In the personal care and luxury sectors, launching new products is often fraught with challenges. According to Kuznetsova one of the biggest hurdles is accurately predicting demand, especially when historical sales data is unavailable.
In a recent interview with CosmeticsDesign, Kuznetsova discussed the reasons behind new product launch failures, how artificial intelligence (AI) can revolutionize demand forecasting, and why personal care and luxury brands must embrace these technologies to succeed in today’s competitive market.
Common causes of beauty product launch failures
Kuznetsova emphasized that a significant reason for new product launches failing to meet expectations is inaccurate demand forecasting. “Without historical sales data, predicting demand accurately is challenging,” she explained.
Other common issues include market saturation, shifts in consumer preferences, and supply chain disruptions. "It is estimated that over 80% of new consumer product launches fail," Kuznetsova noted, underscoring the need for more advanced tools like AI to mitigate these risks.
The difficulty in launching successful products is exacerbated in the personal care and luxury markets, where consumer tastes can be highly unpredictable and competition intense. “Leveraging modern AI tools to improve the odds is a great opportunity to protect the investments,” she said.
AI and machine learning: A game-changer for forecasting
Traditional forecasting methods, often based on historical sales data and subjective insights, are no longer adequate in an industry that demands precision and adaptability. "These dated approaches are problematic because they rely heavily on people with inside knowledge and may be subjective, manual, and time-consuming," said Kuznetsova.
In contrast, AI and machine learning offer a more sophisticated solution. “The machine learning-based forecast can be more accurate than simple statistical methods,” she explained.
AI algorithms can analyze vast amounts of data from diverse sources, including social media trends, supply chain analytics, and the sales of seemingly unrelated products, to provide insights that humans may miss. However, she acknowledged that AI can sometimes feel like a "black box," with its results requiring careful interpretation, particularly during the early phases of its deployment.
The role of probabilistic forecasting
Probabilistic forecasting is another tool that can help companies make informed decisions about product launches. This method predicts a range of possible outcomes, allowing companies to plan for various scenarios. "Since it provides a range, it is more accurate than deterministic forecasting," Kuznetsova explained.
Probabilistic models also allow for real-time updates as new risks or market changes emerge, making the approach particularly actionable in fast-paced industries like beauty and luxury. “It's more actionable, allowing businesses to factor in shipping needs or calculate risks, ultimately leading to better decision-making,” she added.
AI's ability to track emerging trends
The ability to quickly identify and act on emerging trends is crucial for personal care and luxury brands. AI can help by monitoring social media and other platforms to detect shifts in consumer preferences.
Kuznetsova highlighted how AI can track trending topics, analyze sentiment, and even predict how these trends will influence demand. “AI can factor in seasonality, weather patterns, and provide real-time updates with a level of granularity that humans cannot achieve manually,” she noted.
Additionally, events such as fashion weeks, celebrity endorsements, and viral social media posts can significantly impact product demand, especially in the luxury and beauty markets. AI-driven forecasting tools can help companies predict these effects more accurately.
“For example, after a fashion week, AI engines can quickly analyze whether it's the applique or the color of a dress that drives demand,” Kuznetsova said.
Moreover, AI's ability to analyze large datasets allows brands to personalize their campaigns to specific customer segments, leading to higher sales and improved customer satisfaction. "AI may also help factor in risks like supplier delays, which can make or break a season," she added.
Embracing AI for success
As the personal care and luxury sectors become more data-driven, companies that fail to integrate AI into their forecasting processes may struggle to keep up. The technology not only helps brands anticipate market changes but also allows them to react swiftly and efficiently to unpredictable events.
For Kuznetsova, the message is clear: “Leveraging AI tools is not just a competitive advantage but a necessity to protect and maximize investments in new product launches.”
In today’s fast-paced personal care and luxury markets, product launch success is increasingly tied to the ability to forecast demand accurately and adapt to changing consumer preferences. With AI and machine learning offering new, more precise tools for demand forecasting, brands have an unprecedented opportunity to improve their odds of success.
As Kuznetsova concluded, embracing these technologies is key to navigating market complexities and staying ahead of the competition.