Product innovations essentially mean elongating the life line of a brand. For a market such as India, innovations can become tricky given the market dynamics and the discerning consumer. Globally, at least 90 per cent of new product introductions fail in the year they launch. India is often viewed as a hotbed of innovation, but the landscape is highly competitive. Among almost 14,000 launches in the fast-moving consumer goods (FMCG) sector in 2011 for India, research agency Nielsen deemed fewer than 40 as true breakthrough innovations. In a new research, Nielsen puts forward six insights in the product innovation trends in India.
Investment in innovation: One in three organisations in India invests less than 5 per cent of its annual revenue in innovation-related R&D. Only three out of 10 organisations invest 10 per cent or more. The FMCG category tends to invest more heavily on innovations than other sectors.
Triggering innovation: Sharp consumer insight leads to innovations. This is true for almost nine out of 10 organisations, as per Nielsen’s data. Industry professionals also stress the need for a competitive response, improved R&D capabilities, the ability to navigate financial pressures, and securing guidance from senior management as other triggers. FMCG companies tend to be more open to leverage successes in other countries outside of the one they primarily do business in.
Time-to-market: It takes 50 per cent of companies an average of one to two years to take an innovation from concept to launch, which is consistent with a large majority of FMCG companies. Interestingly, three out of 10 companies can turn an innovation around in less than a year; these companies, however, are non-FMCG companies.
Shelf-life of innovation: One in five industry professionals across sectors told us that more than 25 per cent of their ideas make it to the shelves. Comparatively, one in four FMCG industry professional said that more than 25 per cent of their ideas get launched.
Supporting innovation: Companies in India spend about one in three Rupees in the launch year on advertising. Nielsen research suggests that advertising is the second-most important factor with respect to year-one sales, only behind distribution. Trade and consumer promotion account for another 30 per cent of spending for launches in India.
Killing innovation: Experts generally agree on four key disablers that can hamper progress: Long lead times from conceptualisation to launch; allowing short-term priorities to supersede long-term thinking; limited finances available to fund innovations; and conflicting priorities across internal teams.
To better understand the choices and decisions companies in India make regarding innovation, Nielsen talked to 90 industry professionals across industries and levels. The insights helped understand how innovators think, discern whether they’re setting themselves up for success, and determine whether India is living up to market expectations as an innovation leader.