What to expect from an innovation
The role of price and parent brand
The average launch reaches about 1% of category buyers
We tracked the performance of all launches in the BG20 universe (some 90 categories) in one country over three years. Within the first quarter after launching, the average launch reaches 0.39% of category buyers. The number of additional buyers that the launch reaches after each additional quarter in the market declines continuously (0.25% of category buyers in Q2 vs 0.18% in Q4), with the average launch just exceeding 1% of category buyers after a year. Fewer than 1 in 10 launches reach 3% within a year. However – some of that variation can be explained: the power of the parent brand, the launch price and category characteristics make a difference (please revisit next week’s pick of the week for more details).
The larger the launching brand, the better the launch performs
Not all launches are created equal. A launch from a powerful parent brand performs better than a launch from a less powerful parent brand. The former will certainly enjoy an edge when it comes to shopper salience and distribution and most likely also with respect to communication support. A brand with more than 20% market share can expect its launches to reach four times as many buyers as a brand that captures less than 1% share.
The higher the price of the launch, the less reach can be expected
Premium launches pose a higher barrier for shopper adoption. Obviously, buying an unknown entity poses a certain level of risk to begin with – and a higher price increases that perceived risk. Launches that are priced below the category average outperform launches that are priced at least twice as expensive as the category average by a factor of 1.5.