FMCG in Malaysia is intensely competitive – and it’s harder than ever to launch a new product that achieves sustainable growth. By understanding a product’s role and potential, however, a brand can beat the odds.
Between 2000 and 2022, 10% of new product developments (NPDs) in Malaysia reached 1% penetration by the end of their first year. This has now dropped to 9%.
Brands cannot assume they will be able to improve on this figure later: Worldpanel data shows that only around 20% of NPDs grow their buyer base further in the second year.
Early shopper recruitment is the key driver for an NPD’s success in this market – so it’s absolutely crucial to make the first year count.
The bar has been raised
Setting ambitious – yet realistic – penetration targets is vital, especially as the requirements for success have become more demanding.
The 1% penetration benchmark is what Worldpanel refers to as the Bronze Level for NPDs; and this alone is an achievement worth celebrating. Once that bar has been cleared, a brand can set its sights on Silver – the Top 100 NPDs in the market – or Gold, the top 1%. But this has become more difficult. Whereas a product previously needed to reach 1.9% penetration to reach Silver, for example, the benchmark now stands at 2.1%.
To make informed decisions about where to focus investment, and how high to aim, brands must evaluate a product’s potential for shopper recruitment. This needs to be based on a sound understanding of the type of NPD being launched, and its role in helping the brand grow.
Determining the product’s staying power
Brands should also examine how effectively a new product motivates consumers to purchase again, by tracking the repeat rate.
Driving up repeat purchase will support long-term loyalty, which is a vital advantage in a market bursting with choice. However, only around 14% of Malaysian consumers who buy an NPD will make a repeat purchase, while it is more common for the repeat rate to fall than grow over the second year following launch. This makes it even more essential to build the biggest buyer base possible in year one.
A second chance
Of those NPDs that fail to attain Bronze Level in the first year, 4.1% will manage to strengthen their penetration in the second, but it will take continuous support. To cut their losses early on, brands need to distinguish between the NPDs that are worth investing in to improve the buyer base from those they should consider delisting.
Worldpanel by Numerator’s report – The Next Level: What is the next step for a new launch? – describes how brands can make comprehensive plans that ensure they don’t just deliver an impactful launch, but a sustainable product that is successful for years to come.
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