Welcome to our 2015 Insights & Outsights newsletter

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”

(see back issues)

IN THIS REVIEW

• Our website: A refresh

• ‘Innovation’: Should disruption be the goal?

• SmartNews360: More people who want less

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

Our news…

• Premiumization: Unilever strikes for higher ground

• Brand loyalty: Going, going,….?

• Millennials: The experience imperative

• Keeping up with critical news: It’s easier with our help

A few thoughts and observations…

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

• Innovate marginally: Through the power of talk

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

And a few thoughts on innovation…

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 doesn’t 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 website: A refresh

Our news…

‘Innovation’: Should disruption be the goal?

Our news…

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 they’ve 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

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!

The process can seem a little mundane - beyond the brainstorming sessions and

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

We’ve been tracking issues and preparing summaries for over five years now and we’ve built up a library of material that we’ve started to make available online. For example, you can already see archives for our food business and personal care business sites

SmartNews360: More people who want less

We’re 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 we’re 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&G’s activities or Unilever’s

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

Retail news and innovation

Our news…

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 we’ve 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

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

countries

✔ Powerful search

✔ Easy alert creation

✔ Simple notifications

Our news…

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 won’t be easy competing with established prestige skin care powerhouses like Estée 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, Unilever’s Foray Into Prestige Skin Care

A few thoughts and observations…

REN Dermalogica

Kate Somerville Murad

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 it’s 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

It’s 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 besomething, 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:

See too many GoPro ads here, or an amusing spoof

GoPro, with its Be a HERO helps millennials to live, relive

and share their experiences

Learn or watch them celebrate fun, health and

happiness

Color Me Rad and The Color Run give millennials an

excuse to ‘let loose’. Finishing matters less than taking

part and sharing

…and build stronger bonds

Personalized Coca Cola Bottles gives the chance

to make the iconic bottle mean more…

A few thoughts and observations…

Some ideas, markets, trends move so fast that just keeping up is hard

Here’s 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

Keeping up with critical news: It’s easier with our help

A few thoughts and observations…

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

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, it’s 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

It’s essentially a story of looking broad to find ways to make small incremental improvements in any process that when aggregated make a large difference

It’s been applied successfully to many business settings, from healthcare to Google, and in fields as diverse as surgery to speed eating

We’d 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 that’s 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

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

And a few thoughts on innovation…

“…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

Surely you’ve 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

We’ve 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…

It’s remarkable how effective a series of expert interviews with accompanying research and analysis can be in yielding valuable and actionable strategies

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 and…talk to us

Innovate marginally: Through the power of talk

“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

Also good:The era of open innovation

Etc., etc., etc.

And a few thoughts on innovation…

A fast 2015 flop from Sephora

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, it’s much cheaper to find a competitor that failed with a product launch similar to what you’re 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 we’re starting to do this analysis

Sometimes we can even see when a product is launched and dropped in a matter of months. We’ve 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

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

Sephora Collection launched Freshen Up

Cooling Undereye Gels, a “set of

innovative eye therapy pads” that it

promoted through the spring. It’s a nice

idea – “dermal delivery eye pads

combine natural essences with bio-

innovation to provide an all-in-one solution

to all common eye concerns.” They’re

also reusable up to ten times, but users

weren’t 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

The Humdrum The HitsThe Flops

And a few thoughts on innovation…

“Failure” “Success”

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

And finally…

John

+1 212 866 4680+44 1304 613474

+44 7941 372 343

john.marchant@business360.com roger.sharp@business360.com

Roger