In this guest post, Nikki Davey (picture below) from Kantar discusses why your attitude towards innovation can make or break successful growth.
I read this B&T article discussing the 2019 Ricoh Workplace Innovation Index study with both interest and alarm. The study reveals three-quarters of Australian firms admit innovation is not a core value to their business. That is a frightening output for this country. In today’s disruptive and saturated market, those 75 per cent of Aussie businesses must change their attitudes towards innovation now in order to survive – and thrive.
A word of note on the word ‘innovation’ up-front, however. Most marketers think of innovation as the launch of a new product or service (or enhancement to an existing one) – yet, in our age of rapid change, launching new or enhancing current offers is getting riskier.
Innovation should apply to any aspect of the brand from go-to-market to its purpose. To drive growth and brand equity, brands must innovate to deliver new and meaningful experiences that add value to people’s lives.
Innovation creates a sustainable opportunity for growth
The best innovators show the best growth. The 50 best innovators delivered an average overall business growth of 7.9 per cent according to analysis of the biggest 500 FMCG brands in the UK between 2012-2016. Yet business declined by 5.3 per cent for the 100 worst innovators.
Brand value growth is also extraordinary for those with innovation at the forefront of their agenda. A plus-273 per cent brand value growth for high innovators and just plus-36 per cent for low innovators was the story of BrandZTM monitoring of 94 brands over 12 years (2006-2018).
BrandZTM also finds strong brands can also potentially stretch beyond category – those high innovation engagers grew plus-220 per cent because they have something compelling to offer. A strong brand in one category does not guarantee success in another – for example, the HTC First (aka the Facebook phone), Google Glass or Amazon’s Fire Phone.
So, what is key to innovation excellence?
Ultimately, innovation must create meaningful differentiation with your consumers
The best recipe for growth is to start with a difference that has the potential to be meaningful and salient.
- Be salient
This is the main growth lever. If your brand comes readily to mind in the moment, then it is more likely to be bought. The Ehrenberg-Bass Institute has long championed salience as the only important growth driver, however, our analysis finds that unless a brand is either low-priced or is perceived as meaningfully different it will grow more slowly even when salience increases.
- Be meaningful
This is the foundation of any brand. Unless a brand meets people’s needs and is liked it, is unlikely to be bought. You need to find ways to meet people’s needs – stated or unstated – in the moment, better than the current offerings. Knowing how and why people use your brand’s products and services intimately in real life is therefore crucial to success.
Are you clear on the needs of your consumers and how well they are met in each specific moment? For example, by making buying products as easy as possible, Starbucks continues to strengthen through innovation. It debuted a QR-code app in 2011 for loyalty promotions, yet today Starbucks customers can get more than a free drink – it’s a full ‘order and pay’ experience. 30 per cent of US transactions were paid through the app by the end of Q.3, 2017 while their mobile app users spend approximately three times more than the average Starbucks customer.
- Be different
This is your brand’s competitive edge. It is the quality that helps people decide to buy a brand and justify its brand’s price premium. Innovation – in all its forms – has an important role to play in creating brand differentiation, whether functional or emotional. Brands need to be perceived as different and look different if they are to achieve their full potential.
Combining meaning and difference does not guarantee purchase but buyers will be more likely to choose the brands they consider to be meaningfully different. For example, Unilever’s OMO (also known as Persil) is creating a special tag for new clothing that’s 100 per cent water-soluble and can be removed and added to your laundry – and kits good for three washes. It is being trialed in Lebanon in collaboration with the country’s largest chain of sporting merchandise stores and part of OMO’s global ‘Dirt is Good’ campaign.