Are you focusing on your hero products to grow the core?
Great to see strategy consultants Bain banging the drum for growing the core in a recent article here, urging companies to focus on keeping existing "hero products" fit and even turn them into "super heroes". The article has some good examples that bring to life the core growth drivers from our book, Grow the Core: How to focus on your core business for brand success.
I've posted many times about the risk of focusing too much on new product development to drive growth. One reason for this "innovation addiction" is that companies mistakenly believe that their best selling core products "have maxed out their potential", as the article points out. Sometimes companies think that the core business is moribund or even dying, when it may simply be dormant, as I posted on here. This can lead to "a furious attempt to compensate by unleashing a host of new products, with the hope that at least one will eventually catch on."
The risk with this approach is that financial and human resources get diverted from the core to what I call "the new toys". As the authors say, the new products "take advertising, shelf space, promotional slots, salesforce support and management attention away from proven winners." For example, I posted back in 2008 here on Innocent launching Veg Pots, and the risk that this would distract attention from the core smoothies business. Innocent seemed to agree with the recommendation to re-focus on the core, eventually selling off the Veg Pot business, as I posted on here.
The article suggests that companies should "reboot their best-sellers, keeping their strongest products in the best possible shape, continuously upgrading them to introduce new and concrete consumer benefits." The benefit of this approach is that you make what is strong even stronger, without adding extra complexity.
One great way to upgrade the core is through pack innovation. This can improve product delivery, but also help premiumise the core to drive profit. Examples from the article include:
– Heinz ketchup's upside-down bottle boosted sales +6% vs category growth of only 2%
– WD40 Smart Straw: an integrated straw that addressed consumer frustration with losing the tiny straw taped to a normal can, that I posted on here.
– Coca-Cola's “Share a Coke” campaign, printing 150 of Australia's most popular names on packs. This helped "drive a 7% rise in young adult consumption and was later expanded to 80 countries," according to the article.
Beyond the core brand renovation described above, the article suggests that "companies can turn heroes into superheroes, elevating penetration levels by expanding usage among existing consumers through new needs or occasions and by recruiting new consumers."
Innocent Smoothies launch of a single-portion 160 mL bottle to get the brand into "meal deals" is an example of this approach, as I posted on here. This is an example of what I call a "distribution-led" brand extension, as it drives the brand into places where the current product range can't get. This had several benefits:
– Drive penetration: increased shelf presence by securing an extra couple of extra facings on shelf
– Solving a consumer problem: increasing the choice of drinks to have with your meal deal
– Solving a retailer problem: by making their meal deal promotion healthier.
In conclusion, the Bain article is a good challenge, asking you: "Are your heroes flying high enough?". It ends with some good questions to consider:
- Have you been able to boost household penetration of your hero products by 1% annually?
- Is premiumization increasing for your hero products?
- Is price realization for heroes on the rise?
- Is the gross profit for your heroes reflecting their true profitability (and not subsidizing the complexity created by a portfolio of small products)? And is it growing?