Nielsen Southeast Asia Breakthrough Innovation Report 2016

NIELSEN BREAKTHROUGH INNOVATION REPORT 2016 SOUTHEAST ASIAN EDITION

2016 SOUTHEAST ASIAN EDITION

W E L C O M E

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THE NIELSEN BREAKTHROUGH INNOVATION REPORT

LET TER FROM THE AUTHORS Welcome to the second edition of the Nielsen Southeast Asia Breakthrough Innovation Report. JOHAN VRANCKEN Managing Director Nielsen Innovation Practice Growth & Emerging Markets

RUCHI BALLAL Director Nielsen Innovation Practice

CECILIA LV Senior Manager Nielsen Innovation Practice

Copyright © 2016 The Nielsen Company

Nielsen began this journey five years ago in North America where our first Breakthrough Innovation Report launched in 2011. Since then, we have launched the report in Europe, India, China and Southeast Asia. Globally, we have logged thousands of hours of analysis, interviews, and conversations with industry leaders to uncover the secret to achieving true innovation success. The Breakthrough Innovation Report celebrates what truly represents best-of-breed innovation success stories. The Southeast Asia Breakthrough Innovation Report evaluates new products launched in more than 160 product categories, representing 71% of annual consumer packaged goods sales across Indonesia, Thailand, Philippines, Vietnam and Malaysia. Our rigorous review process centres around three key criteria: distinctiveness, relevance and endurance. After reviewing 12,920 new consumer products launched in 2013 through their first 24 months of shelf life to the end of 2015, we name the 10 best-of-breed breakthrough product innovations and shed light on what makes these innovations stand out from the crowd. Our extensive analysis reveals that, for any brand to achieve true breakthrough innovation success, it is critical to seek opportunities to disrupt category norms, leverage analytics to unearth genuine opportunities, create a process to fit an innovation, not the reverse, and make execution a central focus rather than an afterthought. And in order to succeed in all of these areas, consumer insight and analytics play a fundamental role in guiding early stage exploration and pivoting along the innovation journey to make your new product better, stronger, bolder, bigger and, ultimately, to achieve breakthrough innovation success.

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CONGRATUL ATIONS

2016

NIELSEN

BREAKTHROUGH INNOVATION

WINNERS

GARNIER SAKURA WHITE THAIL AND PG 29

MR. KESO PHILIPPINES

DOWNY PARFUM COLLECTION MYSTIQUE THAIL AND AND PHILIPPINES

EC CRUNCHY CHOCO FLAKES PHILIPPINES

PG 31

MOUNTAIN DEW VIETNA M

REXONA INVISIBLE DRY INDONESIA

TEA+ OOLONG TEA VIETNA M PG 27

FA MI CANXI VIETNA M

AQUARIUS VIETNA M

= SEE WINNER SPOTLIGHTS

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FUTURE CONTENDER1

KITK AT GREEN TEA , M AL AYSIA

THE MAKING OF WINNERS: NIELSEN BREAKTHROUGH INNOVATION CRITERIA DISTINCTIVENESS Deliver a new value proposition to the market. Ingredient reformulations, repackaging, size changes, repositioning, and other minor refinements to existing brands are excluded. RELEVANCE Generate significant year-one sales. ENDURANCE Achieve at least 90% of year-one sales in year two. This measure confirms a sustained level of consumer demand while allowing for some decline in revenue during the transition from trial to adoption.


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SOUTHE A ST A SIA

MARKET OVERVIEW

THE FMCG LANDSCAPE FOR YOUR NEXT BREAKTHROUGH INNOVATION

THAILAND | 101 (-4) 4.1%

THE PHILIPPINES | 132 (+14) 7.1% VIETNAM | 107 (-2) 4.8%

MALAYSIA | 87 (+7) 5.1% INDONESIA | 119 (+2) 10.7% How to read: COUNTRY | NIELSEN CONSUMER CONFIDENCE INDEX Q2 2016 (+/- change since Q1 2016) FMCG Nominal Value Growth % MAT Q2 2016 Source: Nielsen Quarter By Numbers, Q2 2016

Amidst a global environment of sluggish economic growth, dampened consumer confidence and concerns over commodity prices and political stability, Southeast Asia continues to shine on most companies’ radar, thanks to a combination of factors such as population size, increasing spending capacity and relatively buoyant economic growth. With strong economic growth and low inflation, Philippines has the most confident consumers in the region. The FMCG industry continues to ride this wave with high growth particularly evident in convenience categories such as ready-to-drink beverages and confectionery, which are attracting significant attention from manufacturers. Indonesia and Vietnam also register on the radar of senior leaders across the region as priority markets to invest in over the next five years. Indonesia has been on the road to recovery since

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the second half of 2015, with both economic growth and consumer sentiment showing signs of improvement. Indonesia is enjoying the fastest FMCG-sector growth in Southeast Asia, highlighting consumers’ positive outlook and willingness to spend. While growth has slowed dramatically in Vietnam, the country’s young, aspirational and increasingly connected consumer base showcases a market where consumers’ lives are improving every day, and where aspiration for new experiences is growing. Thanks to low inflation, Malaysian consumers are growing more confident about the future and their willingness to spend is increasing. While Thailand consumers remain cautious about the economy, the FMCG sector continues to grow at a moderate pace. The growth of the convenience channel in Thailand taps into consumers’ busy lifestyles where they continue to seek products and services that deliver value and convenience.


FIVE EMERGING TRENDS INFLUENCING FMCG INNOVATION SUCCESS

D E M A ND FO R A FFO R DA B LE LUXU RY

A look across Southeast Asia reveals five converging themes which will influence the success of innovation in the region in the years to come.

EM E RG E N CE O F H OM EG ROWN COM PA NIE S

CO N V E NIE N CE

HE A LTH A ND WE LLN E S S


E VO LU TI O N O F TH E CO NNEC TE D CO N S UME R

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KEY TRENDS IN SOUTHEAST ASIA

1. DEMAND FOR AFFORDABLE LUXURY

With rapidly expanding disposable income and a willingness to spend, consumers across Southeast Asia are looking for affordable products that will improve their lives and allow them to enjoy life’s smaller luxuries. FMCG products provide an affordable channel for consumers to step into this “aspirational” lifestyle, as evidenced in the premium FMCG segment which is growing at 21% year-on-year, compared to 8% year-on-year growth across the mainstream FMCG sector. Consumer sentiment reflects this trend, with close to three in five (56%) consumers in Southeast Asia saying they are willing to pay a premium price for innovative new products, compared to just 43% globally2.

ASPIRING FOR BETTER LIVING, AT AFFORDABLE PRICES I AM WILLING TO PAY A PREMIUM PRICE FOR INNOVATIVE NEW PRODUCTS

PRODUCTS AT AFFORDABLE PRICES GLOBAL SOUTHEAST ASIA

43%

51%

56%

43%

Source: Nielsen Going Premium in Southeast Asia report, Oct 2015

One of 2014’s Breakthrough Innovation winners from Southeast Asia3, Japanese skincare brand Hada Labo, was the first of its kind to launch a lower tier premium range in Thailand. While the positioning was at the lower end of the premium tier, and pricing was relatively affordable, the brand’s image was enhanced by consumers’ perception of Japanese products as being superior, and this perception together with clever marketing contributed significantly to the brand’s success. KitKat Green Tea, launched by Nestlé in Malaysia in 2015, is another example of a premium offering that is relatively affordable to everyday consumers. The premium product image is supported by the imported Japanese-quality ingredients and the Japanese-style brand communication and promotion activities. Though priced at 50% higher4 than the category average, KitKat Green Tea is is perceived to be affordable where the actual price of the product is not prohibitive for most consumers.

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2. EMERGENCE OF HOMEGROWN COMPANIES

Across Southeast Asia, homegrown local and regional FMCG brands are going head-to-head with multinational brands, and many are outpacing their multinational rivals on growth. Nielsen research highlights a preference for local brands across Southeast Asia, largely due to factors such as affordability and national pride, and almost three in five Southeast Asian consumers believe local brands are most attuned to their personal needs and tastes. While in the past local players have dominated traditional trade channels and multinationals have focused on modern trade channels, this market dynamic is shifting and local players are growing at more than twice the rate of multinational brands in the modern trade channel. Further highlighting this trend, consumer attitudes toward new products are skewed to local brands, with more than half (52%) of Southeast Asian consumers opting for local brands over global brands when it comes to trialling new products5.

BIG ON HOMEGROWN BRANDS THINKING OF NEW PRODUCT PURCHASES, I PREFER TO PURCHASE LOCAL BRANDS OVER LARGE GLOBAL BRANDS

52% SOUTHEAST ASIA

42% GLOBAL

Source: Nielsen Looking To Achieve New Product Success report, June 2015

SHARE OF VALUE SALES 2012–2014

SOUTHEAST ASIA

WHY LOCAL PREFERENCE? WHAT IS MOST IMPORTANT TO YOU WHEN CHOOSING LOCAL OVER GLOBAL BRANDS?

VALUE GROWTH %

LOCAL

42

43

43

13%

REGIONAL

8

8

9

23%

50

48

48

5%

Y1

Y2

Y3

GLOBAL

Source: Nielsen Go Glocal report, April 2016

BETTER VALUE FOR MONEY

50% 37%

NATIONAL PRIDE POSITIVE PREVIOUS EXPERIENCE

27%

ON SALE/ PROMOTION

27%

SAFER INGREDIENTS/ PROCESSING ORGANIC/ ALL-NATURAL OPTIONS

26% 22%

Wardah, an Indonesian personal care manufacturer, is proving tough competition for multinationals, providing consumers with a range of halal certified beauty care products designed to appeal to Muslim women. The brand’s marketing strategy features women dressed in traditional attire, reinforcing its positioning as a local brand which offers products developed with its consumers’ specific needs in mind. Further contributing to Wardah’s success, its locally developed distribution network ensures its products are readily available to customers.


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3. E VOLUTION OF THE CONNECTED CONSUMER Whether it is premium or value, multinational or local, one trend that resonates across Southeast Asia is connectivity. With smartphone penetration increasing exponentially across the region, consumers have information and purchasing power at their fingertips. Southeast Asian consumers are prolific users of social media, and many look to online reviews to influence their product purchasing decisions and share their experiences with others – one third of Southeast Asian consumers read online product reviews before making a purchase decision6. Subsequently, companies in the region are increasingly leveraging digital campaigns as an important part of their marketing mix when it comes to new product launches. Brands are also creating social media content with strong social messages and impactful campaigns encouraging consumers to share their brand experience more broadly on social media.

ONLINE RETAILING WILL BECOME THE NORM PERCENTAGE AGREEING THAT SHOPPING ONLINE IS CONVENIENT

71%

PERCENTAGE PL ANNING TO BUY GROCERIES ONLINE IN THE NEXT 6 MONTHS

SOUTHEAST ASIA

75%

SINGAPORE

74%

PHILIPPINES

16% 24% 9% 15%

72%

THAIL AND

72%

VIETNAM

18%

MAL AYSIA

18%

70% 64%

INDONESIA

14%

Source: Nielsen The Future of Grocery report, April 2015

While consumers in Southeast Asia are flocking to social networks, ecommerce for FMCG is nascent but growing fast. In this competitive retail environment, retailers and manufacturers must add value and differentiate by providing digital tools to help consumers take control of their shopping experience while also increasing sales potential. The most successful retailers and manufacturers are at the intersection of the physical and virtual world, delivering a seamless customer experience.

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4. HEALTH & WELLNESS

With growing access to information, consumers are increasingly aware of the impact their food and beverage choices have on their health and wellness. Obesity rates in Southeast Asia are generally below developed markets like the UK, US and Australia, however, prevalence is accelerating at an alarming rate, which is serving to raise awareness. While exercise is the preferred method of losing weight for the majority of Southeast Asian consumers, many are looking for fresh, natural and minimally processed foods which meet the needs of their busy lifestyles.

WHAT’S ON THE NEW PRODUCT WISHLIST OF CONSUMERS?

PRODUCTS MADE OF NATURAL INGREDIENTS

PRODUCTS FITTING A HEALTHY LIFEST YLE GLOBAL SOUTHEAST ASIA

29%

38%

36%

28%


This trend is found not only in foods but also in personal care, where consumers are going back to basics, seeking products with natural ingredients. Himalaya Herbals, an Indian pharmaceutical company, is one such example which highlights this shift – the company launched an array of personal care products, anchored on the herbal proposition, across Thailand and Indonesia and is successfully creating a space for itself in the market.


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5. CONVENIENCE

While once it referred to a store front, convenience now describes the way of life for many consumers in Southeast Asia, and there is growing demand for products which make consumers’ lives simpler and easier. It is becoming increasingly important for manufacturers to focus their innovation efforts on products which deliver convenience to consumers, be it functional such as reducing preparation time, or in its logistics such as delivery.

WHAT’S ON THE NEW PRODUCT WISHLIST OF CONSUMERS? PRODUCTS THAT ARE CONVENIENT TO USE

37%

SOUTHEAST ASIA

26%

GLOBAL


With limited time available, consumers want a product that delivers on convenience without sacrificing taste or benefits. W.L. Foods understands that Filipino consumers like to snack, especially when out of home and on the go. Capitalising on this trend, W.L. Foods created EC Crunchy Choco Flakes, a convenient mini pack size of breakfast cereal that moved the product category beyond the breakfast table to an on-the-go snacking alternative.

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SEIZE THE MOMENT Southeast Asian consumers have more disposable income than ever before, are willing to spend, and are on the lookout for new products, providing ripe market conditions for innovation.

LIKE IT WHEN MANUFACTURERS OFFER NEW PRODUCTS

PURCHASED A NEW PRODUCT IN THEIR L AST GROCERY TRIP GLOBAL SOUTHEAST ASIA

NEW

73% 63%

73%

NE

W

57%


WELCOME TO

IN SOUTHEAST ASIA


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HOW DO WINNERS

The Breakthrough Innovation winners spent considerable time to find the consumer struggle with existing products and their compensating behaviours to determine the right “job” to be done. Instead of conforming to existing category norms, the winners challenged established category dynamics, disrupting categories and establishing a new “playing field”.

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JOBS THEORY

WHAT’S A JOB?

WHY ARE JOBS SO IMPORTANT?

A “job” is the progress that an individual seeks in a given circumstance.

Understanding the job reveals why (the cause) people purchase and use products and services, as well as why they sometimes behave in ways that involve no purchase at all (nonconsumption).

The job to be done generates the energy required for someone to take an action, such as pull a brand into his or her life or develop a compensating routine.

Innovation initiatives that are organised to resolve welldefined yet poorly performed jobs proceed with purpose and efficiency. Conversely, initiatives untethered to specific jobs lack meaning and proceed haphazardly, if at all.

While many of the jobs in our lives have adequate solutions, successful innovations resolve circumstances of struggle and fulfill unmet aspirations: they perform jobs that formerly had only inadequate or nonexistent solutions.

Jobs Theory focuses the insight process on the search for circumstances of struggle, unmet aspirations, and pools of nonconsumption. Demand Driven Insights identify poorly performed jobs. Jobs Theory creates a shared purpose and common language that facilitates communication and integration across diverse functional areas. A well-defined job enables efficient development as well as inmarket success.

Viewing the marketplace through the lens of consumers’ jobs to be done, redefines categories (typically far larger than conventionally envisioned) and reframes competitors (typically more numerous and diverse than conventionally considered).

Because jobs occur in the flow of daily life, the circumstance is the essential unit of innovation work— not customer characteristics, product attributes, new technology, or trends.

DIRECTLY VERIFIABLE ELEMENTS INCLUDE: CIRCUMSTANCE

COMPENSATING BEHAVIOR don’t want to go to

hurry up!

how big is the large again?

make my own?

just go without?

shop...

$

sigh.

it’s morning... it’s hot out...

they always mess up my order... it costs too much... don’t like waiting in line

too complicated... time consuming... can never get the flavor right

Who, when, where where

Complication, compromise, trade-off, or struggle

Desired progress, outcome, outcome, experience, experience, or solution or solution

1. Buying and using a product that imperfectly performs the job 2. Cobbling together a workaround workaround solution solution involving involving multiple multiple products products 3. Nonconsuming Nonconsuming compensatory compensatory behaviour behavior Remember: Sometimes Sometimes the the struggle struggle isis discernable and and quite quite clear; clear; other other times, times, especially when when consumers have developed developed compensating compensating routines, routines, the the struggle struggle isis far far less less obvious. obvious. consumers have

WHAT DOES A JOB LOOK LIKE? YOU CAN VISUALISE A CIRCUMSTANCE IN WHICH A JOB ARISES AS A SHORT STORYBOARD CAPTURING ESSENTIAL ELEMENTS. SOME OF THESE ELEMENTS CAN BE DIRECTLY VERIFIED, AND OTHERS NEED TO BE INFERRED AND VALIDATED.

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JOBS THEORY

REMEMBER! •T he essential unit of innovation work is the consumer circumstance, not product attributes, consumer characteristics, or trends. •B ecause the circumstance exists before any innovation enters the world, some compensating behaviour must be “fired” in order for a new solution to be “hired.” For every innovation initiative, managers should know what will be fired and why—the circumstancespecific consumer criteria for making choices.

•A s noted, all products can be viewed as services that successfully resolve circumstances of consumer struggle. • The “job spec” reveals the benefit bundle that will perfectly address the circumstance. The job spec is the innovation blueprint. Identifying a job provides remarkable clarity to the innovation process, enabling bigger wins, faster development, and fewer misfires.

WANT TO SEE JOBS THEORY IN ACTION?

•B ecause jobs-based innovation systematically eliminates waste, jobs-based innovation is lean innovation. Risk tolerance is not a quality of successful innovators. • I nnovation risk is a function of failing to nail a poorly performed job. Risk level is independent of any investment requirements. •W hile technologies, priorities, and daily routines evolve, jobs remain relatively stable over time.

Breakthrough Winners are masters of understanding consumer struggles and nailing down solutions that resolve them. Our Spotlight section features stories of selected winners from Thailand, the Philippines and Vietnam, from companies operating globally and locally. Their stories differ, but they all have something in common: They nail jobs.

ELEMENTS THAT NEED TO BE INFERRED INCLUDE: CRITERIA

SOLUTION is that new?

ia YS ter WA ce i r c AL an t are ums c cir cific e sp

Y AD RE INK DR

D ICFFEEE CO

Y AD RE INK DR

TO

TO

CO

ED ICFFEE

Understanding the the job job Understanding dramatically reconfigures reconfigures dramatically category structure structure and and category competitors. competitors. For For aa given given job, consumers consumers regularly consider an an array of solutions that extends extends well well beyond beyond aa given given store store aisle aisle –and andoften oftenbeyond beyond the the store store as as well. well.

CO

CO TO

Y AD K RE RIN D TO

The criteria criteria that that people people apply apply The in evaluating evaluating “job ‘ job candidates” candidates’ in (i.e., potential potential solutions). solutions). (i.e.,

D ICFFEEE DADY ICFFEREEEDRINK

Wow! It’s like they’ve been reading my mind. Thefunctional, functional,emotional, emotional, The andsocial socialdimensions dimensionsofof and benefitthat thatcollectively collectively benefit constitutethe theideal idealsolution solution constitute forthe thejob: job:the the“job ‘ jobspec,” spec,’ for blueprintfor forsuccessful successful ororblueprint innovation. innovation.

Breakthrough Winners Winners nail nail poorly poorly performed performed jobs: jobs: Breakthrough Coffeehouse taste without the coffeehouse hassle.

Remember: criteria are always circumstance specific.


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WHILE SIMPLE AND INSIGHTFUL IN THEORY, FINDING THE UNDERLYING “JOBS” THAT CONSUMERS NEED IN THEIR LIVES IS A DIFFICULT CONCEPT TO PUT INTO PRACTICE. Breakthrough Innovation winners found underlying consumer pain points and created innovations that made consumers’ lives easier, often breaking existing category boundaries. There is no definitive way to discovering the right “job” that is currently not met by category offerings. However, a number of winning innovations found solutions that connected multiple consumer needs.

NON-CONSUMPTION : Identify new usage circumstances for your category or product | Creating a new usage occasion or product application not only grows the brand but can change the category landscape as a whole. 2

NON-CONSUMER: Appeal to the neglected consumer dissatisfied with current offerings | If consumers are not satisfied with what is currently on offer in the category, creating another “me too” innovation will not suffice. Innovation that stems from an unfulfilled need, an existing gap or a problem in consumers’ lives is more likely to fill that “category gap” and encourage trial. Consumers feel compelled to purchase a product that meets the untapped or unmet need, be it functional like quenching thirst in a quick and convenient way, or emotional such as the desire to relax or feel pampered, or even social, like helping friends to bond at a social gathering. 1

W.L. Foods understands that Filipino consumers like to snack, especially when out of home and on the go. By creating a mini pack size of consumers’ favourite breakfast cereals, EC Crunchy Choco Flakes, W.L. Foods moved the product category beyond the breakfast table to an on-the-go snacking alternative, available at a lower price than usual snacks. By offering a new pack size and position, W.L. Foods extended the traditional category usage occasions to open up new opportunities and take breakfast cereal into a totally new consumption occasion.

When Suntory PepsiCo launched TEA+ Oolong7 Tea in Vietnam, they knew they had tapped into a gap in the ready-to-drink tea market. The category was dominated by sweet, lemon-flavoured green tea – a health compromise to make the product palatable. Suntory PepsiCo changed the category dynamic by creating a ready-to-drink product that is both healthier and tasty with an authentic and wellbalanced tea taste – TEA+ Oolong Tea was born. Read more about this in the Spotlight section.

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3 TRADE-OFFS : Uncover circumstances where consumers are forced to choose between unsatisfactory alternatives | Despite the myriad of products available, in many categories consumers say they are unable to find a product which completely fulfills their needs. For example, an iced tea that quenches thirst but gets warm on a hot day, a healthy snack that delivers on nutritional requirement but lacks taste, or a sunscreen that provides adequate sun protection but is sticky on the skin. Every time a consumer makes a compromise when using a product, there is an unmet need and an opportunity for a breakthrough innovation that will disrupt the category.


4 ACCEPTING THE DOWNSIDE : Seek out categories where consumers are accepting product limitations due to lack of choice | Despite the myriad of products available, consumers sometimes have to accept product limitations when no alternative is available e.g. consider the drowsiness that accompanies flu medicines! Offering consumers a solution that provides the same benefit without the negative consequence will enhance consumers’ lives and satisfaction and be a certain win for the manufacturer. Unilever understands consumers’ compromise when using standard deodorants – unsightly marks that deodorants can leave on their clothes. With the launch of Rexona Invisible Dry, Unilever solves this problem by creating a product that leaves no marks on clothes but retains the odour and sweat protection benefits consumers receive from their regular Rexona deodorants. Launching a product that does not compromise on sweat and odour protection, while ensuring no residue marks are left behind, is the critical factor behind the breakthrough success of Rexona Invisible Dry in Indonesia.

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ANALYTICS MAXIMISE NEW

OLD

SCHOOL THINKING

SCHOOL THINKING

Use analytics to validate ideas and prevent “failure” in market

Use analytics to build ideas and make them better

BUILD

LEARN

HYPOTHESIS IDEA POSITIONING CL AIMS PRODUCT PACKAGING

MEASURE

Most companies use consumer research and analytics to validate ideas and mitigate risks, and eventually try to prevent product launch failures in market. However Breakthrough winners embrace a growth mindset; they use analytics not only to mitigate risk, but also to maximise potential. Their use of analytics enables them to strengthen ideas, increase potential and ultimately succeed in market.

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CREATIVE PRICE VARIETIES

In creating TEA+ Oolong Tea, Suntory PepsiCo undertook a rigorous innovation process over the span of two years that involved team members from all parts of the business. At least ten consumer research studies were conducted to: i) discover consumers’ unmet needs, ii) perfect the product taste profile, iii) validate the packaging and iv) refine the communication strategy. Research and analytics tools were not only used to validate ideas but also to strengthen concept and maximise potential of the initiative.


FIT THE INNOVATION It is important to recognise that there are two kinds of innovations – the kind that keeps the brand fresh and interesting in consumers’ mind so business can be sustained in the competitive environment; and the kind that breaks traditional category norms and disrupts the category. Companies need both kinds of innovations to succeed. But it is key to understand the differences between these two types of innovations and that they require considerably different efforts, investments, and processes to execute. Innovations that continue to sustain and refresh current business (e.g. line extensions; flavour variations) typically align with standard processes and priorities of established business practices. These innovations leverage existing assets and know-how, require relatively little investment, demand little explanation to retail partners, and


provide a return measured in months, not years. For these innovation types, the standard innovation process from concept to launch is sufficient. However, disruptive innovations tend to create unfamiliar challenges for existing processes and expertise. For this type of innovation, companies should expect bigger capital expenditure and sustained marketing support over time. It is extremely difficult, if not impossible, to expect disruptive innovations to flow through the same processes and incentives as line extensions. Companies should not try to force fit disruptive innovations into existing processes; rather they need to create a process to fit each unique innovation.

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EXECUTION Innovating to appeal to a specific consumer circumstance or address an unmet need is critical, but launching a new product into a cluttered and highly competitive landscape is difficult no matter how good the innovation. To ensure consumer trial, every aspect of launch preparation is important. Many marketers restrict their focus to product formulation, communication, and pricing when designing the product mix and neglect the importance of execution in the brand’s story. Execution should not be an afterthought; it should be considered from the outset of the product’s development as part of the full product mix. Product details such as colour and even promotional activity can strengthen the product offering substantially, but only if considered well in advance of the product’s launch, rather than as an afterthought. 1

STAND OUT FROM THE CROWD

The average human attention span is just eight seconds. Every day, consumers are exposed to over 5,000 advertising messages8 . For products to survive in today’s crowded and constantly connected environment, standing out is key. Successful innovation catches consumers’ attention, cuts through the clutter and ensures every marketing dollar delivers maximum impact. All Breakthrough Innovation winners this year have showcased what it takes to stand out from competition. Mr. Keso (a savoury candy) stands out from the crowd not just for its bold and unique flavours, but also for the memorable jingle in the brand’s advertisement. The catchy tune and the appealing visuals of creamy cheese flowing out of the candy shell, coupled with the unique taste of the product, plays to consumers’ senses – sight, taste and sound. Read more about this in the Spotlight section.

The unique black packaging of Downy Parfum Collection Mystique (a fabric conditioner), instantly pops on retail shelves communicating a premium and alluring product with its luxurious black masquerade-themed packaging design clearly differentiated from other competitive products that predominantly feature light-coloured packaging with flowers or smiling families.

2 BE CONSISTENT Consistency in execution that ensures consumers are exposed to the same product messaging across all consumer touchpoints, is pivotal to success. Modestly successful product launches usually address one or two marketing touchpoints. Breakthrough winners design their product mix to deliver a 360 degree consumer experience, resulting in an outstanding brand platform that reinforces the brand’s position across all touchpoints. In Thailand, Garnier Sakura White’s advertising promises to bring pinkish radiance to consumers’ skin with the power of sakura9 extract. This “pinkish radiance” benefit is consistently enforced across every consumer touchpoint, from advertising to packaging, PR, point-of-sale and digital, particularly through the use of color. For example, the packaging heightens the messages through a pink jar and sakura flower graphics on the box and the designs are aligned across the whole range of products. Supporting public relations events further endorsed the message through local presenters with radiant pinkish skin dressed in light pink outfits. Read more about this in the Spotlight section.

Downy Parfum Collection Mystique advertising promises “a mysterious fragrance every day”. This positioning is reinforced via its packaging and point-of-sale material using a black masquerade-themed design. Sampling activity in the form of fragrance balls allows the consumer to test the fragrance as they would a fine perfume which reinforces the premium connection to the consumer as the advertising message promises.

Market execution is pivotal to the success of product innovations and must be planned from the outset of the innovation cycle and not after the product is on its way to stores! 21


ACHIEVING BREAKTHROUGH INNOVATION SUCCESS Breakthrough innovation doesn’t occur by chance. Brands which achieve true innovation success build discipline into their innovation process, forge an open and risk-taking culture, and enlist insight and creativity to guide innovation thinking. They are challenging established category dynamics rather than conforming to them. They consider emerging trends, but don’t follow them blindly. By following a few key guidelines you’ll gain critical insight on consumer behaviors, attitudes and shopping habits to guide your innovation efforts: - Challenge established category dynamics rather than confirming to them to disrupt the category - Use analytics to maximise the opportunity, instead of just validating them - Create a unique process to fit the disruptive innovation - Execution should be a focus and part of the product’s story, not an afterthought


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W I N N E R S P O T L I G H T S

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SPOTLIGHT #1 TEA+ OOLONG TEA SPOTLIGHT #2 GARNIER SAKURA WHITE SPOTLIGHT #3 MR. KESO


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SP OTLIGHT #1

TEA+ OOLONG TEA FINDING THE BLUE OCEAN 10 THROUGH UNDERSTANDING THE NON-CONSUMERS

TEA+ Oolong Tea is by far the most successful product launch reviewed for this year’s Breakthrough Innovation Report. It is the first oolong tea in the ready-to-drink tea category in Vietnam. It reached 10% market share11 in its first year and expanded the overall category, while other products in the category struggled to maintain sales. The success of this Breakthrough winner did not come by chance. In creating TEA+ Oolong Tea, the Suntory PepsiCo team undertook a rigorous innovation process over two years that involved functions from across all parts of the business. At least ten consumer research studies were conducted to discover consumers’ unmet needs, to perfect the product taste profile, to validate the packaging and to refine the communication strategy.

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Suntory PepsiCo discovered that while Vietnamese consumers are becoming increasingly healthconscious, they do not want to compromise on taste. The ready-to-drink tea category in Vietnam is dominated by lemon-flavoured green tea which is both sweet and sour. Suntory PepsiCo uncovered the potential to offer a healthier product that is less sweet but with a more authentic tea taste for the increasingly health-conscious Vietnamese consumer. Suntory PepsiCo identified this blue ocean opportunity and launched a new tea in the category. Importantly, the product proposition is based on two differentiated selling points: the first is the naturally occurring OTPP (Oolong Tea Polymerized Polyphenols), extracted from oolong tea that helps to prevent fat absorption from food; and the second is the unique oolong mild tea taste which is lighter than traditional ready-to-drink tea products. The idea of “feeling light”, as opposed

to bloated or heavy, immediately resonated with Vietnamese consumers, and ultimately became the key focus of the communication. The two well-defined product differentiators, combined with a balanced taste profile, were key to the product’s success. TEA+ Oolong Tea also has a premium image that is supported by Japanese tea quality, but it is available at an affordable price for mainstream consumers. Following TEA+ Oolong Tea’s successful launch into the market, a number of competing brands launched similar oolong tea offerings, but with little success. Suntory PepsiCo’s investment in quality technology enabled it to produce a high quality oolong tea product. This optimal quality, combined with a recipe which appealed to Vietnam consumers’ tastes, resulted in a product offering which its competitors were unable to match.

IN CREATING TEA+ OOLONG TEA, THE SUNTORY PEPSICO TEAM UNDERTOOK A RIGOROUS INNOVATION PROCESS OVER TWO YEARS THAT INVOLVED FUNCTIONS FROM ACROSS ALL PARTS OF THE BUSINESS. AT LEAST 10 CONSUMER RESEARCH STUDIES WERE CONDUCTED TO DISCOVER CONSUMERS’ UNMET NEEDS, TO PERFECT THE PRODUCT TASTE PROFILE, TO VALIDATE THE PACKAGING AND TO REFINE THE COMMUNICATION STRATEGY.


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SP OTLIGHT #2

GARNIER SAKURA WHITE LEVERAGING NATURE TO ADDRESS CONSUMER NEED, SUPPORTED BY 360° EXECUTION

Garnier is a brand which is founded on being inspired by nature. This positioning has guided Garnier’s product development and innovation efforts toward techniques which leverage natural ingredients. It is through this focus that Garnier identified an opportunity to harness the natural healing elements of sakura, a flower that blossoms only seven to fourteen days a year and is appreciated by many Asian cultures as a symbol of the transient nature of life. Garnier also cares deeply about consumer needs. Upon uncovering Thai women’s desire to have not just fair, but pinkish complexion and poreless skin, Garnier tapped into this need gap in the market to create a product that is gentle yet effective in achieving the ultimate pinkish fair skin with a pore-less look.

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Garnier Sakura White promises to bring pinkish radiance to consumers’ skin while minimising pores. The product’s positioning and messaging is carried consistently across every consumer touchpoint, from advertising to packaging, public relations, point-of-sale, and digital communications, particularly through the consistent use of colour. The packaging heightens the message through a pink jar and sakura flower graphics on the box. The designs are aligned across the whole range of products from facial foam, moisturiser, to facial mask. Public relations events further reinforce the same message through local presenters with radiant pinkish skin dressed in light pink outfits. The consistent delivery of its message strengthens the marketing execution and makes every marketing dollar work its hardest.

With the average Thai consumer spending 23 hours online per week 12, digital advertising was also leveraged heavily throughout the campaign. In 2015, Garnier Sakura White launched a campaign offering “the Unlimited Longest Selfie Stick” so that “You’ll never have to show your large pores in your pictures again”. The campaign aimed to capture the selfie-loving culture of Thai young consumers, and the campaign web film generated almost three million views on YouTube. The Garnier team attributes part of the success of Garnier Sakura White to the digital campaigns which resonated with Thai consumers and created significant social media buzz about the brand. Overall, the consistent delivery of key visual cues and messaging across all elements of the product launch was a critical component in the strength of Garnier’s marketing strategy and execution, and ensured maximum return on investment.

GARNIER SAKURA WHITE PROMISES TO BRING PINKISH RADIANCE TO CONSUMERS’ SKIN WHILE MINIMISING PORES. THE PRODUCT’S POSITIONING AND MESSAGING IS CARRIED CONSISTENTLY ACROSS EVERY CONSUMER TOUCHPOINT, FROM ADVERTISING TO PACKAGING, PUBLIC RELATIONS, POINT-OF-SALE, AND DIGITAL COMMUNICATIONS, PARTICULARLY THROUGH THE CONSISTENT USE OF COLOUR.


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SP OTLIGHT #3

MR. KESO INSPIRED BY AND CREATED FOR THE EVERYDAY CONSUMER

Mr. Keso is the first savory candy with cheese filling in the Philippines introduced by Rebisco, a prominent local player in the snack food industry. Rebisco has over 50 years of experience producing quality biscuit and snacks for Filipino consumers. Mr. Keso is part of Rebisco’s Mr. Candies range, the first range of candies from Rebisco aimed at adults.

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Filipino consumers love to snack and many claim to crave specific snack foods at different moments of the day. Mr. Candies are based on traditional and local flavours, and are designed to appeal to these different taste cravings. The idea of a savoury candy with cheese filling was inspired by consumers’ everyday snacking behaviour when pairing flavours. It is typical for Filipinos to pair sweet and salty flavours such as unripe mangoes with salt or shrimp paste, sweet glutinous rice desserts with salty dried fish, or cheese with sweet desserts. Inspired by this pairing behaviour, Rebisco’s marketing, research and development, and consumer research teams set out to find the ideal flavour combination for the next Mr. Candies variant. Months were spent observing local snacking trends, speaking to consumers, brainstorming new flavours, and testing flavour combinations, all of which influenced the new sweet-savory cheese-filling candy.

This product performs two jobs in consumers’ everyday lives: it makes snacking moments more interesting by offering a unique and delightful combination of f lavours; and it fulfils consumers’ craving of creamy cheese during the day with conveniently packaged candies. Rebisco is renowned for its catchy product jingles, and stuck to this tried-and-tested formula to launch Mr. Keso to the market. Despite a limited media budget, the advertising campaign was highly effective in achieving cut-through and standing out from the crowd, ensuring the product was top-of-mind for consumers.

INSPIRED BY THIS PAIRING BEHAVIOUR, REBISCO’S MARKETING, RESEARCH AND DEVELOPMENT, AND CONSUMER RESEARCH TEAMS SET OUT TO FIND THE IDEAL FLAVOUR COMBINATION FOR THE NEXT MR. CANDIES VARIANT. MONTHS WERE SPENT OBSERVING LOCAL SNACKING TRENDS, SPEAKING TO CONSUMERS, BRAINSTORMING NEW FLAVOURS, AND TESTING FLAVOUR COMBINATIONS, ALL OF WHICH INFLUENCED THE NEW SWEET-SAVOURY CHEESE-FILLING CANDY.


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Learn more about the Breakthrough Innovation initiative at www.nielsen.com/breakthrough. Explore more content on a variety of innovation topics at www.nielsen.com/innovation.

FOOTNOTES 1. Future Contender: the innovations under ‘Future Contender’ are new product launches that are launched after the review period of this Breakthrough Innovation report hence have not yet completed 2 years of sales in market however are showing promising signs to be a Breakthrough Innovation Winner in the near future. KitKat Green Tea, launched in Malaysia in August 2015 by Nestlé, is only in the market for one year but shows signs of being a potential Breakthrough Innovation winner in the future 2. Source: Nielsen Going Premium in Southeast Asia report, Oct 2015 3. Source: Nielsen Breakthrough Innovation Southeast Asia edition report, December 2014, 4. T he price of KitKat Green Tea compared to the chocolate category is calculated based on average price per unit. Source: Nielsen Retail Measurement data analysis, Malaysia 2016 5. Source: Nielsen Go Glocal report, April 2016 6. Source: Nielsen The Future of Grocery report, April 2015 7. O olong tea is a type of Chinese tea that takes oxidised tea leaves and then steams or roasts them to halt the oxidation process. It is a popular type of tea drank in China and Japan 8. Source: http://www.nytimes.com/2007/01/15/business/media/15everywhere.html?&_r=0 9. Sakura refers to the cherry blossom, the national flower of Japan 10. B lue Ocean refers to uncontested market space, as argued by Professor W. Chan Kim in the book Blue Ocean Strategy. https://en.wikipedia.org/wiki/Blue_Ocean_Strategy 11. T he market share of TEA+ Oolong Tea in Vietnam is the value share it achieved by July 2014 in Urban Vietnam covering the 6 major cities. Source: Nielsen Retail Measurement data analysis 12. Source: Nielsen Cross Platform report, 2014

SPECIAL THANKS TO THE 2016 BREAKTHROUGH INNOVATION PROJECT TEAM Nicole Corbett, Sivaraman Yegnaraman, Kang Eng Lee, Rishabh Singh, Lovenish Ruhela, Clarina Heng and Sharmaine Ng.

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DISCLAIMER The information contained in this report is based on compilations and/or estimates representing Nielsen’s opinion based on its analysis of data and other information, including data from sample households and/or other sources that may not be under Nielsen’s control. Nielsen shall not be liable for any use of or reliance on the information contained in this report.

ABOUT NIELSEN Nielsen Holdings plc (NYSE: NLSN) is a global performance management company that provides a comprehensive understanding of what consumers Watch and Buy. Nielsen’s Watch segment provides media and advertising clients with Total Audience measurement services across all devices where content — video, audio and text — is consumed. The Buy segment offers consumer packaged goods manufacturers and retailers the industry’s only global view of retail performance measurement. By integrating information from its Watch and Buy segments and other data sources, Nielsen provides its clients with both world-class measurement as well as analytics that help improve performance. Nielsen, an S&P 500 company, has operations in over 100 countries that cover more than 90% of the world’s population. For more information, visit www.nielsen.com/apac. Copyright © 2016 The Nielsen Company. All rights reserved. Nielsen and the Nielsen logo are trademarks or registered trademarks of CZT/ACN Trademarks, L.L.C. Other product and service names are trademarks or registered trademarks of their respective companies.


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