New Products, New Risks – The Uncharted Territory of Product Innovation

Posted by Admin on Mar 18, 2016 8:28:03 AM

New Products, New Risks – The Uncharted Territory of Product Innovation

 

For years, manufacturers and consumers have had a mutual understanding – manufacturers make and consumers buy. If a product was sold out, consumers would wait for restock and if there were deflations in demand, manufacturers would update their products with an occasional new feature. Manufacturers were comfortable and consumers were loyal. Once the economy declined, those days ended. 

 

The Rise of Generic and the Fall of Loyalty 

 

As the economy weakened, brand loyalty faded and consumers based purchasing decisions on a simple question, “What’s the difference between this popular brand and the generic alternative?” Truthfully, there was little differentiation. With the loss of loyal customers to generic brands in this economic environment, manufacturers needed to make continuous distinctions between their brand and the generic substitute in order to maintain and grow their customers' loyalty.


Evolving Toward Continuous Product Innovation  

 

In the past two years, trends show manufacturers moving toward product innovation to regain their customer base. Manufacturers have not only made innovative modifications to existing products, but have also created completely new products to differentiate their brands.


 Let’s examine McCormick & Co., Inc. Following product innovation, McCormick’s sales for the first quarter of 2013 were $934.4 million, up 3% from $906.7 million a year ago. Alan D. Wilson, Chairman, President and Chief Executive Officer said, “Product innovation led to an increase in sales of recipe mixes, as wells as Grill Mates, Zatarain’s and Simply Asia brand products.” Read ‘Product innovation pushes McCormick profit up’ by Food Business News for more about McCormick

 

Know What’s Possible Before Constructing 

 

Although a worthwhile investment, clearly product innovation brings risk. Many manufacturers rush to production by constructing new lines or modifying existing ones in an effort to quickly push new products to market. Unfortunately, these hasty decisions can at times lead to costly pitfalls that negatively impact a manufacturer's overall bottom line. Manufacturers now require informed decision making ability, in shorter time-frames—all while mitigating risk.

 

This virtual facility allows owners to not only mitigate risk during design, but also allows for optimization of the facility once completedView more simulation videos. »

Fortunately, manufacturers now have access to modeling tools that test several possible solutions before construction. Using models allows for replication, investigation and verification of concepts and system scenarios under real-world, plant-floor conditions. Besides giving strategic insight into a manufacturing system, simulation can ultimately reduce time to market by weeks and save millions of dollars.

 

In order to remain relevant, manufacturers must make a continuous effort to be innovative. Simulation modeling tools reduce anxiety and risks by providing a glimpse into the uncharted territory of a new product. 

 

If you would like to speak specifically to a subject matter expert about how to decrease risks and increase awareness within your manufacturing system, contact Keith Perkey, Regional Vice President at 678.328.2908 keith.perkey@haskell.com.

Topics: Consumer Products, Manufacturing