Learning from the Great Recession about innovation
Chicago In the wake of the coronavirus (COVID-19) epidemic, organisations may find it useful to incorporate lessons learned from the 2008 recession into their innovation strategy.
Information Resources Inc. (IRI)’s 2008–2010 New Product Pacesetter reports show that premiumization, higher pack sizes, and brand expandability are among the key trends that developed during the Great Recession.
“People believe that there will be no spending during a recession, but there is a trade-off in dollars,” stated Larry Levin, IRI’s senior vice president of market and shopper intelligence. “Perhaps I used to take the family out to dinner at restaurants and spend $70 or $80 on supper, but these days I make frozen meals that are luxury products compared to their competitors in the frozen aisle. Going to a restaurant or feeding folks at home was the mental trade-off, even if it might be more costly.
Conagra Brands, Inc.’s premium dinners, such as Marie Callender’s Home-Style Creations and Healthy Choice All Natural, were successful because they provided a more upscale in-home dining experience. K-Cups, whose popularity skyrocketed right before the recession, afforded a similar chance to design a kitchen café experience.
Multi-serving goods, such as P.F. Chang’s family size frozen dinners, Stouffer’s Easy Express, and Bertolli oven bake meals, witnessed growth during the recession. K-Cups included in this category.
According to Mr. Levin, “they allowed people to serve a bigger family or on a couple of occasions.” For many customers, “being able to create that extended use was really critical.”
During the Great Recession, big CPGs had trouble launching new items in well-liked, highly penetrated areas. However, they were successful when they expanded their product offerings or pushed their brands into related categories. Examples are the new Gatorade and Powerade products from PepsiCo, Inc. and The Coca-Cola Co., the Special K snack bars from Kellogg Co., and the VIA instant coffee from Starbucks Corp.
The economic downturn of 2020
2020 has already seen the emergence of larger pack sizes and restaurant-quality experiences as prominent themes, and the underlying trend towards at-home eating is expected to be sustained by ongoing pandemic fears.
“65% of Americans say they’re going to take a ‘wait-and-see’ attitude about going back to restaurants, according to our weekly tracking study,” Mr. Levin stated. “Among those 65%, a sizable percentage stated they wouldn’t go for even a few weeks, let alone a few months.”
The fact that customers are spending less time in stores presents a new difficulty. A quarter of consumers stated they were rushing to spend less time in stores, and over a third stated they had ceased searching for new things in recent months.
According to Mr. Levin, “they’re coming to the store with a get in and get out mindset.” They might not see you walking down the aisle, so how can you make sure your marketing message is clear? This will generate fresh approaches to capturing consumers’ hearts and minds so that new products can succeed.
Going forward, it will be crucial to concentrate on qualities that matter most to customers, such self-care.
Mr. Levin stated, “There is a two-pronged devil in this environment.” “On one end of the spectrum, we have the coronavirus, and on the other, we have the financial crisis. Producers have the chance to develop healthier products that fulfil the same purpose as supplements.
There are additional opportunities for items that support emotional and mental health.
“Over the last few months, we’ve seen a growth in CBD sales,” Mr. Levin stated. “As a substitute for getting through this extremely trying time, people may be turning to CBD, which is easier to obtain online.”
Reasons for hope
According to IRI, despite having fewer New Product Pacesetters, smaller manufacturers and up-and-coming brands fared better during the Great Recession than medium-sized and large corporations.
High growth category-focused pure player products performed the best.
As an illustration, consider Chobani, which launched its initial line of Greek yoghurt products in 2007.
Almond milk, Almond BreezeAccording to Mr. Levin, “Chobani was about $1.40 per serving when it hit the market, while the industry was about $1.” “After they realised the benefits of additional protein and a different texture, they were prepared to pay more for it.”
Ocean Spray’s On the Go drink mixes, Cranergy bottled juice, Blue Diamond’s Almond Breeze almond milk, and Snyder’s Lance multigrain pretzels and crackers are a few more popular new goods that were introduced during the Great Recession.
According to Mr. Levin, “many of the small businesses and brands that we saw in 2010 are here and powerful today.” For some of these tiny manufacturers who might be concerned right now, I believe there is hope because they have positioned themselves effectively for future survival or purchase. By looking back, they can see what other people did during the previous recession. They managed to endure and make it through quite well.