It has become increasingly challenging to bring new products to market. Over the past decade, significant changes have occurred—consumers are more sophisticated, the value equation is shifting, retailers are more powerful and the communication models have been revolutionized. Additionally, product development time is now shorter, competition is fiercer than ever, and there is continued fragmentation at the shelf. Despite these changes, many new product development processes and metrics have not been adapted.

Game changing metrics

It is no secret that most new products fall short of expectations for a variety of reasons. The ones that achieve in-market success do three fundamental tasks really well:

Master the Trial Build Chain: Successful new products must have strong consumer appeal and be supported through quality distribution and awareness.

Ensure Strong Ongoing Volume: Successful new products deliver on their consumer promise, with strong performance and on-going marketing support.

Maximize Franchise Incrementality: Successful new products attract new triers or generate new usage occasions in order to minimize cannibalization of established franchises.

While these fundamentals have not changed, the media and retail landscape has, and the current metrics and action standards used in the past are no longer enough to guarantee success today. To gain a fresh understanding for new product dynamics in the context of current marketplace conditions, Nielsen BASES analyzed 1,900+ recent product launches globally and examined how each initiative did in the marketplace against its goals. The net result was a compilation of 500+ cases of in-market launches that were used to develop the next generation success models, providing a strategic framework for how to win in today’s marketplace.

It has become increasingly challenging to bring new products to market. Over the past decade, significant changes have occurred—consumers are more sophisticated, the value equation is shifting, retailers are more powerful and the communication models have been revolutionized. Additionally, product development time is now shorter, competition is fiercer than ever, and there is continued fragmentation at the shelf. Despite these changes, many new product development processes and metrics have not been adapted.

Game changing metrics

It is no secret that most new products fall short of expectations for a variety of reasons. The ones that achieve in-market success do three fundamental tasks really well:

• Master the Trial Build Chain: Successful new products must have strong consumer appeal and be supported through quality distribution and awareness.
• Ensure Strong Ongoing Volume: Successful new products deliver on their consumer promise, with strong performance and on-going marketing support.
• Maximize Franchise Incrementality: Successful new products attract new triers or generate new usage occasions in order to minimize cannibalization of established franchises.

While these fundamentals have not changed, the media and retail landscape has, and the current metrics and action standards used in the past are no longer enough to guarantee success today. To gain a fresh understanding for new product dynamics in the context of current marketplace conditions, Nielsen BASES analyzed 1,900+ recent product launches globally and examined how each initiative did in the marketplace against its goals. The net result was a compilation of 500+ cases of in-market launches that were used to develop the next generation success models, providing a strategic framework for how to win in today’s marketplace.

These are the five requirements identified by The Nielsen Company as essential for new product success:

1. What worked yesterday might not be good enough for tomorrow.

Many organisations have long-established performance standards that they use to evaluate any new product. Sorry, that’s not good enough in today’s marketplace. You need to guide your new product development decisions based on the most up-to-date, multifaceted models of in-market success, to help you anticipate issues more effectively and bring more sound propositions to market.

2. Consumer adoption may be complex, but the steps of the process are clear.

Measure and optimize everything that matters. The current key measures of success—such as purchase intent, units per purchase and frequency of purchase—continue to be critically important and are key to accurate estimations of volume potential. But there are a host of new factors—such as breaking through clutter, generating buzz and offering true innovation—that also need to be considered.

In particular, positive word of mouth is essential. April’s Nielsen Global Online Consumer Survey (of over 25,000 Internet consumers from 50 countries) found that recommendations from personal acquaintances or opinions posted by consumers online are the most trusted forms of advertising in the twenty-first century: ninety percent of consumers surveyed noted that they trust recommendations from people they know, while 70 percent trusted consumer opinions posted online.

3. What it takes to be ready for a successful launch varies at each step in the adoption process.

The consumer adoption process is all about being relevant, getting noticed, getting found on-shelf, being affordable, competitively-priced and delivering on the product promise. Those attributes remain as enduring as ever.

However (depending on the category) it may not be necessary to achieve top of the line excellence for every attribute. For some measures, being “average” may be good enough for in-market readiness and improvements may have limited returns on the potential for success. For other measures, it may be more important to perform better than your competition, as this could represent an area of real competitive advantage.

4. Success is about doing most everything well enough, not about really excelling at one facet.

In-market success is not about doing one thing really well. Rather, it is about doing everything you need to do—covering every touch-point in the consumer adoption process—sufficiently. The initiative that does everything enough, but isn’t a star at any one thing is likely to be a success. A single fatal flaw can derail even the otherwise strongest of initiatives—think “weakest link”. Many marketers fall into a trap of focusing only on the one or two areas that a new product does really well, but ignoring areas that represent barriers to success.

5. Measure what matters, when it matters.

Set action standards for every new product development stage based on the relevant consumer touch-points. And the earlier you start in the new product development process, the better. Even at the earliest stages, you can understand an idea’s ability to stand out, catch attention, and meet a relevant need. As the idea progresses into a more developed concept and branding, features, and pricing are built in, more elements of the communication and point of purchase dynamics can be folded in.

There are no guarantees of success in new product development. But not taking account of these five requirements could be a quick shortcut to failure.

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BrandNew Stores aims to turn fleeting pop-up shops into a chain concept, creating fixed spaces where brands can temporarily present themselves in a regular retail environment. Its first branch opened in the Dutch town of Amstelveen last month, where Alfa Romeo used the shopping mall space to present its new Alfa Mito model. It’s all about experience marketing: companies can use a BrandNew Store for a few weeks to present a product or service, or to reach out to new and existing customers without going for immediate sales.

Targeting premium retail areas where unhurried leisure-shoppers are more likely to explore a client’s offerings, BrandNew Stores will add locations in Groningen, Den Haag and Rotterdam later this year, with more cities to follow in 2010. The stores will be decked out with video screens, interactive floor projectors and other elements that make it easy for brands to present themselves.

Exclusivity has been a major element of the pop-up phenomenon, and brands have mostly limited their temporary attention-seeking abodes to major cities like London and New York. By creating a nationwide network, much of that exclusivity is lost, and the concept becomes more of a regular marketing tool. Which has its benefits: brands can reach a much wider audience, and being able to design once and then move everything to another city significantly brings down the cost per location. Since rents are still down in most malls and high street shopping areas, now’s the time to bring this to other countries.

What can you do with a Pop-Up store?

Lots of things:

How about a purpose-built Nike Tennis pop-up-shop, just 1km from Wimbledon? The store was a hub of tennis activity, featuring vibrant art installations, grass-covered signage and historic memorabilia from Nike’s past Wimbledon champions. As a pop-up shop it only existed for the 2-week duration of the tournament, after which the store returned to its original look and function as a DVD rental store.

How about a water store?

Jewelry:

Sikara & Co. Jewelry Pop-Up Store makes Union Street in San Francisco its new home as a “pop-up” shop.

“This style of store front allows us to open a temporary store in San Francisco and market test our collections as we roll them out nationally; we are very excited to be one of the first pop-up stores in the city,” said Mousumi Shaw, Founder and Creative Director.

The temporary store features globally inspired designs that fall into four collections: Indian, Italian, Mexican and Egyptian.  Limited edition pieces will also be available for the holiday, many of which are exclusive to the Union Street pop-up.  Sikara & Co. has partnered with San Francisco Stylist, Jill Siefert, as she will be helping customers most Mondays in the store with free styling tips.

As the LA Times reports, popup stores are a blessing to landlords in the current economy:

Designed to generate buzz and lure shoppers with a get-in-while-you-can appeal, pop-ups allow merchants to move quickly, opening up shops to test a new product or market, and closing them without much fuss.

Gap Inc. recently opened a pop-up shop on trendy Robertson Boulevard to promote its new premium denim line; celebrities including Halle Berry and Ashlee Simpson-Wentz turned out to the shop’s launch party. Toys R Us Inc. is setting up about 80 temporary toy shops nationwide, including several at upscale malls previously unavailable to the chain. J.C. Penney Co. touted its back-to-school offerings through interactive pop-up displays in half a dozen Southern California malls.

The pop-up phenomenon is not that new. BusinessWeek wrote about it in early 2007, giving a solid business perspective on the experiential marketing possibilities — and providing us with more inspiration along the way:

Four days. That’s how much time New Yorkers had to get a piece of the upscale design line Proenza Schouler at discount prices. On Feb. 2, the über-chic discount retail store Target popped open a store in lower Manhattan, to display this latest high-fashion-at-low-prices design line. The store then closed on Feb. 5.

In a world of BlackBerries and instant messaging, there’s a growing sense of haste in people’s lives. In response, companies trying to get consumers’ attention are trying to create a sense of urgency. For retailers, who need to get people into stores to try out their clothes, their shoes, and any other new products, the store itself is the new limited edition. So limited in fact that it may last a mere 96 hours. “There’s a certain passion about things that shout ‘act now!’ and that has transpired into the way we shop too,” says Claudine Gumbel, co-founder of Think PR, a New York fashion publicity firm.

These days, retailers are adopting the concept of a pop-up store with gusto. A pop-up store opens up at an empty retail location for a few days in a major city, or a mall, with great fanfare. And then, poof! It’s gone. In November [2006], Nike  opened a pop-up store in Soho for just four days for the sole purpose of selling 250 pairs of the Zoom LeBron IV NYC basketball shoes, named after the popular 22-year-old NBA All-Star LeBron James. The special edition shoes were priced at $250 each.

In May and June, Gap kicked off a ’60s style tour, where it used a school bus as a traveling pop-up store that made appearances in Los Angeles and New York and stopped at beaches on both coasts. Instead of seats, the bus sported shelves filled with t-shirts, flip-flops, and beach hats that people bought and paid for at a cash register near the driver’s seat. Even the stodgy giant Wal-Mart adopted the concept last April, when it showed its new fashion line Metro 7 in a Fashion Cabana in Miami’s South Beach district, open for only two days.

BUDGET BUZZ
Retailers use pop-up stores to generate buzz and excitement around a new product launch, as in the case of Target’s Proenza Schouler line. Sometimes, the stores are a great way for stores to check the pulse of consumers and try out new products. Usually, they are less costly than television ads, which can run in the millions of dollars to produce and broadcast, and the stores generate similar buzz and publicity for new brands.

Even nonretailers are giving it a try. The U.S. Potato Board, which represents American potato growers, opened a pop-up store in New York, during the week of Thanksgiving, for less than $200,000. The group, with the help of cartoon character Mr. Potato Head, promoted the message that potatoes contain more potassium than bananas as well as nutrients like folic acid and vitamin C.

Pop-up stores have worked especially well, though, for brands that don’t have a retail outlet store. Currently, the carmaker Lexus is wrapping up its multicity pop-up art gallery tour in Chicago. There, it has rented retail space to showcase three avant-garde artists—a photographer, a video movie maker, and a wood carver—whom the company feels reflect the innovation and design elements of its latest self-parking car.

For much of last year, Ford opened kiosks in several malls around the country to show off its midsize Fusion. The kiosks, labeled Fusion Studio D, were targeted at women, and offered makeovers, fitness training, and health information. The kiosks would pop up in malls in cities around the country, just days before the local Susan G. Komen Foundation’s Race for the Cure, and signed up people who wanted to run to cure breast cancer.

LOOKING FOR KICKS
Of course, it’s not easy to set up a pop-up store [which is why the notion of a store network is so appealing]. Unoccupied stores in hot retail locations aren’t easy to come by [2009 update: more available now]. Moreover, they can backfire, if a retailer doesn’t staff the store with some of the best customer service personnel, who know enough about the brand. “We had to make sure there were people who live and breathe Florida to explain what they were missing,” says Nicki Grossman, chief executive of the Greater Fort Lauderdale Convention & Visitors Bureau, which set up a pop-up store—complete with sandy beaches, a golf putting hole, lifeguards, and beach beauties—in January in New York.

No wonder companies feel the pressure not only to be cool, but to offer visitors an additional kick. For instance, when electronics company JVC opened its pop-up store, it offered karaoke and let people film themselves using its newly launched video camera and make their own DVDs, which folks could then carry home as gifts. And sneaker maker Fila let people draw their own designs on a computer, which they printed on a T-shirt that shoppers could take home with them for free. “You had the sense that you are creating artwork and you are really engaging the consumer, which is the most important part,” says Gumbel of Think PR.

Retailers have clearly discovered that pop-up stores bring brands to life and let people sample products in a great format, without much cost. “Try getting that from a 30-second ad,” says Claudia Strauss, president of Lime PR, in New York.

Uniqlo, the hip Japanese retailer of casual wear, took the pop-up format to a new level late in the runup to the November 2006 opening of its New York store. To announce its arrival, it drove two shipping containers into the city and used them as stores that “popped up” in various locations over eight weeks to show off the company’s apparel:

Pop-up stores — coming to an empty location near you. Are you up for it?

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