Marketing Project

ContentsINTRODUCTION2FACTORS AFFECTING PRODUCT INNOVATION2FACTORS ENHANCING PRODUCT INNOVATION3ROAD MAP FOR DEVELOPING A NEW PRODUCT4PRODUCT INNOVATION- A POTENTIAL SOURCE OF COMPETITIVE ADVANTAGE FOR FIRMS7TRENDS IN DEODORANT INDUSRTY:8NEED FOR NEW PRODUCT INNOVATION IN DEOS12DEMAND DRIVEN INNOVATION:12DIFFERENTIATING YOUR PRODUCT FROM COMPETITORS THROUGH INNOVATION13PROSPECTS:13SUMMARY14

INTRODUCTIONFor 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.

FACTORS AFFECTING PRODUCT INNOVATION Global EngagementFirms have a great advantage if they have global exposure which shows direct positive relationship between global engagement and innovation by firms. Firms have more opportunities to improve and innovate their technologies if they have access to foreign technologies or capital goods for production. Thus Multinational enterprises tend to have higher propensities for innovation of product and process.

Information SpilloversInnovation by one firm not only benefits it but also benefits the imitators. The decision to invest in R&D depends on the expected future profits generated by the new product, which in turns depends on the ability of potential competitors to imitate such innovations.

Market StructureInnovation 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.

FACTORS ENHANCING PRODUCT INNOVATION

Market KnowledgeMarket knowledge is basically knowledge about its customers and competitors. The firm should be very thorough with its Market research.The first component of market knowledge, customer, deals with generating information about present and prospective customers and using it within the firm.The second, competitor, refers to generating information about current and future competitors.

Cross-Functional CollaborationFor a firm to develop a sustainable product, it is very important for various departments to work in sync. Cross-functional collaboration refers to cooperation in inter departmental functioning and extent of representation by various departments (marketing, finance, R & D, etc).

Knowledge Integration Mechanism Maintaining database is crucial for taking decisions in any organization and becomes vital when taking strategic decisions. Knowledge integration mechanism is the process that ensure the capture, analysis, integration and interpretation of market and other types of knowledge and various departments and functional units of the firm.Majority of the firms fail to innovate product because of the inability to manage these factors.

ROAD MAP FOR DEVELOPING A NEW PRODUCTThe process of developing a new product idea can be segregated into five phases:

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 channels- First channel goes back to phase IISecond channel led to phase V to develop new ideas. Phase V: Final Results are compiled to support new product development.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.

Best methods for developing ideas for product innovationVoice-of-customer methods 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. Ethnographic research: Observing, following and probing customers for extended periods as they use or misuse products. The customer or user designs: Customers incentivised to design their next new product. Customer brainstorming: Group of users are assembled and employed in formal brainstorming sessions. Customer advisory board or panel: Customer advisory board or user group is consulted to advise on problems and new products needs. Community of enthusiasts: A community of enthusiasts discuss your product, often on the internet and thereby identify problems and seek ideas for new products.

Open innovation approaches Partners and vendors: Utilizing outside partners and vendors for seeking new product ideas. The advantage is that partners bring extra technical capabilities. Accessing the external technical community: It is an open innovation approach which solicits ideas and solutions from the external scientific and technical community Scanning small businesses and business start-ups: It is an open innovation approach in which small and start-up businesses are accessed to get ideas. 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 Disruptive technologies: Monitor technological trends formally and identify potential radical technologies; and thereby define the resulting new product ideas. 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.

Above methods sourced from http://www.prod-dev.com/SGI/downloads/wp/wp_29.pdfAs per Arthur D. Little global study, of five best practices identified, idea management has the strongest impact on the increase in sales by new products. In other words, having effective idea management results in an extr 7.2 percent of sales from new products.

Role of Research and Development in Product Innovation Success in product Innovation is very critical issue for a company, irrespective of its domain. Understanding the factors that push success of a product can help a company focus valuable resources which in turn improves value delivery process and increase the market demand for a firm's new products. Product development as rational plan, communication web, and 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 innovationCo-relation between R&D factors and improvement in product innovationCo-efficient of corelationcore competenciescompetitive edgeprofitmarket share expansion

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organizational structure0.1360.340.750.287

production capacity0.7150.3610.2870.62

PRODUCT INNOVATION- A POTENTIAL SOURCE OF COMPETITIVE ADVANTAGE FOR FIRMSAs per The Scientific Activity Predictor from Patterns of Heuristic Origins product success was primarily related to the following five factors:(1) User needs should be understood,(2) Attention should be given to marketing and publicity,(3) Development should be efficient,(4) Technology and external scientific communication should be adequately used,(5) Utilization of expertise and knowledge of senior managers.

TRENDS IN DEODORANT INDUSRTY:Given the recent exit of Jyothy Laboratories due to apparent differences with Henkel of Germany, gives insight of the trend in Indian Deodorant sector, especially in Women Deodorant market. Where Fogg created its own market with intense market research and making a right fit product in market, Jyothy laboratories realized it quite late that Indian population is predisposed towards stronger fragrances, which products such as Fa in its portfolio did not accomplish. Jyothy laboratories integrated Fa and other brands of Henkel in its portfolio and its problems started early when Henkel did not let it temper with the original fragrance to make it more India specific. It was one of the initial brands in Women Deodorant category when Jyothy laboratories realized that mens category is already saturated with many products. New Entrants:With the growth of Indian Deodorant market pegged at 18%, it is one of the fastest growing good in FMCG. Riding on this bandwagon, small town, low end deodorant brands such as Dynamite, Aira sensual, Men club, Lady Diana are taking steps to enter into major towns to take like of Axe, Engage and Fogg head on. Earlier Deodorant business happened to be a phenomenon usually reserved for long and hot summers, but its very recent that Indian consumers have given an ear to marketers pitch of smelling good as a part of looking good. Brand expert Harish Bijoor is of opinion that The smell culture is evolving. Deodorants are taking the place of talcum powder just the way tooth paste displaced tooth powder a long time ago,""Low income families are taking to deos as well," he added.Little wonder then the deodorant market is seeing brands emerging as if they are being sprayed out of an aerosol can, and winners are not always predictable. At the higher end, ITC's Engage, available now in 14 variants, have become the second largest player by volume. But the even more smell-good story is that of the largest player, Fogg, marketed by FMCG minnow Vini Cosmetics. 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 IndiaDeodorant 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.Year2014201220112010

Deodorant Market Size (In Rs. Crore)210015211129793

Source: Euromonior InternationalIn 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.

Future growth determinants in deodorant category: Category penetration would continue to increase as the channel increases in its reach. Higher disposable incomes. Consumers looking for products that are strong on innovation.

From Sensational To Functional - The Shift in the Deodorant Industry As the market has matured and competition stiffened consumers, especially well-aware urban consumers have started looking for secondary benefits from their deodorants, such as anti-perspirant, underarm skin whitening and alcohol-free. To tap into the growing needs of urban consumers, new entrants like Fogg and Engage have hit the right chord with the consumers. Fogg has increased its market share manifolds in two years. It clearly managed to dent the market share of Axe that was leading the market. The story is simple: clear product innovation to fill the gap, clear advertising communication and a clear win.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 loopDeodorant 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.

Other product innovations in deodorant market space are Skin whitening deodorant Fragrance retention deodorant Anti-perspirant deodorant Deodorant sticks Alcohol-free

Degree of usage (Consumer study report): According to a consumer research carried out by Mcnroe, Delhi and NCR region contributes almost 14% to the overall deodorant market and consists of heavy users. Also, about 70% of the users are Men, study pointed out. Changes in lifestyle, evolving preferences along with increase in disposable income are also some contributors that are spearheading the growth in the category. Deodorants are becoming an integral lifestyle product as urban youth is increasingly searching for grooming choices to indulge in.

(Taken from Internet) NEED FOR NEW PRODUCT INNOVATION IN DEOSIn recent years, with the increase in men's awareness of personal hygiene, there is a rapid growth in antiperspirants and deodorants formulated for men. The usage rate of antiperspirants and deodorants for men was low. This trend has changed and is here to stay. The market trends for deodorants and antiperspirants are toward clear and highly effective formulations that are mild and non-irritating. Consumers want choice in their antiperspirant/deodorants. While some consumers find fragrance to be the most important aspect they're looking for, others find odour and wetness protection to be the most vital. Improving efficacy and skin compatibility is an ongoing trend in the antiperspirant field. Another latest trend is to formulate products based on naturally-derived raw materials and as a result, formulators are constantly revising old formulas.

DEMAND DRIVEN INNOVATION: Success in innovation is based upon the three core disciplines. Organizations that inculcate these disciplines have a higher chance of success than others: Demand-Driven Insight: At the heart of breakthrough innovation is a deep understanding of latent demands either through market research or an understanding, which not many organizations have. Demand-driven development: 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.

DIFFERENTIATING YOUR PRODUCT FROM COMPETITORS THROUGH INNOVATIONA company can differentiate its product from the competition on the basis of any 1 or more variable in the marketing mix i.e. 4Ps Product, price, place and promotion. Being a FMCG product; Fogg played the first P i.e. Product card quite well. TConsumer need gap leading to Innovation: They found out that the deodorant can be differentiated by having less gas and more perfume. Thus providing more value to the customers. The customers were guaranteed to have 800 sprays from a bottle of Fogg Royal priced at Rs. 170/-. Thus the functionality of having more number of sprays in a bottle worked wonders for Fogg and it became the leader in the market. Communicating the innovation: The functionality was also adopted well in the promoting the product with the tagline No Gas, Only Deo. This kind of positioning was also different from the competition including Axe, which emphasized only on the seduction aspect to sell their deodorants.

PROSPECTS:Increasing number of brands are expected to dive in categories like Antiperspirant, skin- whitening 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.

SUMMARYIn 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. Marketers noticed a gap in dedicated women segment of deodorants and thus it witnessed launch in this segment such as Fogg for women range from Vini Cosmetics Pvt Ltd, Engage for women range from ITC Ltd and Flip for women range from Provogue (India) Ltd. 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. Womens deodorants continued to be marketed on additional benefits theme such as under-arm whitening or antiperspirant, although there were exceptions like Engage for Women from ITC Ltd, which was based on sensual theme. 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. In order to differentiate their products in the competitive market, the owners of deodorants brands like Nivea and Dove offered some additional benefits such as antiperspirant, skin- whitening characteristics or deodorants with no gas. Companies even tried peculiar features, for example, Eternal Personal Care (I) Pvt Ltd launched a deodorant range named Bad Boy. 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.