Consumer no longer always has the last word

Innovation has never been easy. It requires a set of tools and skills that are complex to acquire and manage. However, it is becoming increasingly difficult to achieve.
May 2021
Consumer no longer always has the last word

In recent years, we have seen how innovation has made its way onto the shelves and transformed categories. New packaging and new preservation or manufacturing technology has transformed the look of entire shelves in a matter of a few years.

The next step has been focusing on consumer needs. Philosophies like design thinking have molded the cultures of FMCG organizations towards the search for behavioral insights and unmet needs. We have built new products that are more tailored to the new reality of today’s more demanding and aware consumer.

However, the next force for change in new product development is approaching like a tsunami, with great force and almost without warning. A large number of innovative products will be developed that have nothing to do with how we have worked up to now. Increasingly, we will have to analyze the market as a complex system with various forces that do not always converge.

Currently, it is clear that the consumer is not the same as before the pandemic, though we are still the same people with similar needs. Instead, it is the context that has changed drastically.

On the one hand, we will have governments regulating in order to change the course of many markets. A clear example are the packaging regulations we have seen in recent years and that we will see in the near future. Plastic, the most widely used material for wrapping, containing, and preserving food and consumer projects, has a mandate to change—not only because consumers continue insisting on this change, but because European, national, and local governments are demanding it. 

Something similar occurs with meat consumption and the promotion of alternative proteins. The new EU strategy (From Farm to Fork) aims to encourage a reduction in the consumption of red meat and processed meat products in favor of more plant-based alternatives. Once again, it will not only be the desire of consumers, but also a push from authorities that will generate growth in these categories.

There are also new retailer policies. Many of them, searching for differentiation, have placed certain demands on brands that are forcing structural changes in certain categories. A few examples are the cage-free egg policies that some have implemented, the increasing requests for cleaner labels from their suppliers, and even the use of Fairtrade ingredients in some of their products, such as the UTZ seal on many German chocolate store brands.

Likewise, companies are increasingly taking the UN Sustainable Development Goals (SDGs) into account as a key pillar in their business strategies and therefore in the type of products that they are developing. Large multinationals such as P&G have already taken many steps in this direction and have integrated it into their company strategy. Specifically, they have adopted a large number of initiatives to meet these goals by 2030, such as the reduction of plastic in packaging.

On the other hand, there are changes in society that affect consumption much more than one would think, such as working from home. It seems that we have instantly adopted this habit, and there are already companies that have eliminated office rent from their expenditure.

A new paradigm in innovation is therefore required. We can no longer consider only the triangle of consumer (desire), technology (feasibility), and business (viability). We must now analyze opportunities in terms of systems, consisting in several forces moving in different directions but having implications on the others.

It is therefore important to define the different ecosystems that interact with each other and the forces that drive them. This will help us to understand the current situation and better understand the context and problems that we need to solve. 

This new dynamic requires a more distant and strategic vision than what we have been doing so far. We need to connect many dots and create more complex mappings of actors and forces to be able to develop new forward-looking solutions. The consumer is still at the center, but the surrounding context and the ecosystem has become significantly more complicated and is increasingly key to defining successful products.

This article has also been published in the FMCG & food section of "El Economista" access full article here

Image: Eduardo Soares