Companies have been damaging their business by launching zombie and cannibal products that eat into their profits.
This is according to a UK study by global research consultancy TNS, which defines zombie products as those that fail to provide long-term growth, acting as a dead weight on the company, and cannibal products as those which simply transfer customers from other products in the portfolio, not only failing to provide top-line growth but often leading to brand decline.
The study of almost 3,500 consumer goods launches – including savoury snacks, laundry, soft drinks and skin care products – showed that 60 percent of new launches were of either zombie or cannibal products.
Steve Landis, Global Head of Innovation and Product Development at TNS, says the food and drinks industry in the UK alone is wasting an estimated £600 million per year on research and development, in addition to the billions in pounds of costs in launching over 3,600 zombie and cannibal products:
“When working on innovation programmes, companies launching new products often rely on volume alone to determine the worth of an idea, without determining the positive or negative impact the launch will have across their portfolio. For example, Pringles Xtra – a new product that generated significant sales – heavily cannibalised the existing range, resulting in minimal franchise growth. Too often, these cannibal launches fragment the resources and often lead to shrinkage of the total franchise.
“Only 15 percent of products launched are what we would term as expansion innovations – new products that attract sales which add to a company’s existing revenues. Too many businesses are spending huge amounts of money on quasi innovation that only convinces existing customers to swap within their range. The key to unlocking true growth is to focus on genuine innovations that will draw in brand new customers or lead to greater frequency of use by existing customers.
“The rewards for those that get it right are phenomenal. Launching a successful expansion product, founded in genuine innovation, can rejuvenate a company’s fortunes and put it into a league of its own.”