It can take years to get new products to market. Start with extensive research and development, carry out hundreds of tests, move on to endless focus groups, all before the product even hits the shelves.
However, this month Coca-Cola challenged this traditional route to market in North America by using crowdfunding platform Indiegogo to gauge US consumers demand for premium water brand Valser. By all accounts the campaign went well and the drink is now being piloted in selected restaurants in Atlanta.
How long did it take? Just one month. Of course, there will have been work done prior to this but by using a crowdfunding platform rather than its traditional route to market, Coke has cut down the time it takes to launch a new product considerably.
The campaign gave people a feeling of discovering something new and it felt more authentic. Investors also got the opportunity to purchase bottles of Valser and provide feedback on its taste, brand proposition and price creating loyalty and a two-way conversation from the start.
The whole campaign was thought up by Coca-Cola North America’s innovation team, led by vice-president Dave Preston who says: “We saw this as a unique launch platform but also a way to get a clear read on what consumers want.”
This kind of agile innovation is something Coca-Cola CEO James Quincey has encouraged since he took over last year, telling staff to “make mistakes” and not to be afraid of failure in order to encourage quicker innovation.
This isn’t just a preferred management style it’s a necessity. There have been major changes at the top of both Coca-Cola and rival PepsiCo in the past couple of years, with the latter’s long-time leader Indra Nooyi confirming she will step down after 12 years at the helm later this year. The playbook for organic growth is changing, competition is increasing and drinks giants can no longer rest on their laurels.
Innovation will be key to growth going forward, meaning companies must think faster, better and more originally than ever before. Clearly the fail fast model won’t work if brands continue to take years to develop products – it needs to be done quickly and cheaply to maximise the chances of success and minimise the damage of failure, which is why the crowdfunding approach is so effective.
Coca-Cola is not alone in tapping into the benefits of crowdfunding, with both Heineken and Procter & Gamble having also used Indiegogo to test and launch products.
The playbook for organic growth is changing, competition is increasing and drinks giants can no longer rest on their laurels.
Innovation is hard if you are a well-established company that’s built on carefully considered marketing. After all, businesses don’t want to risk damaging their brands, but the world is changing and companies have to come to terms with the fact they no longer have the luxury of time.
Consumer attitudes are evolving constantly so brands have got to be agile and ready to adapt if they want to keep up. With consumers’ interest in healthy alternatives on the up, for example, both Coca-Cola and PepsiCo have launched new products this year to widen their appeal. Coke introduced Fuze Tea to reduce its reliance on fizzy drinks, while Pepsi unveiled its Drinkfinity concept as it looks to attract younger, more health-conscious customers.
Brands would be wise to adopt a startup culture from the beginning of the product development pipeline. For the launch of Drinkfinity PepsiCo set up a separate office for the brand away from its HQ. These co-working spaces are designed to foster originality and allow people to think outside of their big brand box. And while innovation hubs like this are becoming increasingly popular I think businesses like PepsiCo should be adopting this ethos across the rest of their business too rather than just certain aspects of it.
Ultimately, brands can learn a lot from Coca-Cola’s Indiegogo campaign. It should force companies of all sizes to rethink how they approach innovation because it will be key to not only surviving but excelling in a market with every-changing consumer needs. Brands need to have innovation at their heart and have a startup culture firmly in place in order to test and learn faster than competitors.