Companies Generate Plenty of Product Ideas, But Post-Launch Results Fall Short of Goals

MINNEAPOLIS and LONDON - Oct. 11, 2011 - A new research study identifies a mix of major challenges that today’s consumer goods (CG) manufacturers grapple with in their efforts to maximize business results from investments in product innovation.  The average company derives 25 percent of its revenues from products introduced within the past five years, but only half of the products launched achieve profit goals.  Leading causes of profitability shortfall include lack of product differentiation and poor market analysis.  These and other findings are from a recent survey examining innovation practices, performance and execution impediments among companies across the consumer goods sector.  The research was conducted jointly by CGT (Consumer Goods Technology) magazine and Sopheon Corporation.

The CGT/Sopheon survey encompassed a comprehensive mix of segments comprising the consumer goods market, including food and beverage, apparel and footwear, nonfood consumer packaged goods, consumer durable goods and consumer electronics.  The majority of respondents were from companies with annual revenues of $300 million or more.  Survey distribution was global.

For CG manufacturers, the study indicates, hurdles to the successful development and launch of new consumer products can be found in the earliest stages of the innovation process.  While most companies participating in the survey indicated that they had little difficulty generating product ideas, less than 20 percent of those ideas resulted in products considered to be highly innovative.  The remainder were product revisions, line extensions or promotional ideas and packaging changes.  The principal reason good product ideas fail is that they get stuck between conception and development.  When it came to executing on product ideas, nearly 60% of survey respondents indicated that development resources were stretched too thin because of an excessive number of projects in the pipeline.  A majority also reported rifts in alignment between short-term product development activities and long-term growth strategies.

The results of the research offer a revealing look at a range of other factors impacting the product innovation success of consumer goods manufacturers, including:

  • Information gaps that undercut new product investments;
  • Inhibitors of effective product portfolio management; and
  • Deficiencies in post-launch performance measurement practices.
The survey also identified the tools most commonly used to support new-product portfolio decision-making.
“Consumer goods companies have historically been among the most prolific product innovators in the world,” said Bryan Seyfarth, director of product strategy for Sopheon.  “But our research shows that many manufacturers in the sector today are mired in processes that inhibit breakthrough innovation, depress portfolio value and contribute to competitive vulnerability.  The good news is that solutions to these challenges are within nearly every company’s reach.   Our experience shows that rigorous commitment to the right combination of innovation- governance best practices and technology can kick-start new growth and resuscitate struggling innovation efforts across the enterprise.”

For access to the complete CGT/Sopheon study results, visit:

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