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‘Zombie’ and ‘cannibal’ products killing consumer brands
Companies rely on volume alone to determine the worth of an idea, reveals TNS study.
November 26, 2013 4:05 by kippreport
Companies have been damaging their businesses by launching ‘zombie’ and ‘cannibal’ products that eat into their profits, according to a 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 a brand’s decline.
The study of 3,500 launches of consumer goods, including savoury snacks, laundry, soft drinks and skin care, shows that 60 per cent of new product launches were either ‘zombie’ or ‘cannibal’ products. Both of these, 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 £600 million per year on research and development, in addition to the billions exhausted on launching more than 3,600 ‘zombie’ and ‘cannibal’ products. TNS advises clients on specific growth strategies for their businesses.
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 that a launch will have across their portfolio.
For example, Pringles Xtra – a new product that generated significant sales – heavily ‘cannibalised’ the existing range, resulting in minimal franchise growth. Too often, these launches fragment the resources and lead to a shrinkage of the total franchise.
TNS identified that only 15 per cent of products launched are – what TNS terms as – “expansion innovations” – new products that attract sales that add to a company’s existing revenues.
It believes that the goal of all product innovations should be to generate profit by attracting new customers or increasing the share of wallet (SOW) among current users, as opposed to eating into revenue from existing products, which the company calls “true growth”.
Steve Landis, global head of innovation and product development at TNS, says that too many businesses are spending huge amounts of money on quasi innovation that only convinces existing customers to swap within their range. He adds that the key to unlocking true growth is to focus on genuine innovations that will draw in 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 through genuine innovation, can rejuvenate a company’s fortunes and put it into a league of its own,” he says.