Australian consumers are more sceptical about new products than the global average, with convenience and affordability topping their reasons for purchasing a new product, according to the Nielsen Global New Product Innovation Survey.
Among global consumers interviewed for the survey, 57 per cent said they had bought a new product in their last grocery shop, while only 37 per cent of Australian respondents had done the same.
Only 26 per cent of Australian respondents said they were early purchasers of new product innovation (compared with 39 per cent globally), while 52 per cent said they would wait until the innovation had proven itself before buying.
Trust in established or known brands is extremely important, with 58 per cent of Australians surveyed saying they preferred to buy new products from familiar brands and 54 per cent that they preferred to purchase new products from local or large global brands.
Convenience (24 per cent) and affordability (23 per cent) top Australian respondents’ list of reasons for purchasing a new product. Price is a particularly important barrier to entry, with just 34 per cent saying they are willing to pay a premium for innovative new products – 10 percentage points lower than the global average of 44 per cent.
When it comes to the new products that Aussie consumers wish were available but are not currently, products at affordable prices are most desired, by a wide margin. Forty per cent of respondents say they wish more affordable products were available, 12 percentage points above the next-highest attribute – products made of natural ingredients (28 per cent). This was followed by products fitting a healthy lifestyle (21 per cent) and new food products (20 per cent).
According to Nielsen Director Innovation Practice Thais Gill, in Australia, consumers are more sceptical and more hesitant about parting with their money when it comes to trialling a new product, and a brand name can be one of the most valuable assets a company can possess.
“It can lend credibility to product efficacy and provide an assurance of quality, letting consumers know what they can expect when they buy a product,” she said. “To this end, line extensions can be extremely advantageous. Line extensions are approximately three to four times more common than ‘new manufacturer’ and ‘new brand’ launches combined.
“While a brand extension can provide a strong foundation for success, it doesn’t guarantee it. In fact, a line extension not managed well could actually harm the parent brand. To protect a brand’s reputation, a line extension should clearly link with the core product while also offering consistency, uniqueness and relevance in the market.”
Innovation that offers a real functional difference and offers consumers convenience will also fare well.
“Take the coffee category, for example,” Ms Gill said. “According to the latest Nielsen ScanTrack Consumer data, the coffee category has grown by 13 per cent [an incremental $26.4 million] in value across Australian supermarkets in the year ending January 2015. This is an incredible feat for a mature category in a low-growth grocery environment. Innovation in the form of capsules is the key driver of growth, injecting an additional $29.1 million and driving category value up through premiumisation and increased frequency of purchase.”
Ms Gill says successful product launches are the culmination of organisational focus and commitment to product development, creative marketing, smart leadership and an in-depth understanding of what drives consumer preferences.
“Savvy manufacturers are those who don’t just sell their products at lower prices or on promotion, rather they build cost-cutting into the product development and design process,” she said. “Cost-driven innovation requires letting go of traditional assumptions, and it starts with understanding what trade-offs consumers will make when they can’t afford a product.”