Paul Thompson, Vice President and Global Sector Manager for Consumer Goods at Periscope, a McKinsey Solution, outlines the difference that putting consumer data at the start of the product innovation process can make and how it reduces risk.

Paul-Thompson-2.1The grocery market in the UK is as large as it is competitive, feeding over 64 million people in 27 million homes. For the UK manufacturing sector, food and drink production alone adds £21.9bn in gross value to the UK*. The breadth of products stocked by stores is of course much wider than simply food and drink, which makes keeping categories fresh with new ranges and meeting customers’ hunger for new and interesting products, one of the biggest challenges for those in the grocery trade.

Whether you are looking to identify opportunities for growth in existing branded goods, or to refresh your private labels, the approach to developing new lines has traditionally been product centric. Your teams might spend most of their time trying to develop the next innovation: developing, testing and refining every detail before putting them out. Every effort is taken to mitigate the risk of the investment, but consider Mintel monitors every aspect of over 30,000 product introductions every month, and only a handful will ultimately be successful.

In the last 10 years, the amount of information you can gather about customers and their transactions has grown. While the combination of data gathered at the tills is impressive, eCommerce sites are delivering ever greater levels of insight where tracking a customer who is browsing rather than buying can tell you so much about their behaviour and decision making, before any goods or money have changed hands.

Using consumer shopping data to test an idea before introduction is sensible, but why not use the data from the start to identify the product opportunity? Customer interactions and category analysis can all be used to identify opportunities to find and specify new products based on consumers’ hierarchy of needs and preferences.

More companies are taking advantage of this data, married with external market data to unlock new innovations. This is the new way to enhance traditional PLM (Product Lifecycle Management) approaches with effective customer requirements analysis and can dramatically increase the success of new products by providing an insight-based approach to find, size and evaluate growth and develop launch plans that quantify what is needed.

Data-driven insights further create value, helping managers tailor assortments at store level, simultaneously enhancing customer experience and improving unit economics. Product development is no different. If your organisation is already using data-driven insight to inform some of these areas, you are part of the way there. This is due to the fact one of the biggest hurdles is getting all the data sources coming from different channels to work together as a reflection of the world in which your business operates.

The other piece of the puzzle is training people and changing processes, so product development can be flipped on its head – making the analysis of customer insight data, category performance and market maps central to identifying opportunities. These transformations require a major change-management effort, moving the organisation towards consumer insight-driven mind-set, putting the right people and mix of analytical and business experience in place to drive rigorous decision-making processes, standardise processes, and synchronise efforts.

Switching to a consumer insightdriven new product development methodology cannot happen overnight.

However, major supermarkets and online traders are already adopting this model, allowing them to find new revenue opportunities. Don’t let the information that can drive your success slip through your fingers.

* Food & Drink Federation,

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