Replacing the Innovation Funnel

Eric MeyerDirector of Insights and Innovation

Sunny Delight Beverage Co.

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Agenda

Current Innovation Funnel

Consumer Segmentations Demographic Psychographic Organoleptic

Consumer Directed Development Tunnel “Who” Immersion Proposition Building Blocks Proposition Development

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Current Innovation Funnel

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The New Product ChallengeIn 2008* …

122,743 new products introduced in the U.S.

0.2% achieved more than $10 million in retail sales

Most new items were new sizes, flavors, packaging, health claim line extensions of existing brands

In many cases, package size was reduced to avoid price increases

Of the top 100 new items, 98 items were extensions of existing brands

* New Product Introduction The Nielsen Co., January ‘09

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5

Top 10 New Items Introduced in 2008

New Brands $ VolumeZyrtec $208 MMBud Light Lime $110 MMGatorade Tiger $61 MMZyrtec-D $49 MMKeebler Townhouse Flip Sides $43 MMChildren’s Zyrtec $36 MMTide Total Care - Detergent $30 MMPOWERade Zero $27 MMPediPaws Pet Nail Trimmer $27 MMGillette Venus Embrace Razor $25 MM

Source: Nielsen Strategic Planner, 52 Weeks Ending 12/27/08, Total U.S. Grocery/Drug/Mass excluding Wal-Mart

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248

3 612

51020

= 10 $100M= 20 $50M= 40 $25M

TestsProjectsConcepts Winners

124

For going $100M increase in sales, you need …

Source: R. G. Cooper – Winning at new productsData from PDMA, NPD Survey

Ideas

Innovation Funnel

Total Pipeline

Cooper Stage Gate Industry Innovation Model

InnovationInnovation

StrategyStrategy

PrioritizationPrioritization

Future StateConsumer DrivenInternally

Informed

Make the Funnel More of a Tunnel

Ideas

Results

Current StateInternally DrivenConsumer

Informed

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SDBC Innovation Model

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Segmentation

“Who”Immersion

TeamSynthesis

RapidPrototyping

ConsumerSynthesis

“What”Immersion

TeamSynthesis

RapidPrototyping

ConsumerSynthesis

Consumers create the total proposition, team provides informed stimuli

Innovation process Clarifies the “fuzzy front end” of innovation Achieves speed to market by concurrent, holistic proposition development Delivers results efficiently by increasing the odds of new product success

Consumer SegmentationDemographicPsychographicOrganoleptic

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Demographic Segmentation

Oldest form of consumer segmentation, not very exciting, but still practical in the right context

Age Gender Ethnicity Income Geographic Life Stage

Focus can be narrowed by combinations Un-acculturated Hispanic mom’s w/ Children ages 8-12

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Hypothetical Segment Dimensions

Fin

ancial C

on

straint

Tim

e Co

nstrain

tLunch

Dinner

Snack

Attitu

des

Re

so

urc

es

Situations

Nutrit

ion

Value

Statu

s (te

ens)

Func

tion

Breakfast

No

Co

nstrain

ts

Psychographic Segmentation

Separates consumers based on attitudes and behaviors to go beyond simple demographics

Describes key areas where people in each segment are statistically different from others

General attitudes, e.g. Like to try new things Category specific attitudes, e.g. Nutrition Constraints, e.g. Perceived disposable

income

Deliver initial insights to the brand regarding: Purchase motivators Product benefits to meet consumer needs Branding and brand positioning Communication with target consumers

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Organoleptic Segmentation

Separates consumers based on product usage preferences to go beyond simple demographics

Defines key product attributes that drive in-use liking for different segments

Differences set target product formulas that differentiate brands or product lines

Identifies key areas of unmet needs and points of difference vs. competition

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Segmentation Summary

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Secondary Research

General Primary Research

Segmented Primary

Research

Examples

Industry reports Store dataPanel data

EthnographicFocus groups Surveys

EthnographicFocus groups Surveys

Best Use AcquisitionGlobal Expansion

Competitive learningInforming segment researchNPD volume projection

Concept development Product development Marketing development

For NPD Too distant, can’t see or feel what is going on

Disagreements & conflicting opinions cause confusion and lack of a clear vision

Patterns emerge from like thinking, behavior and beliefs, providing focus

Segmentation Summary

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TestsProjectsConcepts WinnersIdeas

Innovation Funnel

Segmentation brings clarity to the “fuzzy front end” and eliminates pursuing off target projects

Consumer Directed Development

“Who” Immersion

Proposition Building Blocks

Proposition Development

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Case Study The “Who” immersion

Day in the life research

Proposition building blocks Team ClaimStormTM

Concept fragments Team ProtoStormTM

Product/Package starters

Proposition development Consumer Synthesis Field work Holistic ProtoStormTM Consumer Shepparding

Proposition optimization

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The Team

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Marketing

Market Researc

h

Product Dev.

Package Dev.

Sales

Ad Agency

Graphics Agency Finance

Flavor House

Bottle Supplier

Research

Agency

The Bosses

The Latino Ideas CompanyConill

Industry leading

Hispanic branding

Day in the Life

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“Who” Deep Dive Conclusions

Focus on the functional benefit area of combining taste with nutrition

Focus on the emotional benefit between Moms and their children

Six product opportunities identified

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Some current consumers were

using a food processer to

make carrot juice and serving it

mixed with SunnyD!

Concept Fragment ClaimStormingTM Benefit and Reason to Believe Statements

Gold Standard product prototypes

Orange Carrot

Consumer Synthesis Storytelling (collage)

Talk through the title, pictures/words/thoughts and feelings

Concept Fragments Share the potential Sunny D statements and discuss the reasons for their reactions. What are the key benefits you and your family get from preparing & drinking?

Taste prototype products Initial reactions? What do they like about the prototype? What needs to be changes/improved?

Product ProtoStormingTM

Intermission to Helicopter Up

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TestsProjectsConcepts WinnersIdeas

Innovation Funnel

Minimal initiative specific time spent, scope narrowed to 3 ideas One vector DOA One vector off brand strategy Two other vectors combine

What remains is soundly based in emotional/functional needs

“What” Immersion - Field Work

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Home visits Hand picked consumers from the Consumer Synthesis

Groups

Shop-alongs Go directly to her store from her house Shop through her eyes

Another Helicopter Up

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TestsProjectsConcepts WinnersIdeas

Innovation Funnel

Team has internalized First Moment of Truth shopping habits & purchase drivers maximizing point of purchase trial potential

Team has internalized Second Moment of Truth product & packaging requirements maximizing repurchase potential

New SunnyD Orange CarrotA sunny combination of taste and nutrition

Accepted Consumer Belief

Benefit

Reason to believe

F

Holistic ClaimStormingTM

New SunnyD Orange CarrotHomemade taste with SunnyD convenience

G

New SunnyD Orange CarrotA better alternative to sodas that your family will love.

H

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Accepted Consumer Belief

Benefit

Reason to believe

Accepted Consumer Belief

Benefit

Reason to believe

Graphics execution

Holistic ProtoStormingTM

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Package size Live samples to

hold and pour

Product Live samples to see and taste

Color Thickness Sweet/sour balance Flavor intensity Orange to carrot ratio

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Holistic ProtoStormingTM

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Consumer Synthesis

Es importante preparar comida casera para mi familia con ingredientes frescos, pero a veces es bueno poder disfrutar de sabores tradicionales sin tener que perder tiempo y esfuerzo en la preparación. 

Presentamos SunnyD Naranja-Zanahoria, una combinación deliciosa de naranja y zanahoria como la que harías en casa. Ahora disponible para que la lleves contigo a cualquier lugar. 

Nuevo SunnyD Naranja-Zanahoria es una combinación dulce y refrescante entre el rico sabor cítrico de Sunny D y lo bueno de la zanahoria, que te brinda 100% de vitamina C y 20% vitamina A en cada porción. No necesitas lo complicado del extractor; todo viene en la botella. 

Puedes encontrar el nuevo SunnyD Naranja- Zanahoria en la sección refrigerada de tu supermercado, junto con otros productos de SunnyD.

Nuevo SunnyD Naranja-ZanahoriaSabor casero con la comodidad de SunnyD

Optimized Proposition

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SDBC Innovation Model

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Segmentation

“Who”Immersion

TeamSynthesis

RapidPrototyping

ConsumerSynthesis

“What”Immersion

TeamSynthesis

RapidPrototyping

ConsumerSynthesis

Consumers create the total proposition, team provides informed stimuli

Innovation Tunnel Summary

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TestProjectConcept WinnerIdea

Innovation Tunnel

Picking, and becoming intimate with, a focused segment surfaces unique, high potential opportunity areas First and Second Moment of Truth field research informs execution details to maximize trial and repeat purchase Focusing team ideation on proposition fragments, versus brainstorming to find the answer, allows consumers to

construct the ideal solution