Customer-inspired product innovation strategy
Across the functional CPG niche internet communities, you’ll likely hear a swath of members saying, “there’s no innovation anymore in the space.” I adamantly disagree with that consensus. In fact, I even think there’s an oversupply of innovation…consumers just haven’t figured out a way to fit all of it into their lives.
Whose fault is that though? It’s surely not the consumers. The root cause of the problem is that most functional CPG brands deploy the wrong product development process!
Supply Side Innovation
Many functional CPG brands start from their own perspective (instead of the customer perspective) when coming up with new products. This creates business culture that develops products with powerful features, but doesn’t meet a real customer need and therefore fail in the market. This mentality, paired with the lowered barriers of entry have created an overabundance of innovation in every functional CPG product category.
So, what’s the solution?
Instead of starting at what product features a brand wants to develop…use customer input as the central inspiration to help make products valuable to customers.
Demand Side Innovation
Steve Jobs once famously said:
“You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new.”
That might be true for technology, but functional CPG products tend to have much shorter lifecycles and require a quicker response to consumer needs…
Every decision the consumer makes shouldn’t be thought of as trivial. When consumers are looking to buy a product, they’re hiring that product to do a job for them. This is the foundational basis of a business theory called Jobs to be Done. This business theory believes that markets aren’t defined around products, they are defined as groups of people trying to get a job done. Customers aren’t buyers, they are job executors. If you do not understand the deep, detailed, and real reasons why the customer chose to “hire” your product, you’re operating blindly.
So, how does a functional CPG brand get a deep understanding of their customers?
[K.I.S.S.] Start having deep conversations with a set of your superusers.
Why did they choose your product?
How do they use your product?
Why did they switch from a competitor?
I’m not talking about sending a nameless/faceless digital survey. I’m talking about picking up the phone and calling a cross-section of your customers to have a real human-to-human interaction. While superusers are the primary target, don’t overlook expanding into past customers and potential target customers on your social media. The goal of these customer conversations is naturally get into the small details and look for patterns to emerge that show pain points. You should understand the hire/fire decisions of your customers and what are the trade off areas.
With that perspective, you can find ways to rapidly improve your existing products. If you listen well, you may find a solution your customer wants but didn’t even ask for. This is the ideal result and where those special product development opportunities emerge from.
Products are Services. Services are Experiences.
Functional CPG products aren’t just products. Every functional CPG product is a service, and every service is an experience.
It is imperative that you understand how customers actually use your product. The way that they use it is a part of the overall product experience, which brands still have a responsibility for. Functional CPG products are never the entire solution in reaching health and wellness goals. If a customer doesn’t understand how to use the functional CPG product “right” and isn’t reaching their goals, then a brand should be paying attention and iterating product (or other business model elements) to create the optimal product experience.
Case Study: Target Good & Gather
I was lucky enough to be in the crowd at the 2019 Groceryshop conference when then head of Food & Beverage at Target delivered her keynote speech announcing Good & Gather. I instantly thought…
“Wow! Target has built something extremely special here.”
Admittedly, getting excited about a retailer launching a new private label is far from my normal behavior. Yet, there I was envisioning the different strategic scenarios in which Good & Gather could drive massive results for Target’s growing grocery business.
Good & Gather is arguably the most successful private label concept that Target has launched in the company’s recent history. It surpassed $1 billion in sales in just over the first nine months and also became the retailer’s largest owned brand by assortment.
Why was Good & Gather so successful?
When creating Good & Gather, Target wanted to get a deep understanding of its customers rather than simply supplying the market with products that check generalized boxes. The retailer spent hundreds of hours on customer research – it shopped with customers, ate with customers, and sought honest feedback from customers in order to get a full picture of why they were buying certain grocery products.
Target knew that every decision customers made was important and that even the smallest habitual details could help it see patterns in pain points that might turn into potential solutions. Target used this consumer input, along with internal sales data, as the basis for Good & Gather’s initial product assortment and brand propositions.