Should Your Market Research Focus on Growth or Innovation?

Growth and innovation are terms that are thrown around frequently in the business world. In many cases, however, the people using these words don’t have a shared definition of what the terms really mean. Every business aspires to growth. It’s essential to keeping profits flowing and consumers engaged. But where is the line for true innovation? And most importantly, how do brand managers and executives decide whether groundbreaking innovation or more straightforward brand extensions are the right focus for their business? Here’s a closer look at some of the key considerations and how market research can help.

Brand Extensions and Line Growth

When CPG companies talk about growth, they’re often thinking in terms of introducing existing products to new markets or finding creative twists on consumers’ favorite products. The vast majority of the 20,000 plus products that hit retail shelves each year from CPG brands are brand extensions. Companies have successful product lines that they want to build on. Consumers demand fresh twists on classic products to keep buying at a steady rate. In these cases, new flavors or different packaging can keep customers engaged while continuing to build on the success of established brands.

For example, introducing a cranberry-flavored or a chocolate-peanut-butter-flavored granola bar may help attract new customers or get your existing audience to buy more of their favorite foods. Repackaging larger containers of yogurt into convenience packages may attract new audiences looking for healthy on-the-go options. But ultimately these new products and different approaches—although important—are more about growth than innovation. Focusing on growth is important from a business perspective, for helping companies keep their brands relevant and for achieving bottom-line goals including increasing revenue and profits.

Category Defining Products

The word innovation, by contrast, is often misused. True innovation happens in a couple of different instances. One is when companies develop products that invent new categories. An example that was recently cited by a colleague of mine in a MediaPost article was the Swiffer. Once the Swiffer hit the market, homeowners were eager to lose their mops and brooms and embrace this entirely new housecleaning tool for its versatility and higher standard of clean. Innovation can also happen when a CPG brand takes a product and moves across categories.

For example, a producer of chocolate desserts might break into the breakfast category with high-quality artisanal chocolate breakfast cereal or into the alcohol market with a line of chocolate liqueurs. Whether you’re creating a whole new category of products like the iPod did or just taking your core offering into a new area, these types of moves embody innovation.

The Role of Market Research

Market research plays a critical role in helping brands craft their product development strategies. CPG brands rarely focus on an either/or situation; instead, they are simultaneously concentrating on finding ways to reinvent consumers’ favorite products while also looking for new avenues to grow the business.

Market research can help by:

• Enabling brand research to better understand how the market view your company’s core value propositions
• Creating the ability to test concepts before they go to market so that you’re focusing on manufacturing and marketing only the most viable concepts
• Deepening your understanding of your audience, to further refine your approach to product development
• Identifying unmet needs and opportunities in the market that could represent paths to truly innovative product development

Over the lifetime of a business, the product development team should be going after a mix of category defining products and successful brand extensions. New flavors and packaging decisions for successful products help keep them relevant. Major successes for moving into—or creating—whole new product categories can give companies the breakout products needed to dramatically grow companies. Market research plays an essential role in determining how best to move forward, from uncovering what audiences really want to validating concepts before they’re invested in further. When determining your own company’s ideal growth path, ensure that your market research mix is poised to support both creative brand extensions and major moves in the name of product development innovation.