What Explains the Success of Product Innovations? An Analysis with Scanner Data for the German Market of Yoghurt

Abstract

A high degree of product proliferation is characteristic for many markets of processed foods, as is an increasing competition due to globalization and a further liberalization of agricultural markets. It seems increasingly important to secure market shares and sectoral income on unregulated food markets, e.g. by the successful introduction of new food products. It is the objective of this article to elaborate for a market with a high degree of product differentiation, i.e. the German yoghurt market, which determinants may affect the success of product innovations. To examine this question, scanner data are utilized. The success of innovations is measured by the revenue reached within a year after the introduction of a new product in a specified number of stores. As all selected products remained on the shelves for at least 12 months after their introduction, we compare product innovations with a minimum degree of market success among each other. Multiple regression analyses reveal that the variation of revenues across 41 new products can be explained by more than 90 % with ingredients and other attributes of the products, with the type of the marketing channel, with characteristics of the innovations and dummy variables for the names of the manufacturing firms. Interestingly, it is not so much the price premium of an innovation that matters as it is often stressed in hedonic analyses. According to our success criterion, it is more important to realize a sizeable share of the market in order to create a particularly successful new product.