New product incrementality matters to growth
Brands have to innovate and this should pay off via an increase in market share. We compare how market share winners and market share losers differ in their innovation activity across 31 countries, 32,797 brands and 86 categories.
Share winners between 2012 and 2016:
• launch 2.7 new products on average per year while losers introduce 2.4. This translates into 14% of the winners assortment and 10% for losers.
• retain more of their existing range and with the higher share for new products, their overall assortment increases whereas the assortment of losers declines.
• achieve 17% of their sales from new products as opposed to only 12% for losers. This difference is much bigger than the comparison of the number of launches indicating greater appeal for their new products.
• are most reliant on sales from new in household care (on average, 22% of sales) whereas winners in beverage achieve much less from their launches (12%).
Whilst there is some evidence that winners new products fare better, we believe the key is that winners are able to integrate more new products incrementally into their range.