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The CPG innovation process: 6 steps to success

The CPG innovation process: 6 steps to success

The innovation process in CPG doesn’t have to be tricky - here, we outline it in a few simple steps. Learn what these steps are and what CPG brands need to consider to innovate effectively.

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The consumer packaged goods (CPG) sector is a notoriously challenging industry to innovate within. A super competitive landscape, low research and innovation budgets and a constant push to produce new things quickly have made the CPG innovation process challenging. 

So, like, why is it so hard to innovate in CPG?

1) Innovation isn’t easy to do

Part of the challenge of running innovation projects in CPG lies in just how abstract innovation is by nature. Since you’re developing something that’s brand new, you usually can’t predict how your new product, offer, package, or marketing asset will perform in reality. For all you know, the innovation may not even succeed after launch – a risk that every CPG brand has gotta take if they want to innovate. But there are ways of mitigating that risk.

2) Innovation isn’t a dedicated function in a lot of CPG businesses

Most of the time, CPG organizations don’t have special innovation teams or experts. After all, the CPG sector spends about 3% of global R&D spending, as compared to 23% in the electronics sector. It’s less of a focus for CPG than it is for other industries; put a different way, they don’t value it quite as much. So, some CPG brands might not even have the in-house expertise needed to kickstart the innovation process. 

3) Innovation isn’t by nature consumer-centric

Companies love to use the word “consumer-centric” when they build strategies, loiter around the water cooler, or present to other stakeholders. But not every business makes consumer-driven innovation processes. Instead, brands often rely on assumptions and opinions without verifying that those things align with real consumer motivation or needs. This can cause problems before you’ve even gotten to the concept testing stage of innovation.

So, how do we make all of this easier?

The CPG innovation process in 6 simple steps

We’ve got our own approach to the agile innovation journey. This approach lets us ideate, refine, re-test, and move into product development quickly and easily.

Here’s what it looks like:

1) Innovation / Idea generation

This step sets the stage for CPG brands to come up with as many new ideas as possible. You know that you need to come up with one idea that will solve your customer’s pain points or jobs to be done, so this is when you can come up with the craziest and most creative ideas. 

2) Prioritizing ideas

Here, you start testing all the ideas you jotted down. Put them all in an idea screening survey and send it to your potential customers. Ask your respondents to tell you which of the ideas they like best. For example, with Upsiide’s idea screening tool, customers can swipe right or left if they like or dislike an idea (more on that in the next section!). After the survey is done, use that data to finalize which ideas you’re going to bring to the next stage.

If you want to learn more about screening and prioritizing ideas, here’s a little bit of light reading for you.

3) Optimizing ideas with potential

Not all innovations are perfect from the start. That’s why you need to analyze how you can improve aspects of your innovation idea so that it solves your customer’s pain points and adds value to your CPG product portfolio. Upsiide’s Idea Split tool was built exactly for that: respondents answer a few questions about each idea to give more details about why they like or dislike it. Brands can then assess the results against business metrics that matter to them and discover which ideas are worthy of taking into development.

4) Projecting volume, source of volume and incrementality

Competition in the CPG industry is fierce. Launching a new product is way easier when you can pre-emptively calculate where your innovation will source volume from, how it will steal it from your rivals and if there are any of your own products that you’re stealing volume from (i.e., cannibalizing). 

5) Product development and launch

You start prepping yourself for the final product development process by determining who your consumers are and how you will launch the innovation. And then it’s “go time” for the product launch!

6) Tracking and Measuring ROI

Now that the launch is behind you, you can start measuring how your innovation did and what returns it brought back. This is the time to compare your predictions to real performance data. 

This 6-step process helped many of our CPG clients launch great product innovation projects. 

Other stuff you can do to streamline the CPG innovation process

1) Harvest knowledge from resources you’ve already got

Get your hands on any kind of consumer insight when you start running innovation research. Most of the time, the hardest part about using this intel is finding it. You’ll be surprised by just how much information has never been consolidated or internalized by the business (this is your chance to fix that!). 

Some of the places you might want to look at include:

  • Internal resources: stakeholder & expert interviews, agency partners, front-line staff, sales team, customer feedback, social media listening, internal CPG reports, etc.
  • Foundational insights (if you have run any research before): usage & attitude, barriers/motivators, need states, segmentation, etc. 
  • External resources: literature on macro trends, consumer trends, observation (e.g. retail safari), and academic research.

2) Engage your team at every step of the innovation process

This is your moment to proudly exclaim, “Avengers, assemble!”. Maximize the success of your innovation project by leveraging your team’s strengths along the way. Make sure you seek out diverse views from different departments, from top executives to sales & marketing to engineers and product developers.  

Try to create a collaborative environment where everyone gets involved and has their voice heard. Making the working and brainstorming process playful will help create a space that’s open and free of judgments and constraints. 

3) Try out innovation testing and research tools

The innovation research space is full of tools that can help you test and measure your ideas. Some of those tools are provided by research agencies, and some are available for DIY. 

Look around and find tools that are best suited to test CPG innovation ideas and align with your business goals. For example, Upsiide is a great tool to screen innovation ideas thanks to its intuitive and mobile-first interface. Our idea screening feature leverages how people use phones and social media apps like Tinder. 

[picture of Upsiide interface]

You might also find it helpful if a tool lets you use images or videos to test ideas. Visual cues can help show consumers how a new product, package, or feature looks and keep them engaged along the way (P.S. Upsiide can do that, too! Yes, we’re shameless 😜).

Innovating in CPG doesn’t have to be hard anymore…

…especially when you have only 6 steps to follow. Want to start building an innovation project for your CPG brand but not sure where to start? You might want to learn about innovation pipelines and how to build them because they can help you establish your innovation process for the long term. And make sure that you check out this handy article for testing innovation ideas where we’ve outlined all the steps and questions you need to consider in your research. You can thank us later 😉