By Peter Leighton

InnovationProfit: Why it Matters& How to Do It

Drives

Following

You are either deliveringa product that hasalready been made…

Leading

…or you are definingwhat the market wants,

but has not yet articulated.

One often thinks that they aredelivering something new

But usually this is at bestincremental

not relevantlyand typically

differentiated.

and different.

Selling on price, using “push” sales, higher sales & marketingcosts, lower margins & erosionof corporate profits.

And this leads toCommoditization.

But if you deliver a product or service that is truly unique, differentiated and relevant, demand drives profitsand corporate value increases.

• Insulates the brand from competition• Sustains sales velocity• Extends brand lifecycles• Differentiates brands• Builds user engagement

Innovation is essential:

Innovation

of an unmet need.is the articulation

Two key questions:

How do you turn that into

How do you find unmet needs?

innovation?

Leadership meansblazing new trails,

otherwise you areeating someone’s dust.

Stop looking in the rear view mirror.

Apply new research toolsand algorithms.

Define a strategy.

Marketing is the coreto engaging users.

Branded companies outperformunbranded companieson a variety of financialmetrics, including

profitability andvaluation.

Understanding consumer’slifestyles, needs and

behaviors provides insightinto how, what and when

to market your brand.

the most important factor.

Consumers ultimatelydrive the market.

Consumer empowerment is

Two tools to helpidentify consumer needs.

Ethnography

AnalysisCross Impact

Ethnography strives to understandhow people live and make decisions.Unlike traditional research, it isobservational, qualitative andnon-directed.

Defined by products. Fads don’t change behaviors or values.

Time

Aw

aren

ess

Cyclical: Repeating patterns over time (i.e., stock market, fashion).

Defined by values and beliefs.

Time

Aw

aren

ess

Macro: Driving forces that bring changes in values and beliefs (i.e., environmental movement).

Defined by behaviors and activities.

Time

Aw

aren

ess

Micro: Driving forces that define attitudes & behaviors in cultures (i.e., body piercing).

Cross Impact Analysis is a modelthat maps consumer behaviortrends based upon valuesand beliefs; these precede andpredict changes in consumer behavior.

TimeA

doption

Self Care

Innovation Opportunities

Echo Baby

Some current trends:

DRIVERS TRENDS

AgingTime Starved

HealthcareNutritional

DrivenDiet Linked

NutritionalChronic

Better

Information

Families

to Health

Boom(Millennial)

Disease

Population

Costs

Performance

Segregation

Fitness

Convenience “Grab-n-Go”

Therapies

“Alternative”

NutritionalSolutions

category opportunities:

Mental BalanceMood FoodFocus/Relaxation

Phyto- Fractions

Exotic Health

Beauty From Within

Peak PerformanceCognitiveEnergy

Functional Foods

Condition Specific

Anti-Inflammatory

“Wellness Insurance” “Lifestyle Antidotes”

Some current product

Marketing focus:

Traditional Focus:

Product Negatives

Products

Features/Benefits

Brand Awareness

Emerging Focus:

Product Positives

Experiences

Solutions

Brand Presence

A new marketing paradigm :

76% of products are “me-too”

Innovation & Differentiation

and fail within a year of launch.

Balance science/technologywith functionality to delivera lifestyle solution.

Biotech advances are identifyingnew compounds and utility ofexisting botanical constituentswhich have functional applications.

Nutrigenomics is focusing onthe relationship between geneactivity and cell function.

While science is migrating intoconsumer products,

it’s critical to understand thedifference between

Treatment vs. Wellness:

Marketing treatmentMotivation: FEAR

“Disease” solution

Consumers NEED

“Directed” purchase

Safety/Efficacy

Marketing wellnessMotivation: HOPE

“Enhancement” benefit

Consumers WANT

“Selected” purchase

Experience/Convenience

“Wellness”

lifestyle solutions:Consumers want

“Wellness”

Four keys togetting there.

Concept needs tobe understandable

or simple to use.

Brands must beendorsed, believed,

and adopted bystakeholders.

Product needs to

user experience.provide a positive

and based upon

Safety and integrity

compelling science.

are essential,

A credible third party vets the product: Academic, Consumer, Regulatory, etc.

3Third Party

A valued second party endorses the product: Friends, Media, etc.

2Second Party

1

The product meets consumer satisfaction.

First Party

All products require validation.The higher the stakes,

the greater the needfor third party validation.

Ideation & innovation in the product development process:

Concept Feasibility Development Commercialization

Market AssessmentIdea CreationBuild ModelsIntellectual Property

Cost AnalysisRegulatory AssessmentRefine ModelsOperational Requirements

Technical DevelopmentMaterial SourcingSales & Marketing PlanningPackage Design

Pilot ProductionLaunch Plan ExecutionManufacturingProduct Management

B2B Nutraceutical Trends:

Limited ScienceUnrestricted Market

Strong ScienceRestricted Market

B2B Nutraceutical Trends:

BiotechnologyCommodity Raw MaterialsBulk Herbs Plant Sciences

Branded Raw Materials

Thousands of companies selling undifferentiated bulk botanicals. Low margin, no IP, no differentiation.

Hundreds of companies selling processed and standardized raw materials. Low margin, limited IP, limited differentiation.

Dozens of companies selling unique or somewhat novel raw materials. Moderate margin, moderate IP, somewhat differentiated.

Very few companies selling researched, novel bioactive compounds. High margin, moderate to strong IP, high differentiation.

A handful of companies selling well researched, novel bioactive compounds. High margin, strong IP, patented.

+ Targeted finished products + Strategic partnerships

Executing on innovation:

✔ Create unique attributes to the brand with relevant point-of-differentiation in the market.

✔ Target a defined consumer market segment.

✔ Don’t sell a product; Build a strategy.

✔ Develop a brand marketing campaign for online andoffline content based upon the Brand Platform.

Executing on innovation:

✔ Build out several unique finished product formulations including dossiers.

✔Aggregate all literature and supportive data into a complete dossier.

✔ Use media outreach, online marketing and segmented marketing approaches to build consumer advocates.

✔ Support the co-brand, driving value across B2B andB2C.

Consumers eat to enjoy, everything else is secondary.Focus on “Bottom Up” approach to building

In Summary

consumer solutions.Deliver a lifestyle solution, not a medicine.Look for unarticulated consumer needs. Most successes:

Create new sub-categoriesBuild new brands, not line extensionsProvide an experience (convenience, taste, etc.)

Peter LeightonAbunda, Inc.peter@abundasolutions.com(801) 550-6962www.abundasolutions.com

Contact:

Building brands and corporate valuethrough innovation.