Over the past few decades, there has been a significant surge in the variety of FMCG (Fast Moving Consumer Goods) products accessible to consumers in the UK. This growth has been primarily fuelled by various factors, including brands’ ambitions to boost sales and adapt to evolving market conditions and consumer trends.
While expanding product ranges can offer opportunities for business expansion, it also introduces several challenges for brands. These challenges include higher supply chain expenses, difficulties in accurately predicting demand, and the potential for products to go out of stock at store level. Additionally, there is considerable pressure on brands to innovate and introduce new products rapidly.
In today’s rapidly evolving retail landscape, brand owners and managers must discover effective methods to respond swiftly to emerging trends and gather immediate feedback from consumers to evaluate a product’s success. This is where variable data printing can significantly impact a brand’s investment in new product development, as explained by Russell Weller, Head of Product at DP Colour, Domino.
The Proliferation of SKUs
The proliferation of stock keeping units (SKUs), which are distinct product and packaging combinations found on supermarket shelves, has surged over the last five decades. For instance, the average UK supermarket now carries over 30,000 SKUs, nearly quadruple the amount from 1975. In the US, Walmart’s supercentres can stock up to 120,000 items, and Campbell’s Soup alone offers 400 different SKUs.
This proliferation is primarily driven by brands aiming to meet evolving consumer preferences, such as the increase in vegetarian diets and the demand for eco-friendly, recyclable, and sustainable products and packaging. While it brings clear benefits, it also poses significant challenges for brand owners, particularly those managing new product development (NPD).
Firstly, there’s the issue of cost. Research conducted by Domino indicates that NPD, especially in the FMCG sector, is costly, with approximately 75 to 95% of products failing. Harvard Business School reports even higher failure rates, with over 30,000 new products introduced annually, of which 95% miss the mark.
Secondly, agility is crucial in a fast-paced market, but traditional packaging and label printing processes have long lead times and high minimum order requirements, which are impractical for converters and add to development costs.
Lastly, time is a significant constraint. Domino’s research reveals that underperforming new products are often delisted within six weeks, leaving little time to implement changes based on customer feedback.
Digital variable data printing can help alleviate these challenges to some extent. It can reduce the cost of product development by lowering packaging expenses and enable faster response times in packaging innovation. Smaller minimum quantities also address supply chain challenges and reduce packaging waste from excess stock.
Moreover, digital printing allows for designs incorporating variable data and 2D codes to capture real-time consumer feedback, with the option for late-stage customisation in factories to create market variants in real-time.
Increase Agility with Variable Data Printing
Conventional multi-stage packaging and label printing processes do little to meet the demands of new product development managers. Brands and converters recognise that digital printing offers a quicker turnaround for implementing packaging changes. However, the full potential of variable data printing – beyond simply printing numeric codes – is often overlooked.
Variable data printing (VDP) is a type of digital printing where elements like text, graphics, or images can be altered from one printed label to the next without interrupting or slowing down the printing process, enabling the mass customisation of labels.
In the context of new product development, incorporating variable elements and content into labels or packaging provides brands with much-needed speed and flexibility when redesigning product labeling for a new variation or SKU. It also allows for extensive product experimentation and marketing promotions, such as introducing seasonal and limited-edition flavors and on-pack promotions. Additionally, it facilitates cost-effective small runs of new packaging designs for A/B testing.
Variable data printing simplifies the process of updating labels when there are changes to the product formulation or recipe, such as using new ingredients or due to ingredient unavailability.
Moreover, including a variable data QR code, for instance, along with a call to action for consumers to scan the finished pack, can serve as a valuable source of rapid insight into which designs or product variations are more successful.
Collecting Real-Time Customer Feedback
“When it comes to new product development, the goal is to swiftly enhance any aspect, whether it’s messaging, portion size, or anything else that needs adjustment, to not only maintain the product’s presence but to ensure its success and growth.” – Quote from an FMCG brand owner based on Domino research.
While third-party consumer panels and product testing can offer insights during the initial stages of product development, once a product is launched, pinpointing reasons for potential underperformance becomes challenging. In the absence of adequate insight, delisting may seem like the easier option. This is where variable data QR codes prove invaluable for brand owners and product development teams in gathering crucial real-time feedback.
The encouraging news for brand owners is the rising acceptance of QR codes across various contexts, leading to an increase in scans. According to a 2023 Statista research study, the number of consumers in the United States scanning QR codes with their smartphones is projected to grow by 16 million between 2022 and 2025. This growth is attributed to QR codes facilitating mobile payments and providing access to traditionally printed materials online, such as restaurant menus for in-app ordering or weblinks embedded in retail displays.
Similarly, LXA’s ‘State of QR Codes in 2023’ report highlights:
38.99% of respondents expressing a desire for broader use of QR codes in the future. 57% of respondents having scanned a food QR code to obtain specific product information. 67% of respondents agreeing that QR codes simplify life.
For new product development managers, the use of variable data printing via QR codes facilitates seamless A/B testing of packaging variations to determine which garners the highest consumer engagement, swift identification of the preferred product variation when testing new scent or flavor combinations, understanding of regional market preferences, and evaluation of channel effectiveness.
Furthermore, as brands contemplate integrating QR codes, particularly those powered by GS1, as part of the shift to 2D codes at the point-of-sale, leveraging this potent technology to inform product development appears to be a logical progression.
Conclusion
The proliferation of SKUs presents a substantial opportunity for brands, but it also intensifies the demand on brand and new product development managers to swiftly respond to emerging trends and identify successful product variations even more promptly.
To augment their product development process with agility and integrate real-time consumer feedback, brands should contemplate collaborating with packaging and label converters offering high-resolution digital variable data printing within their service portfolio. Alternatively, they may explore investing in digital printing technology to implement variable QR codes near-line within their own manufacturing facilities.
