Stephanie Fierman - Marketing Observations Grown Daily

Stephanie Fierman’s Choices Stay Close to Home

Sunday August 23rd 2009, 11:13 am
Filed under: advertising,branding,licensed content,loyalty marketing,market research,retail,stephanie fierman,US economy

Yet another result of the flailing economy: truly new brand launches are faltering while brand extensions are succeeding.

In 2008, less than 10% of new products were “net new brands,” even though the pace of product introduction was about on par with the last five years. Take a look at the top food and non-food brand launches of last year:

If you remove the pharma/DTC products (which are in a psychic/regulatory/financial class all their own), all the products on these lists are extensions or reformulations.

In the best of times, launching a truly new product is extremely difficult and expensive. Manufacturing, distribution, marketing – starting from scratch is daunting. In a recession, success is even more difficult to achieve.

Then there’s the consumer psyche to consider: what are the monetary and non-monetary risks of trying something truly new? Who hasn’t been curious enough about a new launch – let’s say something perishable that cannot be returned – to try it out? But when money is scarce, the news is full of stories of imprudent spending and people are making trade-offs among the smallest of purchases, the price of “wasting” money suddenly becomes very high. I will feel foolish if I buy this and don’t like it when there are existing substitutes that I know are good enough.

The other thing that’s noticeable about these lists and others is that the “closest in” extensions win: an existing brand holds a space in the consumer’s mind, a range of functionality and messaging in which that brand has credibility. Hershey’s can launch new candies, Porsche can introduce a “wireless racing wheel” for gaming, Mr. Clean can (sort of) try out the car washing business.

But a $1,200 Disney Sleeping Beauty fountain pen or Kellogg’s hip-hop streetwear? Not so much.