Professional Documents
Culture Documents
Innovation in Products
Innovation in Products
Submitted by:
Aayush Sharma (B14126)
Akshay Pandita (B14129)
Karan Chhabra (B14149)
Contents
INTRODUCTION......................................................................................................................... 2
PROSPECTS: .............................................................................................................................. 13
SUMMARY ................................................................................................................................. 14
INTRODUCTION
For a company to succeed and sustain, it becomes necessary at a point to bring innovation in
products and offerings by the company. Increasing competition in todays world has created a
strong need to provide product differentiation. Thus innovation becomes central to business
strategy.
But innovation should also be targeted in the right direction. Companies must be well aware
about the areas which require innovation and then work towards the grey areas.
Although it is imperative to innovate, generation of innovative ideas is highly challenging as
there are plenty of factors involved for the idea to succeed. This makes it risky and difficult to
implement considering the high cost of R&D involved, short PLC (product life cycle and
changing technology. While developing a new product it is important to consider
profitability, quality, cost, flexibility, creativity and delivery.
Companies generally face strategic dilemma whether to exploit existing technologies or
explore new ones. Existing competencies may provide them short term success, but
competence exploitation may hinder firms long term vision by blocking the exploration of
new competencies. Successful product innovation demands that a firm must exploit its
existing competencies while trying to avoid their dysfunctional rigidity effects by renewing
and replacing them with entirely new ones.
new product, which in turns depends on the ability of potential competitors to imitate
such innovations.
Market Structure
Innovation is considered to be both cause and consequence of competitive pressures
characterized by market structure. Thus the threat of new firm entering the market
with better or equivalent product can force the existing players to invest in R&D for
product differentiation.
Phase I: Identify the research method and study related to the innovation targeted and
identify the problem.
Phase II: This phase involves clarification of problems and results from Phase 1
Phase III: Based on the problems and research methods identified, conduct the
analysis and measure the article quality within current cases.
Phase IV: Phase III results are fed in two channelsFirst channel goes back to phase II
Second channel led to phase V to develop new ideas.
New ideas generated are then further used for developing new products.
The Feedback from the organization helps identify the importance of idea as the basis
of products and suggest changes necessary for improving the idea.
Based on the feedback received, ideas are reworked upon to reduce cost and risk.
The results of all the previous stages are then compiled to create a new product or
service.
The above framework can be used by companies to radically increase use of scarce resources
and reduce cost and risk simultaneously. But it is also important for the organization to
continuously nurture and develop innovation process.
Customer visit teams: Teams visit clients and customers to conduct interviews based
on a structured guide to understand problems, needs, and wants.
Customer focus groups for problem detection: Focus groups are used to identify
needs, wants, problems, points of pain, and new product suggestions.
Lead user analysis: A group of innovative customers or users are roped in to identify
problems and potential solutions.
The customer or user designs: Customers incentivised to design their next new
product.
Partners and vendors: Utilizing outside partners and vendors for seeking new product
ideas. The advantage is that partners bring extra technical capabilities.
External product designs: This open innovation method involves using the internet to
invite customers and others from the external world to submit finished product
designs and ideas.
External submission of ideas: In this open innovation approach, customers, users, and
others in the external world are invited to submit their new product ideas, often via the
internet and your Web site.
External idea contest: Involves hosting a contest and inviting the external world to
submit ideas.
Other
Peripheral vision: Examine the outside world to find trends and threats and thereby
identify potential new products
Patent mapping: Mapping or mining others patents to understand where the technical
and competitive activity is and identify the potential areas for a new product.
Idea capture internally: Formally soliciting new product ideas from your own
employees.
disciplined problem solving. Second, synthesize research findings into a model of factors
affecting the success of product development. The model highlights the distinction between
process performance and product effectiveness and the importance of agents, including team
members, project leaders, senior management, customers, and suppliers, whose behavior
affects these outcomes. Third, indicating potential paths for future research based on the
concepts and links that are missing or not well defined in the model.
Co-relation between R&D and product innovation
core
competitive
competencies edge
profit
market
share
expansion
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0.461
0.136
0.715
0.876
0.461
0.136
0.715
0.136
0.715
0.34
0.361
0.75
0.287
0.287
0.62
Intense Competition:
FMGC major HUL's popular deo brand Axe was beaten by Fogg last October and then ITC's
Engage claimed the second spot.
Now Wildstone, a deo from another FMCG minnow, McNROE Cosmetics, is spraying down
Axe's neck, having achieved fourth place in the market. It has become one amongst two top
players with its Wildstone and Secret temptation brands. Bottom line being, that even in
urban India, Deodorant penetration stands to be at 9%, holding opportunities for all the
players to grow the demand.
But one thing which expert agrees upon is that one thing which is driving demand more than
anyone is preference of different fragrances for different occasions. Over 10 per cent of
deodorant consumers are said to be the heavy users who prefer multiple brands and/or
variants of a single brand for multiple occasions. These consumers are vary of the fact that a
usual day at office, an informal party or evening dinner require different fragrances. This
trend is not seen in any other FMCG product as consumers are more loyal towards the brand
they have been using, be it detergent or toothpaste. This is why growth in deodorants is
pegged at 18% vis--vis 9% average growth rate in FMCG.
Deodorant Market in India
Deodorant market is among the fastest growing product in the FMCG category and is
growing at 16 percent in India. This kind of growth also makes India, as the fastest growing
deodorant markets in the world. As a result major FMCG companies are fighting an intensive
battle in for a share of the pie in the Indian. They have made various attempts through
product innovation to grab the consumers attention.
Year
2014
Deodorant Market
2100
Size (In Rs. Crore)
Source: Euromonior International
2012
2011
2010
1521
1129
793
In India the market is dominated by companies of Indian origin, rather than MNCs. As
Economic Times report based on the March 2014 quarter Nielsen data, Fogg leads the
market with 17% market share and is followed by Park Avenue with 8%. While Axe has
slipped to third place with only 6% market share and its market share is now almost identical
to Wild Stone. Although Axe has been in the market for long, it just took four years for Fogg
to become the leader in the market. The reason for this phenomenon success is attributed to
product innovation and creative positioning of Fogg.
Segmentation of this market
Aerosols
Body sprays
Deodorants/anti-perspirants
Roll-ons
Growth driver
Overflow from supply side: Various new brands are introduced in the market every
year each backed by intensive marketing strategy.
Ever evolving consumer preferences: Mass media campaigns have led to creation of
the need to smell good. Natural climatic conditions of the regionof heat/ humidity/
dust, etc fuel this need.
Men in India are slowly becoming more and more conscious of their grooming needs
(including body odour)
Affordability: Most deodorants are in sub - Rs 200 price points which make them
more affordable.
Category penetration would continue to increase as the channel increases in its reach.
Fogg made a clutter breaking entry with a clear message of 800 sprays in one bottle and
grabbed the attention of the consumers who saw the functional benefit as a unique offering.
This category faces three types of consumers - loyalists and semi-loyalists and then there are
hunter consumers. The bulk consumers belong to the segment of loyalists and semi-loyalists
consumers who like to experiment with new fragrances and packaging.
Communication strategy in boring loop
Deodorant market in India for men is much bigger than women. The size ratio is 3:1.
But most of the communication strategy had remained the same highlighting the sex
appeal. Globally, fragrances always talk about attraction that it creates around you. But the
difference lies in how does one goes about communicating that message. Fogg challenged
this model by communicating its product innovation.
Anti-perspirant deodorant
Deodorant sticks
Alcohol-free
Innovation team of the organization has to pursue demand driven insight religiously. They
have to ensure the alignment of concept, product and go-to-market execution, which should
be sufficiently different from the approaches followed previously- then only can the firm
ensure breakthrough proposition.
Pervasive leadership:
Innovation process has to be driven with commitment and passion, crossing the countless
hurdles that come in all the stages and in different forms. It requires an all pervasive
leadership to achieve success.
PROSPECTS:
Increasing number of brands are expected to dive in categories like Antiperspirant, skinwhitening or hair growth so as to increase the perceived value to the customer and thus
earning higher margins on the products.
Deodorant market is expected to grow by a value CAGR of 12% at prices taken constant at
2013 value and reach INR34.1 Billion by 2018.
Deodorant sprays are likely to remain the category leaders given its level of acceptance and
the focus of companies towards new launches in this segment.
As number of launches in women deodorant market as is appearing from the recent launches
by Hindustan Unilever and its plan to extend Lux brand into it.
Engage from ITC ltd can be the fore runner in the market given the positive response it is
able to garner from the market, both customers as well as retailers.
Siyaram Silk Mills Ltd and HLL Lifecare Ltd are planning to enter the deodorant market in
2014. Also, Viacom 18 Media Pvt Ltd (MTV deodorants) and Fizikem Laboratories Pvt Ltd
(Ozo deodorants) are aggressively increasing their penetration in the market.
Deodorant sprays are slowly taking over talcum powder market due to conveniencein the
rural market which have traditionally been strong point for rural markets.
SUMMARY
In the Indian market several domestic and international companies launched their Deodorant
range due to its high growth potential. 2013 witnessed several new launches and marketing
campaigns by new manufacturers.
Growth in value terms of deodorants in 2013 was 28%. Various factors as were
discussed earlier are responsible for it like growing acceptance as a cheaper
alternative to fragrances, increasing penetration in tier III cities and rural areas,
growing working population and increasing need to feel fresh for the whole day.
Growth was slower than the 35% value growth in 2012 (although being highest in
personal care) because deodorants was relatively new in India and was moving
towards a stable growth rate.
Deodorant sprays witnessed fastest growth with 28% in 2013 reason being its
convenience to use compared to a deodorant roll-on. Deodorant sprays also replaced
talcum powder for grooming in urban India.
Interestingly, Mens deodorants accounted for 70% value share of deodorants in India
because of higher proportion of working class men and many times women use Mens
deodorant because of its strong smell.
TV commercials were the preferred way to build the brand equity over the review
period. Mens deodorants continued to be marketed on sensual theme, which was
followed by many new entrants. However, new entrants such as Vini Cosmetics Pvt
Ltd and Nivea India Pvt Ltd tried different themes such as no-gas and antiperspirant.
Deodorants segment witnessed low brand loyalty and impulse buying was the
common phenomenon. Thus, over-the-counter promotions and discount offers in
supermarkets and hypermarkets were preferred by marketers.
This brand was promoted showing the typical sound created by its cap when it is
opened.
There was no trade down from fragrances to deodorants but brands like Fogg from
Vini Cosmetics Pvt Ltd moved closer to perfumes by providing no-gas deodorants.