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Launching New Products in India is a Long-Term Play
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Launching New Products in India is a Long-Term Play

Innovation provided a strong underlying thread of discussion at Nielsen’s Consumer 360 event in India. Mitchell Habib, Nielsen’s operations and innovation chief, told attendees that disruptive innovation was critical to lasting business success and outlined ways it could open new markets in emerging economies. Deepak Gulati, CEO of Tata Docomo, and Banoja Acharya, Nielsen India’s VP, Client Services, shared specific examples and innovation strategies for India.

Launching New Products in India is a Long-Term Play

To succeed in India’s dynamic market, fast-moving consumer goods companies (FMCG) are investing in innovation to take advantage of the rapidly evolving retail landscape and the changing purchasing behavior of consumers.

While new consumer product launches and innovations have proliferated in India over the past decade, FMCG companies can better ensure successful launches with three-to-five year launch plans. “The truly innovative products, have a longer gestation period, need significantly higher investment and usually guarantee slower, but higher returns in the long run,” said Acharya.

Logistical Challenges

Distribution logistics in India hamper first-year sales, as availability levels to Indian consumers are between 75–200 percent lower than in fully developed markets. And, significant marketing support is required, as product launches in India generally require sustained high levels of advertising spending to reach the necessary threshold number of consumers for ROI targets.

After year one, and into years two, three, four, and beyond, however, successful new products and categories reach an inflection point when sales and volume start to rise exponentially. While it takes time to achieve inflection points, the benefits of waiting are certainly sweet—especially once new launches reach their maxima.

However, not all categories are alike. A Nielsen analysis of 100 new product launches shows that the growth curve is different across categories. New launches in the impulse food category have a shorter purchase cycle and typically generate higher interest among consumers. As such, they reach their point of maxima fastest—in as little as three–to–four months. Loyalty plays a big part in personal care products as consumers are less willing to switch brands. These products take the longest to develop—anywhere from seven to 24 months depending on the category. And household care products reach their maxima somewhere in between as these products are driven largely by benefit rather than emotion.

A Different Kind of Competitive Advantage

A unique phenomenon exists in a consumer-driven market like India where competition is not necessarily bad for new brands within the same category. “If multiple brands are introducing similar products with proper marketing support, the new category experiences a larger share-of-voice in the minds of Indian consumers,” said Acharya. “When this occurs, the category—and all the brands within it—can reach the inflection point much quicker on the product launch timeline.”

For example, as several brands entered the anti-aging category, ad spends combined to create a multiplier effect in share-of-voice, significantly boosting sales volume for the category and all the brands in it.

innovation

Serendipitous competition will not always be the case, and even when it exists, the product innovation timeline in India takes longer than in developed countries. To compete in India, FMCG companies must plan their launches and marketing budgets accordingly, availing themselves of all available tools to ensure their products—whether food/beverage, household, or personal care products—resonate for the long term.

Play to Strengths – Don’t Ignore Weaknesses

Whether launching a new product in India—or anywhere else in the world—you are only as strong as your weakest link. Based on Nielsen research and development over a five-year period of new product launches, there are 12 things that every new product must do to succeed. And while a product does not need to exceed expectations across all factors, it must do well enough on all to ensure success.

  1. Offer true innovation
  2. Get noticed
  3. Land your message
  4. Communicate with focus
  5. Be relevant
  6. Be better
  7. Be credible
  8. Limit the battles
  9. Be in the right places
  10. Win the value equation
  11. Deliver on product promises
  12. Be strong in the long run

Given the opportunity that India’s burgeoning middle class represents for both local and multinational FMCG operations, the strategic planning, marketing commitment, and patience required for new product success are surely worth the efforts and expenditures.