but also their employees. 

“I think innovating your content by showing what your narrative is, and by showing what your stories are to incorporate purpose is one of the great examples of content,” Brownlow said.

Summing up, the marketing and brand expert said warned innovation is much more than just technology.

“Sometimes we get sucked into that vortex and it’s not. It’s an enabler of convenience and there are innovation opportunities everywhere,” she added.

“Think of all of those different types of innovation and then claim it.”

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, follow our regular updates via CMO Australia's Linkedin company page, or join us on Facebook: https://www.facebook.com/CMOAustralia.