How Nestlé Launched Twice as Fast as Competitors

How Nestlé’s disruptive innovation approach enabled them to launch products 2x faster than its main competitors

Introduction

In the highly competitive food and beverage industry, launching new products successfully is both a challenge and an opportunity. This case study explores how Nestlé, a global leader in FMCG, significantly enhanced its product launch success in China by leveraging customer discovery and marketing-mix optimization. With the support of external partners such as Chaoly and Innoleaps, Nestlé was able to develop products that resonated deeply with Chinese consumers and bring them to market twice as fast as its main competitors.

The Challenge

Nestlé operates globally with a well-balanced and diversified product portfolio, holding a market-leading position thanks to strong brands, innovation, and technologies. As the company aimed to innovate beyond their traditional core business to identify and create long-term, sustainable growth, they faced a specific challenge in China: ensuring their new product launches met the unique needs and preferences of Chinese consumers.

Nestlé asked Chaoly’s partner Innoleaps to help identify and develop a new product that would drive growth in the Chinese market. Although Nestlé initially assumed that the target audience for a healthy snack would be millennial women living in tier 1 cities with higher disposable income, our data-driven approach revealed a completely different demographic.

The Objective

The primary objective of this project was to unlock new product opportunities by identifying the right target audience, understanding the problems to be solved, and determining the necessary features and ingredients. The project sought to answer critical questions:

• Who is the target consumer?
• What problem are we solving, and which benefits are expected?
• What product format is credible?
• How should we communicate the product benefits to the target group?
• What channels should be used?
• What is the business opportunity size?

Key stakeholders included the R&D and innovation departments to define product features and ingredients, as well as the marketing and sales teams to forecast the market size and tailor messaging.

The Solution: Customer Discovery and Marketing-Mix Optimization

Our approach to solving Nestlé’s challenge was multifaceted, involving in-depth customer discovery and rigorous marketing-mix optimization. ?Nestlé Research worked closely with the Chaoly and Innoleaps teams to ensure that scientific insights were aligned with market needs and consumer preferences.

Customer Discovery Phase

1. Fieldwork and Interviews: Nestlé’s local team, in collaboration with Innoleaps and Chaoly, conducted extensive fieldwork, including interviews with potential consumers. These interviews and online surveys aimed to identify customer pain points, gains, and key jobs to be done.
2. Qualitative Data Analysis: The qualitative data gathered from these interactions helped us understand the real needs and preferences of the target audience. Contrary to initial assumptions, we discovered that urban professionals with certain care needs who neglected their health were a more promising target demographic than the originally assumed demographic of millennial women.
3. Product Concept Design: Using the insights from the customer discovery phase, we designed several potential product concepts tailored to address the identified pains and gains of this new target audience.

Marketing-Mix Optimization

To ensure that Nestlé’s new product was well-positioned in the Chinese market, the marketing-mix optimization process was conducted in a lean manner. Instead of developing the full product, mock-ups were created to test the value propositions. This allowed for quick validation without the need for large-scale investment upfront.

1. Value Proposition Testing: We tested various value propositions in the market to understand the reactions of potential customers. This step was crucial in refining the product concepts and ensuring they resonated with the target audience.
2. Digital Experiments: Leveraging our own online store on the Alibaba platform, we conducted digital experiments through A/B testing to validate the proposed product features and marketing messages.
3. Iterative Refinement: Based on the feedback from digital experiments, we iteratively refined the product concept and its marketing mix. This process ensured that the final product was well-aligned with the preferences and expectations of the target demographic.
4. Conjoint Analysis: To further validate our findings, we used conjoint analysis, a multivariable test, to compare different price-feature combinations against main competitors. This allowed us to understand which features consumers valued most and at what price point, providing a comprehensive view of the product’s competitive positioning.

Implementation and Results

The implementation of our customer discovery and marketing-mix optimization strategies spanned 12 weeks, during which we worked closely with Nestlé’s team to execute the plan effectively.

1. Data-Driven Product Development: The analysis of fieldwork data led to the development of several innovative product concepts. We then conducted digital experiments to test these concepts, adjusting variables such as price, packaging, and messaging to find the optimal combination.
2. Market Positioning: The insights gained from the experiments enabled us to identify a new “route to market” with an innovative value proposition and pricing model. By validating assumptions and refining the product concept based on real customer feedback, we significantly increased the chances of success for Nestlé’s new product launch in China.
3. Real-Life Feedback: ?Using the Chaoly store on the Alibaba platform with a food license, we gathered authentic customer feedback without them knowing they were part of an experiment. This method provided more genuine insights than traditional paid panels and addressed any legal concerns from Nestlé by avoiding the use of their branding.?
4. Accelerated Launch Timeline: Nestlé’s disruptive innovation approach, combined with our efficient methodology, allowed them to bring the new product to market in half the time it typically takes their main competitors. This acceleration was achieved through streamlined processes and rapid iteration based on continuous feedback.

Quantifiable Success

The impact of our methodology was both significant and measurable. Within 12 weeks, we achieved the following outcomes:

• Identification of New Target Audience: The discovery that urban professionals with certain care needs who neglected their health were the primary target demographic allowed for more precise marketing strategies and product
• Innovative Value Proposition: We crafted a compelling value proposition that resonated with the identified target audience, differentiating the product in the competitive market.
• Effective Market Positioning: The new product was effectively positioned in the Chinese market, with a clear understanding of the optimal price point and packaging format.
• Faster Time-to-Market: Nestlé’s innovative approach enabled them to launch the product twice as fast as their main competitors, providing a significant competitive edge.

Results & Reflection

The Nestlé case study exemplifies how a data-driven approach to customer discovery and marketing-mix optimization can transform product launch success. By understanding the unique needs of the Chinese market and validating product concepts through rigorous testing, Nestlé was able to develop and launch a product that truly resonated with its target audience.

This case study underscores the importance of not just identifying the right target audience, but also crafting a value proposition that meets their specific needs and preferences. As companies navigate the complexities of the Chinese market, Nestlé’s experience serves as a powerful model for achieving sustainable growth through innovation and customer-centric strategies. Moreover, their ability to launch products at twice the speed of their competitors highlights the effectiveness of a disruptive innovation approach in the fast-paced FMCG sector.

I’d love to hear your thoughts on these strategies and your experiences in launching products in the Chinese market. What challenges have you encountered, and how did you overcome them? Let’s share ideas and learn from each other’s insights in the comment section!?

Message me, Daphne Tuijn, personally if you'd like a more in-depth conversation regarding launching a new product in China!

Disclaimer: This case study is for illustrative purposes only. To protect confidentiality under the Non-Disclosure Agreement (NDA) between Nestlé, Innoleaps, and Chaoly, specific product details, target audiences, and methodologies have been fictionalized. The product category and demographic described are examples, and any resemblance to actual products, demographics, or strategies is purely coincidental.