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Interest and excitement are spurring conversationNew Products Foster Excitementand Drive AmbassadorshipTo make an impact, of course, new productsneed to capture the attention and interest oftarget shoppers. In a world where consumersare bombarded with an average of 5,000advertisements each day, cutting through theclutter is challenging. Powerful new productlaunches effectively influence social networkconversations, helping brands stand out fromthe crowd.IRI’s 2016 New Product Survey reveals that, for 19percent of consumers, awareness of new products“ Also on trend willbe mobile friendly‘how- to’ videos andaccess to other recipesand support.”— Bradley K. Alexander, president of FlowersBakeries/D.S.D. Segment**Source: Company Press Releasecomes from information on blogs and socialnetworking sites. Among some shopper groups,such as millennials (35 percent), new productenthusiasts* (33 percent), and shoppers fromhouseholds with children (29 percent), this figureis much higher. Consumers may be learning aboutthese products from brand-initiated conversations,but they are also very aware of information beingshared by other product users. CPG marketers mustact to capitalize on this brand ambassadorshipopportunity.Consumers may be learning about these productsfrom brand-initiated conversations, but they arealso very aware of information being shared byother product users.“Tide Simply Cleansmells so good”@DIAMONDHOOPS“Honest cleanat a low price!”Online Chatter Inspires Product Usage IdeasIn addition to providing positive (or negative)feedback, social media conversations can alsoserve to stimulate product usage ideas, which candrive incremental purchase behavior and eveninspire the next wave of new product innovation.The Cobblestone Bread Company is encouragingsocial media discussions with a hashtag,#CBCbreakfast. Through this hashtag, consumersare sharing a variety of recipes, including spinachand cheese bagel strata, rise and shine breakfastmelts and more.“Works just as wellas more expensiveTide products”BY JUSTAGIRL2014Source: Voice of Consumer Analytics courtesy of IRI Social Advantage *Note: New product enthusiasts answered either “I am an early adopter of new category products, I like to have the latest and greatest” or “I am always looking for new category products to try” for atleast three of the following categories: food, beverage, health care, beauty/personal care, home care. For pet care, respondent answered, “I am always looking for new pet care products to try.”NEW PRODUCT PACESETTERS: Harvesting the Fruits of Innovation Done RightIRIworldwide.com7

CPG marketers: think outside the box to maximize growth potential“ SmartRelief givesback pain suffererssafe, effective andaffordable reliefwithout the hassleand expense of a doctor visit.”— Lucas Mininger, IcyHot marketing director,Chattem, Inc.**Source: Company Press ReleaseCPG Marketers Need New Perspective toDeliver Successful New ProductsSocial media conversations can serve as a veryimportant influencer of new product innovation.For this to happen, though, CPG marketers mustopen their minds to outside-the-box thinking.CPG marketers have long talked aboutcategories, aisles and departments. This is howstores are laid out and how sales are measured.Consumers, however, don’t think in terms ofcategories, aisles or departments. They thinkabout what they need and how to satisfy thatneed. They think about how they will use orconsume a product, where they will be at thattime, and added benefits they hope to achieve(think faster/easier cleaning, flavor/textureexcitement, longer-lasting relief).CPG marketers must adopt this broad-scopeconsumer mindset and innovate against it.Marketers must also apply this mindset to theirexamination of the competitive landscape.For example, Greek yogurt not only sourcesvolume from other yogurt brands, but also sourcessignificant volume from healthy snack bars (e.g.,Kind bars), other dairy snacks (e.g., string cheese),and a wide selection of ready-to-eat cereal brands.If marketing programs take only yogurt competitorsinto consideration, messaging will be sub-optimaland impact will be lost.Maximizing innovation value requires taking arealistic look at the competitive landscape tounderstand opportunities and challenges.*Source: Company Press ReleaseNEW PRODUCT PACESETTERS: Harvesting the Fruits of Innovation Done RightIRIworldwide.com8

Quickly identifying and accurately sizing growth opportunities is criticalUnderstand true market/consumer trends/needs/wantsDefine the true competitive setUnderstand key sources of volume and incrementalityKeeping Pace With Change IsNo Easy Feat, But It’s NecessaryThe consumer revolution is real and it is massive.In fact, the only constant in CPG today is change.Bringing successful new products to market in thisturmoil is quite challenging. To get it right, CPGmarketers must quickly and accurately assess whitespace opportunities.First and foremost, that means having a clearunderstanding of the marketplace, including keygrowth drivers and inhibitors of growth. CPGmarketers must also invest to understand their coreand target shoppers—what they need, what theywant, what they are willing to pay for and wherethey expect to buy these products.Discussed earlier in this report, it is critical to realizethat consumers view the CPG marketplace verydifferently from the way manufacturers and retailersview it. They think about satisfying needs, whetherthose be eating occasions, drinking occasions orproduct usage occasions.For CPGs, understanding the true competitive setmeans having a clear understanding of what CPGcategories compete for each particular occasion.This will vary by mindset, daypart and CPG channel.It will also vary from shopper to shopper. Thecompetitive landscape has become much broaderand less traditional than manufacturers havepreviously experienced.NEW PRODUCT PACESETTERS: Harvesting the Fruits of Innovation Done RightIRIworldwide.comIndeed, the days of one-size-fits-all strategies aregone forever. And, importantly, the competitivelandscape will continue to change.Finally, CPG marketers must invest to understandtheir sources of volume and incrementality. Theyneed to know how to appeal to the full pool ofpotential consumers, and they need to know howto entice those consumers to buy more, ratherthan just shifting dollars from one brand within theportfolio to another.The pages that follow provide detailed overview ofthese critical growth levers.9

Feed food and beverage success with sophisticationDeliver Indulgence and ExperiencesThat Bring Excitement Into the KitchenWhat Consumers Want From New Food ProductsToday, four in 10 consumers are regularly buyingpremium quality food and beverages.1 Indeed,CPG food and beverage solutions have become acommon way for consumers to pamper themselveswithout breaking the bank.% of Consumers“ fairlife is a transformationalinnovation that retainsthe purity of real milk yetsignificantly improves itshealth benefits and taste.“— Mike McCloskey, a former veterinarian, activedairy farmer and CEO of the co-op**Source: Company Press ReleaseFlavor excitement breaks up the monotony ofthe daily diet, bringing consumers to new worldswithout even leaving the kitchen. Chili’s At Home lineof frozen dinners and appetizers allows consumersto take their taste buds for a spin with restaurantinspired recipes that combine for a flavor fusion.Starbucks makes experiential dining personalwith a new line, Starbucks Iced Coffee, allowingconsumers to enjoy iced coffee at home just theway they like it.Healthier-for-you solutions are still very much ontrend. But, even healthier products have a flairfor sophistication. fairlife milk, for instance, uses29% indulge24% add21% enjoy optionswithout payingrestaurant pricesexcitement tothe daily dietthat are truly newand differentSource: IRI New Product Surveya patented filtration process that concentratessome of milk’s natural nutrients, while filteringout lactose and reducing sugars.Sophistication within CPG aisles is supportingan influx of crossover brands from restaurantsand other realms. The aforementioned Chili’sAt Home and Starbucks Iced Coffee are twoexamples. McCafé and Krispy Kreme coffeesand Ben & Jerry’s Core are additional examplesof this trend, which has been in play for at leastfive years.Source: IRI Consumer Connect, Q1 20161NEW PRODUCT PACESETTERS: Harvesting the Fruits of Innovation Done RightIRIworldwide.com10

Tap into the “protein brand” to support thequest for satiation and on-the-go consumptionMake It Fast and Easy to Fuel UpDuring the past decade, protein has shiftedfrom a sought-after attribute to a brand in itsown right. Protein is making a march across CPGaisles, where it is now prominently featured onproduct packages across food and beverageaisles—from beverages to yogurt, and everythingin between.Cheerios Protein fuels the family breakfastwith 11 grams of protein (including milk), forlong-lasting energy and a great taste. Quakerhas made protein quick and easy with QuakerProtein Instant Oatmeal, packed with 10 gramsof protein in every serving and ready in undertwo minutes.23%of consumerslook for new foodoptions that canbe eaten on the go12%of consumerslook for newbeverages thatprovide proteinQuick and easy is essential today, and theincreasing pace of on-the-go lifestyles areheavily contributing to this trend.As a result, handheld and on-the-go proteinoptions are hitting the mark across a wide varietyof eating and drinking occasions. TruMoo allowsconsumers to fuel their potential with 25 gramsof protein and no high fructose corn syrup.Clif Kid Zbar Protein is a delicious whole grainprotein snack made with nutritious buildingblocks for kids’ growing bodies so kids cankeep zipping and zooming along. And, GatoradeRecover Whey Protein Bars allow athletes (andweekend warriors) to get the most from theirworkout by fueling muscle recovery to bringmuscles back to life.NEW PRODUCT PACESETTERS: Harvesting the Fruits of Innovation Done RightSource: IRI 2016 New Product SurveyIRIworldwide.com11

Give consumers an opportunity to express their individualityDeliver Against Consumers’Unique Needs and Wants“ The story your hometells is an importantone and we wantedto provide consumerswith a fragrancetechnology that helps to curate andpersonalize that story.”— Tiffany McLaud, marketing director, Air Wick**Source: Company Press ReleaseAccording to IRI’s 2016 New Product Survey, 20percent of consumers actively seek new homecare products that are good for the environmentand 17 percent seek beauty products that offeranti-aging benefits. This is a snapshot of animportant lesson in new product innovation:everyone has different needs, wants andpriorities. Today’s shoppers want CPG solutionsthat recognize this fact.CPG innovators are helping consumers to expresstheir individuality by offering a wide variety ofolfactory experiences across non-food aisles.The largest olfactory launch in 2015 was Air WickLife Scents, a product that fills the home withcontinuous, fresh fragrance for up to 60 daysand also allows consumers to select their desiredfragrance level.The laundry room offers a number of new scentexperiences, including Snuggle Scent Boosters,Bounce Bursts and Arm & Hammer CleanScentsations. And, this year’s Pacesettersare allowing consumers to “escape”in the kitchen with Dawn Escapesand Glad OdorShield with FebrezeFreshness & Gain.New non-food launches bring powerand performance that help consumers’stand apart from thecrowd. Vidal SassoonSalonist gives hairdimensional coverthat rivals the salon.Maybelline Fit Me!Matte Poreless goes beyond skin tone matchingto fit the unique texture issues of normal tooily skin for the ultimate natural look. And, theCaress Fresh Collection offers fragrance touchtechnology that releases bursts of perfume withevery touch of the skin.Non-food innovators arealso finding successtapping into a widevariety of other sizabletargeted market spaces.Purina Cat Chow Gentlefeeds cats with sensitivestomachs. Aussie TotalMiracle Collectionprovides carefree hairwith time to spare byhydrating, strengtheningand protecting. And Gillette Venus has two NewProduct Pacesetter launches, Swirl and EmbraceSensitive, that allow women to get a close shavewith only one stroke.*Source: Company Press ReleaseNEW PRODUCT PACESETTERS: Harvesting the Fruits of Innovation Done RightIRIworldwide.com12

Think broadly about usage occasionsEnhance the Value Proposition byExpanding Across Broader Usage Groups“I look for products from the samebrands/manufacturers withwhom I’ve had a high levelof success in the past.”Mentioned earlier in this report, consumers thinkin terms of needs and wants, rather than thinkingin terms of categories and aisles. The great newsfor CPG marketers is that consumers who havehad good experiences with a brand in the past aregenerally quite open to new products from thatsame brand/manufacturer, even if that brand hasentered into a new market space.% of consumers, by sector“ We are so proud to launchBounty with Dawn webelieve it will changethe way people clean.Original Bounty is stillrecommended for youreveryday routine,but Bounty with Dawncan blast through greasier, morestubborn messes.”Home Care32%Pet Care32%Beverage31%Health Care31%Source: IRI 2016 New Product Survey*Source: Company Press ReleaseBounty with Dawn is a thicker Bounty, with thecleaning power of Dawn built in, to blast throughmesses and pick up more. The new product has30%Beauty/Personal Care— Matt Barresi, brand director, Bounty*Many of the year’s top-selling launches have hadgreat success in rethinking the way consumers canuse their brands, and co-branding is playing a keyrole in bringing new product uses to life.49%Foodallowed Bounty to expand usage beyond “everydayroutine” tasks to “greasier, more stubborn messes.”Speed Stick/Irish Spring GEAR provide effective,long-lasting odor protection in a variety ofscents. The line cuts across much of a man’s dailypersonal care ritual, including deodorants, soapsand body washes.And, Crest and Oral B have come together to provideend-to-end oral care solutions, including the Crest/Oral B Sensi line and Crest/Oral B 3D White Brilliance.Expanding market reach is a fantastic way to driveincremental sales dollars. But, mentioned earlier,understanding where and how categories interact isan essential first step in the process.*Source: Company Press ReleaseNEW PRODUCT PACESETTERS: Harvesting the Fruits of Innovation Done RightIRIworldwide.com13

Invest to clearly understand the competitive setThe breakfast market is comprised of 3 domainsBreakfast MarketDomain 1( 11.1B, 4.3%)Domain 2( 9.0B, 0.6%)Domain 3( 10.7B, 0.2%)Segment ASegment BSegment CSegment DSegment ESegment FCategory ACategory FCategory ICategory NCategory RCategory XCategory BCategory GCategory JCategory OCategory SCategory YCategory CCategory HCategory KCategory PCategory TCategory ZCategory DCategory LCategory QCategory UCategory ECategory MCheeriosProteincompeteshereCategory VCategory WSource: POS Data Latest 52 Weeks ending 4/30/2014 vs. YAGOInvest to Intimately Understandthe Shopping Basket and ItsProduct InteractionsTo be successful, new launches must stand outfrom the crowd. Considering that the averagegrocery store has an estimated 44,000 SKUsand the 85 percent of American householdneeds are fulfilled with the same 150 items, thisis no easy feat.To be successful, brand marketers must understandtheir competitive set based on consumer-relatedconsiderations, including demographics, life stage,etc., as well as distribution area and similarity ofproduct. And, it’s critical to understand that this is nota do-it-and-forget-it assessment. The competitive set isessentially a living, breathing situation that will changeconstantly based on a broad array of evolving marketforces and consumer attitudes and behaviors.NEW PRODUCT PACESETTERS: Harvesting the Fruits of Innovation Done RightIRIworldwide.comSimply stated, having a clear, comprehensiveand consistent understanding of the competitiveset is a critical foundation needed to competeeffectively in the hardscrabble CPG world. It willdetermine the type of product being developed,key and target consumer segments, channelstrategy and market positioning. It will alsohelp highlight high-value opportunitiesfor differentiation.14

Dive deep to understand potential sources of volumeDomain 1Segment ACategory 1Category 2Category 3Brand ABrand EBrand BBrand FBrand CBrand GBrand DBrand HBrand I“ The addition of Nexium24HR to our portfolioenhances our ability tohelp consumers bettermanage their health.”— Paul Sturman, presidentand general manager, PfizerConsumer Healthcare**Source: Company Press ReleaseNote: Private label excluded; Source: Transactions from HH panel data 152 weeks ending 03/23/2014; POS data latest 52 weeks ending 4/30/2014 vs. YAGOA Well-Rounded Understandingof Potential Sources of VolumeWill Increase the Odds of SuccessSimply put, in this context of launching newproducts, source of volume is a measure of whatproportion of the new brand’s demand or volumewill be driven by competing brands within thesame category and substitute categories.When launching a new product, brand marketersmust invest to understand from where and how thenew product will derive its volume. At the sametime, the marketing team must also be aware of thepotential for the new brand’s volume to be stolenby or lost to other brands—whether those brandsare from within the same category or any number ofsubstitute categories.NEW PRODUCT PACESETTERS: Harvesting the Fruits of Innovation Done RightIRIworldwide.comThe marketing team must analyze leakage scenariosto ensure a firm grasp on sources of volume. Thisincludes understanding which product attributes aremost closely associated with switching behavior.The team must closely examine the customerassociated traits of switching behavior, includinglife stage and life style, demographics, etc., andthe likeliness of substituting under each of thesecircumstances.15

A 360-degree view of market potential is essential to accurate sales forecasting“ It’s hard to forecast the impact of marketing and innovationif you don’t know where the sales will come from.”— The Hendry methodCompetitive and Source of VolumeInsights Feed Accurate Volume andIncrementality ProjectionsWhen forecasting the market opportunity for anew brand launch, determining overall sales potentialis critical. With a true understanding of the competitive set and sources of volume, highly accurateestimates of market potential are achievable.These insights will also frame out a clear pictureof what percent of dollar and volume sales can beexpected to be incremental, versus cannibalizedfrom another brand within the product portfolio.By understanding where sales will sourcefrom and what levers are driving those sales,marketers can develop a clear picture of whichNEW PRODUCT PACESETTERS: Harvesting the Fruits of Innovation Done RightIRIworldwide.commarketing levers—product attributes, packaging,pricing, channels—are likely to attract new buyersversus existing consumers. This will

less than 10 new launches capture more than 100 million in year-one sales. This year, nine brands broke through that threshold. IRI New Product Pacesetter brands are the 100 largest non-food and 100 largest food and beverage launches of 2015. These brands are the best of the best, garnering cumulative first-year sales of more than 6.5 billion and