- Billions in lost profitability for UK companies
- 60% of new launches are failing to provide growth or eating into companies’ profits from existing products
21 November 2013 – Companies have been damaging their business by launching ‘zombie’ and ‘cannibal’ products that eat into their profits, according to a landmark UK study by global research consultancy TNS.
‘Zombie’ products fail to provide long-term growth, acting as a ‘dead weight’ on the company, while ‘cannibal’ products simply transfer customers from other products in the portfolio, not only failing to provide top-line growth, but often leading to brand decline.
The UK study of almost 3,500 consumer goods launches including savoury snacks, laundry, soft drinks and skin care showed that 60% of new product launches were either zombie or cannibal products.
Both of these product types, which are typically not detected until too late in the launch process, substantially increase the risk of a company wasting precious resources on non-productive ideas. The food and drinks industry in the UK alone is wasting an estimated £600m per year on R&D, in addition to the billions in pounds of costs in launching over 3,600 zombie and cannibal products.
TNS advises clients on specific growth strategies for their business. When working on innovation programmes, it found that 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 Xtreme – a new product which 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.
TNS identified that only 15% of products launched are what TNS terms ’expansion innovations’: new products that attract sales which add to a company’s existing revenues. TNS believes the goal of all product innovation should be to generate profit through attracting new customers or increasing the share of wallet among current users, as opposed to eating into revenue from existing products. TNS calls this ‘true growth’.
Steve Landis, Global Head of Innovation and Product Development at TNS, said: “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.”
A recent example of an expansion innovation is McCain’s Jackets – one of the most successful launches of 2012 - which delivered significant sales that were highly incremental to the existing brand franchise.
- ENDS –
Notes to editors
|Sector||No. of products analysed||Expansion products||% of Expansion products|
These findings are based on a TNS study, evaluating almost 3,500 new product launches, using Kantar Worldpanel data from December 2006 to November 2011.
 The food and drinks industry invested over £1bn in R&D, resulting in over 6,000 new products in 2011 (Food and Drink Federation, 2013). If 60% are zombie and cannibal products, this results in a loss of £600m on 3,600 products.
TNS advises clients on specific growth strategies around new market entry, innovation, brand switching and stakeholder management, based on long-established expertise and market-leading solutions. With a presence in over 80 countries, TNS has more conversations with the world’s consumers than anyone else and understands individual human behaviours and attitudes across every cultural, economic and political region of the world. TNS is part of Kantar, one of the world's largest insight, information and consultancy groups.
Please visit www.tnsglobal.com for more information.
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For further information, please visit us at www.kantar.com
About Kantar Worldpanel
Kantar Worldpanel is the world leader in consumer knowledge and insights based on continuous consumer panels. We know what shoppers and consumers buy, use and why.
For further information, please visit us at www.kantarworldpanel.co.uk.