Creating successful innovation in consumer products is clearly difficult. According to IRI, less than 25% of new brands in the United States earn $7.5 million in first-year sales, and less than 2% earn $50 million. Overwhelmingly, the big winners tend to be brand extensions, rather than innovative consumer products creating fundamentally new categories.
It is very hard to change engrained consumer behaviors. New brands can also struggle to fit into existing retail merchandising schemes – the Colgate Wisp single-use toothbrush, for example, was stocked initially in both oral care and confectionary. Moreover, brands have become increasingly fragmented, making it harder for new introductions to stand out. It only adds to the challenge that private label has become extremely fast at knocking off successful new products – occasionally even beating brands to achieving national roll-out.
And yet new markets are absolutely fundamental to growth in the consumer products industry. For most brands, extensions can only go so far before they devolve into a confused jumble of SKUs that drive high costs and cannibalization. New flavors and assortments are important to growth, but so too is creating the next Febreze or Red Bull.