Pedro A. Bretones. CEO at -ivoro
Innovation is the word in fashion. In food, the sector in which I work professionally, innovation has been and is encouraged by public funding. A full network of technological centres has proliferated in Spain on the back of public money and the necessity to innovate and bring out new products adapted to the current needs of consumers or simply to differentiate them from competitors’ products.
However, at the same time, innovation has been discouraged by a startling reality: product innovations are easily copied and there is no legal way to protect them. That is the case all over the world, but if we consider that in Spain distributor brands take a large slice of the pie, who would want to invest in innovation? It makes no sense to invest money and resources in launching a product that finds its place in the market, that sells well, and then see that a distributor brand makes the same product more cheaply. I suppose that this sounds familiar to everyone. It’s the low cost model that reduces everything to competing in price, a spiral towards poverty for all, including the consumer. In the food sector, low cost can turn out to be expensive in the long term, both for consumers’ health and for the health of manufacturers who obtain tiny profits that restrict marketing budgets and leave the brands floating in the sea of the distributors. They equally know very well how they can obtain a profit from their square metres and make a living from buying and selling as they expect.
I don’t want to concentrate on problems that everyone knows but try to suggest some ideas in order to find solutions. And in this respect, I firmly believe that companies should complement product innovations with other innovations in their business models that allow them to create a proposal of more complex and unique value that will be more difficult for competitors to copy. In this way, the brand will be able to find a way to differentiate itself, not only by means of the price.
I’m going to focus on four of the ten innovations that Larry Keeley describes in his book “Ten Types of Innovations” and try to adapt them to the food industry. These four innovations are grouped by Keeley in a category he calls “consumer experience”. I’ve chosen these four for two reasons: first, because they’re the innovations that require least investment as they’re not connected to changes in the business internal structure; and second, because I think that this is where the Spanish food industry has most to do.
Four innovation aspects that a food company should address to complement product innovation
1.- Brand universe: help consumers to recognise, remember and prefer your products. A brand is NOT a logo. A brand involves creating a unique language that will be used in all the brand’s communication points. We constantly see corridors and corridors of products whose brands are unknown and irrelevant for consumers. A food entrepreneur is capable of investing his capital in opening a factory, hiring human resources, purchasing goods… But when it comes to investing in creating a brand, most of them are unaware of the importance of this point in order to stand out in the market and defend a territory that enables the company to develop products with a positioning and a price in accordance with the brand, with what it promises, how it does things, the quality it works with, and the values it applies in all its processes. ALL this forms a shield around the brand and, as well as protecting it from competitors, gradually increases in value over time.
2.- Services: help to widen the perception of the use and value of your products. It seems as if food has no use or value, according to the way it is treated from its source to the table. Humans have achieved a standard of living so high that we’ve forgotten that our existence depends on a food system that works. The result is that we no longer think that food is a priority and as a result we spend less and less time and resources on feeding ourselves. If to this we add that the industry produces under the premise “delicious, convenient and economical”, food has become a kind of fuel to continue living. I “purchase” where I get the best price, what does it matter in the end.
However, a new era in a responsible food sector is facing us and companies should work harder to transmit the value of what people eat. This will improve the perception of utility and value that belongs to many kinds of food now available on the market. Quality and Food Safety, which is the greatest concern (if not the only one) of many food companies, is not enough. Education and use information for consumers contribute towards creating a better consumption experience.
3.- Distribution channel: find alternative or complementary ways to distribute a product. Possessing the same distribution as your competitor and the distributor brand is like being in the same basket. Ok, that isn’t altogether bad. But many products don’t work because they’re put on general distribution without any brand support, and then go unnoticed in an ocean of similar options. It is interesting to innovate in more specialised distribution channels, where a product may fit naturally and function more easily; then when it has succeeded in that niche, launching in general distribution is less risky. It’s also useful to think of new unknown channels. For example, the pharmacy channel is little by little opening up in a wider concept that includes healthy foods that prevent possible problems, as well as medicines that cure and alleviate them. In the USA and Canada, “health food centres” are a new channel for healthy food. Petrol stations, local shops, gyms, newsagents… any place in the commercial circuit may become our distribution route as an alternative to the bottleneck of general distribution. Even within general distribution, several sales formats exist with different ranges, price policies and target. My advice is to analyse the different options in depth and begin gradually without being dazzled by the largest, which are not always the best partners for all brands.
I don’t want to go into the matter of e-commerce here, because I think that telling an entrepreneur that they can sell products online involves skipping many chapters in the script of the series “e-commerce in food”. Nevertheless, entrepreneurs with vision who prepare their internal process structure to be able to connect (as a smart factory) with an Amazon-like channel will attract lots of customers, although never in the short term nor cheaply.
4.- Bonding with the consumer: knowing your consumers’ aspirations and wishes and developing an emotional bond. The world communicates digitally today. Brands have never had so close at hand the tools to connect directly with consumers. Until recently, the only thing was advertisements in the media that spread a single very clear message and were usually aimed at the general public on a massive scale.
Nowadays, brands have the great opportunity to develop and transmit many reasons to be chosen, that address the target group in a very precise way, and to listen to what consumers think about their products. Above all, they can protect the brand by creating an emotional bond that strengthens confidence in it and facilitates growth and the launch of new products on the basis of loyal consumers. An emotional bond for brands requires truth, patience and determination to invest for that goal.
Yes, innovate, but not only in the product. It’s necessary to innovate in the brand’s universe, in service, in distribution channels and emotional bonding with consumers. All these changes will create a unique brand EXPERIENCE that will be very difficult for competitors to copy. You can wear the same clothes as I do, but it will be very hard for you to copy my SOUL.
Shall we innovate together?