Halewood International's vodka-lager mix is a good example of new product development. It targets emerging consumer needs based on observed behaviour. In order to develop the RTD market, innovation needs to go further than just adding a new flavour to an existing range.

Following fears that the RTD market is finally entering a decline, or at least plateauing, Halewood International is aiming to liven up the market with its new Red Square branded vodka and lager mix. The new citrus flavour drink aims to appeal both to women who find lager too bitter and men who find RTDs too sweet.

Innovation is certainly the key to maintaining the momentum in the RTD market, which has seen record growth over the past five years. But this is not just novelty for novelty's sake. The product's strange mix of ingredients is apparently based on consumers' actual behavior - Halewood claims to have observed consumers mixing vodka and lager in bars and clubs.

Other recent innovations in the market tend to revolve around introducing new flavours. Cranberry was very popular for a while (due partly to over supply) but now apple and even pear are gaining ground. Bacardi in particular has tried to maintain excitement when introducing new flavours by only releasing them as limited editions. This prevents the public from becoming jaded by yet another variation on a theme.

However, simple innovation in flavour is not enough to keep consumers interested. Innovation strategies need to identify consumer needs and find a novel way of fulfilling them. One good example is WKD's development of the RTD keg. This 5-litre pack is targeted at the at-home occasion, including parties, barbecues and group sports watching. The off-trade is a relatively untargeted market for RTDs, which tend to be drunk in pubs and clubs. Using innovative packaging to open a new occasion is an intelligent example of new product development. For the same reason, various RTD companies are now considering bringing out their product in a can - simply to target young men, who prefer not to drink from a bottle while watching sports.