In every corporate boardroom and C-suite meeting worldwide, the conversation invariably turns to the ever-expanding influence and immense potential of artificial intelligence (AI).
It is a ubiquitous topic that transcends industries and regions, presenting a common challenge: how to harness AI’s capabilities effectively and efficiently.
The results are as vast as they are creative, writes Ben Harknett, CEO, CAMBRI.
From the Heinz ‘Draw Ketchup’ campaign, which asked an AI image generator to draw a bottle of ketchup – and what it got back was thousands of pictures of Heinz – to businesses creating fully functional software in under seven minutes for less than one dollar, companies are just scratching the surface of the immense potential offered by Generative AI.
For Global CPG brands struggling to compete against a growing number of well-equipped and heavily funded market entrants, AI-powered NPD strategies offer a promising competitive edge.
Navigating the Evolving CPG Landscape
In recent years, the consumer goods industry has witnessed a seismic transformation, impacting even the most established CPG brands.
This transition is closely tied to the prevailing consumer trends, stemming from increasing living costs and a significant rise in ethical consumer behaviour.
As a result, the majority of leading CPG brands have confronted a significant downturn in their growth trajectory.
This sharp decline is underscored by staggering statistics, with these brands collectively haemorrhaging over $17 billion in sales to nimble and innovative competitors since 2013.
This shift in market share represents a stark departure from the once competitive advantage that these global giants enjoyed, which used to endure for decades. Now, as Boston Consulting observes, this competitive edge has dwindled to a mere 1-2 years. To compete in this rapidly changing landscape, global innovators must not only acknowledge these consumer trends but also adapt their NPD strategies accordingly. They must draw inspiration from the agile practices of innovative start-ups and leverage their considerable resources to construct a robust, data-driven, multi-tested, iterative fortress of product launches.
Putting AI in the Driver’s Seat
Amidst the daunting CPG landscape, where over 95% of the 30,000-plus new products introduced annually meet their demise, new product development has become a bottomless pit for leading brands, devouring time, funds, and resources. Reports estimate that an average NPD launch uses 50 days of staff time, €500K in development costs not to mention the impact a failed product has on environmental CO2 goals.
To fly against these reports, the well documented AI-powered NPD, Hell Energy Drink, ventured into uncharted territory when the product development team, along with its proprietary AI, dubbed HELL A.I., was tasked with creating a new drink flavour based on current trends and consumer sentiments.
In a remarkable display of efficiency, HELL A.I. harnessed its technological prowess to swiftly devise three distinct beverage recipes. Meticulously fusing a medley of techniques and ingredients, including amino acids, vitamins, and botanicals, it achieved this feat in a fraction of the time traditionally needed.
With NPD success rates in CPG between 5-25%, the capability of AI to conceive a successful product from scratch is a monumental achievement but it’s not a silver bullet.
Human ingenuity will always win out, AI is the co-pilot for innovation, allowing innovation teams to focus their efforts on the creative side of developing new products whilst leveraging AI’s predictive and objective advice to steer towards success.
Winning Strategies for Global innovators in CPG
The speed and cleverness of Generative AI are about to set off a never-ending race in the CPG world, prompting companies to invest heavily and rely on AI to test and launch new products.
To succeed in the AI-driven future of CPG at Cambri we’ve highlighted four key strategies that can make the difference between success or failure.
1. Low Tolerance for Failed Product Launches
It pains me to see new products fail. While for startups, the success of a product launch is make-or-break, large consumer goods companies, who often are launching hundreds of new products a year, are underestimating the impact of failed launches on a business. For starters, staff churn is high in NPD teams (reports show that 30% of innovation teams leave after a year).
However, these setbacks aren’t merely missed opportunities but can also tarnish brand reputation. To remain competitive, innovation success rates must be a core metric at the forefront of innovation leaders’ agendas.
2. Innovate at Speed
In today’s fast-paced consumer landscape, speed to market is paramount. Manufacturing timelines, often constrained by production and supply chain partners, demand an acceleration of the innovation cycle. Staying relevant requires swift innovation but the right innovation is even more important. Iterative testing and testing often will lead to the right answer quicker.
3. Consumer-Centric Development
While startups can readily co-create with their initial consumers, large consumer goods firms must integrate consumer insights into the core of their innovation process. Understanding and responding to consumer preferences are fundamental to launching successful products that’s not just based on gut feeling or limited data.
Here we can take a cue from EVP & Chief Growth Officer at Mondelez, Timothy P Cofer who said, ‘The old, established model, increasingly, is not working… the way we innovate and the way we address a rapidly evolving consumer needs to change.’
4. Adaptive Learning
At startups, founding teams have the unique advantage of overseeing all innovations across the company and applying lessons from past failures to improve the innovation process.
However, at the scale of global consumer goods, a different approach is needed. Creating an ‘innovation memory’ – meaning every innovation project is tracked, and measured centrally so that learnings and best practice can be leveraged and understood is essential. Currently standard practice sees NPD thought of in projects and the consumer data generated is single use.
When it comes to NPD, the relationship between retailers, consumers and brands becomes one of elevating novelty to attract shoppers. As brand guardians we need to be the champions of long-term brand building and understand that a failed product impacts on our brand equity and reputation. A long term educated and tested approach needs to be central to NPD and AI can help us do this better.
The AI-Powered Future for Global CPG Brands
The AI-powered future for global CPG brands and their NPD lies in innovative strategies that leverage the predictive and advisory power of AI to drive ultimate success. Imagine the NPD process that shifts from 95% failure rate to a 95% success rate. Sounds good to me.
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