Welcome to our 2015 Insights & Outsights newsletter

(see back issues)

This year we take a quick look back over our year and some interesting things we noticed
We also bring together some views on our innovation work
We know you have a lot to read, so Thank You for taking the time to look at our newsletter!

insights: discerning the true nature

of a situation

outsights: clearly perceiving and understanding

external things

IN THIS REVIEW
Our website: A refresh
Our news

Innovation: Should disruption be the goal?

SmartNews360: More people who want less
Produx360: Tracking new product launches (and more) in ever more countries

Premiumization: Unilever strikes for higher ground

A few thoughts and

observations

Brand loyalty: Going, going,.?

Millennials: The experience imperative
Keeping up with critical news: Its easier with our help

A choice: Aim for disruption or look for marginal gains?

And a few thoughts
on innovation

Innovate marginally: Through the power of talk

Trawling data: Find abject new product failures and learn from them

Our news

Our website: A refresh

We completed a long overdue refresh of our
main website, giving appropriate emphasis to
those areas that make up most of our business
Competitive intelligence
Innovation support
Newsletters
Rather than have a site that is heavy on slick
graphics and impressive animation, ours
remains fairly plain and simple, which we hope
doesnt reflect us (John and Roger one dull
and the other dim)
Instead, we think a less glitzy site is more in tune
with our core business, which remains driven
by personal relationships
Even after all these years, we have good
relationships with all our clients
Have a look and let us know what you think

Our news

Innovation: Should disruption be the goal?

We all know that innovation is crucial. Companies see it as
the key weapon in the battle to get and stay ahead
But with companies focused on cost-cutting and efficiency
gains, even innovation budgets get challenged
In 2015 we had various clients come to us to help them with
their innovation efforts, to do cheaper what theyve done
before and to leverage our experience and language
capabilities
But what sort of innovation is best? In our view, innovation is
too often associated with disruptive improvement, the
paradigm-shifting insight that redefines (or invents) a
category. (We vent about this later)
Yes, we do sometimes see disruptive innovation. Perhaps the
iPhone, Uber, the Swiffer?
But these examples are rare and, more often than not,
effective innovation comes from small, low-risk, but valuable
improvements that rarely gain attention. And the results can
be dramatic, especially relative to the input
The process can seem a little mundane - beyond the brainstorming sessions and
reimagined futures, effective innovation also means research, tracking, analysis,
thinking, screening and evaluation
These are all things that we do, and do well
Fuel for boring Innovation perhaps that should be our new tag line!

Our news

SmartNews360: More people who want less

Our corporate newsletters keep growing. In 2015 we added secure
authentication, the facility to embed client logos and the ability to
integrate it into a corporate intranet
Weve been tracking issues and preparing summaries for over five
years now and weve built up a library of material that weve started
to make available online. For example, you can already see
archives for our food business and personal care business sites
Were also soon to launch a
separate site for SmartNews360
that will showcase some of the
work we do
Last year we mentioned that we have users at many top
companies. This year were proud to say that we have users at
all the top 10 personal care companies, all the top 10 food
companies and most of the top beauty companies

People seem to like our newsletters because they can

personalize them to get only the material they want, mostly
summarized but with some useful links too. Funny, in this world of
abundant information, value comes in removing most of it
Here are a few examples
P&Gs activities or Unilevers

Examples of food trends [or news in Bakery & Cereal]

Retail news and innovation

Our news

Produx360: Tracking new product launches (and more) in ever more

countries
We continue to build and expand Produx360, our new product
database that also tracks delistings, and price and ingredient
changes
For 2015 we focused on stores in the US and UK, adding to our
product database, refining various algorithms and improving the
user interface
In 2016 our coverage will expand, as weve agreed with a large
client to track other key regions, including retailers in China, Brazil,
France and Germany
Part of this work will include better and easier reporting and some
advanced analysis tools to allow users to interrogate our
database
As ever, if you want to know more or give it a spin, please call
We will soon be sending out an update on all the new
developments for Produx360. Unless you object, we will send one
to you

Powerful search
Easy alert creation
Simple notifications

A few thoughts and observations

Premiumization: Unilever strikes for higher ground

Premiumization continues to play out across many categories
and is picking up steam in Asia as its middle-class surges
On trend is soap and detergent giant, Unilever, which has
moved into prestige skin care with the acquisition this year of
four indie skin care brands
All are premium brands, each offering Unilever something
different in geographies, channels, capabilities,
communications and product offerings - including spa and
salon professional options and more science-based skin health
items

Unilever aims to focus more on higher-margin products,

compete better with new entrants as well as established rivals,
and ride the wave that helped prestige products weather the
global economic storm better than mass
Success will depend on how much autonomy Unilever gives
these indie brands, especially around investment and
marketing, while providing resources so they can scale up
It wont be easy competing with established prestige skin care
powerhouses like Este Lauder, but Unilever says sales are
rapidly approaching a 500 million annual run rate, and CEO,
Paul Polman, says that the prestige skin care business is already
at critical mass, ready to be a major player in the space
We gave more detailed treatment of this in a recent feature,
Unilevers Foray Into Prestige Skin Care

REN Dermalogica
Kate Somerville Murad

A few thoughts and observations

Brand loyalty: Going, going,.?

Those tricky Millennials
They grow up communicating without personal interaction (email,
text), date without commitment (Tinder, Hinge, Happn) and, it
seems, carry over their transactional and devotion-free ways to
brands
In a survey of retail industry leaders, nearly 40 percent said the #1
concern they have about Millennials is their lack of loyalty
With real-time price comparisons and e-commerce looming over
all categories, Millennials know full-well they have options, and
brands fear being left-swiped
But its not so simple. Millennials can be enormously loyal brand
devotees, and not just for the usual suspects (Apple, Nike, Forever
21)
Importantly, loyalty varies significantly across category, raising
worrying questions for beauty and CPG brands, as adroit Digital
found (right)

Millennials just have different values and want different things.

More than other demographics, for example, they want to be
courted with personalized, targeted promotions and discounts (so
say 95% of them)
More fundamental is what they want from brands, and herein lies
the opportunity. They want them to stand for something, to be
authentic, to do (at least some) good and to offer an experience
Its this final thread we pick up on in the next page

A few thoughts and observations

Millennials: The experience imperative

The days when a brand stood merely for a product at a price are gone
Today, consumers, and especially Millennials, want their brands to be
something, to stand for something: they want an experience when they
interact with them
A survey from Harris Poll and Eventbrite found that 78% of Millennials would
rather spend money on a desirable experience or event than buy something
desirable. In a life where the world is a stage (be it social media or reality TV),
69% of Millennials experience fear of missing out and this drives them to show
up, share and engage
So how can brands do this? In short, be different. Excite and engage. Talk
authentically, stand for something and customize where possible
It sounds easy but this is a capriciously difficult cocktail to get right. Here are some brands we think did it well:
GoPro, with its Be a HERO helps millennials to live, relive
and share their experiences

Color Me Rad and The Color Run give millennials an

excuse to let loose. Finishing matters less than taking
part and sharing

Personalized Coca Cola Bottles gives the chance

to make the iconic bottle mean more

See too many GoPro ads here, or an amusing spoof

Learn or watch them celebrate fun, health and

happiness

and build stronger bonds

A few thoughts and observations

Keeping up with critical news: Its easier with our help

Some ideas, markets, trends move so fast that just keeping up is hard
Heres one such fast moving area the blistering rate at which innovative
start-ups are challenging established brands across various categories

Small, agile and dynamic companies are leveraging e-commerce, using

subversive approaches to business and generally making life difficult for
large incumbents
How do you keep up with what you really need to track?
We work with clients to understand what they want to follow and build
search strategies just for them

For example, perhaps a client in female fashion wants to track how:

accessory companies are making shopping less risky for consumers by
letting them try the products at home for free
some beauty companies focus on unserved but important market
segments to capture value
new sales approaches such as a subscription models are evolving, with
some players (like Birchbox that sells beauty brand sample boxes)
launching its own brand
some clothing e-commerce companies are moving beyond digital
sales and opening their own physical stores, turning the tables on the
established brands and retailers
You set us going with your information needs and we send you highly
targeted, personalized newsletters when you want them. Contact us if
you think this would be helpful

And a few thoughts on innovation

A innovation choice: Aim for disruption or look for marginal gains?

Sometimes it feels like business gurus and innovation experts
are desperately seeking the next disruptive innovation
Truth is, such innovations are few and far between and often
well signposted for those willing to keep a lookout
But what about the less glamorous marginal gain?
In almost all cases, its this forgotten step-child of innovation
that will be the true power behind revenue and profit growth
Since the 2012 Olympics, the concept has gained favor with
the story about how the (traditionally ineffectual) British cycling
team captured a hatful of gold medals
Its essentially a story of looking broad to find ways to make
small incremental improvements in any process that when
aggregated make a large difference
Its been applied successfully to many business settings, from
healthcare to Google, and in fields as diverse as surgery to
speed eating
Wed bet dollars to cents it would work in your business
Yes, you can have McKinsey and their ilk crawl over your
organization to spot these minor inefficiencies, but thats often
not necessary, and a much more organic and less disruptive
solution is to. talk (which is what we pick up on next)
More: 1, 2, 3

Sir Dave Brailsford applied the

theory of the aggregation of
marginal benefits to Team Sky
(British Cycling) by breaking
down the process of winning
races into component parts

if you broke down

everything you could think
of that goes into riding a
bike, and then improved it
by 1%, you will get a
significant increase when
you put them all together
(Dave Brailsford)

reportedly runs thousands of data-driven

experiments annually to discover small weaknesses
For example, it found that lightening the blue of the
Google toolbar increased click-through rates significantly

And a few thoughts on innovation

Innovate marginally: Through the power of talk

Surely youve heard this or something similar, If only Unilever [or insert
other large company name] knew what Unilever knows
Large organizations are stocked with highly educated,
knowledgeable, experienced and (mostly) motivated professionals,
exceptionally well-placed to see where inefficiencies lie and propose
what improvements could be made
But, these people are usually either too busy to address these
inefficiencies, or seldom listened to, or both
Weve worked on a couple of projects this year where we were asked
to talk to a wide range of senior managers to find ways to improve
business performance - grow revenue, reduce costs, strengthen
portfolios or franchises, you name it
Its remarkable how effective a series of expert interviews with
accompanying research and analysis can be in yielding valuable and
actionable strategies

To be able to ask a question clearly is two-thirds of

the way to getting it answered John Ruskin
Steven Johnson gave an interesting TED talk about
where ideas come from and the importance of getting
the right setting to encourage talk and ideas exchange

If you get it right, the process can help build an effective roadmap to
bring a wide range of improvements to business performance
As the power of marginal gains gets known, we expect large
organizations will pursue them aggressively and a lot of the gain will be
driven by the power of talk
If you want to know more about our work in this area, please pick up a
phone andtalk to us
Also good:
The era of open innovation
Etc., etc., etc.

And a few thoughts on innovation

Trawling data: Find abject new product failures and learn from them
Look at new product launches and you see a bell curve most
cluster around the middle, successful enough to survive but not very
exciting, a few are runaway successes that capture most of the
attention, and way down in the left-hand tail you have abject
failures, innovations that professionals no doubt thought would set
the world afire they passed reviews, sailed though consumer
testing and business case reviews and yet still failed
And some fail spectacularly, within months of being launched. This is
an enormously costly error and so we wondered whether we could
systematically identify these products. Perhaps we might be able to
see patterns and work out why they failed. At a minimum we would
have a database of the Top Of The Flops that might help
companies when developing similar products
After all, its much cheaper to find a competitor that failed with a
product launch similar to what youre thinking of trying than go
through the pain and cost yourself
All this is easier said than done, but over the last year Produx360 has
been tracking product details at some top retailers in the US and UK,
and were starting to do this analysis
Sometimes we can even see when a product is launched and
dropped in a matter of months. Weve put one in the sidebar along
with some reasons why it may have failed, neat idea though it is
(was)
To learn more about Produx360 and perhaps work with us as we
build this functionality, please contact us

Failure

The Flops

Success

The Humdrum

The Hits

A fast 2015 flop from Sephora

Sephora Collection launched Freshen Up
Cooling Undereye Gels, a set of
innovative eye therapy pads that it
promoted through the spring. Its a nice
idea dermal delivery eye pads
combine natural essences with bioinnovation to provide an all-in-one solution
to all common eye concerns. Theyre
also reusable up to ten times, but users
werent buying and by the end of summer
they were withdrawn
Some reviews were positive but others
highlighted shortfalls that point to flaws
The serum it releases isn't quite enough for
all night/day moisturization so I do pair it
with a eye cream before bed. I've used
it only a couple of times now so I can't say
for sure if it will last ten uses. But I certainly
noticed that the gels are less moist the
second time I used them

And finally
Thank you again for reading this and for your support in 2015
We wish you a Happy New Year and look forward to hearing from you in 2016
Contact us if you want. John is in New York and Roger is in the UK

+44 1304 613474

+1 212 866 4680

John

john.marchant@business360.com

+44 7941 372 343

Roger

roger.sharp@business360.com